UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material Pursuant to §240.14a-12 |
QUAKER CHEMICAL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee |
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☐ | Fee paid previously with preliminary |
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NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
MEETING DATE
May 8, 201911, 2022
QUAKER CHEMICAL CORPORATION
One Quaker ParkHOUGHTON
901 E. Hector Street
Conshohocken, Pennsylvania 19428
Important Notice of Availability of Proxy Materials for Quaker Chemical Corporation’s 2019Houghton’s 2022 Annual Meeting of Shareholders to be held on May 8, 2019.11, 2022. The Notice of Meeting, Proxy Statement and 2021 Annual Report onForm 10-K, including the CEO’s letter to the shareholders,Shareholders are available at www.proxyvote.com.
Notice of Virtual Annual Meeting of Shareholders
TIME: | 8: | |
PLACE: |
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ITEMS OF BUSINESS: | (1) To elect (2)
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WHO MAY VOTE: | You can vote at the meeting and any adjournment(s) of the meeting if you were a shareholder of | |
ANNUAL REPORT: | A copy of our Annual Report, which includes our Annual Report onForm 10-K for the year ended December 31, |
It is important that your shares be represented at the meeting. You are cordially invitedRegardless of whether you plan to attendparticipate in the virtual shareholders’ meeting, in person. Whether or not you expect to attend in person, you are urged to complete, sign, date and return the enclosed proxy in the envelope we have enclosed for your convenience; no postage is required if mailed in the United States. If you plan to participate in the virtual shareholders’ meeting, please see the instructions on page 1 of the Proxy Statement.
By Order of the Board of Directors,
Robert T. Traub
Senior Vice President, General Counsel
and Corporate Secretary
Conshohocken, Pennsylvania
March 29, 201931, 2022
Important Notice of Availability of Proxy Materials
for Quaker Chemical Corporation’s 2019Houghton’s 2022 Annual Meeting of Shareholders to be held on May 8, 2019.11, 2022.
The Notice of Meeting, Proxy Statement and 2021 Annual Report on Form10-K,
including the CEO’s letter to the shareholders,Shareholders
are available at www.proxyvote.com.
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Governance Committee Procedures for Selecting Director Nominees | ||||
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Availability of Form 10-K and Annual Report | ||||
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PROXY STATEMENT | ||||
Proxy Statement
This proxy statement is being furnished to our shareholders in connection with the solicitation of proxies on behalf of our Board of Directors for use at our 20192022 Annual Meeting of Shareholders, and at any and all postponements or adjournments of the meeting, for the purpose of considering and acting upon the matters referred to in the accompanying Notice of Annual Meeting of Shareholders and which are discussed below. The Annual Meeting of Shareholders will be held live via the Internet at our headquarters, located at One Quaker Park, 901 E. Hector Street, Conshohocken, Pennsylvania 19428,www.virtualshareholdermeeting.com/KWR2022, at 8:3000 A.M., local time, on May 8, 2019. 11, 2022. You will not be able to attend the annual meeting in person.
We believe that a virtual meeting provides expanded shareholder access and participation and improved communications, while affording shareholders the same rights as if the meeting were held in person, including the ability to vote shares electronically during the meeting and ask questions in accordance with the rules of conduct for the meeting.
The terms “we,” “our,” “us,” the “Company”“Company,” “Quaker” and “Quaker Houghton,” as used in this proxy statement, refer to Quaker Chemical Corporation.Corporation doing business as Quaker Houghton.
This proxy statement, the accompanying form of proxy and a copy of our Annual Report, which includes our Annual Report on Form10-K for the year ended December 31, 20182021 are first being mailed to our shareholders on or about April 3, 2019.5, 2022.
Information Concerning the Annual Meeting
What matters will be voted on at the meeting?
At the meeting, shareholders will vote on threetwo proposals and any other business properly brought before the meeting:
Election of threefour nominees to serve on our Board of Directors;
Amendment to our Articles of Incorporation, as amended, to implement a majority voting standard for uncontested elections of directors;Directors (or the “Board”); and
Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019.2022.
How does the Board recommend I vote on the proposals?
The Board recommends that you vote:
FOR each of the threefour nominees named in this proxy statement;
FOR approval of an Amendment to the Company’s Articles of Incorporation, as amended; and
FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019.2022.
Who is entitled to vote?can attend the Annual Meeting?
ShareholdersThis year’s annual meeting will be a virtual meeting of the shareholders conducted via live webcast. The meeting will be followed by a question and answer session. All shareholders of record as of the close of business on March 4, 2019,2022 are invited to participate in the record datemeeting. We have structured our virtual meeting to provide shareholders the same rights as if the meeting were held in person, including the ability to vote shares electronically during the meeting and ask questions in accordance with the rules of conduct for the meeting.
To attend the meeting are entitledplease visit www.virtualshareholdermeeting.com/KWR2022. To participate in the annual meeting, you will need the 16-digit control number included on your notice or on your proxy card.
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PROXY STATEMENT | ||
Beneficial shareholders who do not have a control number may gain access to noticethe meeting by logging into their broker, brokerage firm, bank or other nominee’s website and selecting the shareholder communications mailbox to link through to the annual meeting; instructions should also be provided on the voting instruction card provided by your broker, bank or other nominee.
Only shareholders with a valid control number will be allowed to ask questions. Questions relevant to meeting matters will be taken and answered during the meeting as time allows, to emulate an in-person question and answer session. Additional information regarding the rules and procedures for participating in the virtual annual meeting will be provided in our meeting rules of and to voteconduct, which shareholders can view during the meeting at the meeting andwebsite.
What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual meeting website?
If you encounter any adjournmentsdifficulties while accessing the virtual meeting during the check-in or meeting time, a technical assistance phone number will be made available on the virtual meeting registration page approximately 15 minutes prior to the start of the meeting. If there are any technical issues in convening or hosting the meeting, we will promptly post information to our website, https://investors.quakerhoughton.com/event-calendar, including information on when the meeting will be reconvened.
How do I submit a question at the Annual Meeting?
The virtual meeting affords shareholders the same rights as if the meeting were held in person, including the ability to vote shares electronically during the meeting and ask questions in accordance with the rules of conduct for the meeting.
If you wish to submit a question, you may do so during the meeting by logging into the virtual meeting platform at www.virtualshareholdermeeting.com/KWR2022 and typing your question into the “Ask a Question” field, and clicking “Submit.” You will need the 16-digit control number that appears on your proxy card.
Beneficial shareholders who do not have a control number should receive instructions from your broker, bank, or other nominee on how to submit questions at the annual meeting.
Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints.
What is the difference between holding shares as a shareholder of record and as a beneficial owner?
If your shares are registered directly in your name with the Company’s transfer agent, American Stock Transfer & Trust Company, LLC, you are considered, with respect to those shares, the “shareholder of record.” The printed copies of the proxy materials have been sent directly to you by the Company, unless you previously consented to receive all proxy materials electronically via e-mail or the Internet.
If your shares are held in a stock brokerage account, or by a bank or other nominee, you are considered the “beneficial owner” of shares held in “street name,” and the “shareholder of record” of your shares is your broker, bank or other nominee. The printed copies of the proxy materials have been forwarded to you by your broker, bank or other nominee, unless you previously consented to receive all proxy materials electronically via e-mail or the Internet. As the beneficial owner, you have the right to direct your broker,
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bank or other nominee to vote your shares. The Company urges you to instruct your broker, bank or other nominee on how to vote your shares. Please understand that, if you are a beneficial owner, the Company does not know that you are a shareholder or how many shares you own.
How do I cast my vote if I am a shareholder of record?
You can cast your vote:vote as follows:
in person, by attendingBefore the Annual Meeting of Shareholders;
via the Internet, by visiting www.proxyvote.com and following the instructions provided;
by telephone, using the toll-free number listed on the proxy card; or
by mail, if you mark, sign and date the proxy card enclosed with this proxy statement, and return it in the postage-paid envelope provided.meeting:
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via the Internet by visiting www.proxyvote.com and following the instructions provided so long as you vote by 11:59 P.M. Eastern Time on May 10, 2022 for shares held directly and by 11:59 P.M. Eastern Time on May 9, 2022 for shares held in a Plan (each, a “Cutoff Time”);
- | by telephone using the toll-free number listed on the proxy card so long as you vote by the applicable Cutoff Time; or |
- | by mail, if you mark, sign and date the proxy card enclosed with this proxy statement, and return it in the postage paid envelope provided and the Company receives it no later than the applicable Cutoff Time. |
During the meeting:
- | by visiting www.virtualshareholdermeeting.com/KWR2022. You will need the 16-digit control number that appears on your proxy card. |
How do I cast my vote if I am a beneficial owner of shares held in street name?
You can castAs the beneficial owner of shares held in street name, you have the right to direct your vote:broker, bank or other nominee how to vote your shares and it is required to vote your shares in accordance with your instructions. As explained below, under “How will my proxy be voted?”, your bank, broker or other nominee may, under certain circumstances, vote your shares on “routine” matters.
We recommend that you follow the voting instructions in person, by first obtaining a voting instruction form issued in your namethe materials you receive from your broker, and bringing that voting instruction formbank or other nominee to the meeting, together with a copy of a brokerage statement reflecting your stock ownership as of the record date and valid identification;
vote via the Internet, by visiting www.proxyvote.com and following the instructions provided;
by telephone by using the toll-free number found on the voting instruction form; or
by mail if you mark, sign and dateby the voting instruction form and return it in the postage-paid envelope provided by your broker.applicable Cutoff Time.
If I have given a proxy, can I revoke that proxy?
Your presence at the meeting will not in itself revoke any proxy you may have given. If your shares are held in your own name (i.e., you are the shareholder of record), you may revoke your proxy at any time (to the extent it has not already been voted at the meeting), but a revocation will not be effective until it is received. Your proxy will be revoked (to the extent it has not already been voted at the meeting) if you:
give written notice of the revocation to Quaker’sQuaker Houghton’s Corporate Secretary, Robert T. Traub, One Quaker Park, 901 E. Hector Street, Conshohocken, Pennsylvania 19428, or give electronic notice to Mr. Traub at traubr@quakerchem.com;Robert.Traub@quakerhoughton.com;
submit a properly signed proxy with a later date;date and the Company receives it no later than the applicable Cutoff Time;
voting online before the applicable Cutoff Time as described above; or
vote in personattending and voting at the virtual meeting as described above.
If your shares are held in street name through a broker, bank or other nominee for your benefit, you should contact the record holder to obtain instructions if you wish to revoke your vote before the meeting.
2022 Proxy Statement | 3 |
PROXY STATEMENT | ||
How will my proxy be voted?
If you are a registered holder and your proxy is properly executed, returned and received before the meeting and is not revoked, it will be voted in accordance with your instructions. If you return your signed proxy but do not mark the boxes to show how you wish to vote on a proposal, the shares for which you have given your proxy will, in the absence of your instructions to the contrary, be voted as follows:
Proposal 1: “FOR” the election of each of the threefour nominees named in this proxy statement to serve on our Board of Directors;
Proposal 2: “FOR” approval of an Amendment to the Company’s Articles of Incorporation, as amended;
Proposal 3: “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019;2022; and
In the discretion of the proxies on other matters properly brought before the meeting.
If your shares are held in street name through a broker, bank or other nominee for your benefit and your voting instruction form is properly executed, returned and received before the meeting and is not revoked, it will be voted in accordance with your instructions. If you have not furnished voting instructions within a specified period before the meeting, under current New York Stock Exchange (“NYSE”) rules, brokerage firms and nominees that are members of the NYSE may vote their customers’ unvoted shares on “routine” matters but not onnon-routine matters. Under the NYSE rules, routine matters include the ratification of the appointment of our independent registered public accounting firm but do not include the other proposalsproposal on the ballot.
The voting instruction form also grants the proxy holders discretionary authority to vote on any other business that may properly come before the meeting as well as any procedural matters. As of the date of this proxy statement, we do not know of any other matters that will be presented at the meeting.
What does it mean if I get more than one proxy card?
If you hold your shares in more than one account or with more than one broker and/or our transfer agent, you will receive more than one proxy card. Please complete and return each of the proxy cards you receive to ensure that all of your shares are voted.
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PROXY STATEMENT | ||
How many votes are required to approve each proposal, and what are the effects of abstentions and brokernon-votes?
The following table summarizes the vote required for approval of each proposal and the effect on the outcome of the vote of abstentions, uninstructed shares held by brokers (which result in brokernon-votes when a beneficial owner of shares held in street name does not provide voting instructions and, as a result, under the NYSE rules, the institution that holds the shares may not vote those shares on certain proposals) and signed but unmarked proxy cards.
Proposal | Votes Required
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Shares/ Effect of Broker Non- votes(1) | Signed but Unmarked Proxy Cards(2) | |||||||
Proposal 1 | Election of directors | |||||||||||
| Majority of votes cast | No effect(3) | Not voted/No effect(3) | Voted “For” | ||||||||
Proposal | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm | Majority of votes cast | No effect(3) | Discretionary vote by broker | Voted “For” |
(1) | Abstentions and brokernon-votes are included in determining whether a quorum is present. |
(2) | If you are the shareholder of record and complete your proxy card properly, but do not provide instructions on your proxy card as to how to vote your shares, your shares will be voted as shown in this column and in accordance with the judgment of the individuals named as proxies on the proxy card as to any other matter properly brought before the annual meeting. |
(3) | Under |
Our Amended and Restated Articles of Incorporation (the “Articles”) provide that, in an uncontested election, a nominee must receive a majority of the votes cast to be elected. A majority of the votes cast means that the number of votes cast “for” a nominee must exceed the number of votes cast “against” that nominee. Under our Articles, if an incumbent director who is a candidate for re-election is not elected, the director will be deemed to have tendered the director’s resignation to the full Board of Directors. The Governance Committee will make a recommendation to the Board of Directors on whether to accept or reject the resignation, or whether other action should be taken, and the Board of Directors will be required to act on the Governance Committee’s recommendation and disclose its decision and the rationale for the decision. If a nominee fails to receive a majority of the votes cast and the Board of Directors accepts the director’s resignation or the director retires, there would be a vacancy created on the Board of Directors. Our Board of Directors would then have the option under our By-Laws either to appoint someone to fill the vacancy or to reduce the size of the Board of Directors.
This year’s election of directors is an uncontested election of directors. If there were a contested election, then plurality voting, by which directors receiving the highest number of votes, up to the number of directors to be elected in such election, would be elected.
What if a director nominee is unwilling or unable to serve?
We do not expect that to occur. If it does, proxies will be voted for a substitute director nominee designated by our Board of Directors.
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PROXY STATEMENT | ||
Are dissenters’ rights applicable to any of the matters to be voted on at the meeting?
No. Dissenters’ rights do not apply to any of the matters to be voted on at the meeting.
Who will count the vote?
The Judge of Election appointed at the meeting, together with a representative of Broadridge Financial Solutions, Inc., will serve as the inspector of election.
How many shares can be voted at the meeting and what is the total number of votes that can be cast?
As of March 4, 2019,2022, the record date for the meeting, 13,332,87117,894,745 shares of Quaker Houghton common stock were issued and outstanding. Every holder of Quaker Houghton common stock is entitled to one vote for each share held of record on the record date; therefore, at the annual meeting, a maximum of 13,332,87117,894,745 votes can be cast.
How many votes may I cast at the meeting?
You will be entitled to cast one vote for each share of common stock you held on March 4, 2019,2022, the record date for the meeting.
What is a “quorum”?
The presence of shareholders entitled to cast at least a majority of the votes entitled to be cast on a particular matter will constitute a “quorum” for the purpose of considering that matter. For purposes of determining the presence of a quorum, the votes of a shareholder will be counted if the shareholder is present in person or by proxy. Shares that are the subject of abstentions or brokernon-votes will be counted for purposes of determining a quorum.
Who can attend the Annual Meeting?
All shareholders of Quaker who owned shares of record on March 4, 2019 may attend the meeting. If you want to vote in person and you hold Quaker common stock in street name (i.e., your shares are held in the name of a brokerage firm, bank or other nominee), you must obtain a proxy card issued in your name from your broker and bring that proxy card to the meeting, together with a copy of a brokerage statement reflecting your stock ownership as of the record date and valid identification. If you hold stock in street name and want to attend the meeting but not vote in person at the meeting, you must bring a copy of a brokerage statement reflecting your stock ownership as of the record date and valid identification.
How will voting on any other business be conducted?
We do not know of any business to be considered at the meeting other than the proposals described in this proxy statement. However, if any other business is properly presented at the meeting, the proxy being solicited by the Board of Directors will give authority to Michael F. BarryAndrew E. Tometich and Robert T. Traub to vote on such matters at their discretion and they intend to do so in accordance with their best judgment.
Who will pay the cost of this proxy solicitation and how will the solicitation be conducted?
We will pay the expenses of soliciting proxies in the form included with this proxy statement, including the cost of preparing, assembling and mailing material in connection with the solicitation. In addition to the use of the mail, our directors, executive officers and employees may, without additional compensation, solicit proxies by telephone, facsimile, electronic mail and personal contact. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonableout-of-pocket expenses for forwarding proxy materials and Quaker’sQuaker Houghton’s annual report, including its Annual Report on Form10-K, to any beneficial holder of Quaker Houghton common stock.
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Does the Company utilize “householding” for mailing of its proxy materials?
The Securities and Exchange Commission (the “SEC”) permits companies and intermediaries (such as brokers and banks) to satisfy delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivery of a single proxy statement and annual report to those shareholders. This process, which is commonly referred to as “householding,” is intended to reduce the volume
of duplicate information shareholders receive and also reduce expenses for companies. Quaker Houghton has instituted householding for its registered shareholders; some intermediaries may also be householding Quaker’sQuaker Houghton’s proxy materials and annual report. Once you have received notice from the Company, your broker or another intermediary that they will be householding materials to your address, householding will continue until you are notified otherwise or until you or another shareholder who shares your address provides contrary instructions.
If at any time you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, you should contact Victoria K. Gehris, Assistant Secretary, at1-610-832-4246, or inform her in writing at Quaker Chemical Corporation,Houghton, Shareholder Services, One Quaker Park, 901 E. Hector Street, Conshohocken, Pennsylvania 19428. If you hold shares through an intermediary and no longer wish to participate in householding, you should contact your bank, broker or other nominee record holder.
Shareholders who share an address and are receiving multiple copies of annual reports or proxy statements but would like to receive a single copy can contact Victoria K. Gehris at the telephone number or address noted above.
We undertake to deliver promptly to any shareholder at a shared address, upon written or oral request, a copy of Quaker’sQuaker Houghton’s proxy statement and annual report. You may request these documents by calling the telephone number or writing to the address noted above.
PROPOSAL 1 | ||||
Proposal 1 – Election of Directors and Nominee Biographies
What is the makeup of the Board of Directors?
The Quaker Articles of Incorporation divide our Board of Directors into three classes, each consisting, as nearly as possible, ofone-third of the directors. The shareholders elect the members of one class each year to serve for a term of three years. Directors elected to fill vacancies and newly created directorships serve for the balance of the term of the class to which they are elected. Currently, there are eighttwelve directors, two directors in Class I, and threefour directors in each of Class I, Class II and Class III. The current terms of the Class III directors expire at the 20192022 annual meeting of shareholders. At the 20192022 annual meeting, threefour Class III directors are to be elected with each member to serve a three-year term expiring in 20222025 and until his or herthe director’s successor is duly elected and qualified. The current terms of the four directors in Class I expire at the 2023 annual meeting and the current terms of the four directors in Class II expire at the 2024 annual meeting.
Are there any members of the class of directors to be elected at the meeting who are not standing for reelection?
No.
Who are the Board’s nominees this year?
Messrs. Mark A. Douglas, andSanjay Hinduja, William H. Osborne and Ms. Fay West are the nominees for election to the Board of Directors as Class III members. Each nominee, if elected, would hold office until our 20222025 annual meeting of shareholders and until his or hera respective successor is duly elected and qualified.
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Below is information about our nominees for election to the Board as Class III members, including descriptions of their qualifications and their business experience and directorships over the past five years:
Mark A. Douglas, 5659
Director Since: 2013
Governance Committee (Chair) Sustainability Committee President and Chief Officer, Other U.S.-Listed Company Boards: FMC Corporation |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | Management experience of a global chemical business |
• | Experience in |
• | Complementary experience and continuing education through his service on the boards of both public and private companies |
Mr. Douglas has been President and Chief OperatingExecutive Officer of FMC Corporation since June 1, 2018.2020. FMC is a diversified chemicalan agricultural sciences company serving agricultural, industrialthat advances farming through innovative and consumer markets globally for more than a century with innovative solutions, applicationssustainable crop protection technologies. He previously served as President and quality products. He previouslyChief Operating Officer of FMC from June 2018 until May 2020. Prior to that role, he was President, FMC Agricultural Solutions from October 2012 through May 2018, President, FMC’s Industrial Chemicals Group from January 2011 to September 2012 and Vice President, Global Operations and International Development from March to Decemberin 2010. Before joining FMC, Mr. Douglas held various senior management positions with Dow Chemical, a leader in specialty chemicals delivering products and solutions to sectors such as electronics, water, energy and coatings. He was Vice President, President–Asia, Dow Advanced Materials from April to December 2009. Prior to that, he was based in Shanghai, China as Corporate Vice President, President–Asia of Rohm and Haas Company, a chemical manufacturing company, from March 2007 to April 2009. Mr. Douglas currently serves as a director of FMC Corporation and Crop Life International. He also serves on the board of trustees of the Pennsylvania Academy of Fine Arts.
Sanjay Hinduja, 57
Director Since: 2019 Governance Committee Chairman of Gulf Oil International Limited |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | Experience in accounting/finance, financial reporting, risk assessment, organizational development, global organizations, governance, strategic planning and mergers and acquisitions |
• | Complementary experience and continuing education through his service on the board of private companies |
Mr. Hinduja has been Chairman of Gulf Oil International Limited, which is part of the privately controlled Hinduja Group of Companies, since February 2001. He has been employed by the Hinduja Group of Companies since January 1988 and has been responsible for leading Gulf Oil’s global strategy and expansion. He was the Non-Executive Chairman of Gulf Oil Corporation Limited from August 2005 until September 2014. He currently serves as a member of the board of directors of Gulf Oil International Middle East Limited, Gulf Oil Middle East Limited, Gulf Oil Philippines Inc., Sangam Limited, Gulf Oil Marine Limited, and also serves as the Chairman of Gulf Oil Lubricants India Limited. Mr. Hinduja served as Chairman of Houghton International Inc. from January 2013 until its combination with Quaker Chemical Corporation. Mr. Hinduja currently serves as a trustee of the Hinduja Foundation UK, which is responsible for the Hinduja Family philanthropic activities in the UK.
2022 Proxy Statement | 9 |
PROPOSAL 1 | ||
William H. Osborne, 5962
Director Since: 2016 Compensation and Human Resources Committee
Senior Vice President of Operations and Total Quality, |
DIRECTOR QUALIFICATION HIGHLIGHTS
• |
• | Seasoned executive with significant experience in accounting/finance, financial reporting, engineering, global manufacturing and quality, industrial sales and marketing, organizational development, global organizations, governance, strategic planning, mergers and acquisitions, divestitures and corporate development |
Mr. Osborne has been Senior Vice President of Operations and Total Quality Enterprise Performancefor Boeing Defense, Space & Security (BDS), one of The Boeing CompanyCompany’s three business units, since May 4, 2018.2020. The Boeing Company is the world’s largest aerospace company and a leading manufacturer of commercial jetliners and defense, space and security systems. He also maintains oversight for Environment, Health & Safety at BDS. In addition to his current role, Mr. Osborne was named to a two-year assignment in October 2020 leading Boeing’s Manufacturing Council, during which he also will serve on the Boeing Executive Council. Previously, he was Boeing’s Senior Vice President, Enterprise Operations from May 2018 until April 2020. Before joining Boeing, he was Senior Vice President of Global Manufacturing and Quality at Navistar International Corporation, a holding company whose subsidiaries and affiliates produce International® brand commercial and military trucks, from August 2013 to April 2018. He was also Senior Vice President of Custom Products at Navistar from May 2011 to August 2013. Before joining Navistar, he served as President and Chief Executive Officer of Federal Signal Corporation, a designer and manufacturer of a suite of products and integrated solutions for municipal, governmental, industrial and airport customers, from September 2008 to October 2010.
Fay West, 5053
Director Since: 2016 Audit Committee (Chair) Governance Committee Senior Vice President and Chief Financial Officer of |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | Extensive experience in accounting/finance, financial reporting, risk assessment, industrial marketing and services, mergers and acquisitions, divestitures and business restructuring, organizational development, global organizations, strategic planning, governance and corporate development |
• | Complementary experience and |
Ms. West has been Senior Vice President and Chief Financial Officer of Tennant Company, a world leader in the design, manufacture, and marketing of solutions that help create a cleaner, safer, healthier world, since October 2014, beenApril 15, 2021. Prior to joining Tennant, Ms. West was Senior Vice President and Chief Financial Officer of SunCoke Energy, Inc., the largest independent producer of coke in the Americas, with 50 years of experience supplying coke to the integrated steel industry, from October 2014 until April 14, 2021. She also served as Senior Vice President and Chief Financial Officer of SunCoke Energy Partners, L.P., a publicly traded master limited partnership that manufactures coke used in the blast furnace production of steel and provides coal handling services to the coke, steel and power industries.industries, from October 2014 until its merger with SunCoke Energy Partners GP LLC in January 2020. Previously, she was SunCoke Energy’s Vice President and Controller from February 2011 to October 2014 and Vice President and Controller of SunCoke Energy Partners GP LLC, the general partner of SunCoke Energy Partners, L.P. from July 2012 to October 2014. Prior to joining SunCoke Energy, Ms. West was Assistant Controller at United Continental Holdings, Inc., an airline holding company, from April 2010 to January 2011. Ms. West currently servesShe served as a director of SunCoke Energy Partners, L.P. from October 2014 until June 2019.
10 | 2022 Proxy Statement | Quaker Houghton |
PROPOSAL 1 | ||
The Board believes that, in addition to the information presented above regarding each director nominee’s specific experience, qualifications, attributes and skills, each director nominee has significant leadership experience derived from his or hersuch director’s professional experience and has a reputation for integrity and honesty and adheres to high ethical standards. These attributes have led the Board to conclude that each of the nominees should continue to serve as a director of Quaker.Quaker Houghton. The process undertaken by the Company’s Governance Committee in recommending these nominees is described below under the heading “Governance Committee Procedures for Selecting Director Nominees.”
The Board recommends that you vote “FOR” the election of Mark A. Douglas, Sanjay Hinduja, William H. Osborne and Fay West as directors of Quaker.Quaker Houghton.
2022 Proxy Statement | |
CONTINUING DIRECTORS | ||||
Biographies of Continuing Directors
Below is information about our incumbent directors who were elected as Class I members of the Board in 20172020 and whose terms expire in 2020,2023, including descriptions of their qualifications and business experience and directorships over the past five years:
Robert E. Chappell, 74
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DIRECTOR QUALIFICATION HIGHLIGHTS
Mr. Chappell was the Chairman of The Penn Mutual Life Insurance Company, a mutual life insurance company providing life insurance and annuity products, from January 1997 to June 2013 when he retired; its Chief Executive Officer from April 1995 to February 2011; and its President from January 2008 to March 2010. Mr. Chappell has served as a director of CSS Industries, Inc. since 2012 and also serves as a trustee of The Penn Mutual Life Insurance Company.
Robert H. Rock, 68
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DIRECTOR QUALIFICATION HIGHLIGHTS
Mr. Rock has been Chairman and Chief Executive Officer of MLR Holdings, LLC, an investment company operating in the publishing and information industry, since January 2015, having also served as President of MLR Holdings, LLC (and its predecessor, MLR Publishing Company) since 1989. Previously, he was Chairman of The Hay Group, a management consulting firm, from 1984 to 1987. He currently is a trustee of The Penn Mutual Life Insurance Company.
Below is information about our other incumbent directors who were elected as Class II members of the Board in 2018 and whose terms expire in 2021, including descriptions of their qualifications and business experience and directorships over the past five years:
Michael F. Barry, 60
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DIRECTOR QUALIFICATION HIGHLIGHTS
Mr. Barry has been our Chief Executive Officer and President since October 2008 and our Chairman of the Board since May 2009. He has held leadership and executive positions of increasing responsibility since joining Quaker in 1998, including Senior Vice President and Managing Director–North America from January 2006 to October 2008; Senior Vice President and Global Industry Leader–Metalworking and Coatings from July to December 2005; Vice President and Global Industry Leader–Industrial Metalworking and Coatings from January 2004 to June 2005; and Vice President and Chief Financial Officer from 1998 to August 2004. Mr. Barry currently serves as a director of Rogers Corporation and Livent Corporation.
Donald R. Caldwell, 7275
Director Since: 1997 Lead Director
Audit Committee Compensation Resources Committee Chairman and Chief Executive Officer of Cross Atlantic Capital Partners, Inc. Other U.S.-Listed Company Boards: Lightning Gaming, Inc. Simplicity Esports and Gaming Co. |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | Deep financial, entrepreneurial and business expertise perspective, especially on strategic and financial matters |
• | Experience in financial reporting, risk assessment, strategic planning and corporate development |
• | Complementary experience and continuing education in corporate governance, finance and strategy as a member of the boards and board committees of other public companies |
Mr. Caldwell, an experienced and successful investor,co-founded Cross Atlantic Capital Partners, Inc., a venture capital management company, and has served as its Chairman and Chief Executive Officer since 1999. He was Chief Executive Officer of InsPro Technologies Corporation, a company that focuses on providing a policy administration software solution in the insurance industry, one of Cross Atlantic Capital Partners’ portfolio companies from January 2015 to October 2017. Previously, he was President and Chief Operating Officer of Safeguard Scientifics, Inc., a holding company with investments in the growth-stage technology and life sciences businesses, from February 1996 to February 1999. He has been our Lead Director since 2016. He is a director and Chairman of the Board of InsPro Technologies Corporation and a director of Lightning Gaming, Inc., both of which area Cross Atlantic Capital Partners’ portfolio companies.company. In addition, he is currently a director of Haverford Trust Company and a director and Chairman of the Board of Simplicity Esports and Gaming Company (formerly known asI-AM Capital Acquisition Company). He served as a director of Fox Chase Bancorp. Inc. from October 2014 to July 2016. He also served as a director and Chairman of InsPro Technologies Corporation from 2008 to 2020, as a director of Rubicon Technology, Inc. from February 2001 to November 2017, and as a director of Amber Road Inc., from March 2005 to December 2016,2016.
Robert H. Rock, 71
Director Since: 1996 Compensation and Human Resources Committee (Chair) Governance Committee Chairman of MLR Holdings, LLC |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | Experience in organizational development, global organizations, governance, strategic planning and corporate development |
• | Complementary experience and continuing education through his current and former service on the boards of both public and private companies |
Mr. Rock has been Chairman of which areMLR Holdings, LLC, an investment company operating in the publishing and information industry, since January 2015, having also served as Chief Executive Officer from January 2015 until June 2021, and President of MLR Holdings, LLC (and its predecessor, MLR Publishing Company) since 1989. Previously, he was Chairman of The Hay Group, a Cross Atlantic Capital Partners portfolio companies.management consulting firm, from 1984 to 1987. He currently is a trustee of The Penn Mutual Life Insurance Company.
CONTINUING DIRECTORS | ||
Ramaswami Seshasayee, 73
Director Since: 2019 Audit Committee Compensation and Human Resources Committee Former Managing Director and Chief Executive Officer of Ashok Leyland Limited India |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | Experience in accounting/finance, financial reporting, risk assessment, industrial marketing, organizational development, global organizations, governance, strategic planning, mergers and acquisitions, technology and science, and manufacturing |
• | Extensive experience in the transportation industry |
• | Complementary experience and continuing education in corporate governance through his service on the boards of both public and private companies |
Mr. Seshasayee was the Managing Director and Chief Executive Officer at Ashok Leyland Limited, India, a company reported to be the second largest manufacturer of commercial vehicles in India, the fourth largest manufacturer of buses in the world and the twelfth largest manufacturer of trucks, from April 1998 to March 2011; its Executive Vice Chairman from April 2011 until March 2013; and its Non-Executive Vice Chairman from April 2013 until July 2016. Mr. Seshasayee currently serves as a member of the board of directors of Asian Paints, Ltd. Mr. Seshasayee served as Chairman of IndusInd Bank Ltd. India from June 2007 until August 2019. Prior to the combination with Quaker Chemical Corporation, he also served as a member of the board of directors of Houghton International Inc. from April 2013 until 2019.
Andrew E. Tometich, 55
Director Since: 2021 Chief Executive Officer and President |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | Extensive and valuable experience acquired through his critical leadership position within Quaker Houghton and senior leadership roles over the course of his career |
• | Extensive knowledge of accounting/finance, financial reporting, risk assessment, industrial marketing and services, organizational development, global organizations, governance, strategic planning, mergers and acquisitions, technology and science, corporate development, research and development and manufacturing |
Mr. Tometich, who has been employed by the Company since October 2021, has served as Chief Executive Officer and President since December 2021. Prior to joining the Company, Mr. Tometich served as Executive Vice President, Hygiene, Health and Consumable Adhesives at H.B. Fuller Company, a leading global adhesives provider focusing on perfecting adhesives, sealants, and other specialty chemical products to improve products and lives, from August 2019 until September 2021. Previously, Mr. Tometich was Senior Vice President, Specialty Materials Business at Corning Incorporated, one of the world’s leading innovators in materials science with deep manufacturing and engineering capabilities from September 2017 until August 2019. Additionally, Mr. Tometich was President, Performance Silicones Business Unit at The Dow Chemical Company, a leader in specialty chemicals, from June 2016 until February 2017 after having positions of increasing responsibility at Dow Corning Corporation and its subsidiaries from 1989 through 2016.
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CONTINUING DIRECTORS | ||
Below is information about our other incumbent directors who were elected as Class II members of the Board in 2021 and whose terms expire in 2024, including descriptions of their qualifications and business experience and directorships over the past five years:
Michael F. Barry, 63
Director Since: 2008 Chairman of the Board Other U.S.-Listed Company Boards: Livent Corporation |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | Extensive and valuable experience acquired through his critical leadership positions within Quaker Houghton |
• | Extensive knowledge of accounting/finance, financial reporting, risk assessment, industrial marketing and services, organizational development, global organizations, governance, strategic planning, corporate development, research and development and manufacturing |
• | Complementary experience and continuing education in corporate governance through his current and former service on the boards of other public companies |
Mr. Barry has been our Chairman of the Board since May 2009. He was our Chief Executive Officer and President from October 2008 until his retirement on November 30, 2021. He previously held leadership and executive positions of increasing responsibility since joining the Company in 1998. Since 2018, Mr. Barry has also served as a director of Livent Corporation and from 2010 to 2020, he served as a director at Rogers Corporation.
Charlotte C. Decker, 57
Director Since: 2020 Audit Committee Former Chief Information Technology Officer of UAW Retiree Medical Benefits Trust Other U.S.-Listed Company Boards: Federal Home Loan Bank of Indianapolis |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | 25+ years of information technology experience across several major industries |
• | Extensive experience in cybersecurity and information technology |
• | Experience in financial reporting, risk assessment, organizational development, global organizations, governance, strategic planning, mergers and acquisitions, technology and science, and manufacturing |
• | Complementary experience and continuing education in corporate governance through her service on the board of another public company |
Ms. Decker was the Chief Information Technology Officer of the UAW Retiree Medical Benefits Trust, the largest non-governmental purchaser of retiree health care in the United States, covering over 632,300 members, from December 2014 to February 1, 2022. Prior to joining UAW, Ms. Decker served as an IT Management Consultant at Data Consulting Group (DCG), a privately held, minority-owned corporation offering a wide range of management consulting, staff augmentation and outsourcing services, from August 2014 until December 2015. Prior to joining DCG, Ms. Decker served as Vice President and Chief Technology Officer of Auto Club Group, a not-for-profit organization, which provides more than 59 million members with automotive, travel, insurance and financial services through its federation of 34 motor clubs and nearly 1,100 branch offices across North America, from September 2008 through June 2014. Ms. Decker has over 25 years of information technology experience through various leadership positions, including 18 years at Ford and General Motors. Both Ford and General Motors are multinational corporations that design, manufacture, market and distribute vehicles worldwide. Ms. Decker also currently serves as a director of the Federal Home Loan Bank of Indianapolis where she is Chair of the Information Technology Committee.
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| CONTINUING DIRECTORS | |
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Jeffry D. Frisby, 6366
Director Since: 2006 Audit Committee
Executive Chairman
Other U.S.-Listed Company Boards: Astronics Corporation |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | Experience in manufacturing, particularly in the aerospace industry |
• | Experience in accounting/finance, financial reporting, industrial marketing, organizational development, global organizations, governance, strategic planning and corporate development |
• | Complementary experience and continuing education in corporate governance through his service on the boards of both public and private companies |
Mr. Frisby has been Executive Chairman of PCX Aerostructures, LLC since September 8, 2021, having served as President and Chief Executive Officer offrom April 2017 until September 7, 2021. PCX Aerostructures, LLC since April 2017.doing business as PCX Aerostructures, LLCAerosystems, is a leading supplierprovider of highly engineered, precision, flight critical mechanical systems and structural assembliescomponents for rotorcraft and fixed wing aerospace platforms. He previouslyPrior to joining PCX, he was Chief Executive Officer of Triumph Group, Inc., a public company that manufactures aerospace structures, systems and components, from July 2012 to April 2015, and its President from July 2009 to April 2015. He was also Triumph’s Chief Operating Officer from July 2009 to July 2012. Prior to that position, he was Group President of Triumph Aerospace Systems Group, a group of companies that design, engineer and manufacture a wide range of proprietary andbuild-to-print components, assemblies and systems for global aerospace original equipment manufacturers, from April 2003 to July 2009. He also held a variety of other positions within the Triumph Group as well as a predecessor group company, Frisby Aerospace, Inc. Mr. Frisby served as a director of Triumph Group, Inc. from July 2012 to April 2015. Mr. FrisbyHe currently serves as a director of Astronics Corporation and PCX Aerostructures, LLC.
Michael J. Shannon, 61
Director Since: 2019 Sustainability Committee Former Chief Executive Officer of Houghton International Inc. Other U.S.-Listed Company Boards: Hexion Inc. |
DIRECTOR QUALIFICATION HIGHLIGHTS
• | Extensive and valuable experience acquired through his leadership roles in global chemical businesses |
• | Experience in accounting/finance, financial reporting, risk assessment, industrial marketing and services, organizational development, global organizations, governance, strategic planning, research and development, and manufacturing |
• | Complementary experience and continuing education in corporate governance through his service on the boards of both public and private companies |
Mr. Shannon was the Chief Executive Officer of Houghton International Inc., a global leader in delivering advanced metalworking fluids and services for the automotive, aerospace, metals, mining, machinery, offshore and beverage industries, from December 2015 until July 2019. Previously, he was Houghton’s Chief Operating Officer from April 2014 until November 2015. Mr. Shannon joined Houghton in 2009 as Senior Vice President Global Operations, Supply Chain, Information Technologies (IT) and Environmental, Health and Safety (EH&S) before assuming additional commercial responsibilities prior to becoming Chief Operating Officer. Prior to joining Houghton, he spent 24 years at Ashland Inc. in various senior-level positions including Corporate Officer and President of Global Supply Chain. Mr. Shannon served as a member of the board of directors of Houghton International Inc. from December 2015 until its combination with Quaker Chemical Corporation. He also served as a director of Reichhold Chemical from June 2016 to July 2017. He currently serves as a member of the board of directors of Hexion Inc.
CORPORATE GOVERNANCE | ||||
Quaker’sQuaker Houghton’s business is conducted by its officers, managers and associatesemployees under the direction of the Chief Executive Officer (“CEO”) and with oversight by the Board of Directors. The Company’s CEO ishad historically also been the Chairman of the BoardBoard. However, in light of Directors. The Board has long held that, given Quaker’sthe significant growth in the size and management structure,complexity of the Company and Mr. Barry’s decision to retire at the end of 2021, the Board concluded that it is bestwas appropriate, after Mr. Barry’s retirement, to combineseparate the roles of CEO and Chairman of the Board and CEO. The Board believes having one leader serving as both Chairman and CEO provides decisive and effective leadership.Board.
The Board of Directors has also appointed an independent Lead Director. The Lead Director rotates on a biennial basis unless the Board determines that the reappointment of the Lead Director at the end of atwo-year term is in the best interests of the Company. The Lead Director serves as the liaison between the Chairman/CEODirectors, Chairman and the Board of Directors.CEO. The Lead Director also ensures that the respective responsibilities of the directors and the Chairman/CEOChairman are understood; collaborates with the Chairman/Chairman and CEO to ensure the appropriate flow of information to the Board; works with the Chairman/CEOChairman to develop the agendas for Board meetings; coordinates and develops the agenda for and presides over sessions of the Board’s independent directors; ensures appropriate minutes are kept of such meetings and, as appropriate, communicates to the Chairman/Chairman and CEO the substance of such discussions. Mr. Donald R. Caldwell is currently thehas served as our Lead Director having beensince 2016 and was reappointed to the position for atwo-year term onin May 9, 2018.2020.
In accordance with NYSE rules, the Board affirmatively determines the independence of each director and nominee for election as a director in accordance with guidelines it has adopted which include all elements of independence set forth in the NYSE listing standards. The Company’s director independence standards are described in the Company’s Corporate Governance Guidelines.
On an annual basis, each director and executive officer is obligated to disclose, among other things, any transactions with the Company in which the director (or any organization of which the director is a partner, shareholder or officer) or executive officer, or any member of his or her immediate family, have a direct or indirect material interest. Based on the Company’s adopted independence standards and the information provided by the directors, the Board determined at its meeting held on February 26, 2019,23, 2022, that allnon-employee directors who served in fiscal 2018,2021, with the exception of Michael J. Shannon, as well as each nominee for director and thosenon-employee directors who will continue to serve after our 20192022 annual meeting of shareholders, are independent within our guidelines and have no material relationship with the Company as defined by our guidelines. The Company’s independentnon-employee directors are Donald R. Caldwell, Robert E. Chappell,Charlotte C. Decker, Mark A. Douglas, Jeffry D. Frisby, Sanjay Hinduja, William H. Osborne, Robert H. Rock, Ramaswami Seshasayee and Fay West. William R. Cook, who servedWith respect to Mr. Osborne, the Board considered the scope and nature of the business Quaker Houghton transacts with The Boeing Company, a company at which Mr. Osborne is currently serving as Senior Vice President of Operations and Total Quality for Boeing Defense, Space & Security (BDS), one of The Boeing Company’s three business units, as further discussed under “Certain Relationships and Related Party Transactions,” and determined per the Company’s Corporate Governance Guidelines that the transactions between the Company and The Boeing Company are not material to him and do not impair his independence or present a conflict of interest in connection with his service on the Board. With respect to Mr. Shannon, the Board considered the scope and nature of the business Quaker Houghton transacts with Hexion Inc., a company at which Mr. Shannon is currently serving on the Board of Directors, as further discussed under “Certain Relationships and Related
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CORPORATE GOVERNANCE | ||
Party Transactions,” and determined per the Company’s Corporate Governance Guidelines that the transactions between the Company and Hexion Inc. are not material to him and do not present a conflict of interest in 2018 untilconnection with his retirementservice on May 9, 2018, was also an independentnon-employee director.the Board.
Based on the Company’s independence standards, the Board has affirmatively determined that Michael F. Barry is not independent because he previously served as an executive officer of the Company, Andrew E. Tometich is not independent because he currently serves as an executive officer of the Company.Company and Michael J. Shannon is not independent because he served as an executive officer of Houghton International Inc. There are no family relationships between any of the Quaker Houghton directors, executive officers or nominees for election as directors.
Governance Committee Procedures for Selecting Director Nominees
The Governance Committee’s goal is to assemble a Board that brings to Quaker Houghton a variety of perspectives and skills derived from high quality business and professional experience. The current composition of the Board includes directors (including those nominated for reelection this year) with complementary skills, expertise and experience such that the Board, on the whole, has competence and experience in a wide range of relevant areas.
Quaker’sQuaker Houghton’s Board includes eighttwelve directors who are or have served as chief executive officers or in other senior management roles, sixten directors with specialized accounting and finance knowledge, threeeight directors with experience in the chemical industry or other technology or science areas, sevennine directors who have served on the boards of other public companies, eighttwelve directors with international business experience and fournine directors with experience in industries served by Quaker.Quaker Houghton. The Governance Committee will continue to evaluate the needs of Quaker Houghton and its shareholders to ensure that the competency of the Board, as a whole, is relevant and robust.
In evaluating director nominees, the Governance Committee considers the appropriate size of Quaker’sQuaker Houghton’s Board of Directors and the needs of Quaker Houghton and its shareholders with respect to the particular talents, experience and capacities of its directors, including: experience in industries similar to Quaker’s;Quaker Houghton’s; managerial and other leadership experience; business acumen and other particular expertise; business development experience; strategic capability; independence of judgment; familiarity with corporate governance and the responsibilities of directors and the ability to fulfill those responsibilities; standing and reputation as a person of integrity; the potential contribution of each individual to the diversity of backgrounds, experience and competencies that the Governance Committee desires to have represented; and ability to work constructively with the CEO and the Board. In considering nominees for the Board of Directors, the Governance Committee considers the entirety of each candidate’s credentials and the anticipated contributions of the individual as a member of the Board.
Under Quaker’sQuaker Houghton’s Corporate Governance Guidelines, directors who also serve as CEOs or in equivalent positions should not serve concurrently on more than three other boards of public companies in addition to the Quaker Houghton Board, and directors who do not serve as CEOs or in equivalent positions should not serve concurrently on more than four other boards of public companies in addition to the Quaker Houghton Board. Under the listing standards of the NYSE, without specific approval from the Board, no member of the Audit Committee may serve on more than twothree public company audit committees in addition to Quaker’s Audit Committee. The Board has determined that Mr. Caldwell’s simultaneous service on the audit committees of more than two public companies in addition to Quaker’s does not impair his ability to effectively serve on Quaker’sQuaker Houghton’s Audit Committee.
When identifying and evaluating nominees for director, the Governance Committee first examines whether current members of the Board are willing to continue their service. Current members of the Board with skills
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CORPORATE GOVERNANCE | ||
and experience that are relevant and who are willing to continue to serve are considered for renomination, balancing the value of continuity of service with that of obtaining a new perspective. If a current member does not choose to stand for reelection, the Governance Committee will not recommend that director for reelection. If the Governance Committee recommends an increase in the membership of the Board, it will identify the experience and personal capacities desired and will seek suggestions as to nominees from the current Board membership. In addition, and as has been done in the past, the Governance Committee may engage third parties to assist in the identification or evaluation of potential director nominees.
Summary of Director Core Competencies
The following chart summarizes the core competencies currently represented on our Board.
SKILLS | DIRECTORS WITH EXPERIENCE | |
Senior Leadership |
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Accounting / Financial Experience |
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Technology / Science / Chemical Industry |
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Other Public Company Board Experience |
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International Business Experience |
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Industry Knowledge |
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Although we do not have a formal policy regarding diversity and do not have constituent or representative directors, diversity is one important factor, among many,others, in our nomination process. The Governance Committee considers a variety of factors, including age, gender, race, executive and professional experience, and perspectives of the candidate and how the candidate’s qualifications will enhance the composition of the Board of Directors as a whole.Forty-two percent (42%) of our Board is comprised of directors who self-identify as minorities or persons of color, and women.
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CORPORATE GOVERNANCE | ||
All but onethree of our continuing directors are independent and our Board has a mix of relatively newer and longer-tenured directors. The charts below show board makeup by various characteristics:
Shareholder Nominations and Recommendations
The Company’s RestatedBy-Laws(“By-Laws (“By-Laws”) describe how shareholders may nominate candidates for election to our Board of Directors. For our 20202023 annual meeting of shareholders, shareholders may nominate a candidate for election to our Board only by sending written notice to our Corporate Secretary at our principal office at One Quaker Park, 901 E. Hector Street, Conshohocken, Pennsylvania 19428. This notice must be received on or before February 8, 2020,10, 2023, but no earlier than January 9, 202011, 2023 (except that if the date of the 20202023 annual meeting of shareholders is more than 30 days before or more than 60 days after the anniversary date of the 20192022 annual meeting, this notice must be received no earlier than the close of business on the 120th day before the date of the 20202023 annual meeting and not later than the close of business on the later of the 90th day before the date of the 20202023 annual meeting or, if the first public announcement of the date of the 20202023 annual meeting is less than 100 days before the date of the meeting, by the 10th day after the public announcement).
The notice to our Corporate Secretary must contain or be accompanied by the information required by Sections 3.15 and 2.13 of ourBy-Laws, including, among other things: (i) the name, age, principal occupation and business and residence address of each person nominated; (ii) the class and number of shares of our stock which are directly or indirectly owned beneficially and/or of record by each person nominated; (iii) the name and record address of the shareholder making the nomination and the beneficial owner, if any, on whose behalf the nomination is made; (iv) the class and number of shares of our stock which are directly or indirectly owned beneficially and/or of record by the shareholder making the nomination and the beneficial owner, if any, on whose behalf the nomination is made; (v) a description of any direct and indirect compensation and other monetary agreements, arrangements and understandings, and any other material relationships (including any familial relationships) between the shareholder giving notice (and the beneficial owner) and the nominee and any respective affiliates, associates or others with whom any of them are acting; and (vi) a description of any hedging or other transaction that has been entered into by or on behalf of, or any other agreement or understanding (including, without limitation, any put, short position or any borrowing or lending of shares) that has been made, the effect or intent of which is to mitigate loss to or manage risk of share price changes for, or to increase or decrease the voting power of, the shareholder or any shareholder associated person (as defined in theBy-Laws) with respect to any share of our stock, as well as certain other information. This list of required information is not exhaustive. A copy of the full text of the relevantBy-Law provisions, which includes the complete list of all information that must be submitted to nominate a director, may be obtained upon written request directed to our Corporate Secretary at our principal office. A copy of ourBy-Laws is also posted on the Investor Relations/Investors/Corporate Governance section of our website athttps://www.quakerchem.comwww.quakerhoughton.com.
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CORPORATE GOVERNANCE | ||
In addition to a shareholder’s ability to nominate candidates to serve on our Boardfor election as directors as described above, shareholders also may recommend to the Governance Committee a prospective nominee for its consideration. The Governance Committee will consider timely recommendations received from shareholders regarding director nominee candidates and accompanied by sufficient information to enable the Governance Committee to assess the candidate’s qualifications, along with confirmation of the candidate’s consent to serve as a director if elected. Such recommendations should be sent to our Corporate Secretary at our principal office. Any recommendation received from a shareholder after January 1 of any year is not assured of being considered for nomination in that year. The Governance Committee applies the same criteria in evaluating candidates nominated by shareholders as it does in evaluating candidates identified by Company sources. No shareholder or group of shareholders recommended a director nominee for election at Quaker’s 2019 annual meeting of shareholders.Quaker Houghton’s 2022 Annual Meeting.
WhileThe Board is responsible for the Board hasoverall oversight of the ultimate oversight responsibility forCompany’s risk management consistentpractices. The Board regularly reviews the material risks associated with Quaker’sthe Company’s business plans and operations as part of its oversight of the Company’s strategic direction and ongoing activities. The full Board retains primary oversight of systemic risk, as well as certain key risks, including those associated with our strategic plan, capital structure and development activities and those associated with significant external events. Consistent with the Company’s By-Laws, the Board has delegated muchoversight of the Company’s management of material risks within committees’ areas of responsibility for risk management to the standing Committees ofAudit Committee, the Board. Compensation and Human Resources Committee, and the Sustainability Committee as applicable.
The Audit Committee has oversight over financial risks, such as financial reporting and internal controls; compliance risks, including oversight of the compliance program and disposition of certain complaints and/or violations of the Code of Conduct and Financial Code of Ethics; and operational risk, such as loss of property, cyber-security, business interruption and other exposures traditionally mitigated through insurance products.
In addition, the Compensation/Management DevelopmentThe Compensation and Human Resources Committee is responsible for developing a balanced compensation system for all employees, including appropriate long-term and short-term incentive compensation targets that encourage aan appropriate (and not excessive) level of risk-taking behavior consistent with the overall financial/strategic goals of the Company, as well as oversight of the management, development and succession processes. Finally, from time
The Sustainability Committee is responsible for monitoring and evaluating the Company’s approach to time, Quaker faces othersustainability and assisting in the integration of sustainability planning into the Company’s business planning and strategy, risk management, process and culture. Accordingly, the Sustainability Committee has oversight over risks material to its business and,that are potentially implicated in thoseconnection with sustainability matters.
circumstances,At meetings of the Board (or at times, the Executive Committee) is regularly informed and provides input and adviceits committees, Company management routinely presents on actions being considered to mitigate exposures associated with those risks. As appropriate, the Board considers specific risk topics, including risks associated with our strategic plan, our capital structure and our development activities. Further, the Board is routinely informed of developments at and affecting the Company that could affect ourthe Company’s existing risks or risk profile, or other aspects of our business through reports from our business unitsproviding the directors with an opportunity to discuss these risks and otherwise. Thisthe Company’s risk mitigation practices and promoting a coordinated approach to risk oversight. Further, this oversight by the Board is designed to maintain an appropriate level of risk and to address new risks as they arise.
Throughout 2021, the Board exercised continuous oversight of the Company’s strategy and response to the ongoing COVID-19 pandemic, particularly with respect to the social, IT environment/information security and financial challenges presented, receiving frequent updates from management not only in regular meetings
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but also through the receipt of periodic information throughout the year. This regular dialogue and access to information provided the Board with tools to effectively exercise its oversight function and provide leadership and support to management during unprecedented times.
Communications with the Board of Directors; Corporate Governance Guidelines
Shareholders or other interested parties may communicate with any of our directors, includingnon-management directors, by writing to them c/o Robert T. Traub, Senior Vice President, General Counsel and Corporate Secretary, at the address set forth above.below. All communications received will be forwarded to the Governance Committee and the addressee. The Board believes it is management’s role to speak for Quaker Houghton and, accordingly, any such communication received will be shared with the Chief Executive Officer and other executive officers, as appropriate. The Company has adopted Corporate Governance Guidelines and other governance materials. Our Code of Conduct, Financial Code of Ethics for Senior Financial Officers, Corporate Governance Guidelines and Audit, Compensation/Management DevelopmentCompensation and Human Resources, Governance and Sustainability Committee Charters have been posted on and are available free of charge by accessing the Investor Relations/Investors/Corporate Governance section of our website athttps://www.quakerchem.comwww.quakerhoughton.com or by written request addressed to Quaker Chemical Corporation, One Quaker Park,Houghton, 901 E. Hector Street, Conshohocken, Pennsylvania 19428, Attention: Victoria K. Gehris, Assistant Secretary. The references to our website contained in this proxy statement are for informational purposes, and the content of the website is not incorporated by such references in this proxy statement.
The Company has a compliance program, the governing documents of which include a Code of Conduct (which is applicable to all of the Company’s directors, executive officers and employees) and a Financial Code of Ethics for Senior Financial Officers (which is applicable to the Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Global Controller, Senior Treasury Analyst, each Controller at majority-owned affiliates, Assistant Controller, and other individuals performing similar functions designated by the Board). The Company’s compliance program embodies the Company’s global principles and practices relating to the ethical conduct of the Company’s business and its longstanding commitment to fairness, honesty, integrity and full Company compliance with all laws affecting the Company’s business.
The Company’s compliance program includes a means for employees, customers, suppliers, shareholders and other interested parties to submit confidential and anonymous reports of suspected or actual violations of the Company’s Code of Conduct or the Financial Code of Ethics for Senior Financial Officers relating, among other things, to:
accounting practices, internal accounting controls, or auditing matters and procedures;
theft or fraud of any amount;
insider trading;
performance and execution of contracts;
conflicts of interest;
violations of securities and antitrust laws; and
violations of the Foreign Corrupt Practices Act.
Any employee, shareholder or other interested party can call the Quaker Houghton Hotline at1-800-869-9414 or1-503-747-1970 from outside the United States. The Quaker Houghton Hotline is a toll-free telephone line dedicated solely to receiving questions and concerns and directing them to the appropriate authority for action. All calls are answered by an independent third-party service available 24 hours a day, seven days a week. Alternatively, any employee, shareholder or other interested party may
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CORPORATE GOVERNANCE | ||
report such activity or issues viahttps://quakerchem.ethicspoint.com,quakerhoughton.ethicspoint.com, an independent third-party provider. At that website, an interested party will be provided with a case number, which will allow the individual to request afollow-up. To further track the case, one may also request a login and password, which will allow the individual tofollow-up on the case as necessary.
The Audit Committee oversees the administration of the Company’s compliance program and is directly responsible for the disposition of all reported violations of the Financial Code of Ethics for Senior Financial Officers and complaints received regarding accounting, internal accounting controls or audit matters. In addition, the Audit Committee is responsible for the disposition of all violations of (and approves any requested waivers to) the Code of Conduct for directors and executive officers and for the disposition of other serious violations of the Code of Conduct. No such waivers were requested in 2018.2021. We maintain a current copy of our Financial Code of Ethics for Senior Financial Officers and will promptly post any amendments to or waivers of our Financial Code of Ethics for Senior Financial Officers on our website athttps://www.quakerchem.comwww.quakerhoughton.com under the heading Investors/Corporate Governance.
Employee, Officer and Director Hedging
As described in the Company’s Policy Relating to Confidentiality of Information and Insider Trading in Securities, directors, officers and employees of Quaker Houghton and its subsidiaries, may not participate in hedging type activities in Quaker Houghton stock, including trading in puts, calls or similar options on Quaker Houghton stock or selling Quaker Houghton stock “short.” Such individuals may, however, receive and exercise stock options granted to them by Quaker Houghton.
On August 1, 2019, Quaker Chemical Corporation completed its combination (the “Combination”) with Houghton International Inc. (“Houghton”). Quaker Houghton is a global leader in industrial process fluids. With a presence around the world, including operations in over 25 countries, our customers include thousands of the world’s most advanced and specialized steel, aluminum, automotive, aerospace, offshore, can, mining, and metalworking companies. Our high-performing, innovative and sustainable solutions are backed by best-in-class technology, deep process knowledge, and customized services. With approximately 4,700 employees, including chemists, engineers and industry experts, and robust research and development, we seek to help our customers optimize processes, reduce costs, advance safety and sustainability, and advance progress.
During the year ended December 31, 2021, Quaker Houghton achieved net sales of $1.761 million and net income of $121.4 million. These results reflect challenging market conditions resulting from the COVID-19 pandemic, raw material availability, supply chain disruptions, the shortage of semiconductors which impacted many of our customers, and the inflationary environment that manifested itself in mid-2021.
We, at Quaker Houghton, understand that we have a great responsibility to act sustainably towards our environment, communities, colleagues and customers. At its core, sustainability focuses attention on meeting the needs of the present while managing environmental, social and economic concerns in a responsible and ethical manner so that future generations are healthy and successful.
In 2021, we have continued to dedicate significant resources towards our Sustainability Program and in order to ensure total alignment with our business strategy we have restructured our Sustainability organization to report directly to the Chief Strategy Officer. The Board Sustainability Committee, consists
CORPORATE GOVERNANCE | ||
entirely of non-management directors, all of whom have substantial relevant industry experience as well as expertise in sustainability matters. Our executive Sustainability Steering Committee includes, among others, our Chief Strategy Officer and Senior Manager, Corporate Sustainability. Both committees were active in 2021 and provided oversight on strategy, disclosure alignment and governance related to sustainability matters.
As an output of the materiality assessment we completed late in 2020 (which involved many stakeholders including investors, customers, suppliers, and colleagues), in August of 2021 we launched our Sustainability Program which includes our short- and long-term goals that are closely aligned with the United Nations Sustainable Development Goals. The program provides areas of strategic focus and provides a framework of new initiatives to be implemented, as well as a roadmap to build them into an integrated management approach.
Our approach to sustainability is built on four key pillars, outlined below, that support our vision and align to our core values: (i) live safe; (ii) act with integrity; (iii) drive results; (iv) exceed customer expectations; (v) embrace diversity; and (vi) do great things together. By fostering a culture that exemplifies our core values, we gain, as a company, unique perspectives, backgrounds and varying experiences to ensure continued long-term success.
Innovating Together for a Better Tomorrow
• | Minimizing hazards in our portfolio |
• | Formulating with renewable raw materials |
• | Transitioning our solutions to support a low carbon economy |
Protecting Our Planet
• | Reducing our direct emissions |
• | Managing our water responsibly |
• | Minimizing our waste |
Empowering Our Colleagues and Communities
• | Embracing diversity and inclusion |
• | Investing in our people’s growth and development |
• | Supporting our local communities’ development |
• | Empowering our colleagues to live safe |
Sourcing Our Materials Responsibly
• | Confirming sustainable sourcing of raw materials |
• | Ensuring everyone in the supply chain is treated with dignity and respect |
Our Sustainability Report, published annually and available on our website, includes more information about our program and corresponding short and long term goals. Our 2020 Sustainability Report is available on our website at: https://www.quakerhoughton.com/sustainability, and our 2021 Sustainability Report is expected to be available on our website within 20 days following the date of this proxy statement. Information in these reports and on our website is not incorporated into this proxy statement.
2022 Proxy Statement | |
CORPORATE GOVERNANCE | ||
We anticipate that our 2021 Sustainability Report will be aligned to the Sustainability Accounting Standards Board (SASB) Chemical Industry Standards and the Global Reporting Initiative (GRI). The report also will reflect how the core elements of the Task Force on Climate-related Financial Disclosure (TCFD) have been incorporated into our strategy, governance and disclosure.
Quaker Houghton considers its employees as its greatest strength in differentiating our business and strengthening our market positions. We have established core values that are inclusive of embracing diversity and creating a culture where we learn from and are inspired by the many cultures, backgrounds and knowledge of our team members. The Company’s goal is to have an organization that is inclusive of all of its people and is representative of the communities in which we operate. The Company’s core values are: (i) live safe; (ii) act with integrity; (iii) drive results; (iv) exceed customer expectations; (v) embrace diversity; and (vi) do great things together. Our core values embody who we are as a company, guide our decisions and inspire us. Our commitment to these values, in words and actions, builds a stronger Quaker Houghton, and these values guide the Company’s internal conduct and its relationship with the outside world. By fostering a culture and environment that exemplifies our core values, we gain, as a company, unique perspectives, backgrounds and varying experiences to ensure continued long-term success. The Company respects and values all of its employees and believes belonging, inclusion, diversity and equality are essential to drive the Company’s success.
The Company is committed to maintaining a strong safety culture and to emphasizing the importance of its employees’ role in identifying, mitigating and communicating safety risks. The Company maintains policies and operational practices that communicate a culture where all levels of employees are responsible for safety. We believe that the achievement of superior safety performance is both an important short-term and long-term strategic goal in managing our operations. The Company emphasizes ten “lifesaving rules” which make a significant difference in preventing serious injuries and fatalities. The Company also requires all employees to regularly complete safety trainings. Additionally, our senior management team is closely involved in our safety programs, and conducts regular reviews of safety performance metrics and reviews the Company’s safety performance during Company-wide meetings.
Talent Management and Retention
Maintaining a robust pipeline of talent is crucial to the Company’s continued success and is a key aspect of succession planning efforts across the organization. The Company’s leadership and human resources teams are responsible for attracting and retaining top talent by facilitating an environment where employees want to show up to work and do great things together. To achieve sustained high performance, Management invests in the development, safety and wellbeing of its employees. We measure training hours, turnover, time to hire, and diversity hiring to assess our progress in these areas. Additionally, the Company regularly evaluates its compensation and benefits package, including health and wellness benefits, paid-time off policies, monetary compensation and educational reimbursements, to ensure that the Company’s total compensation and benefits packages are aligned with our business strategy, organizational culture, and diversity and inclusion philosophy while ensuring we remain competitive in the markets we serve while following local and statutory wage and benefits laws and guidelines.
24 | 2022 Proxy Statement | Quaker Houghton |
CORPORATE GOVERNANCE | ||
Forward-Looking Statements
This proxy statement contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified because they do not relate strictly to historical or current facts, and include statements as to our intents, beliefs and goals, among other things. We caution you not to place undue reliance on our forward-looking statements. Our forward-looking statements are subject to risks, uncertainties and assumptions about the Company and its operations that are subject to change based on various important factors, many of which are beyond our control. A major risk is that demand for the Company’s products and services is largely derived from the demand for its customers’ products, which subjects the Company to uncertainties related to their businesses, including our customers’ willingness to participate in our sustainability initiatives and our ability to devote adequate resources to such initiatives. Other major risks and uncertainties include, but are not limited to, the primary and secondary impacts of the COVID-19 pandemic, including actions taken in response to the pandemic by various governments, which could exacerbate some or all of the other risks and uncertainties faced by the Company, as well as the potential for significant increases in raw material costs, supply chain disruptions, customer financial instability, worldwide economic and political disruptions such as the current conflict between Russia and Ukraine, foreign currency fluctuations, significant changes in applicable tax rates and regulations, future terrorist attacks or other acts of violence, and other factors related to the Combination, other acquisitions and integration efforts.
For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021, as amended, and in our quarterly and other reports filed from time to time with the SEC. We do not intend to update or revise any forward-looking statements to reflect new information or future events or for any other reason.
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COMMITTEES | ||||
Meetings and Committees of the Board
Our Board of Directors has four standing committees, the Audit, Compensation/Management Development, ExecutiveCompensation and Human Resources, Governance, and Sustainability Committees. Each member of these committees (other than Mr. Shannon who serves on the Audit, Compensation/Management Development and Governance CommitteeSustainability Committee) is independent, as defined for members of the respective committee in the listing standards of the NYSE and Quaker’sQuaker Houghton’s Corporate Governance Guidelines. The Audit Committee is established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “1934 Act”). The Board has affirmatively determined that threefour out of the fourfive members of the Audit Committee, including its current Chair, Fay West, meet the criteria for an “audit committee financial expert” as defined by the SEC and that William H. Osborne and Michael J. Shannon, although not currently a membermembers of the Audit Committee, also meetsmeet this financial expert criteria. The Board of Directors has adopted a charter for each of these committees other than the Executive Committee.committees. Each committee reports its actions to the full Board at the Board’s next regular meeting. A summary of the principal duties of each committee follows the table below.
Committee Membership and Meetings Held in 2018 | ||||||||||||||||
Committee Membership and Meetings Held in 2021 | Committee Membership and Meetings Held in 2021 | |||||||||||||||
Name | Audit | Compensation/ Management Development | Executive | Governance | Audit | Compensation and Human Resources | Governance | Sustainability | ||||||||
Michael F. Barry | X | |||||||||||||||
Donald R. Caldwell | X | X | CHAIR | X | X | |||||||||||
Robert E. Chappell | X | CHAIR | ||||||||||||||
William R. Cook(1) | CHAIR(2) | X | X | |||||||||||||
Charlotte C. Decker | X | |||||||||||||||
Mark A. Douglas | X | X | CHAIR | X | ||||||||||||
Sanjay Hinduja | X | |||||||||||||||
Jeffry D. Frisby | X | X | X | CHAIR | ||||||||||||
William H. Osborne | X | X | X | X | ||||||||||||
Robert H. Rock | CHAIR | X | CHAIR | X | ||||||||||||
Ramaswami Seshasayee | X(1) | X | ||||||||||||||
Michael J. Shannon | X(2) | X | ||||||||||||||
Fay West | CHAIR(3) | X(4) | CHAIR | X | ||||||||||||
Number of Meetings in 2018(5) | 5 | 4 | 0 | 3 | ||||||||||||
Number of Meetings in 2021(3) | 7 | 5 | 7 | 4 |
X | Member. Each of the individuals listed in the table above held the committee memberships indicated throughout |
(1) | Committee member |
(2) |
|
(3) |
|
|
The Board of Directors held |
Time is regularly scheduled at each regular meeting for thenon-employee and independent directors to meet as a separate group. The Chairman acts as chairperson during the executive and non-management executive sessions and the Lead Director acts as chairperson during these sessions.the independent directors executive session. Consistent with NYSE requirements, to the extent any non-employee director is not independent, at least once a year, the independent directors meet in executive session including only independent directors.
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COMMITTEES | ||
Quaker Houghton does not have a formal policy regarding attendance by members of the Board at its annual meeting of shareholders, but all directors are encouraged to attend. In 2018, allAll of the directors serving at that time attended the annual meetingvirtual 2021 Annual Meeting of shareholders.
Shareholders except Ramaswami Seshasayee.
Engages the independent registered public accounting firm and approves all audit andnon-audit fees.
Reviews and discusses with management and the independent registered public accounting firm the earnings press releases and the annual and quarterly financial statements, including disclosures in the Company’s SEC Reports under Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Discusses with management and the independent registered public accounting firm any audit concerns or difficulties and management’s response.
Reviews the Company’s financial reporting and accounting standards and principles, material changes to the accounting policy and financial reporting practices.
Reviews and approves related party transactions.
Reviews the internal audit plan and discusses with the internal auditor and the independent registered public accounting firm their assessment of the effectiveness of Quaker’sQuaker Houghton’s internal controls.
Reviews the experience and qualifications of the senior members of the internal auditor and the quality control procedures of the auditor and sets policies for the hiring of employees for the independent accounting firm.
Oversees the handling of matters relating to compliance with law and ethics, including adherence to the standards of business conduct and ethics required by Quaker’sQuaker Houghton’s policies.
Provides oversight to the Chief Financial Officer and Risk Manager on matters relating to risk management generally.
Provides oversight of IT and cybersecurity activities and programs.
Compensation/Management DevelopmentCompensation and Human Resources Committee:
Reviews management’s compensation philosophiesthe Company’s Compensation, Benefit and policies.People Management programs to ensure alignment with business strategy, Company culture and diversity and inclusion philosophy. Provides recommendations to the Board as required by the plan.
ApprovesCollaborates to align strategic initiatives with all Board appointed committees.
Reviews and approves matters affecting CEO and Executives including annual, short-term and long-term incentive programs, performance objectives for the CEO, evaluates the CEO’s performancetargets and achievements against objectives, and makes a recommendationto make recommendations to the Board regarding the CEO’s base salary.compensation.
Reviews performance evaluations and approves annual salariesthe design and structure of incentive-based compensation plans and equity-based plans.
Reviews and recommends to the Board for all executive officers, other than the CEO.
Approvesapproval performance criteria for annual incentive and long-term incentive award opportunitiesplans.
Regarding any severance arrangements, change-in-control agreements, equity awards, or special or supplemental benefits in relation to an employment agreement, to make recommendations to the Board for the CEO and to approve, as recommended by the CEO, for all executive officers, including the CEO.other officers.
Administers Quaker’s Global Annual Incentive Plan and Long-Term Performance Incentive Plan.
Reviews and evaluates management development and succession planning and oversees these processes.
Reviews and discusses with management disclosures under the Compensation Discussion and Analysis section of this proxy statement and makes recommendations to the Board for inclusion of the Compensation Discussion and Analysis section in this proxy statement and the Company’s Annual Report on Form10-K.
Acts forIn consultation with Management, oversee regulatory compliance with respect to executive compensation matters, including overseeing the Board in situations requiring prompt actionCompany’s policies on structuring compensation programs to pursue tax deductibility, and, as and when a meetingrequired, establish performance goals and certify the attainment of such goals.
To assure an annual management succession review by Management with the full Board is not feasible.Board.
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Makes recommendations to the Board about external corporate development programs.
COMMITTEES | ||
Establishes guidelines regarding Quaker’s capital structure and deployment of capital resources.
Evaluates the size and composition of the Board and recommends changes as appropriate.
Reviews and recommends nominees for election as directors.
Reviews the Board’s committee structure and recommends directors to serve as members of each committee.
Reviews and makes recommendations to the Board with respect to the compensation of the Company’s directors.
Develops and reviews annually Quaker’sQuaker Houghton’s Corporate Governance Guidelines.
Conducts an annual performance evaluation of the Board and ensures each Board committee conducts its own annual self-evaluation.
Reviews and approves related party transactions and similar transactions and establishes policies and procedures for such transactions.
The Audit Committee,Sustainability Committee:
Evaluates and advises the Compensation/Management Development CommitteeBoard and the Governance CommitteeCompany on the Company’s safety, environmental and sustainability programs.
Reviews these programs (objectives, plans, and performance) and recommends actions, as necessary, to ensure continuous performance improvement and alignment with internal and external expectations and business strategy.
Monitors program goals in light of environmental and social trends and expectations.
Evaluates employee occupational safety and health, process safety and monitors environmental responsibility programs.
Monitors the Company’s sustainability program, including program development and advancement, goals and objectives, and progress toward achieving those objectives.
Reviews and advises on the Company’s policies and procedures relating to sustainability and social responsibility activities, including those pertaining to: energy consumption, water usage, climate change, greenhouse gases and other emissions, waste disposal, recycling, and global social matters.
Our Board committees each operatesoperate under a charter. These charters can be foundcharter that has been posted on the Company’s website athttps://www.quakerchem.comwww.quakerhoughton.com under the heading Investors/Corporate Governance.
INTERLOCKS AND INSIDER PARTICIPATION | ||||
Compensation Committee Interlocks and Insider Participation
The individuals who served as members of the Compensation/Management DevelopmentCompensation and Human Resources Committee during the year ended December 31, 20182021 are Robert H. Rock (Chair), Donald R. Caldwell, Jeffry D. Frisby and William H. Osborne and Ramaswami Seshasayee, each of whom is an “independent” director.director under the rules of the NYSE and our Corporate Governance Guidelines. No member of the Compensation/Management DevelopmentCompensation and Human Resources Committee was, during 2018,2021, or had previously been, an officer or employee of Quaker Houghton or its subsidiaries nor had any material interest in a transaction with Quaker Houghton or a business relationship with, or any indebtedness to, Quaker Houghton, in each case that would require disclosure under applicable rules of the SEC. During 2018,2021, no executive officer of Quaker Houghton served as a director or a member of the compensation committee of another company, one of whose executive officers served as a member of Quaker’sQuaker Houghton’s Board of Directors or Compensation/Management DevelopmentCompensation and Human Resources Committee.
Proposal 2 – Approval of an Amendment to the Company’s Articles of Incorporation, as amended
On February 26, 2019, the Board of Directors voted unanimously to submit for shareholder approval a proposed amendment (the “Amendment”) to the Company’s Articles of Incorporation, as amended, intended to enhance the Company’s corporate governance. The Amendment, if approved, will implement a majority voting standard in the election of directors in uncontested elections. The Board of Directors has declared the Amendment to be advisable and in the best interests of the Company and its shareholders and recommends that the shareholders approve the Amendment.
Currently, even in uncontested elections, directors are elected by a plurality vote pursuant to applicable law. This means that if three directors are nominated, for example, the three nominees receiving the most “for” votes would be elected orre-elected, even if one of those nominees only received one vote in favor of election.
Upon implementation of a majority voting standard, a nominee must receive a majority of the votes cast in an uncontested election. A majority of the votes cast means that the number of votes cast “for” a nominee must exceed the number of votes cast “against” that nominee. Each shareholder would be entitled to only one vote per share for each nominee in an uncontested election of directors and each director nominee would be voted upon separately. Abstentions and brokernon-votes would not be counted as votes cast. Under the Amendment, if an incumbent director who is a candidate forre-election is not elected, the director will be deemed to have tendered his or her resignation to the Board of Directors. The Governance Committee will make a recommendation to the Board of Directors on whether to accept or reject the resignation, or whether other action should be taken, and the Board of Directors will be required to act on the Governance Committee’s recommendation and disclose its decision and the rationale for the decision.
The adoption of a majority voting standard is consistent with the Company’s desire to more closely align the interests of the shareholders with the accountability of the Board of Directors. The Board of Directors believes the Amendment is in the shareholders’ long-term best interests and would help ensure that each director represents the interests of all shareholders, rather than a minority shareholder or special constituency.
This summary of the Amendment is qualified in its entirety by the complete text of the Amendment, which is included in the Articles of Amendment attached as Appendix A to this Proxy Statement. The current Articles of Incorporation, including the most recent previous Amendment dated September 7, 2017, can be found as Exhibits 3(i)(a) and 3(i)(b) of the Company’s Annual Report on Form10-K filed on February 28, 2019, incorporated by reference from their initial filings on Current Reports on Form8-K filed July 31, 2013 and September 11, 2017, respectively.
If the Amendment is approved, it will become effective upon the filing of Articles of Amendment to the Company’s Articles of Incorporation with the Department of State of the Commonwealth of Pennsylvania. The affirmative vote of a majority of votes cast by the Company’s shareholders at the Annual Meeting is required for approval of this Proposal 2. Abstentions or brokernon-votes will not be counted as votes cast.
The Board of Directors recommends that you vote “FOR” approval of an Amendment for the Company’s Articles of Incorporation, as amended.
EXECUTIVE COMPENSATION | ||||
Compensation Discussion and Analysis
The purpose of this Compensation Discussion and Analysis section is to explain to shareholders and our other stakeholders how and why compensation decisions are made for the executive officers listed in the Summary Compensation Table below. When we use the term “executive officers,” we mean the Named Executive Officers for fiscal 2018,2021, who are Michael F. Barry, Andrew E. Tometich, Mary Dean Hall, D. Jeffry Benoliel, Wilbert Platzer andShane W. Hostetter, Joseph A. Berquist, Jeewat Bijlani, and Wilbert Platzer, as well as the Company’s other senior officers.
Quaker’s Compensation/Management Development Committee (the “Committee”) has implemented executive compensation programs designed to reward performance. The Company is engaged in a highly specialized businessbusinesses with a broad global footprint, requiring a management team with specificunique skills and knowledge. TheQuaker Houghton’s Compensation and Human Resources Committee (the “Committee”) believes that our compensation programs must be competitive in order to attract and retain high-performing executives with the requisite skill set and performance orientation.orientation and has implemented executive compensation programs designed to incentivize high performance.
In fiscal 2018, Quaker’s2021, Quaker Houghton’s executive team successfully managed the Company during the ongoing global COVID-19 pandemic, decreased raw material availability, supply chain disruptions, the shortage of semiconductors which impacted many of our customers, and the inflationary environment that manifested itself in mid-2021, while continuing to post recordoutperform the market and successfully service our customers globally. 2021 results include:
Record net sales record cash flow from operating activities, and recordnon-GAAP earnings and adjusted EBITDA results. Net sales increased by 6% overof $1,761 million, a 24% increase compared to the prior year, primarily reflecting higher volumes, selling and price mix, the acquisition of Coral Chemical and several smaller acquisitions made during 2021, and some currency effects.
Record earnings as our earnings per diluted share and non-GAAP earnings per diluted share increased by 21% aswere $6.77 and $6.85, respectively, for 2021, compared to fiscal 2017. Cash flow from operating activities$2.22 and $4.78, respectively, for 2020. Record full year net income of $121.4 million increased by 22%, and the Company’s$81.7 million or 206% compared to $36.7 million in 2020.
Record full year adjusted EBITDA increased 9% year-over-yearshows 23% growth for 2021 to a record $125.6 million, exceeding $100 million for the fourth year in a row and for only the fourth time in Company history. Our average stock price in 2018 was $168.20 per share compared to $142.29 per share in the prior year and $94.74 per share in 2016, an almost $26 increase over prior year and another record share price.$274 million.
In this Compensation Discussion and Analysis, we refer to EBITDA, non-GAAP earnings per diluted share and adjusted EBITDA,net income, which arenon-GAAP financial measures. A full discussion of our use ofnon-GAAP earnings per diluted share and adjusted EBITDAfinancial measures to enhance a reader’s understanding of the financial performance of the Company, and a reconciliation of these measures to earnings per diluted share and net income, respectively,the GAAP measures can be found on pages 3040 to 3346 in“Non-GAAP Measures” of Item 7 of the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2018,2021, provided with this proxy statement.
For 2021 compensation decisions, Quaker Houghton refined the performance metrics under our Annual Incentive Plan (the “AIP”). The AIP provides eligible employees with the opportunity to earn an annual incentive award based upon business performance. The AIP includes net income as a key financial performance objective, but also now incorporates other financial and Combination integration measures, as further described below.
Except for the changes explained below, Quaker Houghton’s overall compensation strategy and specific programs have not changed over the past several years. We have overall sought to maintain a consistent
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COMPENSATION DISCUSSION AND ANALYSIS | ||
year-over-year approach to ensure that our compensation remains predictable and competitive to the market, as well as fair and reasonable. In particular, we have continued to:
use benchmarks for total direct compensation and long-term compensation designed to mitigate the possibility of inappropriate risk taking on the part of executives;
align senior level compensation with the long-term success of the Company by ensuring that the higher the position within management the more an executive’s compensation is incentive-pay dependent and the more the executive’s incentive pay is long-term oriented; and reward long-term performance with stock-based compensation measured by total shareholder return as other stock-based compensation in order to align the interests of management directly with our shareholders.
Consistent with this approach, we have sought and have received approval from our shareholders for incentive plans that we use to attract, motivate, retain and reward our executives.
The Committee continually reviews our executive compensation programs to ensure they achieve the desired goals of aligning our compensation practices to performance and pay practices in the Company’s industry to achieve sustainable shareholder value creation. The Committee has again determined that the Company’s current compensation programs are not likely to encourage excessive risk taking. In reaching that conclusion, the Committee considered key design elements of our compensation programs, including that they (i) employ a balanced mix of components of salary and annual and long-term incentives not overly-weighted to short-term incentives, (ii) use multiple performance factors preventing an overemphasis on any one metric, (iii) are measured against peers to ensure that they are competitive and reasonable, and (iv) incentive awards are capped at 200% of target.
In addition, at the Company’s 2020 annual meeting of shareholders, the shareholders overwhelmingly voted, on an advisory basis, to approve the Company’s compensation of our Named Executive Officers. Given the significant level of support received in the recent 2020 advisory vote, the Board of Directors and Committee have not made any material changes to our executive compensation policies since that time.
In making decisions about fiscal 20182021 salaries and performance targets, the Committee also considered fiscal 20172020 corporate performance. Factors affecting the key components of our executive compensation programs for fiscal 20182021 were:
Adjusted Net Income.Income. Adjusted net income is a key financial metric for the corporate component of the Company’s annual cash incentive awards (the adjustments to net income for purposes of setting these targets are explained in greater detail below). Performance with respect to this metric for fiscal 20182021 was well abovebelow target level and resulted in a payout representing 66% of the maximum payment for the corporate componentAIP given the headwinds the Company faced with the ongoing global COVID-19 pandemic, decreased raw material availability, supply chain disruptions, the shortage of semiconductors which impacted many of our customers, and the totalinflationary environment that manifested itself in mid-2021.
Integration, Operational and Market Share Metrics. Continuing for 2021, global safety performance and integration success were key performance metrics along with market share gains which was an added metric for this performance year. These three specific measures were key performance measures under the AIP for the Company’s annual cash incentive awards forand our results met or exceeded the Named Executive Officers.parameters in each of these areas.
Quaker’sQuaker Houghton’s Stock Performance.Performance. Long-term incentives make up a significant portion of each of the Named Executive Officers’Officer’s compensation. In order to align the Named Executive Officers’ incentives with our shareholder returns, the value to be earned on a portion of our long-term awards is directly linked to the performance of our stock. The portion of the equity component of these incentives is tied to stock performance and the amount payable on our cash awards is based on our total shareholder return (which we define as the year-over-year stock price increase or decrease plus dividends paid) as compared to a specific peer group. Our Named ExecutiveFor the cash component of our long-term incentive program, Quaker Houghton’s
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COMPENSATION DISCUSSION AND ANALYSIS | ||||
|
Benchmarking.Benchmarking. Based on our review of competitive benchmarking for compensation and our results of operations, in 2017, we rewarded our Named Executive Officers with salary and/or incentive compensation increases in 20182021 as described further below.
Quaker’s overall compensation strategy and specific programs have not changed over the past several years as we have strived to maintain a consistent year-over-year approach to ensure that our compensation remains predictable and competitive to the market, as well as fair and reasonable. In particular, we have continued to:
Use benchmarks for total direct compensation and long-term compensation to mitigate the possibility of inappropriate risk taking on the part of executives;
Align senior level compensation with the long-term success of the Company by ensuring that the higher the position within management the more compensation isincentive-pay dependent and the more incentive pay is long-term oriented; and
Reward long-term performance with cash compensation measured by total shareholder return and stock-based compensation in order to align the interests of management directly with our shareholders.
Consistent with this approach, we have sought and have received approval from our shareholders regarding incentive plans that are used to attract, motivate, retain and reward our executives. In fact, when two of our incentive plans were presented to the shareholders for approval at the 2016 annual meeting of shareholders, they overwhelmingly approved both plans.
The Committee continually reviews our executive compensation programs to ensure they achieve the desired goals of aligning our compensation practices to performance and pay practices in the Company’s industry and prudent risk taking to achieve sustainable shareholder value creation. The Committee has again determined that the Company’s current compensation programs are not likely to encourage excessive risk taking because the metrics in the Company’s compensation plans are linked to corporate performance as it relates to set budgetary targets and because the plans are measured against identified peer comparison groups.
In addition, at the Company’s 2017 annual meeting of shareholders, the shareholders overwhelmingly voted, on an advisory basis, to approve the Company’s compensation of our Named Executive Officers. At the same 2017 annual meeting of shareholders, the shareholders also voted to recommend an advisory vote on the Company’s compensation once every three years and the Company has followed this recommendation. Given the significant level of support received in the 2017 advisory vote, the Board of Directors and Committee have not made any material changes to our executive compensation policies and decisions since that time.
Quaker Houghton, like many companies of similar size, relies on a small group of managers who have the requisite skills and knowledge to enable us to achieve our business strategies, operate as a globally integrated whole and deliver value to our shareholders.
To attract and retain talented senior level managers, we have adopted a compensation approach that:
provides opportunities for highly competitive levels of total compensation when merited by performance;
creates incentives to perform over a multiple-year period; and
aligns interests of the management team with those of our shareholders.
Quaker Houghton compensates its executive officers (who for 2018 includeleadership team (including our Chairman, CEO and President and our vice presidents)executive officers) through a total compensation package. ThisFor 2021, this package consistsconsisted of a mix of base salary, an annual cash incentive bonus, long-term incentives comprising both equity awards and cash payments and a competitive benefits package comprising medical, life, disability and retirement using both qualified andnon-qualified programs, where appropriate.
The Committee is responsible for overseeing and developing the compensation and management development programs for the Company. Consistent with its charter, the Committee is composed solely of “independent” members of our Board of Directors under our Corporate Governance Guidelines and the listing standards of the NYSE. Four members of our Board, Donald R. Caldwell, Jeffry D. Frisby, William H. Osborne, and Robert H. Rock (Chair) and Ramaswami Seshasayee currently sit on the Committee. The Committee’s responsibilities include the evaluation of, approval of, and recommendation to Quaker’sQuaker Houghton’s Board of Directors with respect to the plans, policies and programs related to the compensation of the Company’s executive officers and, in the Committee’s discretion, the engagement of an outside compensation consultant. TheIn fulfilling its duties, the Committee considers the recommendations of the CEO as it relates to the annual salaries of the other executive officers and works closely with members of management, in fulfilling its duties. Management providesincluding the CEO who provide the necessary information and coordinatescoordinate with the Committee’s outside consultants,consultant(s), when appropriate, to ensure that the Committee is sufficiently informed when taking action or recommending action on compensation matters. As discussed below, the Committee considers benchmarking data is used prior tobefore making any such decisions. The Committee’s charter describes in full the Committee’s authority, responsibilities and specific powers and can be accessed on the Company’s website athttps://www.quakerchem.comwww.quakerhoughton.com under the heading Investors/Corporate Governance.
Section 162(m) of the Internal Revenue Code, as amended (the “Code”) precludes Quaker Houghton from taking a Federal income tax deduction for compensation paid in excess of $1 million to certain of our executive officers. While the Committee generally attempts to structurestructures the compensation paid to executive officers so that it is fully deductible for Federal income tax purposes, the Committee believes that the primary purpose of our compensation is to support Quaker’sQuaker Houghton’s business strategy and the long-term interests of Quaker’s
32 | 2022 Proxy Statement | Quaker Houghton |
COMPENSATION DISCUSSION AND ANALYSIS | ||
Quaker Houghton’s shareholders. Accordingly, the Committee may choose to provide compensation that is not deductible in order to retain or to secure the services of key executives when it determines that it is in Quaker’sQuaker Houghton’s best interests to do so. Recent tax legislation has eliminated the exception under Section 162(m) for performance-based compensation, effective for tax years beginning after December 31, 2017. Thus, all compensation to certain of our executive officers over the $1 million limit willis now be nondeductible starting in 2018 (subject to exceptions for certain grandfathered arrangements entered into before November 2, 2017)arrangements). While Quaker’s shareholder-approved bonus and incentive plans were previously structured to provide that certain awards could be made in a manner intended to qualify for the performance-based compensation exception, that exception will no longer be available other than with respect to certain grandfathered arrangements. For 2018, despite the elimination of the performance-based compensation exception, the compensation paid to our executive officers (other than Mr. Barry) did not exceed the Section 162(m) limitation. Compensation paid to Mr. Barrycertain executive officers exceeded the Section 162(m) limitation and a portion of this compensation is not deductible by Quaker.Quaker Houghton.
The Committee has the authority to engage independent advisors to assist it in carrying out its responsibilities. To assist Quaker Houghton in establishing a total direct compensation package comprising base salary, an annual cash incentive bonus and long-term incentives, the Committee has since 2015 engaged Willis Towers Watson (“WLTW”WTW”), a leading global professional services company with specific expertise in the areas of benefits, talent management, rewards, and risk and capital management, as an independent consultant on compensation issues.
Management had no role in selecting the Committee’s compensation consultant. In addition, WLTWWTW has, from time to time, provided the Committee with executive compensation studies and analyses, as well as benchmarking data and counsel on compensation issues as needed or desired. In 2021, WTW provided services to the Committee related to the retirement of Michael F. Barry as CEO and the appointment of Andrew E. Tometich as our new CEO. WTW also provided some services related to the appointment of Shane W. Hostetter as our CFO in early 2021.
WLTWWTW also provided no otherlimited services to the Company in fiscal 2018 other than2021 specifically related to an employment and retention branding exercise (along with advising the Committee on various executive compensation matters. Management had no role in selecting the Committee’s compensation consultant.matters as described above). The Committee has assessed the independence of WLTWWTW pursuant to Securities and Exchange CommissionSEC rules and concluded that WLTW’sWTW’s work for the Committee and(and the Governance Committee doeswork for the Company as referenced above) do not raise any conflict of interest.
Due to our size and diversity of our businesses around the world, we have not identified one specific peer group that is appropriate to use in defining market total direct compensation for our executive officers. Our primary benchmarks for 20182021 total direct compensation for our executive officers were derived from compensation information provided by WLTWWTW that is a blend of Peer Group (as defined below) compensation data and broader group data comprising a composite of credible, published executive compensation surveys. The Peer Group data reflectsIn light of the increased size of the Company, the Peer Group developed by a previous compensation consultant as well as WLTW. This Peer Group includes data for 13 publicly traded firmswas updated several years ago to include companies in the chemicals industry of similar in size (as measured by revenue and market capitalization) to Quaker. The Peer Group companies are: Acetoand was used by the Committee in making total direct compensation decisions for 2021. This peer group includes the following 15 companies: Albemarle Corporation, American VanguardFerro Corporation, BuckeyeGCP Applied Technologies, Inc., Cabot MicroelectronicsH.B. Fuller Company, Ingevity Corporation, Calgon Carbon Corporation, Hawkins, Inc., Innophos Holdings, Inc., Innospec Inc., LandecKraton Corporation, LSB Industries,Minerals Technologies Inc., OM Group, Inc.,NewMarket Corporation, OMNOVA Solutions Inc., Rayonier Inc., Sensient Technologies Corporation, Stepan Company, Venator Materials PLC, and Rogers CorporationW. R. Grace & Co. (collectively, the “Peer Group”). Data for international Managing Directors is derived from surveys for their respective geographies. Though the Committee closely analyzes the data provided by WLTW, it exercises its discretion in the weight it assigns to this data in making compensation decisions.
We generally aim to benchmark total direct compensation to the market 50th percentiles. We believe the philosophy of targeting total direct compensation to the market 50th percentiles reduces the possibility of excessive risk taking on the part of executives in order to achieve performance targets at the maximum levels. This approach is the starting point of the analysis as other factors are taken into consideration, including experience, breadth of responsibilities, tenure in the position, whether the position held is for succession planning purposes, overall individual performance and internal equity. We do not assign a particular weight to any of these factors but exercise discretion in this regard.
2022 Proxy Statement | 33 |
COMPENSATION DISCUSSION AND ANALYSIS | ||
In determining 20182021 compensation for the Named Executive Officers (including for Messrs. Hostetter and Tometich for the portion of 2021 after they became our CFO and CEO, respectively), the Committee used the benchmarking data WLTWWTW had previously provided and various other factors, as described above. Ms. Hall’s and Mr. Berquist’s targeted total direct compensation for 2018 was between the 25th and 50th percentiles of WLTW’s comparative data. Messrs. Barry’s, Benoliel’sBijlani’s and Platzer’s targeted total direct compensation for 20182021 was at or near the 50th percentile of benchmark levels based on U.S. data. levels. Mr. Berquist’s targeted total direct compensation was near the 75th percentile of the WTW data and Messrs. Hostetter and Tometich’s targeted total direct compensation was at or below the 25th percentile of benchmark levels. Although the Committee closely analyzes the data provided by WTW, it exercises its discretion in the weight it assigns to this data in making individual compensation decisions.
Total compensation earned in 20182021 for each Named Executive Officer is reflected in the Summary Compensation Table below.
Allocating Between Current and Long-Term Compensation
The Committee, in seeking to ensure the appropriate focus on performance and risk, has developed, in consultation with WLTW,WTW, guidelines for executive officers for allocating the desired total direct compensation package among base salary, an annual cash incentive bonus and long-term incentives. As a general philosophy, these guidelines provide that the higher the position within management the more the executive’s total compensation is dependent on incentive pay and the more the executive’s incentive pay is long-term oriented. This is donedesign aims to better align senior level compensation with the long-term success of the Company. These guidelines are reviewed regularly to ensure their marketplace competitiveness.
The charts below illustrate the 2021 pay mix and the target total direct compensation components for Messrs. Barry and Tometich and our other named executive officers:
COMPENSATION DISCUSSION AND ANALYSIS | ||||
In the case of Mr. Barry, the guidelines for base salary range from 27% to 41% of total compensation, for annual cash incentive bonus from 20% to 22% of total compensation and for long-term incentives from 39% to 51% of total compensation. The applicable guidelines for our other executive officers for base salary range from 50% to 68% of total compensation, for annual cash incentive bonus from 15% to 21% of total compensation and for long-term compensation from 15% to 30% of total compensation.
Each year, the Committee reviews and discusses the base salaries of our executive officers. The Committee’s final determination of salary increases dependsis based on a number of factors, including market data reported by WLTW,WTW, specific position responsibilities and scope, experience and tenure, current job performance and Quaker’sQuaker Houghton’s overall financial results. A Named Executive Officer’s performance and achievement of individual goals established by the Committee are taken into consideration for salary determinations. In the case of some of our foreign-based executive officers, salary increases may be a result of legal mandates of a particular country or region which influence the final determinations of the Committee even when similar increases were not granted to officers of comparable positions residing in the United States. Based on its analysis of all of the factors referenced above, in 2018,2021, the Committee recommended, and the Board approved salary increases for each of the Named Executive Officers, effective March 11, 2018,April 1, 2021, except for Mr. Platzer whose salary increase was
2022 Proxy Statement | 35 |
COMPENSATION DISCUSSION AND ANALYSIS | ||
effective March 1, 2018. Mr.2021. Messrs. Barry’s salary increase isand Tometich’s salaries are described below under the heading “Chief Executive Officer Compensation.” The other Named Executive Officers’ base salary increases and total base salary received for 20182021 are described in the table below:
Named Executive Officer
| Initial Base Salary Rate ($)
| New Base Salary Rate ($)
| Base Salary Received ($)
| Initial 2021 ($) | New 2021 Base Salary Rate ($) | 2021 Year-End ($) | |||||||||||||||
Mary Dean Hall |
| 370,000
|
|
| 385,000
|
|
| 382,116
|
| 420,420 | 437,237 | 146,824 | |||||||||
D. Jeffry Benoliel
|
| 359,378
|
|
| 370,159
|
|
| 368,086
|
| ||||||||||||
Wilbert Platzer(1)
|
| 302,417
|
|
| 308,824
|
|
| 305,770
|
| ||||||||||||
Shane W. Hostetter(2) | 270,400 | 390,000 | 353,200 | ||||||||||||||||||
Wilbert Platzer(3) | 356,962 | 342,815 | 339,519 | ||||||||||||||||||
Joseph A. Berquist |
| 331,081
|
|
| 347,000
|
|
| 343,939
|
| 420,420 | 437,237 500,000 | 451,668 | |||||||||
Jeewat Bijlani | 420,420 | 435,135 | 431,286 |
(1) | Ms. Hall resigned effective April 18, 2021. |
(2) | Mr. Hostetter received both a merit increase and a promotional increase upon his appointment as Chief Financial Officer in April of 2021. |
(3) | Mr. Platzer’s compensation is paid in E.U. Euros. |
(4) | Mr. Berquist received a merit increase in April of 2021 and then received a raise upon his appointment as Executive Vice President, Chief Strategy Officer and Managing Director Global Specialty Businesses in September of 2021. |
The second component of the total direct compensation package is the annual cash incentive bonus which is determined under the Globalplan (the Annual Incentive Plan (“GAIP”or the “AIP”). All AIP bonuses are subject to the discretion of the Committee.
The GAIPAIP is intended to provide associatesemployees of Quaker Houghton or its subsidiaries with an opportunity to receive incentive bonuses based on the achievement ofpre-established goals. Bonuses underThe AIP is designed to:
align rewards with the GAIP may be paid in cash or inbusiness strategy and culture of Quaker common stock, although we generally payHoughton, putting emphasis on individual, team and company contributions;
increase the GAIP bonus in cash, absent unusual circumstances.transparency of how rewards are calculated; and
allow flexibility for Company functions and business units to align.
Overview of Performance Metrics
The maximum bonus that an eligible associate may earn under the GAIP for a yearAIP is comprised of financial metrics as well as other market share, integration and operational metrics. Target incentive opportunities are based on a percentage of the associate’san employee’s annual base salary. Those percentages for performance during 2018 (resulting in the GAIP payment in early 2019) are shown in the chart below. Thesalary with component bonus earned isopportunity ranging from 0% up to a maximum of 200% based on achievement of both corporate financial and individual objectives. Corporate financial objectivesbusiness performance.
Financial Metrics
Financial goals are typically determined based on the budget for the coming year with the target bonus for the global corporate portioncomponent set at or around budgeted consolidated Non-GAAPnet income. The actual bonus varies depending on actual performance. The individual objectives are further divided intoFor the regional objectivesand Global Specialty Business corporate components, the goals were set using a metric of profit before tax (“PBT”) or similar direct earnings measure for regional associates (Mr. Berquist) and individual objectives fornon-regional associates (Messrs. Barry, Benoliel, and Platzer and Ms. Hall). Regional executive officers have the opportunity to earn up to a maximum of 23.38% (which represents 182% of target) of their base salary on achievement of their regional objectives as opposed to a maximum of 11.69% for individual objectives fornon-regional associates (excluding the CEO who can earn a higher amount). The CEO can earn a maximum of 25% of his base salary forcertain Global Specialty Businesses.
| COMPENSATION DISCUSSION AND ANALYSIS | |
|
achieving individual objectives.For 2021, the Company had one global corporate financial goal of net income, which applied to all AIP participants, and was established at three levels: (1) threshold (set at 90% of the target, the level at which the bonus pool began to accumulate); (2) target; and (3) maximum. Achievement at or below the threshold level of net income will typically result in no payout for this global component of the corporate financial goals. The Committee selected a target Non-GAAP net income level of $127.3 million, which was approved by the Board, because of its correlation to the 2021 budgeted net income of $109.5 million. The Committee determined that the higher potential individual objective percentagebased on 2021 performance, which included consolidated non-GAAP net income for the CEO is warranted due to his heightened responsibility and experience, and after considering relevant market data. To achieveyear ended December 31, 2021 of $122.8 million, that an award of 70% of this target award opportunity was earned for this component.
Regional financial goals for the maximum regional bonus, regional operating income must exceed budgeted levels and other regional financial andnon-financial goals must be met. In addition, because the total amount of an individual’s GAIP bonus can never exceed his or her overall maximum bonus opportunity, if the sum of the actual corporate bonus earnedCompany’s three regions (Americas, EMEA, and the regional bonus earned exceeds the overall maximum opportunity,APAC region) were based on a target PBT calculation and were measured against the regional bonus earned is limited tobudget for the individual’s overall maximum opportunity. The rationale for providing this opportunity torespective region. This regional executive officers is to reward them withup-side potential in years where there is strong performance in the applicable region but overall corporate performance is lower due to weakness in other regions or other factors negatively impacting the corporate component of the bonus. The specificAIP’s corporate financial goals applies to all AIP participants in the region in which they are located. As with the global financial component, there are three levels of payout for regional financial performance, except that the threshold is set at 80% of the target. The Committee determined that:
an award of 87% of the target award opportunity was earned for the Americas region based on actual PBT performance of $53 million versus a target PBT of $61 million;
an award of 83% of target was achieved for the EMEA region based on actual PBT performance of $31 million versus a target PBT of $37 million, and
an award of 93% of target was earned for the APAC region based on actual PBT performance of $58 million versus a target PBT of $63 million.
Our Global Specialty Businesses financial component of the AIP applies to all AIP participants in any of the Global Specialty Businesses (Grease, Coatings, Mining, Off-Shore, Metal Finishing and Cans) regardless of geographic location. This component is based on the global financial results for the business in which each AIP participant resides and is based on a budgeted PBT calculation for each particular specialty business and measured against such budget for the year. This component has the same levels as the regional component discussed directly above: (1) threshold (set at 80% of the target, the level at which the bonus pool began to accumulate); (2) target; and (3) maximum. The Committee determined based on 2021 performance that awards earned equated to payments ranging from 0% to 200% of target depending on the individual business lines.
Market Share, Integration and Operational Metrics
For 2021, the targets and performances of the market share, integration and safety/operational metrics were respectively set and measured through December 31, 2021. Under the AIP, annual cash incentive bonuses had historically been determined based on achievement of both corporate financial and individual objectives. However, beginning in 2020, in place of individual goals, respectively,the integration metrics employed were selected for performance during 2018 are discussed below undertheir relationship to driving our new culture and to allow flexibility for the headings “Corporate Financial Goals”combined businesses and “Individual Goals.”functions to align. In 2021, the Company continued use of the integration metric and also employed market share growth and safety goals. For 2022, the Company will also begin using a 10% global ESG measure for the Company’s 2023 Sustainability goals. The Company set the following target goals for these metrics for 2021.
Regional / Global Market Share Gains
The following chart shows, asCompany’s regional and global market share gain goals are applicable to AIP participants based on the region in which they are located or whether they have a percentage of base salary, the maximum potential bonus and the bonus amounts payableglobal role. This metric is based on target achievement and maximum achievement, allocated between corporate and individual objectives for 2018. The table also shows the percentage and amount of base salary actually paid as a result of achievement during 2018.revenue from
Named Executive Officer
| Maximum
|
Corporate Financial Objectives (as a % of base salary) | Individual Objectives (as a % of base salary) | Total GAIP Bonus
| ||||||||||||||||||||||||||||||
Target | Maximum | Achieved(2) | Target | Maximum(1) | Achieved(3) | |||||||||||||||||||||||||||||
Michael F. Barry
|
|
200
|
(4)
|
|
75.000
|
|
|
175.00
|
|
|
115.00
|
|
|
25.00
|
|
|
N/A
|
|
|
25.00
|
|
|
1,190,000
|
| ||||||||||
Mary Dean Hall
|
|
93.5
|
|
|
35.063
|
|
|
81.81
|
|
|
53.76
|
|
|
11.69
|
|
|
N/A
|
|
|
11.69
|
|
|
251,983
|
| ||||||||||
D. Jeffry Benoliel
|
|
93.5
|
|
|
35.063
|
|
|
81.81
|
|
|
53.76
|
|
|
11.69
|
|
|
N/A
|
|
|
11.69
|
|
|
242,269
|
| ||||||||||
Wilbert Platzer
|
|
93.5
|
|
|
35.063
|
|
|
81.81
|
|
|
53.76
|
|
|
11.69
|
|
|
N/A
|
|
|
11.69
|
|
|
202,125
|
| ||||||||||
Joseph A. Berquist |
|
93.5 |
|
| 35.063 |
|
|
81.81 |
|
|
53.76 |
|
|
11.69 |
|
|
23.38 |
|
|
16.27 |
(5) |
|
243,009 |
|
|
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS | ||
new business gains less business losses. Target level is 2% of market share gains, net of any losses year-over-year. The Committee determined that market share gains were above 3% in each of the Americas, EMEA and APAC and accordingly, maximum awards were earned for this metric by participants in those regions. The Committee also determined that awards of 100% of target were earned by participants with global roles based on market share gains of 2%.
Corporate Financial GoalsOrganization Integration Success
The corporate financial goalsCompany targeted having all integration initiative action items completed on time, within budget and with good quality. This target applied to all AIP participants, except for participants in the 2018 GAIP bonuses wereGlobal Specialty Business segment. The primary measurement was regional value capture, including cost synergies, and the 2021 target value capture was set at $82.0 million. Considerations for achievement above and below the target depended on completion time, quality and alignment to budget. The Company met expectations for integration success, as it had a total value capture of approximately $81.2 million with all regions meeting their targets. The Committee therefore determined, based on performance, that the Company’s consolidated net income and wereparticipants earned an award of 100% of the target award for this metric.
Global Safety Performance
The Company safety goals apply to all AIP participants. Target level is achieved when the total recordable incident rate (“TRIR”) is below target, which was set at $64.7 millionthe most recently available American Chemistry Council median occupational illnesses and injuries (“OII”) rate, and the Company targets are shown in the table below. OII is defined as the number of net income at threshold (the level at whichemployees per 100 full-time employees who have been involved in a recordable illness or injury.
The Company targeted having an overall global OII rate of 0.45 and achieved an excellent 0.33 OII rate. For purposes of a regional role, the bonus pool beganAmericas, EMEA, and APAC each had a specific OII goal and met or exceeded its respective target goal. Achievement of an OII rate equal to accumulate), $71.9 millionor less than the target will result in an award of net income at100% of the target and $79 million of net income at maximum.award opportunity. The Committee selected these net income levels, which were approved by the Board, because of their correlation to the 2018 budgeted adjusted net income of $71.9 million, the level of improvement over 2017 adjusted net income and the difficulty of achieving these targets in a very challenging business environment.
When the Committee set the 2018 GAIP targets, it also approved certain significantnon-budgeted business circumstances for which adjustment could be made by the Committee to the reported net income for purposes of calculating the award. They included site consolidation expenditures for consolidating U.S. operations beyond budgeted amounts; customer bankruptcies or customer plant shutdowns; change in accounting principles; unusual factors driving an increased tax rate;non-recurring adjustments to income such as asset write-downs or write-offs, restructuring and related charges and first-year acquisition costs/losses; adverse legal judgments, settlements, litigation expenses, and legal (includingvalue-added-tax (“VAT”) assessments) and environmental reserves; expenditures for discretionary Board initiated or approved corporate actions, plans or major initiatives, including individual personnel actions; changes in foreign exchange rates; and interest expense from the Company’s share repurchase program. To be “significant” an individual effect must have apre-tax impact of at least $200,000, or thepre-tax equivalent for tax adjustments. No adjustment to earnings is applied unless the aggregate total of all effects is at least $1 million on apre-tax basis.
In 2018, reported net income was $59.5 million, which includes the Company’s GAIP bonus accrual. The Company’s net income adjusted for this GAIP bonus accrual would have exceeded the threshold net income level referenced above. Under this adjusted net income level, a corporate award equal to 11% of the corporate maximum would be earned. The Committee considered sixnon-budgeted items in determining the actual payout percentage. These sixnon-budgeted items mainly, but not exclusively, reflectnon-GAAP items outlined in our reported financial results for fiscal 2018. The Committee used its discretion to adjust the net income amount downward to exclude the equity income from a captive insurance company, to exclude the proceeds related to the liquidation of an inactive legal entity, and to exclude the income received related to a litigation settlement. The Committee also adjusted the net income upward to adjust for Houghton International, Inc. (“Houghton”) combination costs, the effect of certain favorable tax impacts, as well as adjusting for the currency conversion impacts of certain hyper-inflationary economies. Accordingly, taking into account the adjustments made by the Committee,determined that all participants earned an award equal to 66%of 100% of the maximum potentialtarget award for this metric.
Target OII/TRIR | Achieved OII/TRIR | Payout | ||||
Global | ≤.45 | 0.33 | 100% of target payout | |||
Regional – EMEA | ≤.69 | 0.35 | 100% of target payout | |||
Regional – APAC | ≤.39 | 0.27 | 100% of target payout | |||
Regional – Americas | ≤.36 | 0.36 | 100% of target payout |
Weighting Matrix
Financial Metrics | Market Share, Integration and Operational Metrics | |||||||||
Role | Global Financial (Net Income) | Regional/GSB (PBT) | Net Market Share Gains | Organization Integration Success | Safety | |||||
Global Role | 60% | – | 10% | 20% | 10% | |||||
Regional Role | 30% | 30% | 10% | 20% | 10% | |||||
Global Specialty Business | 40% | 40% | 10% | – | 10% |
The above chart indicates the corporate componentweighting for each AIP participant of the overall GAIP bonus.
Individual Goals
When setting the individual goals under the GAIP, the Committee receives specific input from the CEOfinancial and reviews the approved operating plan for the upcoming fiscal year. The CEO also recommends the goals for the other Named Executive Officers and works with the Committee to determine his own individual goals. The Committee works closely with the CEO to review and analyze the selected performance metrics and the probabilities and risks of achieving these metrics. Ultimately, the Committee approves the individual goals for the CEO and the other Named Executive Officers. For 2018, the Committee determined that these goals were difficult for the Named Executive Officers to achieve but achievable with substantial effort by each of them.
In 2018, Mr. Barry’s individual goals included, among other things, achieving the 2018 financial plan (with focus areas including sales, cash flow from operating activities, and EBITDA (which we defined as net income before interest, taxes, depreciation and amortization) per the approved budget); executingbased on the Company’s strategicperformance.
| COMPENSATION DISCUSSION AND ANALYSIS | |
|
planPayout for each business segment (with focus areas including achieving established goals for the key account management program and customer relations management system); strengthening2021
As discussed above, in 2021, the Company for the future (including continued work on a business transformation projectunderperformed in oneeach of the Company’s regions); completing additional North America sites forfinancial metrics listed above due primarily to unprecedented increases in raw material costs, global supply chain and logistics cost pressures the Company’s Responsible Care initiative; completing major Company programs (including the Company’s safety and sustainability initiativesexperienced throughout 2021 and the finalizationimpacts of the Company’s “economic value added” performance analysis for each region globally); and providing appropriate governance and risk management forongoing COVID-19 pandemic. However, the Company (including having no material weaknessesmet or restatements to earningsexceeded each of the market share, integration and operational metrics listed above. As a result, AIP plan participants with an Americas regional role achieved 80% of their target award opportunity, participants with an EMEA regional role achieved an award of 76% of their target award opportunity, and participants with an APAC regional role achieved an award of 89% of their target award opportunity. Participants with Global roles achieved 92% of their target opportunity. Mr. Berquist has a mix of Global and Global Specialty Business responsibilities and achieved 96% of his total target award opportunity.
Bonuses under the AIP may be paid in 2018 and completing and reviewing withcash or in shares of Quaker Houghton common stock, although we generally pay the Board the Company’s enterprise risk management program).
Because the Committee determined thatbonus in cash. All payouts for 2021 were made in cash. Mr. Barry had meta target and maximum incentive opportunity equal to 100% and 200%, respectively, of his established individual GAIP goals, heyear-end 2021 base salary. His total bonus awarded under the AIP and paid for 2021 (at 92% of target) was $897,000. Mr. Tometich was not eligible and was not awarded 100%a bonus for 2021 given his start date in October of his individual objectives portion2021. Instead, Mr. Tometich was provided a cash payment of the GAIP bonus. The majority of Mr. Barry’s goals were qualitative in nature, however, Mr. Barry’s goals did have quantitative components. The 2018 financial plan included the key metrics of sales, cash flow from operating activities, and EBITDA growth as areas of focus. Despite the challenging global economic environment, sales and adjusted EBITDA results in 2018 were records for the Company with adjusted EBITDA results surpassing the results from both 2016 and 2017. Net sales increased by 6% year-over-year and adjusted EBITDA was up 9% from 2017, exceeding $100 million for the fourth consecutive year and for only the fourth time in Company history. Cash flow from operating activities was a record $78.8 million, an increase of 22% from prior year. Our average stock price in 2018 was $168.20 per share compared to $142.29 per share$550,000 in the prior year, an almost $26 increase year-over-year and anall-time record share price.
The individual goalsfirst quarter of 2022. For additional detail, please refer to the other executive officers were a mix of limited quantitative performance objectives (for the regional associates) and managerial goals, such as achieving regional business and operating budgets; achieving capital expenditure targets; achieving certain contribution margin levels; achieving certain net cash flow targets; ensuring that strategic plans are properly executed for his or her area of responsibility; continuing to implement Company safety programs to strengthen the safety culture; and upgrading the Company’s enterprise risk management processes and programs. Three of the corporate Named Executive Officers (Messrs. Benoliel and Platzer and Ms. Hall) achieved 100% of their maximum opportunity on their individual components of the annual bonus as they achieved their individual goals as outlined below. Mr. Berquist, the one regional Named Executive Officer for 2018, earned 139% of his regional target bonus opportunity. Mr. Berquist’s region was above the target goal on regional profitability, and he met many of his other regional goals (including in compliance and certain budgetary areas as explained below) to earn this percentage.
For 2018, the Named Executive Officers (other than Mr. Barry) had the following individual or regional goals:
section titled “Mr. Tometich’s Employment Agreement.” Ms. Hall had quantitative goalsa target and maximum incentive opportunity equal to 65% and 130%, respectively, of increasingher year-end 2021 base salary. She was awarded a bonus for 2021 of $77,394 reflecting her departure early in the Company’s overall contribution margin (defined as the overall selling pricesyear. Messrs. Berquist and Bijlani had target and maximum incentive opportunities equal to 65% and 130% of Company products minus all variable costs) and meeting or exceeding certain budgeted financial targets, including achieving budgeted net income, EBITDA and cash flow targets and six qualitative individual goals: (i) ensuring all finance and information technology critical functions are operational on day one of the closing of the anticipated Houghton combination with no disruptions in reporting or other requirements; (ii) maintaining reporting and disclosure quality and ensuring no significant deficiencies, material weaknesses or recurring Sarbanes-Oxley (“SOX”) issues as part of the Company’s internal controls testing;their (iii) co-leadingyear-end of the implementation of a business transformation project in one of the Company’s regions and achieving expected efficiency benefits; (iv) maintaining investor relationships and developing plans to expand analyst coverage post-closing of the Houghton combination; (v) establishing a consistent and reliable global process for banking and hedging requirements; and (vi) managing interest expense to reduce costs.
2021 base salary respectively. Mr. BenolielHostetter had a main quantitative goal of increasing the contribution margin (defined as the overall selling prices of Company products minus all variable costs)target and maximum incentive opportunity equal to 60% and 120% of his various global businesses and numerous qualitative individual goals that focused on business strategy and strategic planning for both global and
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2021 year-end base salary. Mr. Platzer had six principal goals for the function he supervised in 2018: (i) achieving the 2018 budgeted global manufacturing costtarget and capital expense targets; (ii) continuingmaximum incentive opportunity equal to strengthen the safety culture55% and meeting certain targets in this area; (iii) achieving recertifications for various Company locations for the Company’s Responsible Care Program; (iv) achieving additional certifications for several additional locations for such Program; (v) ensuring SOX compliance (with no material weaknesses, significant deficiencies or recurring issues); and (vi) meeting certain agreed upon developmental actions.
Mr. Berquist had thirteen principal goals for the region he supervised: (i) achieving the 2018 budgeted net income and net cash flow targets; (ii) increasing the contribution margin in his region to certain budgeted percentages; (iii) achieving working capital and capital expenditure budgeted targets; (iv) maintaining all key customer business and managing customer churn; (v) fully evaluating the “economic value added” performance analysis and recommendations and having appropriate action plans in place by customer and segment; (vi) achieving global expansion of certain product lines and businesses; (vii) meeting certain budget targets for core markets and particular key strategic initiatives and specific business segments and product lines; (viii) continuing to strengthen the safety culture and meeting specific targets in this area; (ix) establishing key account management protocols and establishing a three-year calendar for strategic planning; (x) ensuring SOX compliance (with no material weaknesses, significant deficiencies or recurring issues); (xi) monitoring compliance with the Foreign Corrupt Practices Act of 1977 and continuing the monitoring, auditing and training programs; (xii) implementing the 2018 corporate social responsibility program goals; and (xiii) successfully achieving the account management program 2018 goals. Mr. Berquist achieved 139%110% of his regional bonus opportunity. His region was above the target goal on profitability2021 year-end base salary. Messrs. Berquist, Bijlani, Hostetter and contribution margin,Platzer each respectively were awarded and he met various of his other regional goals, including, but not limited to, strengthening the safety culturepaid $311,350, $226,270, $215,280 and meeting certain targets, meeting certain budget targets for core markets and particular key strategic initiatives, and ensuring SOX compliance.$143,920 as their 2021 AIP bonuses.
Our shareholders approvedIn 2021, the 2016 Long-Term Performance Incentive Plan (“LTIP”) at our 2016 annual meeting of shareholders and the long-term incentive awards discussed in this Compensation Discussion and Analysis section of this proxy statement were awarded under the LTIP.
Under the LTIP, stock options, restricted stock, long-term cash payments and other types of awards can be made to participants. This plan is intended to assist us in attracting, retaining and motivating employees,non-employee directors and consultants through the use of compensation that rewards long-term performance. The use of stock-based compensation in our long-term incentive plan balances the cash-based annual incentive bonus and cash portion of our long-term performance plan. The Committee believes that stock ownership by management and equity-based performance compensation arrangements are useful tools to align the interests of management with those of Quaker’s shareholders. Under the LTIP, a three-year performance period is used. Generally, employees selected as award recipients hold key positions impacting the long-term success of Quaker and its subsidiaries. These awards are based on overlapping three-year performance periods, so a new program starts each year and a payment is made each year, if earned.
Under the Company’s LTIP, in 2016, Mr. Barry and the other Named Executive Officers were awarded options, time-based restricted stock and a target cash award for the 2016-2018 performance period. Payment of the cash award was dependent upon achieving apre-determined targeted performance over the three-year period based on the Company’s relative total shareholder return (“TSR”) as compared to the TSR of the S&P SmallCap 600 (Materials Group). The threshold for the TSR target was relative performance at the 30thpercentile of the
comparison group, target was at the 50thpercentile and maximum was at the 85th percentile. For this period, Quaker’s TSR of 168% equated to a peer group ranking in the 98th percentile of the comparison group warranting a payout at maximum. For these purposes, TSR is calculated by using theone-month average stock price at the end of the performance period, divided by theone-month average stock price at the beginning of the performance period, plus any dividends paid over that period.
The Committeeagain reviewed current trends in long-term compensation practices with WLTW.WTW. The most recent review confirmed that Quaker’sQuaker Houghton’s practices were generally consistent with those of other public companies and are as follows:
Provide for three types of awards (cash,(performance-dependent stock unit awards (“PSUs”), restricted stock and options) to senior executives, including the Named Executive Officers, but limit awards for lower level executives and senior management to cashPSUs and restricted stock.
The cashPSU portion of the Company’s LTIP2016 Long-Term Performance Incentive Plan (“LTIP”) is performance-based. The performance criteria for the cash paymentPSU is a single metric, relative TSRtotal shareholder return (“TSR”) over the applicable period as compared to the S&P SmallCap 600MidCap 400 Index (Materials Group). By tying the cashthis award to shareholder value, it allows a market metric to be used as a performance measure without accounting complications. For these purposes, TSR is calculated by using the one-month average stock price at the end of the performance period, divided by the one-month average stock price at the beginning of the performance period, plus any dividends paid over that period.
Restricted stock is time basedtime-based and vests at the end of three years assuming continued employment of the grantee. These restricted shares are eligible for dividends payable, prior to and after vesting, at the time dividends are paid generally. For Mr. Platzer only, the time-based portion of the award was granted in the form of time-based restricted stock units (“RSUs”), also subject to three year vesting and entitled to dividend equivalents earned at the time dividends are paid generally. The RSUs were structured to be equivalent in value to restricted stock.
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COMPENSATION DISCUSSION AND ANALYSIS | ||
Options are time basedtime-based and vest in three approximately equal installments over a three-year period commencing with the anniversary of the date of grant.
Our shareholders approved the 2016 Long-Term Performance Incentive Plan (“LTIP”) at our 2016 annual meeting of shareholders. The long-term incentive awards discussed in this Compensation Discussion and Analysis section of this proxy statement were awarded under the LTIP.
The relative value of each of the three categories of awards is roughly equal at the time of grant assuming target performance for the cashPSU portion. The starting point for determining the Named Executive Officers’ LTIP award is to first determine the percentage of base pay for each position at the 50th percentile of market comparables.
Similar to the other components of total direct compensation, other factors in determining the actual percentage of base salary are taken into consideration such as experience, breadth of responsibilities, tenure in the position, whether the position held is for succession planning purposes, overall individual performance and internal equity. Based on recommendations from the Committee’s outside compensation consultants as to typical plan design, in recent years (including 2018) the Committee has divided the total LTIP award into three components, allocated equally (based on fair value) to stock options, restricted stock and a target cash award.
Under the LTIP, in 2019, Mr. Barry and the Named Executive Officers (at that time) were awarded options, time-based restricted stock and a target cash award for the 2019-2021 performance period. Payment of the cash award portion of the 2019-2021 grant was dependent upon achieving a pre-determined targeted performance over the three-year period based on the Company’s TSR as compared to the TSR of the S&P MidCap 400 Index (Materials Group). The threshold for the TSR target was relative performance at the 30th percentile of the comparison group, target was at the 50th percentile and maximum was at the 85th percentile. For the 2019-2021 period, Quaker Houghton’s TSR of 25% equated to a ranking in the 20th percentile of the comparison group resulting in no payout for this award year after several years of a maximum payout award for previous plan years.
Under the LTIP, stock options, restricted stock, long-term cash payments, and other types of awards can be made to participants. In March 2021 (similar to the award in 2020), the Company included PSUs as a component of its LTIP. These awards will be settled in common shares subject to the achievement of market-based and time-based vesting conditions. The number of fully vested shares that may ultimately be issued as settlement for each award may range from 0% up to 200% of the target award, subject to the achievement of the Company’s TSR relative to the performance of the S&P MidCap 400 Materials Group, over the three-year period from January 2021 to December 2023. The LTIP is intended to assist us in attracting, retaining and motivating employees, non-employee directors and consultants through the use of compensation that rewards long-term performance. The use of stock-based compensation in our long-term incentive plan balances the cash-based annual incentive bonus and cash portion of our long-term performance plan. The Committee believes that stock ownership by management and equity-based performance compensation arrangements are useful tools to align the interests of management with those of our shareholders. Under the LTIP, a three-year performance period is used. Generally, employees selected as award recipients hold key positions impacting the long-term success of Quaker Houghton and its subsidiaries. These awards are based on overlapping three-year performance periods. Therefore, a new program starts each year and a payment is made each year, if earned.
In the first quarter of 2018,2021, the Committee selected participants for the 2018-20202021-2023 performance period, including all of the Named Executive Officers.Officers (other than Mr. Tometich). The specific amount of each award
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was determined based on market data provided by WLTW,WTW, as well as the relative position and role of each executive officer within the Quaker Houghton organizational structure, influence on long-term results, past practice, performance factors independent of the terms and amounts of awards previously granted and policy targets for the mix of compensation between base salary, annual and long-term incentives. The Committee determined that the use of thea percentage of base salary as the basis for LTIP awards has at times caused internal inequity issues. To mitigate this dynamic, the Committee has begun to use market data related to a percentage of base salary with application of an absolute value in making awards determination for similarly valued positions of Senior Vice President, Chief Financial Officer and Treasurer;Treasurer for Ms. Hall and Mr. Hostetter; Senior Vice President, Global Specialty Businesses and Chief Strategy Officer and Executive Vice President, Chief Strategy Officer and Managing Director Global Specialty Businesses for Mr. Berquist (reflecting his promotion in September of 2021); Senior Vice President – North America;Managing Director, Americas for Mr. Bijlani; and Senior Vice President – Global Operations, EHS and Procurement; and Vice President and Global Leader – Metalworking, Can and Mining. The Committee agreed with the proposed recommendations for total LTIP valuation of each executive. The target awardProcurement for Mr. Barry was 220% of base salary while for the other Named Executive Officers the range was 46% to 51% of base salary.Platzer. The comparative data indicated that the CEO’s LTIP target awards percentage should be higher than the other Named Executive Officers because his leadership role in the global organization and level of responsibility and experience warrants the greater percentage opportunity.
The Committee agreed with the proposed recommendations for total LTIP valuation of each executive. The target award for Mr. Barry was 250% of base salary while for the other Named Executive Officers the range was 75% to 100% of base salary.
Under the LTIP, with respect to the 2018-20202021-2023 performance period, Mr. Barry received a long-term incentive grant consisting of a target cash awardPSU opportunity of $623,333, 4,1073,310 units, 3,310 shares of restricted stock and 20,25111,912 options. Mr. Tometich received a special grant upon his starting with the Company in October of 2021 consisting of a target PSU opportunity of 3,775 units and 3,775 shares of restricted stock. Ms. Hall and Mr. Berquist each received a target cash awardPSU opportunity of $76,667, 505462 units, 462 shares of restricted stock and 2,4901,661 options. Mr. PlatzerHostetter received a target cash awardPSU opportunity of $56,667, 373168 units and 252 shares of restricted stock. Mr. Hostetter received an additional grant upon his promotion to Senior Vice President and Chief Financial Officer, which included an additional PSU opportunity of 248 units, 162 shares of restricted stock and 1,8411,517 options. Mr. BenolielMessrs. Berquist, Bijlani and Platzer each received a target cash awardPSU opportunity of $170,000.367 units, 367 shares of restricted stock (367 RSUs for Mr. Platzer) and 1,319 options. Mr. Berquist received an additional grant in 2021 upon his promotion to Executive Vice President, Chief Strategy Officer and Managing Director Global Specialty Businesses, which included an additional 992 shares of restricted stock. Mr. Bijlani received an additional grant in 2021 reflecting a market adjustment for his position, which included an additional 431 shares of restricted stock.
The exercise price of options awarded under the LTIP is not less than 100% of the “fair market value” of a share of Quaker Houghton common stock on the date the option was granted, which is defined as the last sale price for a share of common stock as quoted on the NYSE for that date or, if not reported on the NYSE for that date, as quoted on the principal exchange on which the common stock is listed or traded, and if no such sales are made on that date, then on the next preceding date on which there are such sales.
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Comparative Stock Price Performance Graph
The following graph compares the cumulative total return (assuming reinvestment of dividends) from December 31, 20132016 to December 31, 20182021 for (i) Quaker’sQuaker Houghton’s common stock, (ii) the S&P SmallCap 600MidCap 400 Index (the “SmallCap“MidCap Index”), and (iii) the S&P 600400 Materials Group Index (the “Materials 400 Group Index”). The graph assumes the investment of $100 on December 31, 20132016 in each of Quaker’sQuaker Houghton’s common stock, the stocks comprising the SmallCapMidCap Index and the stocks comprisingMaterials Group Index, respectively. The comparison of the Materials 400 Group Index.Index was added in 2021 to provide a closer comparison to the MidCap Index comparison.
12/31/2013
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Quaker Chemical Corporation
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| $100
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| $121.21
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| $103.27
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| $173.53
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| $206.55
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| $245.59
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S&P SmallCap 600 Index
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| 100
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| 105.76
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| 103.67
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| 131.20
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| 148.56
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| 135.96
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S&P 600 Materials Group Index | 100 | 100.30 | 74.58 | 115.37 | 126.81 | 98.59 |
12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | |||||||||||||||||||||||||
Quaker Chemical Corporation
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| $100
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| $119.03
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| $141.53
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S&P MidCap 400 Index
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| 100
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| 116.24
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| 103.36
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| 130.44
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| 148.26
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| 184.97
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S&P 400 Materials Group Index
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| 100
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| 121.55
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| 96.79
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| 116.99
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| 129.45
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| 171.17
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Chief Executive Officer Compensation
The Committee generally uses the same factors in determining the compensation of the CEO as it does for the other executive officers. The Committee considers CEO compensation in the Peer Group and the benchmarking data provided by WLTWWTW as a starting point for determining competitive compensation. The Committee then, in consultation with the CEO, develops Company performance objectives for the CEO and periodically assesses the performance of the CEO. The Committee also evaluates how much the CEO should be compensated in relation to the other Company executives, but the Committee has not adopted any formula linking the level of CEO compensation to that of other executives.
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Mr. Barry
Based on Mr. Barry’s level of responsibility, experience, market data and the Company’s good performance, the Committee determined that Mr. Barry’s pay was in an appropriate range in absolute terms and as compared to the other executive officers. Mr. Barry’s base salary at the start of 20182021 was $825,000$945,000 and, based on Mr. Barry’s level of responsibility, experience, market data and the Company’s performance, he received a raise, effective March 11, 2018,April 1, 2021 to $850,000. Accordingly, the total base salary Mr. Barry received for 2018 was $845,192. Additionally, given$975,000. Given Mr. Barry’s tenure as CEO andretirement in recognition of the record Company results over the past several years and the significant shareholder value created over the same time period, including a Company-record average stock price in 2018,2021, he receiveddid not receive a raise effective in March of 2019, to $880,000. Further, the Committee determined this increase to be appropriate given the overall Company performance and that it and the awards discussed in the next paragraph keep Mr. Barry’s total direct compensation generally within comparable market data. for 2022.
For more information on the terms of Mr. Barry’s employment and compensation, please refer to the section below titled “Mr. Barry’s Employment Agreement.”
In 2018,2021, Mr. Barry’s total bonus potential under the GAIPAIP was 100% of his base salary at target and 200% of his base salary at maximum if all goals were met.maximum. For 2019,2022, Mr. Barry’s totalBarry is not entitled to any bonus potential undergiven his departure near the GAIP will be 100%end of his base salary at target and 200% of his base salary at maximum if all goals are met.2021. For the 2018-20202021-2023 performance period, Mr. Barry received a long-term incentive grant opportunity of $1,870,000$2,437,500 at target, which equates to 220%250% of his base salary. In addition,
Mr. Tometich
Mr. Tometich’s base salary as of December 31, 2021 was $800,000.
Mr. Tometich was not eligible to participate in the AIP for 2021. Instead, Mr. Tometich received a one-time cash payment of $550,000 in lieu of participation in the AIP in 2021. This cash payment is subject to clawback per the terms of his employment agreement and Mr. Tometich is obligated to repay this amount to the Company if he were to resign for any reason (other than for cause) or a change of control within two (2) years of commencing employment with the Company. For 2022, Mr. Tometich’s total bonus potential under the AIP is 100% of his base salary at target.
On October 13, 2021, Mr. Tometich was granted a one-time equity award with a cash value equal to $1,750,000 as an offset to the equity with his former employer that expired upon his joining the Company. This equity award was a mix of 50% time-based restricted stock and 50% PSUs. The time-based restricted stock will vest one year from the date of grant or, if earlier, upon Mr. Tometich’s involuntary termination of employment for other than cause. The PSUs will vest based on the performance achieved during the three-year performance period beginning on October 1, 2021 and ending September 30, 2024. Mr. Tometich is eligible to participate in the next grant cycle under the LTIP for the 2022-2024 performance period. Mr. Tometich’s award for this performance period will include a mix of time-based restricted stock, stock options, and target performance stock units as determined by the Compensation and Human Resources Committee with a value at target equal to $1,680,000.
Mr. Tometich also received a lump sum payment of $150,000 to cover relocation expenses and this payment was grossed-up by an additional $136,894 for federal, state and local income and employment taxes. If Mr. Tometich were to voluntarily leave the Company within one year of receipt of this amount, Mr. Tometich is obligated to return the financial relocation assistance to the Company. Mr. Tometich is eligible to be reimbursed up to $8,000 per calendar year for financial planning expenses.
Based on Mr. Tometich’s level of responsibility, experience, market data and the Company’s good performance, the Committee determined that these increasesMr. Tometich’s pay is in Mr. Barry’s incentive compensation were warranted due to his increased experiencean appropriate range in absolute terms and tenure in the position, and also dueas compared to the Company’s continued strong financialother executive officers.
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COMPENSATION DISCUSSION AND ANALYSIS | ||
For more information on the terms of Mr. Tometich’s employment and overall performance andcompensation, please refer to the consistently large increase in shareholder value over the past several years, including the record share price in 2018. The Committee determined these increases to be particularly appropriate because they keep Mr. Barry’s total direct compensation generally within comparable market data.section titled “Mr. Tometich’s Employment Agreement.”
To align the interests of executive officers with the interests of our shareholders, each of the Named Executive Officers must maintain a minimum ownership in Quaker Houghton stock. For the CEO, the minimum is five times his base salary and for our other Named Executive Officers the minimum is one andone-half times the executive’s base salary. The ownership levels must be attained by the end of five years after the later of the appointment of the person as an executive officer (including the Named Executive Officers) or the date the policy was modified. All of the Company’s Named Executive Officers as of June 30, 2021 were in compliance with the stock ownership policy as of June 30, 2018that date, when last reviewed by the Committee. The Committee reviews the ownership levels once per year typically in themid-year time frame. The Company has a hedging policy, which is described under “Employee, Officer and Director Hedging” earlier in this proxy statement.
U.S. Qualified Defined BenefitForeign Plan
Before 2006, most of Quaker’s U.S. employees were covered by anon-contributory qualified defined benefit retirement plan. The plan, when originally adopted, had a traditional final pay formula for calculating a participant’s benefit which had been modified over the years. In 2001, a new formula was adopted. It is an
accrual-based formula providing for annual credits of 3% to 7% of an employee’s salary depending on age and service, with interest on the balance accruing based on the average rate of interest on30-year treasury bonds (or 3.79%, if more). The pension benefit is currently calculated based on the benefit accrued under the old formula as of December 31, 2000, and then under the new formula commencing January 1, 2001. In 2005, the pension plan benefits were frozen for allnon-union participants, including all U.S. based executive officers, resulting in no further increase in pension benefits for compensation or service after such date. In 2013, the pension plan benefits were frozen for union participants. In November 2018, the Board resolved to terminate the plan. Quaker is in the process of taking various actions to effect the complete termination of the pension plan including applying to the Internal Revenue Service for a favorable determination letter on the termination, drafting plan communications to participants and selecting an annuity provider and/or an insurance company for any amounts for which annuities need to be purchased. Quaker currently expects to complete the termination process by 2020.
Foreign Plans
Mr. Platzer’s retirement benefits are provided under a defined benefit pension plan maintained by the Company’s Netherlands operating subsidiary.
The salary ceiling for the calculation of Mr. Platzer’s retirement benefits remains at E.U. Euros 250,000. Since 2004, the Netherlands plan has had a career average pay formula that provides for a target retirement benefit of 80% of career average salary assuming employment of 40 years. In 2004, the formula was modified freezing salary levels at then current levels for pension purposes, with annual increases aligned with the wage index. To the extent the increase in inflation exceeds 3%, half of the excess will be added to the assumed rate of annual increases with a maximum of 4%. Prior to 2004, the plan was a final salary plan and provided 70% of final salary assuming employment of 40 years. For pension purposes, pensionable salary is defined as 14.02 times monthly salary. Pension liabilities under this plan are funded through an insurance policy.
Nonqualified Supplemental Retirement Income Program
We have also providepreviously offered supplemental retirement income to certain of our U.S. based executive officers. Executive officers arewere designated by the Committee to participate in the Supplemental Retirement Income Program (“SRIP”). Currently, the SRIP is no longer available for new participants.
At this time, Messrs.Mr. Barry and Benoliel arewas the only active executive officers participatingofficer to participate in the SRIP. It provides an annual benefit of 50% of the participant’spre-tax “average annual compensation,” reduced by three offsets and further reduced if the participant completes fewer than 30 years of service. This benefit is generally payable over the participant’s lifetime, starting within seven months after the participant’s retirement (on account of disability or after attaining age 62), or starting after the participant’s 65th birthday (if the participant’s employment terminates after five years of participation but before retirement). Other benefit forms are 36 monthly installments (if payments start after the participant attains age 65) or monthly payments over the lifetime of the participant with a lump sum payable to his surviving beneficiary. However, benefits are payable in a lump sum if the present value of the participant’s benefit does not exceed a Code limit ($18,50019,500 for distributions in 2018)2021) or if the participant dies or a change in control occurs.
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Average annual compensation is defined for this program as the average of the participant’s annual base compensation and annual bonuses paid in the three calendar years (of the last ten) in which such amounts were the highest. The offsets are the participant’s annual Social Security benefit (based on certain assumptions), the annual benefit payable to the participant over his lifetime under the qualified defined benefit retirement plan discussed above, and the aggregate amount of the qualifiednon-elective contributions made on the
participant’s behalf under the Quaker Chemical CorporationCompany’s Retirement Savings Plan (plus assumed earnings) expressed as an annual benefit payable over the participant’s lifetime. The service reduction is equal to 3.333% for each year (or partial year) of service fewer than 30 completed by the participant.
For the twolast remaining active participantsparticipant in the SRIP their(Mr. Barry), his accrued benefit is the greatest of:
1. | the benefit payable under the formula set forth in the SRIP as in effect prior to January 1, 2005, based on the participant’s salary plus bonus and years of employment when he attained age 55; or |
2. | the sum of the benefit the participant would have accrued as of December 31, 2006, under the formula set forth in the SRIP as in effect prior to January 1, 2005, based on the participant’s salary plus bonus and years of employment at December 31, 2006, plus the benefit the participant accrues under the new formula, described above, but disregarding service completed before 2007; or |
3. | the amount determined under the new formula described above. |
It is anticipated that from December 20182019 onwards the new formula will yield the highest benefit.
Mr. Barry is entitled to receive additional service and age credit (18 months, in the case of termination other than on account of death, “disability” or by us for “cause” or a “covered termination,” as the latter term is defined in his Change in Control Agreement and 24 months in the event of a “covered termination,” as such term is defined in his Change in Control Agreement) for all purposes under the SRIP, including for purposes of determining Mr. Barry’s eligibility for the “age 55” formula described in 1, above.
Mr. Barry’s SRIP benefit will commence on January 1, 2022 in the form of a joint and survivor annuity. The present value of Mr. Barry’s SRIP benefit commencing on January 1, 2022 in the form of a joint and survivor annuity is $11,143,375.
Severance and Change in Control Benefits
The Committee believes that appropriate severance and change in control benefits are an important part of the total compensation benefits package because they enhance our ability to compete for talent and foster stability in our management. Quaker Houghton has entered into employment agreements with each of our Named Executive Officers, pursuant to which severance benefits are payable to each of them and has also entered into change in control agreements with each of them pursuant to which the executive officers will receive certain benefits if they are terminated within a specified period following (or with respect to Mr. Platzer, a specified period before) a change in control of Quaker.Quaker Houghton. In determining amounts payable, the Committee seeks to provide severance benefits sufficient to allow our executives time to find a comparable position elsewhere and change in control benefits sufficient to induce our executives to support a change in control transaction fully and remain with us despite any risk of termination after the transaction.
Mr. Barry’s Employment Agreement
Mr. Barry was employed pursuant to an employment agreement that automatically renewed for one-year terms unless either Quaker Houghton or Mr. Barry gave 90 days’ prior notice of non-renewal. In accordance
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COMPENSATION DISCUSSION AND ANALYSIS | ||
with the terms of the employment agreement, the Board reviewed and adjusted Mr. Barry’s annual base salary each year. Mr. Barry was eligible to participate in our AIP and LTIP, as well as certain other benefit programs as discussed earlier in this proxy statement.
Because Mr. Barry voluntarily retired in 2021 as previously announced, the Company will not be obligated to make any further payments to him other than for amounts accrued as of the date of his retirement and as provided for in Mr. Barry’s transition agreement, as described below.
Pursuant to the Transition Agreement between Mr. Barry and the Company, dated as of April 21, 2021 (the “Transition Agreement”), Mr. Barry agreed to retire from his role as President and CEO of the Company on December 31, 2021. Following his retirement and effective January 1, 2022, Mr. Barry agreed to continue to serve on the Board as a non-executive director and will retain the role of Chair of the Board, in the capacity as non-executive Chair. In connection with the appointment of Mr. Tometich as President and CEO effective December 1, 2021, Mr. Barry, with the agreement of the Board, decided to advance the date of his retirement from his role as CEO and President from December 31, 2021 to November 30, 2021 to help facilitate a smooth transition. Following his retirement from his role as CEO and President, Mr. Barry agreed to remain with the Company, either as an employee or a consultant, through December 31, 2021 to assist with the transition. Mr. Barry continued to receive his then current level of compensation and benefits through December 31, 2021 and will also receive the full amount of his AIP bonus earned with respect to calendar year 2021.
Beginning on January 1, 2022 and continuing for as long as Mr. Barry serves as a director, the Company will compensate Mr. Barry for his services as a director on the same basis as it compensates the non-management members of the Board. The Company will pay him additional compensation of $100,000 per annum (or such greater amount as may be approved by the Board) for his services as non-executive Chair. This compensation will be paid on the same basis as the compensation payable to the Lead Director (if there is one, otherwise on the same basis as those directors serving as chairs of Board committees), pro-rated in the event of a partial year. However, Mr. Barry’s compensation for serving as non-executive Chair will be paid in monthly installments. As a non-executive director, Mr. Barry will not be considered to have had a termination of service for purposes of the Company’s long-term performance incentive plan and will continue to vest in his outstanding equity awards in accordance with their existing terms, but will no longer be eligible for the Company’s benefit plans, except for certain medical and disability coverage, and will not be entitled to any severance.
The Transition Agreement further provides that Mr. Barry will continue to comply with the non-compete and non-solicitation restrictive covenants of his prior employment agreement for as long as he is a member of the Board, and for a period of 18 months thereafter. Mr. Barry will also be subject to ongoing confidentiality restrictions.
Mr. Tometich’s Employment Agreement
Mr. Tometich is employed pursuant to an employment agreement that automatically renews forone-year terms unless eitherpermits Quaker Houghton or Mr. Barry givesTometich to terminate Mr. Tometich’s employment on 90 days’ priorwritten notice, ofnon-renewal.with or without cause or reason. In accordance with the terms of the employment agreement, the CommitteeBoard reviews and adjusts Mr. Barry’s annualTometich’s base salary each year. The total base salaryfrom time to time. Mr. Barry received for 2018 was $845,192. Mr. BarryTometich is eligible to participate in our GAIPAIP and LTIP, as well as certain other benefit programs as discussed earlier in this proxy statement.
Mr. Barry’sTometich’s employment agreement provides that upon the termination of his employment for any reason except for death or “disability,” orother than (i) by usQuaker Houghton for “cause,” or a “covered termination,” as this latter term is defined in(ii) his Change in Control Agreement,death, Quaker Houghton will pay him 18 monthly severance payments that, in the aggregate, are equal to 150% of his base salary at the time of termination plus a bonus equal to the average annual bonus paid to him under Quaker’s annual incentive compensation in the applicable three-year period, excluding from the average any year in which no amounts were paid. In general, this three-year period would be expected to be the year of termination and the two preceding years (if Mr. Barry received a bonus in the year of his termination), or otherwise, the three calendar years prior to his termination of employment.
In addition to the payments described above, Mr. Barry is entitled to 18 months of medical and dental coverage at a level equal to the coverage provided before his date of termination of employment and the severance allowance will be taken into account in determining his retirement benefit under the SRIP. In addition, an additional 18 months of service and age will be credited in determining this retirement benefit. See the discussion under the caption “Potential Payments Upon Termination or Change in Control” in this proxy statement. Mr. Barry’s severance payments are contingent upon signing a form of release satisfactory to Quaker.
“Cause” is defined under Mr. Barry’s employment agreement as willful and material breach of the terms of his employment agreement (after having received notice thereof and a reasonable opportunity to cure or correct) or dishonesty, fraud, willful malfeasance, gross negligence or other gross misconduct, in each case relating to the performance of Mr. Barry’s duties to Quaker that is materially injurious to the Company, or a conviction of or guilty plea to a felony. A “covered termination” is termination of Mr. Barry’s employment within two years following a change in control by the Company without cause or by Mr. Barry for “good reason” (as defined in the change of control agreement between the Company and Mr. Barry).
In the case of termination of employment because of disability, Mr. Barry will be entitled to at least 50% of applicable pay during the period that benefits are payable under our long-term disability plan. In the case of termination of employment because of death, Mr. Barry’s beneficiary would receive in a lump sum the higher of two times his annual base salary for the year in which his death occurred or the death benefit (as a multiple of base salary) to which any other executive officer would be entitled. The Company currently has a program in which all Named Executive Officers participate entitling each to a death benefit equal to 100% of base salary in the year of death and 50% of base salary in each of the four years thereafter. Mr. Barry would be entitled to this death benefit as it provides a greater benefit than that provided under his employment agreement. See the discussion under the caption “Potential Payments Upon Termination or Change in Control” in this proxy statement.
In the case of a termination (other than for death, disability, by us for “cause,” or by Mr. Barry other than for “good reason”) within two years following a change in control, Mr. Barry would, instead of the payments described above, be entitled to payment equal to two times the sum of his highest annualized base salary during his employment plus an amount equal to the greater of (i) the average of the annual amounts paid to him under all applicable annual incentive plans during the applicable three calendar-year period described in Mr. Barry’s change in control agreement, excluding from the average any year in which no amounts were paid, or (ii) the target bonus which would have otherwise been payable to Mr. Barry for the calendar year in which the change in control transaction occurred. In general, this three-year period would be expected to be the year of termination and the prior two years (if Mr. Barry received a bonus in the year of his termination) or, otherwise, the three calendar years prior to his termination of employment.
In addition, Mr. Barry would be entitled to receive (i) his earned but unpaid base salary through the date of termination at the current rate, or if higher, at the rate in effect at any time during the90-day period preceding the change in control; (ii) any unpaid bonus or annual incentive payable to him in respect of the calendar year ending prior to termination; (iii) the pro rata portion of any and all unpaid bonuses and annual incentive awards for the calendar year in which the termination occurs which would have been payable had the target level of performance been achieved for the calendar year; and (iv) the pro rata portion of any and all awards under the LTIP for the performance period(s) in which the termination occurs, which would have been payable had the target level of performance been achieved for the performance period. In addition, Mr. Barry’s severance allowance will be taken into account in determining his retirement benefit under the SRIP and an additional 24 months of service and age will be credited in determining this retirement benefit. Mr. Barry is also entitled toone-year outplacement services and participation in our medical, dental and life insurance programs as if stillTometich
| COMPENSATION DISCUSSION AND ANALYSIS | |
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severance consisting of 18 months of salary and bonus at target paid biweekly over an eighteen month period, provided Mr. Tometich signs a release within 45 days of receipt or separation of service. Continuation of all medical and dental coverage will also be available for this period as well as reasonable outplacement assistance for one year following the separation from service. Mr. Tometich’s employment agreement contains a confidentiality and an 18-month non-competition and non-solicitation provision, in the event of termination for any reason.
In case of termination of employment because of death, Quaker Houghton will not be obligated to make any further payments under the employment agreement except for amounts accrued as of the date of Mr. Tometich’s death, except that Quaker Houghton will pay a death benefit equal to 100% of base salary in effect on the day before death and 50% of base salary in each of the four years thereafter.
“Cause” is defined under Mr. Tometich’s employment agreement as willful and material breach of the terms of his employment agreement (after having received notice thereof and a reasonable opportunity to cure or correct) or Quaker Houghton’s policies, or dishonesty, fraud, willful malfeasance, gross negligence or other gross misconduct, in each case relating to the performance of Mr. Tometich’s duties to Quaker Houghton that is materially injurious to the Company, or a conviction of or guilty plea to a felony.
Mr. Tometich’s change in control agreement provides that Mr. Tometich is entitled, if terminated (other than for disability, death, by us for “cause,” or by the executive officer other than for “good reason”) within two years following a change in control, to severance in an amount equal to two times the sum of highest annualized base salary plus an amount equal to the average of the total annual amounts paid to Mr. Tometich under all applicable annual incentive compensation plans during the applicable three calendar-year period described in the change in control agreement, excluding from the average any year in which no amounts were paid. In general, this three-year period would be expected to be the year of termination and the prior two years (if Mr. Tometich has received a bonus in the year of his termination of employment) or, otherwise, the three calendar years prior to the year of his termination of employment.
In addition, Mr. Tometich would be entitled to receive (i) earned but unpaid base salary through the termination at the rate in effect on the date of termination or, if higher, at the rate in effect at any time during the 90-day period preceding the change in control; (ii) any unpaid bonus or annual incentive payable to the executive in respect of the calendar year ending prior to the termination; (iii) the pro rata portion of any and all unpaid bonuses and annual incentive awards for the calendar year in which the termination occurs based on mid/target performance; and (iv) the pro rata portion of any and all awards under the Company’s LTIP for the performance period(s) in which the termination occurs, which would have been payable had the target level performance been achieved for the performance period. Mr. Tometich would also be entitled to one year of outplacement services and participation in the Company’s medical, dental and life insurance programs as if still employed for a period of two years.24 months. In addition, the benefits and payments will be discontinued if Mr. Tometich violates the confidentiality provisions of his change in control agreement (at any time) or the non-compete provisions of the change in control agreement (during employment or the one-year period thereafter). To the extent the severance allowance, together with any other payments contingent upon a change in control, exceed the limits under Code section 280G (generally, three times Mr. Barry’sthe individual’s average annual compensation for the prior five years), the severance allowance will be reduced to the extent necessary to avoid the disallowance of a deduction under Code section 280G or imposition of the excise tax under Code section 4999 (assuming reduction of the severance allowance is the least economically detrimental to him)the executive). The Committee believes that providing benefits for Mr. Barry’sTometich’s termination within two years following a change in control is fair because he has the broadest responsibility and accountability in ensuring the success of our business and would be crucial to retain in
2022 Proxy Statement | 47 |
COMPENSATION DISCUSSION AND ANALYSIS | ||
any change in control. This is consistent with our philosophy of tying compensation to level of responsibility and influence over the Company’s results and performance. See the discussion under the caption “Potential Payments Upon Termination or Change in Control” in this proxy statement. These benefits will be paid or provided only if Mr. BarryTometich signs a general release of claims unless prohibited by local law.
Mr. Barry’s employment agreement contains a confidentiality and an18-monthnon-competition provision, in the event of termination for any reason. In addition, Mr. Barry’s change in control agreement contains a confidentiality and a24-monthnon-competition provision, in the event of termination for any reason. If a court were to determine that he breached these provisions, the Company’s obligations to make payments under the agreements would terminate.
Other Named Executive Officers
Messrs. Benoliel,Hostetter, Berquist, Bijlani and Platzer and Berquist and Ms. Hall are each entitled to severance under their respective employment agreements if the Company terminates their employment (other than in the case of termination for “cause” (for those agreements where “cause” is defined), disability, death or retirement) equal to 12 months base salary at their then current rate of salary. In addition, Mr. Platzer is entitled to severance prescribed by law in certain foreign jurisdictions which, if greater, would be in lieu of any severance due under any agreements with Quaker.Quaker Houghton. “Cause” is defined in Mr. Platzer’s employment agreement as: (i) willful and continued failure (following written notice) of the executive to perform his duties under the employment agreement; or (ii) the willful engaging by the executive in a continued course of misconduct which is materially injurious to Quaker Houghton, monetarily or otherwise. In the case of Messrs. Benoliel andHostetter, Berquist and Ms. Hall,Bijlani, “cause” generally means: (i) willful and material breach of their memorandum of employment; (ii) dishonesty, fraud, willful malfeasance, gross negligence or other gross misconduct, in each case relating to the performance of duties which is materially injurious to Quaker;Quaker Houghton; or (iii) conviction of or plea of guilty or nolo contendere to a felony. Messrs. Benoliel,Hostetter, Berquist, Bijlani and Platzer and Berquist and Ms. Hall are also entitled to reasonable outplacement assistance under their respective employment agreements. Messrs. Benoliel’s,Hostetter’s, Berquist’s, Bijlani’s and Platzer’s and Berquist’s and Ms. Hall’s severance payments are contingent upon signing a form of release satisfactory to Quaker.Quaker Houghton. None of the Named Executive Officers are entitled to severance under their employment agreements if they terminate their employment voluntarily, even if for good reason. Under their respective employment agreements, Messrs. Benoliel andHostetter, Berquist and Ms. HallBijlani would receive any severance payments in semi-monthly installments and Mr. Platzer would receive any severance payments in a lump sum. See also the discussion under the caption “Termination Other than for Cause, Disability, Death or Retirement” in this proxy statement.
Following mutually agreeable discussions with Mr. Benoliel during 2017, it was decided that as part of the Company’s integration planning for its combination withQuaker Houghton Mr. Benoliel’s current position would be restructured. After subsequent discussions, Mr. Benoliel left the Company effective March 1, 2019. Mr. Benoliel will receive severance and other benefits that will be substantially similar to those he would have received in connection with a termination of employment following a change in control of the Company pursuant to his existing change in control agreement with the Company.
Quaker has entered into change in control agreements with each of its Named Executive Officers. Under these agreements (Mr.(Messrs. Barry’s isand Tometich’s are described above), the officers, other than Mr.Messrs. Barry and Tometich are entitled, if terminated (other than for disability, death, by us for “cause,” or by the executive officer other than for “good reason”) within two years following (or also within six months before, with respect to Mr. Platzer) a change in control, to severance in an amount equal to 1.5 times the sum of highest annualized base salary plus an amount equal to the average of the total annual amounts paid to the executive under all applicable annual incentive compensation plans during the applicable three calendar-year period described in the change in control agreements, excluding from the average any year in which no amounts were paid. In general, this three-year period would be expected to be the year of termination and the prior two years (for Messrs. Benoliel andHostetter, Berquist and Ms. Hall,Bijlani, if the executive received a bonus in the year of the executive’s termination of employment) or, otherwise, the three calendar years prior to the year of his or hersuch executive officer’s termination of employment. See the discussion under the caption “Potential Payments Upon Termination or Change in Control” in this proxy statement. In addition, these executive officers are entitled to receive (i) earned but unpaid base salary through the termination at the rate in effect on the date of termination or, if higher, at the rate in effect at any time during the90-day period preceding the change in control; (ii) any unpaid bonus or annual incentive payable to the executive in respect of the calendar year ending prior to the termination; (iii) the pro rata portion of any and all unpaid bonuses and annual incentive awards for the calendar year in which the termination occurs based on target performance for Messrs. Benoliel, PlatzerHostetter, Berquist, Bijlani and Berquist and for Ms. Hall;Platzer; and (iv) the pro rata portion of any and all
48 | 2022 Proxy Statement | Quaker Houghton |
COMPENSATION DISCUSSION AND ANALYSIS | ||
awards under the Company’s LTIP for the performance period(s) in which the termination occurs, which would have been payable had the target level performance been achieved for the performance period.
In addition to the amounts described above, our other Named Executive Officers are also entitled toone-year outplacement services and participation in our medical, dental and life insurance programs as if still employed for a period of 18 months. Mr. Platzer is also entitled to receive additional payments as prescribed by the law in the foreign jurisdiction in which he is located. These benefits will be paid or provided only if the executive officer signs a general release of claims unless prohibited by local law. In addition, the benefits and payments will be discontinued if the executive officer violates the confidentiality provisions of his or hersuch executive officer’s respective change in control agreement (at any time) or thenon-compete provisions of the change in control agreement (during employment or theone-year period thereafter). To the extent the severance allowance, together with any other payments contingent upon a change in control, exceed the limits under Code section 280G (generally, three times the individual’s average annual compensation for the prior five years), the severance allowance will be reduced to the extent necessary to avoid the disallowance of a deduction under Code section 280G or imposition of the excise tax under Code section 4999 (assuming reduction of the severance allowance is the least economically detrimental to the executive).
In the change in control agreements “cause” generally means: (i) the willful and material breach of the employment agreement between the executive and Quaker Houghton (after having received notice and the reasonable opportunity to correct); (ii) dishonesty, fraud, willful malfeasance, gross negligence or other gross misconduct, in each case relating to the performance of the executive’s employment with Quaker Houghton which is materially injurious to Quaker;Quaker Houghton; or (iii) conviction of or plea of guilty to a felony. “Good reason” includes, other than by reason of executive’s death or disability: (i) any reduction in the executive’s base salary from that provided immediately before the “covered termination” or, if higher, immediately before a change in control; (ii) any reduction in the executive’s bonus opportunity (including cash or noncash incentives) or increase in the goals or standards required to accrue that opportunity, as compared to the opportunity and goals or standards in effect immediately before the change in control; (iii) a material adverse change in the nature or scope of the executive’s authorities, powers, functions or duties from those in effect immediately before the change in control; (iv) a reduction in the executive’s benefits from those provided immediately before the change in control, disregarding any reduction under a plan or program covering employees generally that applies to all
employees covered by the plan or program; or (v) the executive being required to accept a primary employment location which is more than 25 miles from the location at which he or she was primarily employed during the90-day period prior to a change in control.
In addition to the payments and benefits discussed above, the executive officers are entitled to the payments and benefits that are available to all employees on termination of employment, including vested benefits under the Company’s qualified defined benefit retirement plan and 401(k) plan, short-term and long-term disability benefits (in the event of disability) and life insurance benefits (in the case of death).
Perquisites and Other Benefits
As a general matter, the Company does not provide perquisites to its executive officers, other than an allowance for financial planning services. In Asia and Europe, consistent with regional compensation practices, cars are provided to mid and upper level managers. For more details on these perquisites, please refer to footnote 4 to the Summary Compensation Table.
COMPENSATION COMMITTEE REPORT | ||||
The Compensation/Management DevelopmentCompensation and Human Resources Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis section included above with management and, based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and in Quaker’sQuaker Houghton’s Annual Report on Form10-K for the fiscal year ended December 31, 20182021 for filing with the SEC.
Compensation/Management DevelopmentCompensation and Human Resources Committee
Robert H. Rock, Chair
Donald R. Caldwell
Jeffry D. Frisby
William H. Osborne
Ramaswami Seshasayee
COMPENSATION TABLES | ||||
The table below summarizes the total compensation awarded to, paid to, or earned by each of our executive officers who are named in the table. In this proxy statement, we sometimes refer to this group of individuals as our “Named Executive Officers.”
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Name and Principal Position (a) | Year (b) | Salary ($)(c) | Bonus ($)(d) | Stock Awards(1) ($)(e) | Option Awards(1) ($)(f) | Non-Equity Incentive Plan Compensation(2) ($)(g) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings(3) ($)(h) | All Other Compensation(4) ($)(i) | Total ($)(j) | |||||||||||||||||||||||
Michael F. Barry |
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2021 2020 2019 |
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967,154 858,035 888,635 |
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0 0 0 |
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1,639,774 1,796,299 670,959 |
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812,518 771,662 670,970 |
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897,000 2,239,750 1,853,475 |
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37,000 1,333,337 3,047,000 |
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46,976 46,331 61,043 |
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4,400,422 7,045,414 7,192,082 |
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Andrew E. Tometich |
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2021 |
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163,077 |
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286,494 |
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2,005,432 |
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0 |
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0 |
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0 |
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1,567 |
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2,456,570 |
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Mary Dean Hall |
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2021 2020 2019 |
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146,824 397,136 397,439 |
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0 0 0 |
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228,874 232,530 236,563 |
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113,297 100,005 86,653 |
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77,394 412,942 309,910 |
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0 0 0 |
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19,452 22,353 19,475 |
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585,841 1,164,966 1,050,040 |
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Shane W. Hostetter |
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2021 |
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353,200 |
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20,000 |
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204,739 |
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100,956 |
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215,280 |
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0 |
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20,228 |
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914,403 |
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Joseph A. Berquist |
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2021 2020 2019 |
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451,668 398,628 377,434 |
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0 0 0 |
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411,738 201,674 379,864 |
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89,969 86,662 79,973 |
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311,350 370,690 298,539 |
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0 0 13,000 |
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25,599 24,029 20,018 |
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1,290,324 1,081,683 1,168,828 |
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Jeewat Bijlani |
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2021 2020 |
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431,286 398,628 |
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0 0 |
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281,709 201,674 |
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89,969 86,662 |
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226,270 373,002 |
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0 0 |
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28,443 20,909 |
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1,057,677 1,080,875 |
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Wilbert Platzer |
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2021 2020 2019 |
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374,812 374,739 344,506 |
(5)
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0 0 0 |
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181,812 201,674 229,902 |
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89,969 86,662 79,973 |
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143,920 325,965 256,575 |
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0 622,948 512,119 |
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37,828 40,390 48,172 |
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828,341 1,652,378 1,471,247 |
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(1) | The amounts in columns (e) and (f) reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for |
2022 Proxy Statement | 51 |
COMPENSATION TABLES | ||
under the Company’s |
(2) | The amounts in column (g) are incentive cash bonuses earned in |
(3) | The amounts shown in column (h) reflect the actuarial increase or decrease in the present value of the Named Executive Officer’s benefits under all pension plans established by the Company determined by using the interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. See Note |
(4) | Includes employer contributions during 2021 by the Company to the U.S. based Named Executive Officers pursuant to the Company’s Retirement Savings Plan: |
Includes the costs associated with the use of a Company-provided automobile consistent with the regional compensation practices in Europe for Mr. Platzer in the amount of |
Includes dividends paid in 2021 on time-based restricted stock awards: |
Includes life insurance credit |
Includes the costs associated with financial planning |
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(5) |
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Salary includes a representation fee and a holiday allowance: |
COMPENSATION TABLES | ||
Provided below is information on grants made in 20182021 to the Named Executive Officers under the Company’s LTIP. In February 2018,March 2021, awards for the 2018-20202021-2023 period were made to the Named Executive Officers (other than Mr. Tometich) consisting of options vesting in three approximately equal installments over the three-year period, time-based restricted stock or units vesting after the three-year period and a cash bonusPSU opportunity. See discussion under the heading “Long-Term Incentives” under the Compensation Discussion and Analysis section in this proxy statement.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
| Estimated Future Payouts Under Equity Incentive Plan Awards
| All Other Stock Awards: Number of Shares of | All Other Option Awards: Number of Securities | Exercise or Base Price | Grant Date Fair Value of Stock and | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(8)
| Estimated Future Payouts Under Equity Incentive Plan Awards(1)
| All Other Stock Awards: Number of Shares of | All Other Option Awards: Number of Securities | Exercise or Base Price | Grant Date Fair Value of Stock and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name (a)
| Grant Date (b)
| Threshold ($)(c)
| Target ($)(d)
| Maximum ($)(e)
| Threshold (#)(f)
| Target (#)(g)
| Maximum (#)(h)
| Stock or Units(2) (#)(i)
| Underlying Options(3) (#)(j)
| of Option Awards(4) ($/Sh)(k)
| Option Awards(5) ($)(l)
| Grant Date (b)
| Target ($)(d)
| Maximum ($)(e)
| Threshold (#)(f)
| Target (#)(g)
| Maximum (#)(h)
| Stock or Units(2) (#)(i)
| Underlying Options(3) (#)(j)
| of Option Awards(4) ($/Sh)(k)
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Michael F. Barry
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2/26/18
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249,333
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623,333
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1,246,666
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0
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0
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0
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4,107
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20,251
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151.75
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1,246,604
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| 3/15/21 | 975,000 | 1,950,000 | 1,324 | 3,310 | 6,620 | 3,310 | 11,912 | 245.49 | 2,452,292 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Andrew E. Tometich(6) | 10/13/21 | 0 | 0 | 1,510 | 3,775 | 7,550 | 3,775 | 0 | 231.78 | 2,005,431 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mary Dean Hall
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2/26/18
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30,667
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76,667
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153,334
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0
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0
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0
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505
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2,490
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151.75
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153,281
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| 3/15/21 | 284,204 | 568,408 | 185 | 462 | 924 | 462 | 1,661 | 245.49 | 342,172 | |||||||||||||||||||||||||||||||||||||||||||||||||||
D. Jeffry Benoliel
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2/26/18
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68,000
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170,000
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340,000
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0
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0
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0
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0
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0
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0
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0
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shane W. Hostetter(7) | | 3/15/21 4/19/21 | 234,000 | 468,000 | | 67 99 | | 168 248 | | 336 496 | | 252 162 | | 0 1,517 | | 245.49 240.20 | | 103,848 201,846 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph A. Berquist | | 3/15/21 10/13/21 | 325,000 | 650,000 | | 147 0 | | 367 0 | | 734 0 | | 367 992 | | 1,319 0 | | 245.49 231.78 | | 271,781 229,926 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeewat Bijlani | | 3/15/21 10/13/21 | 282,837 | 565,674 | | 147 0 | | 367 0 | | 734 0 | | 367 431 | | 1,319 0 | | 245.49 231.78 | | 271,781 99,897 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wilbert Platzer
|
|
2/26/18
|
|
|
22,667
|
|
|
56,667
|
|
|
113,334
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
373
|
|
|
1,841
|
|
|
151.75
|
|
|
113,272
|
| 3/15/21 | 156,922 | 313,843 | 147 | 367 | 734 | 367 | 1,319 | 245.49 | 271,781 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph A. Berquist
|
|
2/26/18
|
|
|
30,667
|
|
|
76,667
|
|
|
153,334
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
505
|
|
|
2,490
|
|
|
151.75
|
|
|
153,281
|
|
(1) | The amounts shown in column |
(2) | The amounts shown in column (i) for awards granted on |
(3) | The amounts shown in column (j) reflect the combination of incentive andnon-qualified options which were issued under the LTIP. These options vestone-third |
(4) | With respect to the awards granted |
2022 Proxy Statement | 53 |
COMPENSATION TABLES | ||
(5) | The amounts included in column (l) represent the full grant date fair value of the awards computed in accordance with FASB ASC Topic |
(6) | Reflects grant made upon appointment of Mr. Tometich as CEO. |
(7) | Reflects grant made upon appointment of Mr. Hostetter as CFO. |
(8) | These columns show the potential payment range under the 2021 Annual Cash Incentive Plan. For additional information, see “Compensation Discussion and Analysis – Annual Cash Incentive Bonus.” The cash incentive payment range is generally from 0% to 200% of target. There is no threshold or equivalent for these awards. The actual amount paid out under the 2021 AIP is paid out in early 2022 and presented in the Summary Compensation Table in the column entitled “Non-Equity Incentive Compensation.” |
COMPENSATION TABLES | ||||
Outstanding Equity Awards at FiscalYear-End
Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name (a) | Number of Securities Underlying Unexercised Options(1) (#) Exercisable (b) | Number of Securities Underlying Unexercised Options(1) (#) Unexercisable (c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(d) | Option Exercise Price ($)(e) | Option Expiration Date (f) | Number of Shares or Units of Stock That Have Not Vested (#)(g) | Market Value of Shares or Units of Stock That Have Not Vested(2) ($)(h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(j) | Number of Securities Underlying Unexercised Options(1) (#) Exercisable (b) | Number of (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(d) | Option Exercise Price ($)(e) | Option Expiration Date (f) | Number of Shares or Units of Stock That Have Not Vested (#)(g) | Market Value of Shares or Units of Stock That Have Not Vested(2) ($)(h) | Equity Incentive Plan Awards: Number of Unearned Shares, Units Other Rights That Have Not Vested(8) (#)(i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, or Other Rights That Have Not Vested(8) ($)(j) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael F. Barry | 11,289 | 11,289 | 0 | 72.12 | 2/23/2023 | 6,932 | (3) | 1,231,886 | 0 | 0 | 6,750 | 0 | 0 | 151.75 | 2/26/2025 | 4,331 | (3) | 999,508 | 5,647 | 2,324,079 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7,081 | 14,160 | 0 | 134.60 | 2/27/2024 | 4,086 | (4) | 726,123 | 7,064 | 7,064 | 0 | 154.92 | 2/25/2026 | 5,647 | (5) | 1,303,215 | 3,310 | 330,881 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0
|
|
| 20,251
|
|
| 0
|
|
| 151.75
|
|
| 2/26/2025
|
|
| 4,107
| (5)
|
| 729,855
|
| 8,213 | 16,425 | 0 | 136.64 | 3/30/2027 | 3,310 | (6) | 763,882 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 11,912 | 0 | 245.49 | 3/15/2028 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Andrew E. Tometich | 0 | 0 | 0 | 0 | 0 | 3,775 | (7) | 871,195 | 3,775 | 452,185 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mary Dean Hall | 2,559 | 1,279 | 0 | 72.12 | 2/23/2023 | 879 | (6) | 156,207 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 305 | 125,354 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
39 | 3,849 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shane W. Hostetter | 0 | 1,517 | 0 | 240.20 | 3/15/2028 | 336 | (3) | 77,542 | 292 | 120,176 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
815 | 1,630 | 0 | 134.60 | 2/27/2024 | 785 | (3) | 139,502 | 242 | (4) | 55,849 | 168 | 16,794 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 2,490 | 0 | 151.75 | 2/26/2025 | 470 | (4) | 83,524 | 439 | (5) | 101,312 | 248 | 24,791 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 505
| (5)
|
| 89,744
|
| 252 | (6) | 58,157 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
162 | (6) | 37,386 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. Jeffry Benoliel | 0 | 1,213 | 0 | 72.12 | 2/23/2023 | 745 | (3) | 132,394 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph A. Berquist | 0 | 842 | 0 | 154.92 | 2/25/2026 | 516 | (3) | 119,082 | 634 | 260,929 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 1,844 | 0 | 136.64 | 3/30/2027 | 1,936 | (4) | 446,790 | 367 | 36,687 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 1,319 | 0 | 245.49 | 3/15/2028 | 634 | (5) | 146,315 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
367 | (6) | 84,696 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
992 | (6) | 228,934 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeewat Bijlani | 2,421 | 0 | 0 | 154.92 | 2/26/2025 | 516 | (3) | 119,082 | 634 | 260,929 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,684 | 842 | 0 | 154.92 | 2/25/2026 | 1,290 | (4) | 297,706 | 367 | 36,687 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
923 | 1,844 | 0 | 136.64 | 3/30/2027 | 634 | (5) | 146,315 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 1,319 | 0 | 245.49 | 3/15/2028 | 367 | (6) | 84,696 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 1,458 | 0 | 134.60 | 2/27/2024 | 421 | (4) | 74,816 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
431 | (6) | 99,466 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wilbert Platzer | 0 | 1,213 | 0 | 72.12 | 2/23/2023 | 745 | (3) | 132,394 | 0 | 0 | 0 | 842 | 0 | 154.92 | 2/25/2026 | 516 | (3) | 119,082 | 634 | 260,929 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
730 | 1,458 | 0 | 134.60 | 2/27/2024 | 421 | (4) | 74,816 | 0 | 1,844 | 0 | 136.64 | 3/30/2027 | 968 | (4) | 223,395 | 367 | 36,687 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0
|
|
| 1,841
|
|
| 0
|
|
| 151.75
|
|
| 2/26/2025
|
|
| 373
| (5)
|
| 66,286
|
| 0 | 1,319 | 0 | 245.49 | 3/15/2028 | 634 | (5) | 146,315 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
367 | (6) | 84,696 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph A. Berquist | 0 | 1,213 | 0 | 72.12 | 2/23/2023 | 745 | (3) | 132,394 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
730 | 1,458 | 0 | 134.60 | 2/27/2024 | 421 | (4) | 74,816 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 0
|
|
| 2,490
|
|
| 0
|
|
| 151.75
|
|
| 2/26/2025
|
|
| 505
| (5)
|
| 89,744
|
|
(1) | The options have a seven-year |
(2) | Reflects amounts based on the closing market price of the Company’s common stock on the NYSE of |
(3) | Time-based restricted stock awards granted under the LTIP which vested on February |
(4) | Time-based restricted stock awards granted under the LTIP which vest on |
(5) | Time-based restricted stock awards granted under the LTIP which vest on |
(6) | Time-based restricted stock awards granted under the LTIP which vest on March 15, 2024. |
(7) | Time-based restricted stock award granted under the LTIP |
2022 Proxy Statement | |
COMPENSATION TABLES | ||
(8) | The PSUs granted in 2020 under the LTIP vest on March 30, 2023, based on the level of achievement of the performance condition. Actual performance through December 31, 2020 exceeded target. As such, pursuant to SEC rules and regulations, for the awards granted in fiscal year 2020, the number of shares and payout value reflected above assume maximum performance. The PSUs granted in 2021 under the LTIP vest on March 15, 2024 based on the level of achievement of the performance condition. Actual performance through December 31, 2021 was below threshold and would have resulted in no payout. As such, pursuant to SEC rules and regulations, for the awards granted in fiscal year 2021, the number of shares and payout value reflected above assume threshold performance. The final number of common shares (and therefore, value of the awards) awarded to the Named Executive Officers pursuant to the PSUs, if any, will not be determined until the vesting date, based on an achievement percentage of actual performance at the end of the performance period multiplied by each Named Executive Officer’s respective target PSU award. |
Option Exercises and Stock Vested
This table shows the number and value of stock options exercised and stock awards vested during 20182021 by the Named Executive Officers.
Option Awards
| Stock Awards
| Option Awards
| Stock Awards
| |||||||||||||||||||||||||||||
Name (a)
| Number of Shares Acquired on Exercise(1) (#)(b)
| Value Realized on Exercise(2) ($)(c)
| Number of Shares Acquired on Vesting (#)(d)
| Value Realized on Vesting(3) ($)(e)
| Number of Shares Acquired on Exercise(1) (#)(b)
| Value Realized on Exercise(2) ($)(c)
| Number of Shares Acquired on Vesting (#)(d)
| Value Realized on Vesting(3) ($)(e)
| ||||||||||||||||||||||||
Michael F. Barry | 5,965 | 391,901 | 4,696 | (4) | 710,411 | 0 | 0 | 4,107 | (4) | 1,159,735 | ||||||||||||||||||||||
Andrew E. Tometich | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Mary Dean Hall | 0 | 0 | 880 | (5) | 135,027 | 6,958 | 799,114 | 505 | (4) | 142,602 | ||||||||||||||||||||||
D. Jeffry Benoliel | 6,116 | 448,979 | 586 | (4) | 88,650 | |||||||||||||||||||||||||||
0 | 0 | 1,180 | (6) | 287,932 | ||||||||||||||||||||||||||||
Shane W. Hostetter | 0 | 0 | 328 | (4) | 92,621 | |||||||||||||||||||||||||||
0 | 0 | 242 | (5) | 60,921 | ||||||||||||||||||||||||||||
Joseph A. Berquist | 3,437 | 366,916 | 505 | (4) | 142,602 | |||||||||||||||||||||||||||
Jeewat Bijlani | 0 | 0 | 494 | (4) | 139,496 | |||||||||||||||||||||||||||
Wilbert Platzer | 1,957 | 195,436 | 586 | (4) | 88,650 | 2,378 | 265,366 | 373 | (4) | 105,328 | ||||||||||||||||||||||
Joseph A. Berquist | 1,957 | 145,827 | 586 | (4) | 88,650 | |||||||||||||||||||||||||||
2,000 | (6) | 300,360 |
(1) | The amounts shown in column (b) reflect the total number of shares acquired on exercise. |
(2) | Reflects the difference between the exercise price of the option and the last reported sale price for a share of common stock as quoted on the NYSE on the date of exercise. The value of exercising stock options can be realized in cash or in stock. Of the value realized on exercise, all amounts reflect the value in cash. |
(3) | Amounts reflect the closing price of the Company’s common stock on February |
(4) | Represents a time-based restricted stock award under the LTIP which vested 100% on February |
(5) |
|
(6) | Represents |
COMPENSATION TABLES | ||
The table below shows the present value of accumulated benefits payable to each of the Named Executive Officers and the number of years of service credited to each under each of the Netherlands Pension PlansPlan and the Supplemental Retirement Income Program under which they are (or may be) entitled to receive payments and benefits. In 2020, the Company completed the termination of its U.S. Pension Plan and distributed all remaining benefits. Ms. Hall isand Messrs. Berquist, Bijlani, Hostetter and Tometich are not listed in the table below because she does notthey neither participate in any of the Netherlands Pension Plans orPlan nor the Supplemental Retirement Income Program. For information on the valuation methodologies and material assumptions used in quantifying the present value of the accrued pension benefit, see Note 2021 of Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form10-K for the year ended December 31, 2018.2021. Also, see discussion under the heading “Retirement Benefits” under the Compensation Discussion and Analysis section in this proxy statement.
Name (a)
| Plan Name (b)
| Number of Years Credited Service(1) (#)(c)
| Present Value of Accumulated Benefit ($)(d)
| Payments During Last Fiscal Year ($)(e)
| Plan Name (b)
| Number of Years Credited Service(1) (#)(c)
| Present Value of Accumulated Benefit ($)(d)
| Payments During Last Fiscal Year ($)(e)
| ||||||||||||||||
Michael F. Barry |
U.S. Pension Plan |
|
6.0833 |
|
|
77,000 |
|
0 | Supplemental Retirement Income Program(2) | 23 | 11,402,000 | 0 | ||||||||||||
Supplemental Retirement Income Program
|
| 20
|
|
| 6,988,000
|
| 0
| |||||||||||||||||
D. Jeffry Benoliel |
U.S. Pension Plan |
|
9.6667 |
|
|
182,000 |
|
0 | ||||||||||||||||
Supplemental Retirement Income Program
|
| 23
|
|
| 2,017,000
|
| 0
| |||||||||||||||||
Joseph A. Berquist |
U.S. Pension Plan |
|
7.7500 |
|
|
33,000 |
|
0 | ||||||||||||||||
Supplemental Retirement Income Program(2)
|
| N/A
|
|
| N/A
|
| N/A
| |||||||||||||||||
Wilbert Platzer(3)
|
The Netherlands Pension Plan
|
|
32.4167
|
|
|
2,786,714
|
|
0
| The Netherlands Pension Plan | 35.4167 | 3,638,288 | 0 |
(1) | In |
(2) |
|
(3) | Mr. Platzer’s pension benefits include amounts accrued during his employment by the Company’s Netherlands operating subsidiary. Mr. Platzer’s pension benefit includes amounts accrued over nine years with a prior employer. |
2022 Proxy Statement | |
COMPENSATION TABLES | ||
Potential Payments upon Termination or Change in Control
We describe below estimated amounts payable to each of our Named Executive Officers under certain situations, assuming the termination of employment and, where applicable, that a change in control occurred on December 31, 2018.2021. For purposes of this section, the term “change in control” generally means: (a) any person who, subject to certain exceptions, is or becomes the beneficial owner of securities of Quaker Houghton representing 30% or more of the combined voting power of Quaker’sQuaker Houghton’s then outstanding securities or such lesser percentage of voting power (but not less than 15%), as determined by the independent members of the Board of Directors; (b) during anytwo-year period, directors of Quaker Houghton in office at the beginning of such period plus any new director whose election by the Board of Directors or whose nomination for election by Quaker’sQuaker Houghton’s shareholders was approved by a vote of at leasttwo-thirds of the directors then still in office (who either were directors at the beginning of the period or whose election or nomination for election was previously so approved) shall cease for any reason to constitute at least a majority of the Board; (c) the consummation of (i) any consolidation or merger of Quaker Houghton in which Quaker Houghton is not the continuing or surviving corporation or pursuant to which Quaker’sQuaker Houghton’s voting common shares would be converted into cash, securities, and/or other property, other than a merger of Quaker Houghton in which holders of Quaker Houghton common shares immediately prior to the merger have the same proportionate ownership of voting shares of the surviving corporation immediately after the merger as they had in the common shares immediately before; or (ii) any sale, lease, exchange, or other transfer of all or substantially all the assets or earning power of Quaker;Quaker Houghton; or (d) the approval of the liquidation or dissolution of Quaker Houghton by its shareholders or the Board of Directors.
Except for the Supplemental Retirement Income Program, the amounts shown are estimated amounts, and have not been calculated as a present value or otherwise adjusted for varying payment dates. For information on material assumptions used in quantifying the present value of the Supplemental Retirement Income Program benefit, see Note 2021 of Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form10-K for the year ended December 31, 2018.2021. The amounts shown are estimates of the amounts that would be paid; the actual amounts to be paid can only be determined at the time of the executive’s separation from the Company (or a change in control, if applicable). Also, see the discussions under the headings “Severance and Change in Control Benefits” through “Other Benefits on Termination” in the Compensation Discussion and Analysis section of this proxy statement. As previously disclosed, Mr. Benoliel’s employment with the Company terminated on March 1, 2019. Mr. Benoliel will receive severance and other benefits that will be substantially similar to those he would have received in connection with a termination of employment following a change in control of the Company.
COMPENSATION TABLES | ||
Named Executive Officers – Estimated Payments and Benefits
Upon Termination of Employment in Connection With a Change in Control
Michael F. Barry | Mary Dean Hall | D. Jeffry Benoliel | Wilbert Platzer(1) | Joseph A. Berquist | ||||||||||||||||
Severance Allowance ($)(2)
|
| 3,400,000
|
|
| 826,607
|
|
| 802,573
|
|
| 672,583
| (3)
|
| 775,430
|
| |||||
Annual Bonus ($)
|
| 850,000
|
|
| 179,988
|
|
| 173,049
|
|
| 144,375
|
|
| 162,223
|
| |||||
Performance Incentive Units ($)
|
| 1,073,707
|
|
| 124,355
|
|
| 148,008
|
|
| 106,943
|
|
| 116,982
|
| |||||
Restricted Stock Awards (time-based vesting) ($)(4)
|
| 2,687,864
|
|
| 468,977
|
|
| 207,210
|
|
| 273,496
|
|
| 296,953
|
| |||||
Stock Options ($)(5)
|
| 2,328,159
|
|
| 248,413
|
|
| 190,935
|
|
| 238,727
|
|
| 255,575
|
| |||||
Medical/Dental/Life Insurance ($)(6)
|
| 52,484
|
|
| 27,657
|
|
| 42,777
|
|
| 11,157
|
|
| 41,436
|
| |||||
Outplacement Assistance ($)(7)
|
| 8,500
|
|
| 8,500
|
|
| 8,500
|
|
| 8,500
|
|
| 8,500
|
| |||||
Supplemental Retirement Income Program ($)(8)
|
| 6,451,000
|
|
| 0
|
|
| 1,587,000
|
|
| 0
|
|
| 0
|
| |||||
Total
|
| 16,851,714
| (9)
|
| 1,884,497
| (9)
|
| 3,160,052
| (9)
|
| 1,455,780
| (10)
|
| 1,657,100
| (9)
|
| Andrew E. Tometich | Michael F. Barry(1) | Joseph A. Berquist | Jeewat Bijlani | Mary Dean Hall(2) | Shane Hostetter | Wilbert Platzer(3) | |||||||||||||||||||||
Severance Allowance ($)(4) |
| 1,600,000
|
|
| 0
| (1)
|
| 1,066,773
|
|
| 957,527
|
|
| 0
| (2)
|
| 711,474
|
|
| 796,794
| (5)
| |||||||
Annual Bonus ($) |
| 0
|
|
| 975,000
| (1)
|
| 325,000
|
|
| 282,838
|
|
| 0
| (2)
|
| 234,000
|
|
| 188,548
|
| |||||||
Performance Incentive Units ($)(6)
|
| 0
|
|
| 671,000
| (1)
|
| 80,000
|
|
| 80,000
|
|
| 66,326
| (2)
|
| 34,800
|
|
| 79,990
|
| |||||||
Performance Stock Units ($)(7) |
| 289,867
|
|
| 0
| (1)
|
| 125,723
|
|
| 125,723
|
|
| 88,076
| (2)
|
| 76,868
|
|
| 125,723
|
| |||||||
Restricted Stock Awards (time-based vesting) ($)(8) |
| 871,195
|
|
| 0
| (1)
|
| 1,025,817
|
|
| 747,266
|
|
| 287,932
| (2)
|
| 330,246
|
|
| 573,488
|
| |||||||
Stock Options ($)(9) |
| 0
|
|
| 0
| (1)
|
| 237,468
|
|
| 237,468
|
|
| 149,194
| (2)
|
| 0
|
|
| 237,468
|
| |||||||
Medical/Dental/Life |
| 689
|
|
| 22,671
|
|
| 43,936
|
|
| 1,377
|
|
| 0
| (2)
|
| 42,427
|
|
| 0
|
| |||||||
Outplacement Assistance ($)(11) |
| 8,500
|
|
| 0
| (1)
|
| 8,500
|
|
| 8,500
|
|
| 0
| (2)
|
| 8,500
|
|
| 8,500
|
| |||||||
Supplemental Retirement Income Program ($)(12) |
| 0
|
|
| 11,143,375
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 0
|
| |||||||
Total |
| 2,770,251
| (13)
|
| 12,812,046
|
|
| 2,913,217
| (13)
|
| 2,440,699
| (13)
|
| 591,528
|
|
| 1,438,315
| (13)
| 2,010,511 | (14) |
(1) | Mr. Barry’s amounts reflect actual payments and benefits payable upon Mr. Barry’s retirement as of December 31, 2021. Mr. Barry served as CEO and President of the Company until November 30, 2021 and remained employed by the Company until December 31, 2021. Beginning January 1, 2022, Mr. Barry continued to serve on the Board, in a non-executive director capacity. This table reflects the amounts payable to Mr. Barry as a result of his retirement as of December 31, 2021, and does not include the estimated payments and benefits that would be provided to Mr. Barry in each covered circumstance in connection with a change in control had he not retired as of December 31, 2021. Per Mr. Barry’s Transition Agreement, his outstanding equity awards will continue to vest in accordance with their existing terms and existing vesting schedules. Therefore, the value of the Performance Stock Units, Restricted Stock Awards, and Stock Options as of December 31, 2021 are marked as $0, because those outstanding awards will continue to vest according to their current terms and schedules and do not accelerate upon Mr. Barry’s retirement as of December 31, 2021. Mr. Barry is not eligible for severance payments or outplacement assistance upon his retirement as of December 31, 2021. Mr. Barry’s medical, dental, and life insurance benefits and Supplemental Retirement Income Program (SRIP) benefit are discussed in further detail below. |
(2) | Ms. Hall’s amounts reflect actual payments and benefits payable upon Ms. Hall’s resignation and termination of employment as of April 18, 2021. This table reflects the amounts payable to Ms. Hall as a result of her termination of employment as of April 18, 2021, and does not include the estimated payments and benefits that would be provided to Ms. Hall in each covered circumstance in connection with a change in control had she not terminated employment on April 18, 2021. Ms. Hall is not eligible for severance payments, nor for outplacement assistance upon her resignation and termination of employment as of April 18, 2021. The value of Ms. Hall’s equity awards is in accordance with the terms of the LTIP. The value of Ms. Hall’s Performance Incentive Units and Performance Stock Units are prorated as of Ms. Hall’s termination date of April 18, 2021, based on her active service during the applicable performance periods. The value of Ms. Hall’s Restricted Stock Awards reflects the prorated shares outstanding, based on the number of full months of active service during the applicable restriction period. The value of Ms. Hall’s Stock Options reflects the prorated number of options exercisable as of April 18, 2021, based on the full months of active service during each applicable vesting period. The value of Ms. Hall’s Performance Stock Units, Restricted Stock Awards, and Stock Options are based on the closing market price of our common stock on April 16, 2021 (as Ms. Hall’s termination date of April 18, 2021 was a Sunday) of $244.01. |
(3) | Amounts due in foreign currency were converted to U.S. Dollars for the purposes of this table at the spot rate in effect on December 31, |
2022 Proxy Statement | 59 |
COMPENSATION TABLES | ||
(4) | To the extent the severance allowance, together with any other payments contingent upon a change in control, exceed the limits under Code section 280G (generally, three times the individual’s average annual compensation for the prior five years), the severance allowance will be reduced to the extent necessary to avoid the disallowance of a deduction under Code section 280G or imposition of the excise tax under Code section 4999 (assuming reduction of the severance allowance is the least economically detrimental to the executive). No reduction was required to the severance allowance of any of the Named Executive Officers. |
The amount to which Mr. Platzer may be entitled under the law of The Netherlands is estimated at |
This amount reflects the pro rata portion of the 2019 PIU cash grants paid out at target. |
(7) | This amount reflects the pro rata portion of the 2020 and 2021 PSU grants paid out at target multiplied by the closing market price of our common stock on December 31, 2021 ($230.78). |
(8) | This amount reflects the closing market price of our common stock on December 31, |
This amount reflects the number of shares for which options would become vested on a change in control, multiplied by the positive difference (if any) between the closing market price of our common stock on December 31, |
This amount reflects the value of medical, dental and life insurance coverage for 24 months (Mr. |
This amount is the estimated value of providing outplacement counseling and services during |
|
If the change in control falls within the meaning of Code Section 409A, severance payments are made in a lump sum. For any other change in control, severance payments are made in monthly installments. |
All severance benefits are made in a lump sum. |
60 | 2022 Proxy Statement | Quaker Houghton |
COMPENSATION TABLES | ||
Termination Other than for Cause, Disability, Death or Retirement Not Involving a Change in Control
Under the terms of their employment agreements, the Named Executive Officers are entitled to severance benefits and, with the exception of Mr. Barry, certain outplacement services if the Company terminates their employment (for other than cause, disability, death or retirement) and the termination is not in connection with a change in control. In addition, Ms. Hall is entitled to 12 months of continued medicalMessrs. Berquist, Bijlani, and dental coverage after termination at Quaker’s cost, Mr. Berquist isHostetter are entitled to continuation of medical and dental coverage consistent with Quaker’sQuaker Houghton’s severance program in place at the time of termination, and Mr. Barry isTometich would be entitled to participate in Quaker’sQuaker Houghton’s medical and dental plans for 18 months after termination on the same basis as an active employee. In the case of such a termination, Mr. BarryTometich is entitled to a multiple of 1.5 times his base salary and bonus paid to him during a three-year period as described in his employment agreement. In the case of such a termination, Messrs. Benoliel,Berquist, Bijlani, Hostetter and Platzer and Berquist and Ms. Hall are entitled to severance equal to 12 months of base salary as of the termination date. The estimated aggregate severance amounts payable under such circumstances are as follows: $2,503,142$1,200,000 (Mr. Barry)Tometich); $385,000 (Ms. Hall)$500,000 (Mr. Berquist); $370,159$435,135 (Mr. Benoliel)Bijlani); $308,824$390,000 (Mr. Hostetter) and $342,815 (Mr. Platzer); and $347,000 (Mr. Berquist). Mr. BarryTometich will be paid his severance inbiweekly over eighteen monthly installments commencing on the 60th day after his separation;months; Messrs. BenolielBerquist, Bijlani and Berquist and Ms. HallHostetter will respectively be paid their severance in twenty-four semi-monthly installments; and Mr. Platzer will be paid his severance in accordance with Dutch legal practice.
Termination as a Result of Death or Disability
If employment were terminated on December 31, 2018,2021, as a result of death or disability (as defined in the respective plan), the amounts shown above for Annual Bonus (assuming target performance is attained), Restricted Stock Awards (time-based vesting) and Stock Options would also be paid. In the case of death on December 31, 2018,2021, a death benefit would be paid for 20182021 (in 2019)2022) of $850,000$800,000 (Mr. Barry)Tometich), $385,000 (Ms. Hall)$500,000 (Mr. Berquist), $370,159$435,135 (Mr. Benoliel)Bijlani), $308,824$390,000 (Mr. Hostetter) and $342,815 (Mr. Platzer) and $347,000 (Mr. Berquist), plus 50% of base salary during each of 2019, 2020, 20212023, 2024, 2025, and 20222026 (Mr. Barry, $425,000; Ms. Hall, $192,500;Tometich, $400,000; Mr. Benoliel, $185,080;Berquist, $250,000; Mr. Bijlani, $217,568; Mr. Hostetter, $195,000; and Mr. Platzer, $154,412; and Mr. Berquist, $173,500)$171,408).
PAY RATIO DISCLOSURE | ||||
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations of the SEC, we are providing the following information about the annual total compensation of our employees and the annual total compensation of our CEO, Michael F. Barry.Andrew E. Tometich. The Company is presenting Mr. Tometich’s total compensation annualized as described below, rather than Mr. Barry’s, because Mr. Tometich was CEO as of December 31, 2021, the date used to select the median employee. For 2018,2021, our last completed fiscal year:
The median of the annual total compensation of all employees of our company and its consolidated subsidiaries (other than our CEO) was $47,298;$41,600; and
The annual total compensation of our CEO was $3,093,893. This amount equals the CEO’s compensation as reported in the Summary Compensation Table presented elsewhere in this proxy statement, was $4,848,181.plus an additional amount that reflects the annualizing of his base salary, consistent with the applicable U.S. Securities and Exchange Commission guidance.
Based on this information, for 20182021 the ratio of the annual total compensation of Mr. Barry, our CEO, to the median of the total compensation of all employees was 10374 to 1. This payIn light of the additional one-time cash for relocation that was paid in 2021, the 2022 ratio information has been calculated in a manner consistent with SEC regulations.may vary from the 2021 ratio.
Methodology
There has been no change in our employee population or employee compensation arrangements that we believe would significantly affect our pay ratio disclosure. As such, we are using the same methodology andas we used in last year’s proxy statement, but determined a new median employee in our pay ratio calculation as webased on 2021 compensation. The methodology and assumptions used in last year’s proxy statement.to determine the new median associate and pay ratio are set out below.
To identify the median of annual total compensation of all our employees, as well as to determine the annual total compensation of the “median employee,” the methodology and material assumptions, adjustments and estimates that we used were as follows:
1. | We determined that as of |
2. | Our |
3. | For each of the |
62 | 2022 Proxy Statement | Quaker Houghton |
PAY RATIO DISCLOSURE | ||
determined, our calculation of employee bonuses was based on bonus and commission information for |
4. | After determining the median group of employees, the compensation of these employees was calculated using actual |
5. | With respect to the annual total compensation of our CEO, we used the amount in the “total” column (column (j)) of our |
2022 Proxy Statement | |
DIRECTOR COMPENSATION | ||||
The Governance Committee is charged with reviewing and making recommendations to the Board of Directors with respect to director compensation. The Company uses a combination of cash and stock-based compensation to attract and retain candidates on the Board. Director compensation is targeted at the median of the relevant comparison groups (discussed below) consistent with the positioning of executive officer compensation. In the past, in making this determination, the Governance Committee used certain industry-wide data obtained by Quaker’sQuaker Houghton’s management to set compensation.
For the 2018-20192021-2022 Board year, each independentnon-management director received an annual cash retainer of $55,000$78,000 and a time-based restricted stock award equal to $60,000$110,000 in accordance with the Company’s LTIP, issued in June 2018,2021, which vests in a single installment a year from the date of issuance assuming continued Board membership. In addition, each independent director received $1,250 for each Boardan annual fee related to their specific committee membership as follows: Audit Committee, $9,000; Compensation and Board committee meeting he or she attended,Human Resources Committee, $5,000; Governance Committee, $5,000, and Sustainability Committee, $5,000, and the chairperson of each Board committee received the following additional compensation: Audit Committee, $12,000; Compensation/Management Development$20,000; Compensation and Human Resources Committee, $8,000; Executive Committee, $4,000; and$15,000; Governance Committee, $8,000.$12,500; and Sustainability Committee, $12,500. The Lead Director received an additional annual retainer of $15,000.
After reviewing comparative market data$20,000. Effective January 1, 2022, Mr. Barry, became a non-management Director and received from various sources,a prorated portion of the cash and equity retainers for the balance of the 2021-2022 Board year in accordance with the stock ownership guidelines and the Company’s Board, based on the Governance Committee’s recommendation, approved certain adjustments to director compensation on February 26, 2019. Effective with the 2019-2020 Board year, each independent director will receive an annual cash retainer of $65,000 and a time-based restricted stock award equal to $85,000, issued in June 2019, which will vest in a single installment a year from the date of issuance assuming continued Board membership. The Board also decided, given current trends for director compensation, to eliminate the fees for Board and Committee attendance and instead provide an annual fee to each specific committee member as follows: each Audit Committee member will receive $7,500, each Compensation/Management Development Committee member will receive $5,000, and each Governance Committee member will receive $4,000.LTIP. In addition, for his service as the chairperson of each Board Committee will receive the following compensation: Audit Committee, $20,000; Compensation/Management Development Committee, $15,000; Executive Committee, $5,000; and Governance Committee, $10,000. The Lead Director will receivenon-executive Chair, Mr. Barry receives an annual retainer of $20,000.$100,000, which is paid in monthly installments.
The 2013 Director Stock Ownership Plan was adopted by the Board of Directors of the Company on March 6, 2013 and approved by the shareholders at the 2013 annual meeting. Presently, under the terms of the Plan, each independent director is required to beneficially own on May 1 of the applicable calendar year shares of Quaker Houghton common stock equal to the Threshold Amount, which is defined as the quotient obtained by dividing (i) 400% of the annual cash retainer for the applicable calendar year by (ii) the average of the closing price of a share of Quaker Houghton common stock for the previous calendar year. If an independent director’s share ownership falls below the Threshold Amount, 75% of the annual cash retainer payable will be paid in shares of Quaker Houghton common stock and the remaining 25% of the annual cash retainer will be paid in cash, unless the director elects to receive a greater percentage of Quaker Houghton common stock (up to 100%). If a director’s share ownership meets or exceeds the Threshold Amount, the director may irrevocably elect to receive common stock in payment of a percentage (up to 100%) of the annual cash retainer for the applicable year.
DIRECTOR COMPENSATION | ||||
Director Compensation
Name(1)(a)
| Fees Earned or Paid in Cash(2) ($)(b)
| Stock Awards(3) ($)(c)
| Option Awards ($)(d)
| Non-Equity Incentive Plan Compensation ($)(e)
| Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(f)
| All Other Compensation(4) ($)(g)
| Total ($)(h)
| Fees Earned or Paid in Cash(2) ($)(b) | Stock Awards(3) ($)(c) | Option Awards ($)(d) | Non-Equity Incentive Plan Compensation ($)(e) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(f) | All Other Compensation(4) ($)(g) | Total ($)(h) | ||||||||||||||||||||||||||||||||||
Donald R. Caldwell
|
| 92,750
|
|
| 59,995
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 588
|
|
| 153,333
|
| 112,000 | 109,792 | 0 | 0 | 0 | 753 | 222,545 | ||||||||||||||||||||
Robert E. Chappell
|
| 74,250
|
|
| 59,995
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 588
|
|
| 134,833
|
| |||||||||||||||||||||||||||
William R. Cook(5)
|
| 6,250
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 299
|
|
| 6,549
|
| |||||||||||||||||||||||||||
Charlotte C. Decker | 87,000 | 109,792 | 0 | 0 | 0 | 753 | 197,545 | |||||||||||||||||||||||||||||||||||||||||
Mark A. Douglas
|
| 72,500
|
|
| 59,995
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 588
|
|
| 133,083
|
| 100,500 | 109,792 | 0 | 0 | 0 | 753 | 211,045 | ||||||||||||||||||||
Jeffry D. Frisby
|
| 73,750
|
|
| 59,995
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 588
|
|
| 134,333
|
| 104,500 | 109,792 | 0 | 0 | 0 | 753 | 215,045 | ||||||||||||||||||||
Sanjay Hinduja | 83,000 | 109,792 | 0 | 0 | 0 | 753 | 193,545 | |||||||||||||||||||||||||||||||||||||||||
William H. Osborne
|
| 71,250
|
|
| 59,995
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 588
|
|
| 131,833
|
| 88,000 | 109,792 | 0 | 0 | 0 | 753 | 198,545 | ||||||||||||||||||||
Robert H. Rock
|
| 75,500
|
|
| 59,995
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 588
|
|
| 136,083
|
| 103,000 | 109,792 | 0 | 0 | 0 | 753 | 213,545 | ||||||||||||||||||||
Ramaswami Seshasayee | 92,000 | 109,792 | 0 | 0 | 0 | 753 | 202,545 | |||||||||||||||||||||||||||||||||||||||||
Michael J. Shannon | 83,000 | 109,792 | 0 | 0 | 0 | 753 | 193,545 | |||||||||||||||||||||||||||||||||||||||||
Fay West
|
| 82,000
|
|
| 59,995
|
|
| 0
|
|
| 0
|
|
| 0
|
|
| 588
|
|
| 142,583
|
| 112,000 | 109,792 | 0 | 0 | 0 | 753 | 222,545 |
(1) |
|
(2) | Under the terms of the Company’s 2013 Director Stock Ownership Plan, the following directors were paid a portion of their retainer for the |
(3) | The amounts reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for outstanding equity awards under the Company’s LTIP. |
(4) | The amounts in this column for each director include dividends paid on unvested time-based restricted stock awards. |
|
2022 Proxy Statement | |
COMPENSATION POLICIES AND PRACTICES | ||||
Compensation Policies and Practices – Risk Assessment
The Compensation/Compensation and Human Resources Committee, in partnership with Willis Towers Watson and Management, Development Committeeincluding the Senior Vice President, Chief Human Resources Officer, conducted a risk assessment in 2018an annual review to considerdetermine whether any of our compensation policies and practices created risks that are reasonably likely to have a material adverse effect on the Company’s business or operations. In order to assess risk as it relates to compensation, management conducted a global audit of all compensation practices, including base pay philosophies and corporate and regional bonus plans. This global auditreview consisted of an examination of both the Company’s regional pay practices and bonus plans and the corporate-wide compensation programs. Management, including the Senior Vice President, –Chief Human Resources Officer, reported the results of this auditreview to the Committee. After review, the Committee concluded that none of the Company’s current compensationpractices and programs would be reasonably likely to encourage excessive risk taking because the metrics in the Company’s compensation plans are linkedregionally and locally aligned with legal and statutory practices as well as having clear linkage to corporate performance as it relates to set budgetarybudgets, targets and because the plans are measured against identified peer comparison groups. After a discussion with management about these findings, theperformance. The Committee thereafter determined that the Company’s compensation policies and practices were not reasonably likely to have a material adverse effect on the Company’s business or operations.
STOCK OWNERSHIP | ||||
Stock Ownership of Certain Beneficial Owners and Management
The following table shows how much of Quaker’sQuaker Houghton’s common stock is beneficially owned by each person known to us to be the beneficial owner of more than 5% of Quaker’sQuaker Houghton’s common stock as of December 31, 2018.2021. Each beneficial owner has sole voting and sole dispositive power for the shares listed, except as noted.
Name and Address
| Number of Shares Beneficially Owned
| Approximate Percent of Class
| Number of Votes
| |||||||||
BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055
| 1,901,771 | 14.3 | 1,901,771 | |||||||||
The Vanguard Group(2) 100 Vanguard Boulevard Malvern, PA 19355
| 1,476,813 | 11.07 | 1,476,813 | |||||||||
Eagle Asset Management, Inc.(3) 880 Carillon Parkway St. Petersburg, FL 33716
| 983,268 | 7.37 | 983,268 | |||||||||
JPMorgan Chase & Co.(4) 270 Park Avenue New York, NY 10017
| 721,268 | 5.4 | 721,268 | |||||||||
Royce & Associates, LP(5) 745 Fifth Avenue New York, NY 10151
| 713,137 | 5.35 | 713,137 | |||||||||
T. Rowe Price Associates, Inc.(6) 100 E. Pratt Street Baltimore, MD 21202
| 689,792 | 5.1 | 689,792 | |||||||||
Neuberger Berman Group LLC/ Neuberger Berman Investment Advisers LLC(7) 1290 Avenue of the Americas New York, NY 10104
| 687,508 | 5.16 | 687,508 |
Name and Address
| Number of Shares Beneficially Owned | Approximate Percent of Class | ||||
Gulf Hungary Holding Korlátolt Felelősségű Társaság and QH Hungary Holdings Limited(1) BAH Center 2 Furj Street 1124 Budapest, Hungary
| 4,273,951 | 23.9 | ||||
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055
| 2,036,672 | 11.4 | ||||
Durable Capital Partners LP(3) 5425 Wisconsin Avenue, Suite 802 Chevy Chase, MD 20815
| 1,464,443 | 8.2 | ||||
The Vanguard Group(4) 100 Vanguard Boulevard Malvern, PA 19355
| 1,546,999 | 8.65 | ||||
T. Rowe Price Associates, Inc.(5) 100 E. Pratt Street Baltimore, MD 21202
| 1,343,648 | 7.5 | ||||
Neuberger Berman Group LLC and Neuberger Berman Investment Advisers LLC(6) 1290 Avenue of the Americas New York, NY 10104
| 906,708 | 5.07 |
(1) | The number of shares beneficially owned and number of votes are based on the Schedule 13D/A filed with the SEC on March 11, 2021 by Gulf Hungary Holding Korlátolt Felelősségű Társaság (“Gulf Hungary”) and its wholly-owned subsidiary QH Hungary Holdings Limited (“QH Hungary”), as well as the Company’s records subsequent to that date. Of the 4,273,951 shares reflected, 4,172,897 shares are beneficially owned by QH Hungary and 101,054 shares are beneficially owned by Gulf Hungary. The 101,054 shares are currently held in the name of Citibank N.A. pursuant to an escrow agreement in order to secure Gulf Hungary’s indemnification obligations under the share purchase agreement entered into in connection with the Combination. Gulf Hungary has the sole power to vote or to direct the vote and the sole power to dispose of or to direct the disposition of the 101,054 shares and shared voting and dispositive power with QH Hungary over the 4,172,897 shares. The approximate percentage of common stock owned by Gulf Hungary is based on information available to the Company as of the record date. |
(2) | As reported in Schedule 13G/A filed on January |
2022 Proxy Statement | 67 |
STOCK OWNERSHIP | ||
BlackRock Fund Advisors; BlackRock Institutional Trust Company, National Association; BlackRock Asset Management Ireland Limited; BlackRock Financial Management, Inc.; BlackRock Japan Co., Ltd.; BlackRock Asset Management Schweiz AG; BlackRock Investment Management, LLC; BlackRock Investment Management (UK) Limited; BlackRock Asset Management Canada Limited; BlackRock Investment Management (Australia) Limited; |
(3) | As reported in Schedule 13G filed on February 4, 2022 by Durable Capital Partners LP with the SEC. Durable Capital Partners LP, investment advisor to Durable Capital Master Fund LP has the |
As reported in Schedule 13G/A filed on February |
shared power to dispose or to direct the disposition of |
|
|
(5) | As reported in Schedule 13G/A filed on |
|
As reported in Schedule |
STOCK OWNERSHIP | ||
The following table shows the number of shares of Quaker’sQuaker Houghton’s common stock beneficially owned by each of our directors and the Named Executive Officers named in the Summary Compensation Table in this proxy statement and by all of our directors and executive officers as a group. The information in the table is as of March 4, 2019.2022. Each director and executive officer has sole voting and sole dispositive power over the common stock listed opposite his or herthe executive officer’s name, unless we have indicated otherwise.
Name
| Aggregate Number of Shares Beneficially Owned
| Approximate Percent of Class(1)
| Number of Votes
| Aggregate Number of Shares Beneficially Owned
| Approximate Percent of Class(1)
| Number of Votes
| |||||||||||||||||||||||||||||||||||||||
Michael F. Barry
|
|
213,767
|
(2)
|
|
1.60
|
|
|
170,277
|
|
|
146,879
|
(2)
|
|
*
|
|
|
105,605
|
| |||||||||||||||||||||||||||
Donald R. Caldwell
|
|
5,345
|
|
|
*
|
|
|
5,345
|
|
|
6,587
|
|
|
*
|
|
|
6,587
|
| |||||||||||||||||||||||||||
Robert E. Chappell
|
|
29,214
|
|
|
*
|
|
|
29,214
|
| ||||||||||||||||||||||||||||||||||||
Charlotte C. Decker
|
|
1,605
|
|
|
*
|
|
|
1,605
|
| ||||||||||||||||||||||||||||||||||||
Mark A. Douglas
|
|
1,834
|
|
|
*
|
|
|
1,834
|
|
|
2,206
|
|
|
*
|
|
|
2,206
|
| |||||||||||||||||||||||||||
Jeffry D. Frisby
|
|
6,261
|
|
|
*
|
|
|
6,261
|
|
|
7,479
|
|
|
*
|
|
|
7,479
|
| |||||||||||||||||||||||||||
Sanjay Hinduja(3)
|
|
1,887
|
|
|
*
|
|
|
1,887
|
| ||||||||||||||||||||||||||||||||||||
William H. Osborne
|
|
3,025
|
|
|
*
|
|
|
3,025
|
|
|
4,867
|
|
|
*
|
|
|
4,867
|
| |||||||||||||||||||||||||||
Robert H. Rock
|
|
12,381
|
|
|
*
|
|
|
12,381
|
|
|
12,255
|
|
|
*
|
|
|
12,255
|
| |||||||||||||||||||||||||||
Ramaswami Seshasayee
|
|
1,893
|
|
|
*
|
|
|
1,893
|
| ||||||||||||||||||||||||||||||||||||
Michael J. Shannon
|
|
1,366
|
|
|
* |
|
|
1,366
|
| ||||||||||||||||||||||||||||||||||||
Andrew E. Tometich
|
|
3,775
|
|
|
* |
|
|
3,775
|
| ||||||||||||||||||||||||||||||||||||
Fay West
|
|
2,492
|
|
|
*
|
|
|
2,492
|
|
|
4,465
|
|
|
* |
|
|
4,465
|
| |||||||||||||||||||||||||||
Mary Dean Hall
|
|
10,474
|
(2)
|
|
*
|
|
|
4,176
|
| ||||||||||||||||||||||||||||||||||||
D. Jeffry Benoliel
|
|
61,323
|
(2)(3)
|
|
*
|
|
|
58,652
|
| ||||||||||||||||||||||||||||||||||||
Shane W. Hostetter
|
|
2,966
|
(2)
|
|
* |
|
|
2,461
|
| ||||||||||||||||||||||||||||||||||||
Joseph A. Berquist
|
|
15,976
|
(2)
|
|
*
|
|
|
13,773
|
| ||||||||||||||||||||||||||||||||||||
Jeewat Bijlani
|
|
12,797
|
(2)
|
|
*
|
|
|
5,566
|
| ||||||||||||||||||||||||||||||||||||
Wilbert Platzer
|
|
8,469
|
(2)
|
|
*
|
|
|
5,183
|
|
|
4,321
|
(2)
|
|
*
|
|
|
2,118
|
| |||||||||||||||||||||||||||
Joseph A. Berquist
|
|
14,692
|
(2)
|
|
*
|
|
|
11,190
|
| ||||||||||||||||||||||||||||||||||||
All directors and officers as a group (16 persons)
|
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389,901
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(2)
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2.9
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|
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324,812
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(4)
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All directors and officers as a group (21 persons)
|
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264,917
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(2)
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1.5
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196,634
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(4)
|
* | Less than 1%. |
(1) | Based upon |
(2) | Includes the following respective numbers of shares subject to options that are currently exercisable or exercisable within 60 days of the record date: |
(3) |
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(4) | Represents |
2022 Proxy Statement | |
Based solely on (i) our review of reports submitted to us during and with respect to the year ended December 31, 2018, filed with the SEC pursuant to Section 16(a) of the 1934 Act, including any amendment thereto and (ii) written representations of Quaker’s directors and officers, Quaker believes that all reports required to be filed under Section 16(a) of the 1934 Act, with respect to transactions in Quaker’s common stock through December 31, 2018, were filed on a timely basis.
The Board recognizes that related party transactions may present a heightened risk of conflicts of interest and/or improper valuation or the perception thereof. Nevertheless, the Board also recognizes that there are situations when related party transactions are consistent with the best interests of the Company. Accordingly, the Governance Committee, on the Board’s authority, has adopted a written policy to govern the review and approval of all related party transactions involving the Company.
The policy requires all related party transactions involving $50,000 or more be reviewed by the Governance Committee. Related parties are defined as any director, nominee for director, senior officer (including all Named Executive Officers), a beneficial owner of more than five percent of the Company’s voting securities and any immediate family member of the foregoing.foregoing, or an entity owned or controlled by one of the foregoing persons or in which such person has substantial ownership. Prior to entering into a transaction with Quaker Houghton subject to the Governance Committee’s review, the related party must make a written submission to Quaker’sQuaker Houghton’s General Counsel setting forth the facts and circumstances of the proposed transaction, including, among other things, the proposed aggregate value of such transaction, the benefits to Quaker Houghton, and an assessment of whether the proposed transaction is on terms comparable to those available from an unrelated third party. The Governance Committee (or, when urgent action is required, that Committee’s Chair) will evaluate all of the foregoing information to determine whether the transaction is in the best interests of Quaker Houghton and its shareholders, as the Committee (or Chair) determines in good faith.
ThereIn 2019, Quaker consummated the Combination. The aggregate consideration for the outstanding share capital acquired by Quaker was (a) $170,828,827 in cash and (b) 4,329,176 shares of the Company’s common stock. The consideration was paid to the owners of Houghton, including Gulf Hungary, and certain members of Houghton management, some of whom are now officers or directors of Quaker Houghton. Because certain amounts of their respective consideration were no related party transactionsheld in 2018.escrow until scheduled releases under the Combination transaction documents, these officers or directors of Quaker Houghton received cash or shares from escrow in 2021 in the following amounts:
Mr. Michael J. Shannon, a current director of Quaker Houghton and formerly the Chief Executive Officer and a director of legacy Houghton: $53,770 in cash and 593 Quaker Houghton common shares.
Mr. Jeewat Bijlani, a Named Executive Officer of Quaker Houghton and formerly an executive officer of legacy Houghton: $184,389 in cash and 89 shares.
Dr. David Slinkman, a current executive officer of Quaker Houghton and formerly an executive officer of legacy Houghton: $162,765 in cash and 59 shares.
Ms. Kimberly Johnson, a former executive officer of Quaker Houghton and formerly an executive officer of legacy Houghton who departed the organization on February 14, 2022: $94,385 in cash.
Mr. Sanjay Hinduja, a current director of Quaker Houghton, served as a director of legacy Houghton and he, along with certain members of his family, including his immediate family (the “Hinduja Family”), beneficially owned approximately 98.7% of Houghton’s outstanding share capital prior to closing the Combination. From escrow releases in 2021, the Hinduja Family has received consideration of $12,954,940 and 182,181 shares. The shares have been issued to Gulf Hungary, which is ultimately owned by the Hinduja Family.
Houghton and, effective upon the Combination, now Quaker Houghton, sells various metalworking and other products to The Boeing Company (“Boeing”), the world’s largest aerospace company and leading manufacturer of commercial jetliners and defense, space and security systems. Mr. Osborne is currently the Senior Vice President, Operations and Total Quality for Boeing Defense, Space and Security. The annual sales by Quaker Houghton to Boeing in 2021 was approximately $1,247,000 and such sales are continuing
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | ||
in 2022. The transactions are sales to Boeing of various metal working products and certain greases and are all under arms-length arrangements. Mr. Osborne is not involved in the transactions in any way and did not receive a commission or any other payment in connection with Quaker Houghton’s sales to Boeing.
In addition, Quaker Houghton purchases a Neodecanoic Acid from Hexion Inc. Hexion Inc. manufactures and sells a broad range of thermoset technologies, in a range of applications and industries. Mr. Shannon is currently on the Board of Directors of Hexion. The annual purchases by Quaker Houghton from Hexion in 2021 were approximately $627,163 and such purchases are continuing in 2022. The transactions are all under arms-length arrangements and Mr. Shannon is not involved in the transactions in any way.
2022 Proxy Statement | |
PROPOSAL | ||||
Proposal 32 – Ratification of Appointment of Independent Registered Public Accounting Firm
The BoardAudit Committee’s appointment of Directors has selected PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the year ending December 31, 2019.2022 is being submitted to our shareholders for ratification. PwC has been our independent registered public accounting firm since at least 1972. There is no requirement that the Board’s selection of PricewaterhouseCoopers LLPPwC be submitted to our shareholders for ratification or approval. The Audit Committee and the Board, however, believesbelieve that Quaker’sQuaker Houghton’s shareholders should be given an opportunity to express their views on the selection. WhileIf the Board is not bound byshareholders fail to ratify the appointment of PwC, the Audit Committee will reconsider whether to retain the firm. Regardless of whether the shareholders ratify the appointment of PwC at the annual meeting, the Audit Committee, in its discretion, may retain PwC or select a vote against ratifying PricewaterhouseCoopers LLP, the Board may take a vote against PricewaterhouseCoopers LLP into consideration in future years when selecting our independentdifferent registered public accounting firm. PricewaterhouseCoopers LLP has auditedfirm at any time if it determines that doing so would be in the Company’s best interests and those of our financial statements since at least 1972.shareholders.
We anticipate that representatives of PricewaterhouseCoopers LLPPwC will be present at the meeting and, if present, we will give them the opportunity to make a statement if they desire to do so. We also anticipate that the representatives will be available to respond to appropriate questions from shareholders.
Audit fees charged to us by PricewaterhouseCoopers LLPPwC for audit services rendered during the years ended December 31, 20172020 and 20182021 for the integrated audit of our financial statements and our internal controls over financial reporting included in our Annual Report on Form10-K, the review of the financial statements included in our quarterly reports on Form10-Q, and foreign statutory audit requirements totaled $1,768,928$7,304,000 and $1,953,356,$5,983,000, respectively.
Audit-related fees charged to us by PricewaterhouseCoopers LLPPwC for audit-related services rendered, primarily related to foreign statutory audit-related assistance, certifications and other audit-related services, during the years ended December 31, 20172020 and 2018,2021, totaled $167,258$30,000 and $132,000,$103,128, respectively.
Tax fees charged to us by PricewaterhouseCoopers LLPPwC for tax services rendered, primarily related to tax compliance, during the years ended December 31, 20172020 and 2018,2021, totaled $498,954$561,000 and $784,000,$1,207,945, respectively.
The fees billed to us by PricewaterhouseCoopers LLPPwC for all other services rendered, primarily related to accounting research and disclosure software purchased by the Company from PricewaterhouseCoopers LLP, during the years ended December 31, 20172020 and 2018,2021, totaled $6,840$7,000 and $7,000,$5,847, respectively.
The Audit Committee has adopted a policy governing thepre-approval of services provided by Quaker’sQuaker Houghton’s independent registered public accounting firm. The policy generally permits certain pre-approved services, but requires specific Audit Committee pre-approval for any pre-approved services that exceed the pre-approved fee levels and for services not otherwise generally pre-approved. The policy expressly
72 | 2022 Proxy Statement | Quaker Houghton |
PROPOSAL 2 | ||
prohibitsnon-audit services for which engagement is not permitted by applicable law and regulations, including internal audit outsourcing and “expert services.”services” unrelated to the audit. A list of prohibited and permitted services is set forth in the policy. Permitted services under the policy include audit and audit-related services, internal control-related consulting,tax services and certain other tax-relatednon-audit services and consulting servicesthat the Audit Committee determines would not related to information systems design and implementation.impair the independence of the independent auditor. Audit and audit-related services include, among other things, internal control review, services related to securities filings, accounting and financial reporting consultations, statutory audits, acquisition and divestiture-related due diligence and benefit plan audits.
Internal control-related consulting is limited to assessing and recommending improvements to Quaker’sQuaker Houghton’s internal control structure, procedures or policies.Tax-related services are limited to tax compliance and planning. All services provided by Quaker’sQuaker Houghton’s independent registered public accounting firm must bepre-approved by the Audit Committee though the committee’s authority may be delegated to one or more of its members.
All of the fees paid to PricewaterhouseCoopers LLPPwC during the years ended December 31, 20172020 and 2018,2021, werepre-approved by the Audit Committee in accordance with itspre-approval policy.
The Board of Directors recommends that you vote “FOR” ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2019.2022.
REPORT OF THE AUDIT COMMITTEE | ||||
The Audit Committee of Quaker’sQuaker Houghton’s Board of Directors oversees Quaker’sQuaker Houghton’s financial reporting process on behalf of the Board of Directors and acts pursuant to the Audit Committee Charter, which is available athttps://www.quakerchem.comwww.quakerhoughton.com by accessing the Investor Relations/Investors/Corporate Governance section of our website. The Board of Directors has affirmatively determined that each member of the Audit Committee qualifies as an “independent” director under the current listing standards of the NYSE and Quaker’sQuaker Houghton’s Corporate Governance Guidelines.
As stated in its charter, the Audit Committee’s job is one of oversight. It is not the duty of the Audit Committee to prepare Quaker’sQuaker Houghton’s financial statements or plan or conduct audits to determine that Quaker’sQuaker Houghton’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles or that Quaker’sQuaker Houghton’s internal controls over financial reporting are adequate. Financial management (including the internal auditing function) of Quaker Houghton is responsible for preparing the financial statements and maintaining internal controls and the independent registered public accounting firm is responsible for the audit of the annual financial statements and the internal controls and rendering an opinion as to the foregoing. In carrying out its oversight responsibilities, the Audit Committee is not providing any special assurance as to Quaker’sQuaker Houghton’s financial statements or internal controls or any professional certification as to the outside auditor’s work.
The Audit Committee reviewed and discussed with management Quaker’sQuaker Houghton’s audited financial statements for the year ended December 31, 2018.2021. The Audit Committee has also discussed with PricewaterhouseCoopers LLP, Quaker’sQuaker Houghton’s independent registered public accounting firm, the matters required to be discussed by Auditing Standard No. 1301, as adopted by the Public Company Accounting Oversight Board and the SEC, which includes, among other items, matters related to the conduct of the audit of Quaker’sQuaker Houghton’s financial statements. The Audit Committee has also received the written disclosures and the letter from PricewaterhouseCoopers LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding PricewaterhouseCoopers LLP’s communications with the Audit Committee concerning its independence from Quaker Houghton and its related entities, and has discussed with PricewaterhouseCoopers LLP its independence from Quaker Houghton and its related entities.
Based on the review and discussions referred to above, the Audit Committee recommended to Quaker’sQuaker Houghton’s Board of Directors that Quaker’sQuaker Houghton’s audited financial statements be included in Quaker’sQuaker Houghton’s Annual Report on Form10-K for the year ended December 31, 20182021 for filing with the SEC.
Audit Committee
Fay West, Chair
Donald R. Caldwell
Mark A. DouglasCharlotte C. Decker
Jeffry D. Frisby
Ramaswami Seshasayee
GENERAL | ||||
Availability of Form 10-K and Annual Report on Form10-Kto Shareholders
Additional copies of our Form 10-K and Annual Report on Form10-Kto Shareholders are available without charge to shareholders upon written request to: Quaker Chemical Corporation, One Quaker Park,Houghton, 901 E. Hector Street, Conshohocken, Pennsylvania 19428, Attention: Victoria K. Gehris, Assistant Secretary. We will also provide copies of the same material to brokers, dealers, banks, voting trustees and their nominees for the benefit of their beneficial owners of record.
Shareholders interested in submitting a proposal for inclusion in our proxy statement for next year’s annual meeting must do so in compliance with applicable Securities and Exchange CommissionSEC rules and regulations. Under Rule14a-8 of the Securities Exchange Act of 1934, as amended, adopted by the SEC, to be considered for inclusion in our proxy materials for our 20202023 annual meeting, a shareholder proposal must be received in writing by our Corporate Secretary at our principal office at One Quaker Park, 901 E. Hector Street, Conshohocken, Pennsylvania 19428 no later than November 30, 2019.December 1, 2022. If the date of our 20202023 annual meeting is moved more than 30 days before or after the anniversary date of this year’s meeting, the deadline for inclusion of proposals in our proxy statement will instead be a reasonable time before we begin to print and mail our proxy materials next year. Any such proposals will also need to comply with the various provisions of Rule14a-8, which governs the basis on which such shareholder proposals can be included or excluded from company-sponsored proxy materials.
If a shareholder desires to submit a proposal for consideration at the 20202023 annual meeting, but not have the proposal included with our proxy solicitation materials relating to the 20202023 annual meeting, the shareholder must comply with the procedures set forth in Section 2.12 of ourBy-Laws. This means that the written proposal must be received by our Corporate Secretary at our principal office on or before February 8, 202010, 2023 but no earlier than January 9, 202011, 2023 (except that if the date of the 20202023 annual meeting of shareholders is more than 30 days before or more than 60 days after the anniversary date of the 20192022 annual meeting, this notice must be received no earlier than the close of business on the 120th day before the date of the 20202023 annual meeting and not later than the close of business on the later of the 90th day before the date of the 20202023 annual meeting or, if the first public announcement of the date of the 20202022 annual meeting is less than 100 days before the date of the meeting, by the 10th day after the public announcement). The notice to our Corporate Secretary must contain or be accompanied by the information required by Sections 2.12 and 2.13 of ourBy-Laws including, among other things: (i) the name and record address of the shareholder making the proposal and the beneficial owner, if any, on whose behalf the proposal is made; (ii) the class and number of shares of our stock which are directly or indirectly owned beneficially and/or of record by the shareholder making the proposal and the beneficial owner, if any, on whose behalf the proposal is made; (iii) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest of the shareholder making the proposal and the beneficial owner, if any, on whose behalf the proposal is made, in such business; (iv) a description of any agreements, arrangements, proxies and understandings between such shareholder and beneficial owner, if any, and any other person or persons (including their names) related to the proposal; and (v) a description of any hedging or other transaction that has been entered into by or on behalf of, or any other agreement or understanding (including, without limitation, any put, short position or any borrowing or lending of shares) that has been made, the effect or intent of which is to mitigate loss to or manage risk of share price changes for, or to increase or decrease the voting power of, the shareholder or any shareholder associated person (as defined in theBy-Laws) with respect to any share of our stock, as well as certain other information. This
2022 Proxy Statement | 75 |
GENERAL | ||
list of required information is not exhaustive. A copy of the full text of the relevantBy-Law
provisions, which includes the complete list of all information that must be submitted to us before a shareholder may submit a proposal at the 20192022 annual meeting, may be obtained upon written request directed to our Corporate Secretary at our principal office. A copy of ourBy-Laws is also posted on the Investor Relations/Investors/Corporate Governance section of our website athttps://www.quakerchem.comwww.quakerhoughton.com. The procedures for shareholders to follow to nominate candidates for election to our Board of Directors are described in the discussion under the heading “Governance Committee Procedures for Selecting Director Nominees” under the Corporate Governance section in this proxy statement. We did not receive any such proposals with respect to the 20192022 Annual Meeting.
All proposals should be submitted in writing to: Quaker Chemical Corporation, One Quaker Park,Houghton, 901 E. Hector Street, Conshohocken, Pennsylvania 19428, Attention: Corporate Secretary.
A proxy form is enclosed for your use. Please complete, date, sign and return the proxy at your earliest convenience in the enclosed envelope, which requires no postage if mailed in the United States. A prompt return of your proxy will be appreciated.
By Order of the Board of Directors,
Robert T. Traub
Senior Vice President, General Counsel and
Corporate Secretary
Conshohocken, Pennsylvania
March 29, 201931, 2022
ARTICLES OF AMENDMENT
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RESOLVED, that the articles of incorporation of the Corporation be amended as follows:
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7. (a) In an election of directors that is not a contested election, each director shall be elected by the vote of the majority of the votes cast with respect to that director. For the purposes of this Article 7, a majority of the votes cast means that the number of votes cast “for” a nominee must exceed the number of votes cast “against” that nominee. This Article 7 shall not apply to an election of directors by holders of any class of stock (other than Common Stock) issued by the Corporation who have the right, voting separately as a class or otherwise, to elect directors.
(b) In a contested election of directors, the candidates receiving the highest number of votes, up to the number of directors to be elected in such election, shall be elected. Shareholders shall not have the right to vote against a nominee in a contested election of directors.
(c) For purposes of this Article 7, a contested election is one in which the number of candidates exceeds the number of directors to be elected. The number of candidates for an election shall be determined in accordance with these Articles of Incorporation, the Corporation’sBy-Laws, including any advance notice provisions of each, and applicable law.
(d) If an incumbent director who is a candidate forre-election is not elected, the director shall be deemed to have tendered his or her resignation to the Board to be effective as of the adjournment of the meeting of the Board at which a decision on whether to accept the resignation is made by the Board. The Nominating Committee, if any, will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board shall act on the Nominating Committee’s recommendation and disclose its decision and the rationale therefor within 90 days after the date of the certification of the election results. The director who is deemed to have tendered his or her resignation shall not participate in the decisions of the Nominating Committee or of the Board with respect to his or her own resignation.
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[Remainder of Page Intentionally Blank]
CORPORATE HEADQUARTERS
Quaker Chemical Corporation
One Quaker ParkHoughton
901 E. Hector Street
Conshohocken, Pennsylvania 19428
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and 2021 Annual Report on Form 10-K, including the CEO's letter to the
shareholders,Shareholders are available at www.proxyvote.com.
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D67265-P64721
QUAKER HOUGHTON
Annual Meeting of Shareholders
May 11, 2022 8:00 A.M.
This proxy is solicited by the Board of Directors
The undersigned, revoking all prior proxies, hereby appoints Andrew E. Tometich and Robert T. Traub, and each of them, as proxies of the undersigned, with full power of substitution and authority to act in the absence of the other, to vote all shares of common stock of Quaker Chemical Corporation, doing business as Quaker Houghton (the “Company”), for which the undersigned is entitled to vote at the Annual Meeting of Shareholders of the Company to be held live via the Internet at www.virtualshareholdermeeting.com/KWR2022 at 8:00 A.M., Eastern Time, on Wednesday, May 11, 2022, and at any adjournment or postponement thereof.
The undersigned also hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders, the Proxy Statement with respect to said Meeting, and the Company’s Annual Report on Form 10-K, for the year ended December 31, 2021.
This proxy, when properly executed, will be voted in the manner directed by the undersigned. If no such directions are made, this proxy will be voted “For” the election of the nominees listed in Proposal 1 for the Board of Directors and “For” Proposal 2.
Continued and to be signed on reverse side
QUAKER HOUGHTON ATTN: ROBERT T. TRAUB 901 E. HECTOR STREET CONSHOHOCKEN, PA 19428 |
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. Eastern Time on May 10, 2022 for shares held directly and by 11:59 P.M. Eastern Time on May 9, 2022 for shares held in a Plan. 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.
During The Meeting - Go to www.virtualshareholdermeeting.com/KWR2022
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. Eastern Time on May 10, 2022 for shares held directly and by 11:59 P.M. Eastern Time on May 9, 2022 for shares held in a Plan. 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.
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.
For comments and/or address changes, please send them via e-mail to: investor@quakerhoughton.com.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D67264-P64721 KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY |
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E58594-P16444
QUAKER HOUGHTON
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1b. | Sanjay Hinduja | ☐ | ☐ | ☐ | |||||||||||||||
1c. | William H. Osborne |
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1d. | Fay West | ||||||||||||||||||
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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| Ratification of the appointment of PricewaterhouseCoopers LLP as the | ☐ | ☐ | ☐ |
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NOTE:In their discretion, the proxies are authorized to vote upon such other matters as may properly come before the meeting or any adjournment or postponement thereof. |
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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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