NON-QUALIFIED DEFERRED COMPENSATION
We have adopted
several plans or arrangements that providethe Executive Savings Investment Plan which provides for the deferral of compensation on a basis that is not
tax-qualified.Deferred Compensation Plan
Under the terms of our deferred compensation plan, an unfunded,non-qualified plan, prior to January 1, 2013, executives could elect to have up to 100% of their annual cash bonus deferred until their retirement or other termination of employment, or for a shorter three-year period (at the executive’s election, in advance). The amounts deferred under the terms of the plan are credited into a prime rate fund, which credits account balances at the prime rate quoted by The Wall Street Journal as of the first business day of the given quarter. For fiscal 2019, the rate credited under this fund was 5.25% through December 20, 2018; 5.50% through August 1, 2019; 5.25% through September 19, 2019; and 5.00% through September 27, 2019. Interest equivalents are credited on a daily basis to the prime rate fund. Previously, executives could elect to also credit amounts under the plan to an Edgewell common stock unit fund or Vanguard tracking funds. On November 16, 2014, the Vanguard tracking fund option was eliminated for allnon-director participants, and on December 15, 2014, the Edgewell common stock unit fund was eliminated for allnon-director participants.
Until January 2013, deferrals of cash bonuses into the Edgewell common stock unit fund during each calendar year were increased by a 25% match from Edgewell (which vests three years from the date of crediting, provided the deferred bonus is kept in that fund for at least one year). Vesting will accelerate upon an executive’s retirement (which for purposes of this plan means the attainment of age 55 with ten years of service), death, permanent disability, involuntary termination, or a change of control of our Company (defined, for purposes of this plan, as the time when (i) an individual or group acquires more than 20% of our common stock, (ii) our continuing directors no longer constitute a majority of our Board, or (iii) a majority of the continuing directors approve a declaration that a change of control has occurred). Effective January 1, 2013, executives no longer have the opportunity to defer portions of their salary and bonus compensation under our Company’s deferred compensation plan, or to receive a Company match on the qualifying portion of the deferral.
Account balances for executives who were employed at our former parent, Ralston Purina Company (“Ralston”), prior to ourspin-off in 2000, also generally include amounts credited during that prior employment. Ralston assigned liability for such amounts to us in thespin-off of our Company from Ralston. Long-term deferrals in the plan may be paid out in a lump sum in cash six months following termination, or in five orten-year increments commencing the year following termination of employment.
Executive Savings Investment Plan
Under the terms of our ESIP, amounts that would be contributed, either by an executive or by our Company on the executive’s behalf, to our 401(k) plan but for tax limitations, are credited to the
non-qualified ESIP. Under that plan, executives may elect to defer their contributions and Company contributions in any of the measurement fund options which track the performance of the Vanguard investment funds offered under our 401(k) plan. Deferrals and vested Company contributions may be transferred to different investment options at the executive’s discretion. Deferrals in the ESIP, adjusted for the net investment return, are paid out in a lump sum payment, or in five or ten annual installments, following retirement or other termination of employment.
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NON-QUALIFIED DEFERRED COMPENSATION TABLE
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Name | | Plan | | Executive Contributions in Fiscal 2019 ($)(1) | | Edgewell Contributions in Fiscal 2019 ($)(2) | | Aggregate Earnings in Fiscal 2019 ($)(3) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at 9/30/2019 ($)(5) |
Mr. Little | | Deferred Compensation Plan | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | |
| ESIP | | | $ | 51,503 | | | | $ | 31,231 | | | | $ | 2,259 | | | | $ | 0 | | | | $ | 103,230 | |
| Deferred Vested Stock Equiv. | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | |
| Total | | | $ | 51,503 | | | | $ | 31,231 | | | | $ | 2,259 | | | | $ | 0 | | | | $ | 103,230 | |
Mr. Hutchison | | Deferred Compensation Plan | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | |
| ESIP | | | $ | 43,854 | | | | $ | 36,125 | | | | $ | 6,480 | | | | $ | 0 | | | | $ | 108,567 | |
| Deferred Vested Stock Equiv. | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | |
| | Total | | | $ | 43,854 | | | | $ | 36,125 | | | | $ | 6,480 | | | | $ | 0 | | | | $ | 108,567 | |
Mr. Hill | | Deferred Compensation Plan | | | $ | 0 | | | | $ | 0 | | | | $ | 145,352 | | | | $ | 0 | | | | $ | 2,818,748 | |
| ESIP | | | $ | 69,261 | | | | $ | 16,607 | | | | ($ | 7,169 | ) | | | $ | 0 | | | | $ | 1,426,669 | |
| Deferred Vested Stock Equiv. | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | | | | $ | 0 | |
| Total | | | $ | 69,261 | | | | $ | 16,607 | | | | $ | 138,183 | | | | $ | 0 | | | | $ | 4,245,417 | |
Mr. Hatfield | | Deferred Compensation Plan | | | $ | 0 | | | | $ | 0 | | | | $ | 547,754 | | | | $ | 777,274 | | | | $ | 10,230,745 | |
| ESIP | | | $ | 76,377 | | | | $ | 86,875 | | | | ($ | 69,725 | ) | | | $ | 67,577 | | | | $ | 2,319,583 | |
| Deferred Vested Stock Equiv. (4) | | | $ | 0 | | | | $ | 0 | | | | ($ | 968,493 | ) | | | ($ | 1,446,470 | ) | | | $ | 0 | |
| Total | | | $ | 76,377 | | | | $ | 86,875 | | | | ($ | 490,464 | ) | | | ($ | 601,619 | ) | | | $ | 12,550,328 | |
| | Mr. Little | | | ESIP | | | $104,850 | | | $95,250 | | | $103,042 | | | $0 | | | $606,795 | |
| | Deferred Vested Stock Equiv. | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | |
| | Total | | | $104,850 | | | $95,250 | | | $103,042 | | | $0 | | | $606,795 | |
| | Mr. Sullivan | | | ESIP | | | $65,224 | | | $48,124 | | | $8,282 | | | $0 | | | $154,857 | |
| | Deferred Vested Stock Equiv. | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | |
| | Total | | | $65,224 | | | $48,124 | | | $8,282 | | | $0 | | | $154,857 | |
| | Mr. O’Toole | | | ESIP | | | $24,628 | | | $22,939 | | | $4,012 | | | $0 | | | $71,749 | |
| | Deferred Vested Stock Equiv. | | | $0 | | | $0 | | | $0 | | | $0 | | | $0 | |
| | Total | | | $24,628 | | | $22,939 | | | $4,012 | | | $0 | | | $71,749 | |
Note: Mr. SullivanMss. Iasenza and Ms. Iasenza electedGaget did not to participate in the ESIP during FY2019FY2021 and, therefore, they are not included in this table.
(1)
| Since 2012, our officers have no longer been eligible to contribute to the deferred compensation plan. The officer contributions to our ESIP during fiscal 20192021 consist of deferrals of salary earned with respect to fiscal 2019. 2021. |
(2)
| Our contributions to our ESIP consist of Company contributions which would have otherwise been contributed to the 401(k) plan but for limitations imposed by the Internal Revenue Service. These amounts, in their entirety, are included in the “All Other Compensation” column of the “Summary Compensation Table.” |
(3)
| Aggregate earnings/(losses) shown in this column consist of: |
amounts credited to each executive under the investment options of each of the plans, reflecting actual earnings on investment funds offered under our 401(k) plan,
in the case of the prime rate option of our deferred compensation plan, the actual fund return rates,
the appreciation or depreciation in value of each of the investment options in the plans between October 1, 20182020 and September 30, 2019,2021, and
the appreciation or depreciation in value of vested restricted stock equivalents (see footnote 4 below).
The above-market portion of interest on the prime rate option (in excess of 120% of the APR) is set forth in the column titled “Change in Pension Value and
Non-qualified Deferred Compensation Earnings” of the “Summary Compensation Table.”
(4)
| Officers were previously allowed to defer conversion of vesting restricted stock equivalents until their termination of employment from our Company. Mr. Hatfield deferred 52,238 equivalents prior to the change in policy noted in footnote (1) above. These equivalents were delivered to Mr. Hatfield six months after his retirement and are included in the “Option Exercises and Stock Vested” table.
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(5) | Of the aggregate balances shown in this column, with respect to the deferred compensation plan, $2,765,914 was previously reported as compensation for Mr. Hatfield in the “Summary Compensation Table” of our proxy statements for previous annual meetings. The balances in that plan for each of the officers also include amounts deferred by them, Company matching deferrals, and earnings thereon, in years in which they were not named executive officers and their compensation was not included in the “Summary Compensation Table,Table.” and for Mr. Hatfield , include amounts deferred under the terms of the Ralston deferred compensation plan, the liabilities of which were assumed by us at the time of ourspin-off. The balances also reflect earnings and losses during the past fiscal year. Of the aggregate balances shown in this column, with respect to our ESIP, the following amounts were previously reported as compensation in the “Summary Compensation Table” of our proxy statements for prior years:
|
Mr. Little - $17,750
$253,326, andMr. HutchisonSullivan - $21,750
$31,950Mr. Hatfield - $1,121,817
The balances also reflect earnings and losses during the past fiscal year. Of the aggregate balances shown in this column with respect to the vested stock equivalents set forth in footnote (4) above, 52,328 equivalents were previously reported as compensation for Mr. Hatfield in the “Summary Compensation Table” of our proxy statements for the years when the awards were granted.
TABLE OF CONTENTS
ITEM 4. APPROVAL OF THE COMPANY’S AMENDED AND RESTATED2018 STOCK INCENTIVE PLAN
We are asking our shareholders to approve the adoption of the Edgewell Personal Care Company Amended and Restated 2018 Stock Incentive Plan (the “A&R 2018 Plan”). The full text of the A&R 2018 Plan is attached to this Proxy Statement as Exhibit A. Our Board approved and adopted the A&R 2018 Plan on November 8, 2019, subject to shareholder approval. The A&R 2018 Plan is now being submitted to our shareholders for their approval with respect to future awards. The A&R 2018 Plan will become effective upon shareholder approval, and no awards may be granted under the A&R 2018 Plan after the date that is 10 years from the date the A&R 2018 Plan was last approved by our Company’s shareholders.
The A&R 2018 Plan will amend and restate our Company’s 2018 Stock Incentive Plan (the “2018 Plan”). If shareholders approve the adoption of the A&R 2018 Plan, the 2018 Plan will immediately be superseded with respect to future awards, and the remaining authorized shares under the 2018 Plan will become available for grant under the A&R 2018 Plan, as described in greater detail under “Description of the A&R 2018 Plan – Authorized Shares” below. Additional shares are being requested under the A&R 2018 Plan.
The closing stock price of a share of our Company’s common stock as reported on the New York Stock Exchange on November 29, 2019, our record date, was $31.16.
Executive Summary of Changes in the A&R 2018 Plan:
An increase in the amount of authorized shares
Strengthened language to eliminate any perceived discretion regarding dividend or dividend equivalents
Addition of a minimum vesting requirement for qualifying awards
Highlights of the A&R 2018 Plan and Best Practices
A&R 2018 Plan does…
Provide for a minimumone-year vesting period subject to certain limited exceptions
Subject the payment of dividends and dividend equivalents on an award to the vesting of the award
Contain limits on the number of shares or cash amounts that may be granted to any employee or consultant in a year
Contain a limit on the number of shares and the cash amounts that may be granted or paid to anynon-employee director in a year
Provide for the recycling of shares back to the plan pool only in the event of expiration, forfeiture or cancellation of awards
Provide for the forfeiture/clawback of incentive awards under certain circumstances
Provide the opportunity for awards to qualify as “performance-based compensation” under Section 162(m) of the Code
A&R 2018 Plan does NOT…
Permit single-trigger vesting on a change of control (except where an acquirer does not assume outstanding awards)
Permit liberal share recycling
Permit the direct or indirect repricing of stock options or stock appreciation rights without shareholder approval
Permit the grant of stock options or stock appreciation rights with below-market exercise prices
Permit excise taxgross-ups
Contain any “evergreen” provisions that automatically add shares to the plan reserve
Permit the grant of reload stock options
Permit “net share counting” upon the exercise of stock options and stock appreciation rights
Permit the recycling of shares underlying awards that are settled in cash
Description of the A&R 2018 Plan
The principal terms of the A&R 2018 Plan are described below, but the description is qualified in its entirety by reference to the A&R 2018 Plan itself. In the event of a conflict between the description and the terms of the A&R 2018 Plan itself, the terms of the A&R 2018 Plan will govern. The A&R 2018 Plan will not become effective unless approved by shareholders.
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Purpose
The purpose of the A&R 2018 Plan is to:
attract, motivate and retain highly qualified and experienced employees andnon-employee directors;
tie the compensation of employees to the performance of our Company; and
allow for the grant of qualifying performance-based compensation for purposes of tax deductibility.
Administration
Except as noted below, the A&R 2018 Plan will be administered by the Compensation Committee (the “Committee”) of our Board. Each member of the Committee shall be:
an “outside director” within the meaning of Section 162(m) of the Code;
a“Non-Employee Director” within the meaning of Rule16b-3 under the Exchange Act; and
anon-employee director meeting the independence requirements for compensation committee members under the rules and regulations of the exchange on which our Company’s shares are traded.
The Committee will have the authority to select the employees and other individuals (other thannon-employee directors) to receive awards under the A&R 2018 Plan, to determine the type, size and terms of the award to be made to each individual selected, to modify the terms of any award that has been granted, to determine the time when awards will be granted, to establish performance objectives, and to prescribe the form of award agreement. The Committee is also authorized to interpret the A&R 2018 Plan and the awards granted under the A&R 2018 Plan, to establish, amend and rescind any rules and regulations relating to the A&R 2018 Plan, and to make any other determinations that it deems necessary or desirable for the administration of the A&R 2018 Plan. The Committee may authorize any one or more of its members or any officer of our Company or any affiliate to execute and deliver documents or to take any other action on behalf of the Committee with respect to awards made or to be made to participants, subject to the requirements of applicable law, including without limitation, Section 16 of the Exchange Act and Section 162(m) of the Code.
The Board has all the powers otherwise vested in the Committee by the terms of the A&R 2018 Plan in respect of awards granted tonon-employee directors.
Notwithstanding the foregoing, except for permitted adjustments in connection with a corporate transaction or recapitalization, neither the Committee nor the Board may reprice, adjust or amend the exercise price of stock options or stock appreciation rights previously awarded, whether through amendment, cancellation and replacement grant, or any other means, unless such action is approved by the shareholders of our Company. Any amendment or repeal of this prohibition against repricing requires the approval of the shareholders of our Company.
Eligible Participants
Employees andnon-employee directors of our Company or our affiliates, and other individuals who perform services for our Company or any of our affiliates, are eligible to receive awards under the A&R 2018 Plan. As of December 1, 2019, approximately 6,000 persons, including five executive officers and elevennon-employee directors, may be considered for awards under the A&R 2018 Plan.
Neither the Committee nor the Board has made any decisions with respect to the individuals who may receive awards under the A&R 2018 Plan after February 6, 2020, or the amount or nature of future awards. It is contemplated that any annual restricted stock equivalent awards tonon-employee directors and any newnon-employee director restricted stock equivalent awards would be made under the A&R 2018 Plan. See “Item 1. Election of Directors—Director Compensation.”
Authorized Shares
An additional 2,850,000 shares are being requested under the A&R 2018 Plan.
The maximum number of shares available for grant and issuance under the A&R 2018 Plan shall be 2,850,000, plus the number of remaining shares of Common Stock not issued or subject to outstanding grants under the 2018 Plan, plus any shares of Common Stock that are subject to awards granted under the 2018 Plan that expire, are forfeited or canceled or terminate for any other reason after January 26, 2018 without the issuance of shares. Any shares of Common Stock that are subject to outstanding awards granted under the 2018 Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award under the 2018 Plan after January 26, 2018 shall not become available under
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the A&R 2018 Plan. No awards may be granted under the 2018 Plan on or after February 6, 2020 subject to shareholder approval of the A&R 2018 Plan. As of September 30, 2019, 3,744,226 shares would have been available for grant and issuance under the 2018 Plan.
Awards other than stock options or stock appreciation rights will be counted against the reserve available for issuance in a 1.95 to 1 ratio.
Shares available forre-issuance under the A&R 2018 Plan:
• Shares underlying awards that are forfeited, canceled, expired or otherwise terminated without the issuance of shares.
Shares not available forre-issuance under the A&R 2018 Plan:
• Shares delivered to, or retained by our Company, in payment of the exercise price of a stock option;
• Shares delivered to, or retained by our Company, in satisfaction of the tax withholding obligations with respect to an award;
• Shares covered by a stock-settled award such as a stock appreciation right that were not issued upon the settlement of the award; and
• Shares repurchased on the open market with the proceeds from the payment of the exercise price of a stock option.
Awards will be counted against the available share reserve on the date of grant, based on the maximum number of shares that may be issued pursuant to the award. Shares issued under the A&R 2018 Plan may come from newly issued, treasury or reacquired shares, or any combination thereof.
Types of Awards
The A&R 2018 Plan allows for the granting of the following types of awards:
Stock options (both incentive stock options andnon-qualified stock options);
Stock appreciation rights;
Restricted stock equivalents;
Other stock-based awards; and
Each award granted under the A&R 2018 Plan is subject to an award agreement containing the particular terms and conditions of that award, subject to the limitations imposed by the A&R 2018 Plan. A participant’s rights in an award may be assigned or transferred only in the event of death, or if permitted by the Committee, to certain members of the participant’s immediate family.
Stock Options.A stock option is the right to purchase a specified number of shares for a specified exercise price. Stock options may be either (a) incentive stock options, which are stock options that meet the requirements under Section 422 of the Code, or(b) non-qualified stock options, which are stock options that do not meet the requirements of Section 422 of the Code or that are designated as a nonqualified stock option. Stock options (other than stock options assumed or granted in substitution for outstanding stock options of a company acquired by our Company or any affiliate) are subject to the following: (i) the exercise price shall be equal to or greater than the fair market value of the shares subject to such stock option on the date of grant; and (ii) the expiration date shall be no later than 10 years from the date of grant. Only employees of our Company and our affiliates may receive awards of incentive stock options, and incentive stock options are subject to additional limitations. The exercise price may be payable either in (1) cash, (2) if permitted by the Committee, by delivery of irrevocable instructions to a broker to deliver promptly the proceeds from the sale of shares, (3) if permitted by the Committee, by tendering shares previously acquired, (4) if permitted by the Committee, by withholding shares that would otherwise be issued having a fair market value on the exercise date equal to the exercise price, or (5) any combination of the foregoing.
Stock Appreciation Rights.A stock appreciation right is a right to receive cash or other property based on the increase in the value of a share over the per share exercise price. Stock appreciation rights (other than stock appreciation rights assumed or granted in substitution for outstanding stock appreciation rights of a company acquired by our Company or any affiliate) are subject to the following: (a) the exercise price shall be equal to or greater than the fair market value of the shares subject to such stock appreciation right on the date of grant; and (b) the expiration date shall be no later than 10 years from the date of grant.
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Restricted Stock.Restricted Stock is an award of shares that is subject to vesting conditions. Prior to the expiration of the vesting period, a participant who has received an award of restricted stock has the right to vote and to receive dividends on the underlying unvested shares, subject, however, to the restrictions and limitations imposed pursuant to the A&R 2018 Plan and award agreement.
Restricted Stock Equivalents.A restricted stock equivalent is an award that is valued by reference to shares, which may be paid to a participant upon vesting in shares, cash or other property.
Other Stock-Based Awards.An “other stock-based award” is an award denominated or payable in shares, other than a stock option, stock appreciation right, restricted stock or restricted stock equivalent. Other stock-based awards may be settled in cash, shares or other property.
Performance Grants.A performance grant is a right to receive cash, shares or other property if the terms and conditions of the performance grant are satisfied. Performance objectives may be based upon Company, business unit, participant and/or other performance objectives, including but not limited to the performance criteria listed under “Qualifying Awards” below. Performance grants include stock options, stock appreciation rights, restricted stock, restricted stock equivalents and other stock-based awards that are subject to performance vesting conditions.
Dividend Equivalents.Awards other than stock options and stock appreciation rights may include the right to receive dividends or dividend equivalents, subject to such terms, conditions, restrictions or limitations, if any, as the Committee may establish. However, dividends and dividend equivalents may be paid with respect to any award only if, when and to the extent that the award vests, and until such time, dividends and dividend equivalents may be held in escrow (with or without the accrual of interest) or be reinvested into additional shares subject to the same vesting or performance conditions as the award on which they are payable.
Award Limits
Non-Employee Director Award Limits.The aggregate maximum fair market value (determined as of the date of grant) of the shares granted under the A&R 2018 Plan in a calendar year in respect of services as anon-employee director may not exceed $500,000, and the maximum amount that may be paid in a calendar year to anynon-employee director in property other than shares (including cash) in respect of services as anon-employee director may not exceed $500,000.
Employee and Consultant Award Limits.The maximum number of shares that may be granted to any employee or consultant during any one calendar year under all awards is 500,000, and the maximum amount of cash that may be paid to any employee or consultant during any one calendar year under all performance grants shall be $20,000,000.
Minimum Vesting Periods
All awards must be subject to a minimum vesting period of at least one year, except:
up to a maximum of five percent of the number of shares available under the A&R 2018 Plan may be issued without regard for any minimum vesting period;
in the event of the death, disability or retirement of the participant, or involuntary termination other than for cause of the participant’s service, or in connection with a change of control of our Company; and
for awards assumed or granted in substitution for outstanding awards of a company acquired by our Company or any affiliate.
Tax Withholding
The exercise or payment of awards and the issuance of shares under the A&R 2018 Plan is conditioned upon a participant making satisfactory arrangements for the satisfaction of any liability to withhold federal, state, local or foreign income or other taxes. In accordance with rules established by the Committee, the required tax withholding obligations may be settled in cash, or with shares, including shares that are part of the award that gives rise to the withholding requirement.
Qualifying Awards
The Committee may (but is not obligated to) grant qualifying awards that constitute qualified performance-based compensation under Section 162(m) of the Code. Qualifying awards are intended to be fully deductible without regard to the $1 million cap on deductibility under Section 162(m) of the Code, as in effect on the date of this Proxy Statement.
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The performance objectives for qualifying awards (other than stock options and stock appreciation rights) may be based upon the attainment of specific orper-share amounts of, or changes in, one or more, or a combination of two or more, of the following:
earnings per share, net earnings per share or growth in such measures;
revenue, net revenue, income, net income or growth in revenue or income (all either before or after taxes);
return measures (including, but not limited to, return on assets, capital, investment, equity, revenue or sales);
cash flow return on investments which equals net cash flows divided by owner’s equity;
controllable earnings (a division’s operating profit, excluding the amortization of goodwill and intangible assets, less a charge for the interest cost for the average working capital investment by the division);
operating earnings or net operating earnings;
share price (including, but not limited to, growth measures);
total shareholder return (stock price appreciation plus dividends);
operating margin or growth in operating margin;
market share or growth in market share;
cash flow, cash flow from operations or growth in such measures;
sales revenue or volume or growth in such measures, including total Company, divisional, or product line sales or net sales figures;
gross margin or growth in gross margin;
corporate value measures;
goals related to acquisitions, divestitures or customer satisfaction;
debt-to-equity ordebt-to-stockholders’ equity ratio;
sustainability and environmental impact; or
Performance may be measured on an individual, corporate group, business unit, subsidiary, division, department, region, function or consolidated basis and may be measured absolutely or relatively to our Company’s peers.
The Committee may provide that in measuring achievement of performance objectives, an award may include or exclude items such as:
• the effects of acquisitions, divestitures, extraordinary dividends, stocksplit-ups, stock dividends or distributions, recapitalizations, warrants or rights issuances or combinations, exchanges or reclassifications with respect to any outstanding class or series of our Company’s stock;
• a corporate transaction, such as any merger of our Company with another corporation; any consolidation of the Company and another corporation into another corporation; any separation of our Company or our business units (including aspin-off or other distribution of stock or property by our Company);
• any reorganization of our Company (whether or not such reorganization comes within the definition of such term in Section 368 of the Code), or any partial or complete liquidation by our Company, or sale of all or substantially all of the assets of our Company;
• the impact of changes in tax rates or currency fluctuations or changes in accounting standards or treatments;
• advertising or promotional spending or capital expenditures outside of annual business plans;
• events such as plant closings, sales of facilities or operations, and business restructurings; or
• the impact of other extraordinary, unusual,non-recurring or infrequently recurring items.
The Committee shall have the discretion to reduce (but not to increase) some or all of the amount that would otherwise be payable under the qualifying award by reason of the satisfaction of the performance objectives set forth in the qualifying award.
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Change of Control of our Company
The Committee may provide in an award agreement provisions relating to a “change of control” of our Company, including without limitation the acceleration of the exercisability, vesting or settlement of, or the lapse of restrictions or deemed satisfaction of performance objectives with respect to, an award; provided that, in addition to any other conditions provided for in the award agreement:
• any acceleration of the exercisability, vesting or settlement of, or the lapse of restrictions or deemed satisfaction of performance objectives with respect to, an award in connection with a change of control may occur only if (i) the change of control occurs, and (ii) either (A) the employment of the participant is terminated (“double-trigger”) or (B) the acquirer does not agree to the assumption or substitution of outstanding awards; and
• for any award that is earned or vested based upon achievement of performance objectives, any amount deemed earned or vested in connection with a change of control or associated termination of employment shall be based upon the degree of performance attainment through the date of such change of control or associated termination of employment, as applicable, with such amount either paid in full or paid pro rata based on the period of time elapsed in the performance period as of the applicable date, as determined by the Committee in its sole discretion.
“Change of control” means the occurrence of a change of control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or not our Company is then subject to such reporting requirement; provided that, without limitation, a change of control shall be deemed to have occurred if a “change in control” occurs within the meaning of Section 409A of the Code.
Recoupment/Clawback
Notwithstanding anything in the A&R 2018 Plan or in any award agreement to the contrary, our Company will be entitled to the extent required by applicable law (including, without limitation, Section 10D of the Exchange Act and any regulations promulgated with respect thereto) or stock exchange listing conditions, in each case as in effect from time to time, to recoup compensation of whatever kind paid under the A&R 2018 Plan by our Company at any time.
Provisions for Foreign Participants
The Committee may modify awards granted to participants who are foreign nationals or employed outside the United States or establish, amend or rescind rules,sub-plans or procedures under the A&R 2018 Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefits or other matters.
Adjustments
In the event of any change in the outstanding shares of our Company by reason of any corporate transaction or change in corporate capitalization such as a stock split, stock dividend,split-up,split-off,spin-off, recapitalization, merger, consolidation, rights offering, reorganization, combination, consolidation, subdivision or exchange of shares, a sale by our Company of all or part of our assets, any distribution to shareholders other than a normal cash dividend, partial or complete liquidation of our Company or similar event, the Committee or Board, as applicable, shall adjust the:
• class and aggregate number of shares available under the A&R 2018 Plan;
• individual award maximum limits under the A&R 2018 Plan;
• class, number and exercise price of outstanding stock options and stock appreciation rights granted under the A&R 2018 Plan; and
• class and number of shares subject to any other awards granted under the A&R 2018 Plan.
Amendments
The A&R 2018 Plan may be amended in whole or in part at any time and from time to time by the Board, and the terms of any outstanding award under the A&R 2018 Plan may be amended from time to time by the Committee (or Board as applicable) in its discretion provided that no amendment may be made without shareholder approval if such amendment would:
• increase the number of shares available for grant under the A&R 2018 Plan;
• decrease the minimum stock option or stock appreciation right exercise price;
• reduce the minimum vesting or performance periods;
• change the individual award limits; or
• amend or repeal the prohibitions against repricing or exchange.
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No amendment may adversely affect in a material manner any right of a participant under an award without his or her written consent.
Termination
The A&R 2018 Plan may be suspended in whole or in part at any time and from time to time by the Board. The A&R 2018 Plan shall terminate upon the adoption of a resolution of the Board terminating the A&R 2018 Plan. No award may be granted under the A&R 2018 Plan after the date that is 10 years from the date the A&R 2018 Plan was last approved and adopted by the shareholders of our Company. No termination of the A&R 2018 Plan shall materially alter or impair any of the rights or obligations of any person, without his or her consent, under any award granted under the A&R 2018 Plan.
New Plan Benefits
The benefits or amounts to be received by or allocated to participants and the number of shares to be granted under the A&R 2018 Plan cannot be determined at this time because the amount and form of grants to be made to any eligible participant in any year is determined at the discretion of the Committee or Board, as applicable. It is contemplated that any annual restricted stock equivalent awards tonon-employee directors and any newnon-employee director restricted stock equivalent awards would be made under the A&R 2018 Plan. See “Item 1. Election of Directors—Director Compensation.”
Certain U.S. Federal Income Tax Consequences of A&R 2018 Plan Awards
Section 162(m) of the Code places a $1 million annual limit on the compensation deductible by our Company that is paid to certain covered employees. Historically, section 162(m) of the Code generally denied public companies a federal income tax deduction for compensation paid to certain covered employees in excess of $1 million for each covered employee during the tax year unless such compensation was qualifying performance-based compensation. The Tax Cuts and Jobs Act, enacted in December 2017, eliminated the exception for deductibility for qualifying performance-based compensation paid pursuant to plans approved by shareholders. For fiscal year 2019, the deductibility of certain covered employees’ compensation will be considered under the limitations under Section 162(m).
Awards that are granted, accelerated or enhanced upon the occurrence of a change of control may give rise, in whole or in part, to “excess parachute payments” within the meaning of Section 280G of the Code and, to such extent, will benon-deductible by our Company and subject to a 20 percent excise tax on the recipient.
State and local tax consequences may in some cases differ from the federal tax consequences discussed above. In addition, awards under the A&R 2018 Plan may be made to employees who are subject to tax in jurisdictions other than the United States and may result in consequences different from those described above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR THE APPROVAL OF THE
AMENDED AND RESTATED 2018 STOCK INCENTIVE PLAN AS DESCRIBED IN THIS PROXY STATEMENT.
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Edgewell| 2019 Proxy Statement | | 65 |
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about our Company’s common stock that may be issued upon the exercise of options, warrants and rights under all our Company’s existing compensation plans as of September 30,
2019: | | | | | | | | | | | | |
| Plan Category | | (1) Number of
Securities to be Issued upon
Exercise of
Outstanding Options, Warrants and Rights | | | (2) Weighted-Average
Exercise Price of
Outstanding Options, Warrants and Rights | | | (3) Number of Securities
Remaining Available for Future Issuance Under Equity Compensation
Plans (Excluding
Securities Reflected in Column (1), and as Noted Below) | |
Equity compensation plans approved
by security holders | | | 1,716,519 | | | | $82.53 | | | | 3,744,226 | |
Equity compensation plans not
approved by security holders | | | None | | | | n/a | | | | None | |
Total | | | 1,716,519 | | | | $82.53 | | | | 3,744,226 | |
| | Equity compensation plans approved by security holders | | | 2,820,126 | | | $60.13 | | | 3,497,035 | |
| | Equity compensation plans not approved by security holders | | | None | | | n/a | | | None | |
| | Total | | | 2,820,126 | | | $60.13 | | | 3,497,035 | |
(1)
| (1) | The number of securities to be issued upon exercise of outstanding options, warrants and rights shown above, as of September 30, 2019,2021, includes 1,207,0301,895,506 restricted stock equivalents which have been granted under the terms of our Company’s 2000 Incentive Stock Plan (pursuant to which no further equity awards may be made), our Company’s 2009 Stock Plan (pursuant to which no further equity awards may be made), and our A&R 2018 Stock Incentive Plan, and 509,489924,620 stock option awards which have been granted under the terms of the A&R 2018 Stock Incentive Plan and the 2009 Stock Plan. |
(2)
| (2) | The weighted average exercise price does not take into account securities which will be issued upon conversion of outstanding restricted stock equivalents. |
(3)
| (3) | This number only reflects securities available under the A&R 2018 Stock Incentive Plan. Under the terms of that plan, any awards other than options, phantom stock options or stock appreciation rights are to be counted against the reserve available for issuance in a 1.95 to 1 ratio. |
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66 | | | Edgewell| 20192021 Proxy Statement | 53 |
