☐ | 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 |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notice of Annual Meeting of Shareholders
2020 Proxy Statement
YOUR VOTE IS IMPORTANT
Please vote by using the internet, telephone, smartphone
or by signing, dating and returning the enclosed proxy card
TO THE HOLDERS OF COMMON STOCK OF MSA SAFETY INCORPORATED ∎ 1000 CRANBERRY WOODS DRIVE, CRANBERRY TOWNSHIP, PENNSYLVANIA 16066 ∎ PHONE(724) 776-8600
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TOTHE HOLDERSOF COMMON STOCKOF
MSA SAFETY INCORPORATED:INCORPORATED:
Notice is hereby given that the Annual Meeting of Shareholders of MSA Safety Incorporated will be held on Tuesday,Friday, May 12, 20202023 at 9:00 A.M.a.m., Eastern Time, via a live audio webcast only at www.virtualshareholdermeeting.com/MSA2020MSA2023 for the purpose of considering and acting upon the following:
(1) Election of Directors for 2023: The election of three directors for a term of three years;
(1) | Election of Directors for 2026: The election of three directors for a term of three years; |
(2) Selection of Independent Registered Public Accounting Firm: The selection of the independent registered public accounting firm for the year ending December 31, 2020;
(2) | Management Equity Incentive Plan Approval: Approval of Adoption of the Company’s 2023 Management Equity Incentive Plan. |
(3) | Selection of Independent Registered Public Accounting Firm: The selection of the independent registered public accounting firm for the year ending December 31, 2023; |
(3) Say on Pay: To provide an advisory vote to approve the executive compensation of the Company’s named executive officers;
(4) | Say on Pay: To provide an advisory vote to approve the executive compensation of the Company’s named executive officers; |
(5) | Say on Pay Frequency: To provide an advisory vote on the frequency of the advisory vote to approve executive compensation; |
and such other business as may properly come before the Annual Meeting or any adjournment thereof.
Only the holders of record of Common Stock of the Company on the books of the Company at the close of business on February 12, 202014, 2023 are entitled to notice of and to vote at the meeting and any adjournment thereof.
Notice of Internet Availability of Proxy Materials: Instead of mailing printed proxy materials in 2023, on March 30, 2023 we mailed a Notice of Internet Availability of Proxy Materials advising shareholders to view our Proxy Statement, Proxy Card and 2022 Annual Report free of charge online at www.proxyvote.com, or to request paper or email copies. Only shareholders who have requested printed materials will receive them. We encourage all shareholders to access the Company’s proxy materials online to reduce the environmental impact and costs associated with paper copies.
You are cordially invited to attend the meeting. Whether or not you expect to attend the meeting, please vote by promptly submitting your proxy by mail, by the internet or by phone. If you attend the meeting, you may, if you wish, withdraw your proxy and vote your shares during the meeting.
By Order of the Board of Directors,
Richard W. Roda Secretary |
March 30, 2023
IMPORTANT NOTE ABOUT
THE 20202023 ANNUAL MEETING
MSA will not hold an in-person Annual Meeting of Shareholders in 2020. Due to the uncertain public health impact of coronavirus COVID-19 as of the date of this Notice and Proxy Statement,2023. Instead, the Annual Meeting of Shareholders will be held in a virtual meeting format only. Shareholders must use the following link to access the virtual meeting on the meeting date:
www.virtualshareholdermeeting.com/MSA2020MSA2023
Upon accessing the link, shareholders must enter the12-digit control number found on their proxy card, voting instruction form or notice;notice of internet availability of proxy materials; otherwise, admittance to the meeting will not be approved. There will be no physical meeting location established.
It is not necessary to attend the meeting to vote your shares. To vote your proxy by mail, mark your vote on the proxy card and follow the mailing directions on the card. To vote your proxy by telephone or electronically using a smartphone, tablet or the internet, follow the instructions on the proxy card. If you received a notice of internet availability of proxy materials, you may vote by following the instructions contained in the notice. The proxy holders will vote your shares according to your directions. If you sign and return your proxy card but do not mark any selections, your shares represented by that proxy will be voted as recommended by the Board. Whether or not you expect to attend the virtual meeting, we encourage you to vote by proxy as soon as possible, in case you later decide not to attend the meeting.
By Order of the Board of Directors,
MSA 2023 PROXY STATEMENT |
RICHARD W. RODA
Secretary
April 7, 2020
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MSA 2023 PROXY STATEMENT |
Proxy Summary
2023 ANNUAL MEETING OF SHAREHOLDERS
When: 9:00 a.m. | ||||||
Record Date: February 14, 2023 | Where: www.virtualshareholdermeeting.com/MSA2023 | |||||
Voting: | Shareholders of the Company as of the Record Date are entitled to vote on the matters presented at the meeting. Each share of |
Voting MattersBUSINESS OVERVIEW
Established in 1914, MSA Safety Incorporated is the global leader in the development, manufacture and supply of safety products that protect people and facility infrastructures. Recognized for market leading innovation, many MSA products integrate a combination of electronics, mechanical systems and advanced materials to protect users against hazardous or life-threatening situations. Our comprehensive product line, which is governed by rigorous safety standards across highly regulated industries, is used by workers around the world in a broad range of markets, including the fire service, construction, industrial manufacturing applications, oil, gas and petrochemical industry, utilities and mining. Our core products include breathing apparatus where self-contained breathing apparatus is the principal product, fixed gas and flame detection systems, portable gas detection instruments, industrial head protection products, firefighter helmets and protective apparel and fall protection devices.
MSA 2023 PROXY STATEMENT | i |
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VOTING MATTERS
PROPOSAL NO. 1 |
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Mr. William M. Lambert, Ms. Diane M. Pearse, and Mr. Nishan J. Vartanian were nominated by the Board for election in the Class of 2023. The table beginning on page 2Mr. William M. Lambert, Ms. Diane M. Pearse and Mr. Nishan J. Vartanian were nominated by the Board for election in the Class of 2026. The table beginning on page 3 sets forth certain information about the nominees, all of whom are currently members of the Board, and about the other directors whose terms of office will continue after the Annual Meeting. We are asking shareholders to vote FOR the election of the nominees, each of whom has consented to be named as a nominee and to serve if elected.
THE BOARD RECOMMENDS A VOTE FOR EACH NOMINEE |
We are asking shareholders to approve the selection of Ernst & Young LLP as our independent registered public accounting firm for 2020.
PROPOSAL NO. 2 | ||||
MANAGEMENT EQUITY INCENTIVE PLAN APPROVAL | PAGE 19 | |||
We are asking shareholders to vote FOR the Company’s 2023 Management Equity Incentive Plan, to ensure the Company’s continuing ability to provide a flexible range of compensation awards, including performance-based compensation awards, under the plan. THE BOARD RECOMMENDS A VOTE FOR THE MANAGEMENT EQUITY INCENTIVE PLAN |
PROPOSAL NO. 3 | ||||
SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | PAGE 66 | |||
We are asking shareholders to THE BOARD RECOMMENDS A VOTE FOR THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
We are asking shareholders to vote FOR the Company’s compensation of the named executive officers. The Board and the Compensation Committee will take into account the outcome when considering future executive compensation arrangements. In 2019, the shareholders voted in favor of the Company’s executive compensation program, with 99% of the votes cast by shareholders voting FOR the proposal. The Board and Compensation Committee took this vote into consideration in designing the executive compensation program for 2020. Please see the Compensation Discussion and Analysis in the proxy statement for complete details about compensation for the named executive officers.
Your Vote is Important: Shareholders can vote using any of the following methods
PROPOSAL NO. 4 | ||||
SAY ON PAY | PAGE 67 | |||
We are asking shareholders to vote FOR the Company’s compensation of the named executive officers. The Board and the Compensation Committee will take into account the outcome when considering future executive compensation arrangements. In 2022, the shareholders voted in favor of the Company’s executive compensation program, with 97.2% of the votes cast by shareholders voting FOR the proposal. The Board and Compensation Committee took this vote into consideration in designing the executive compensation program for 2023. Please see the Compensation Discussion and Analysis in the proxy statement for complete details about compensation for the named executive officers. THE BOARD RECOMMENDS A VOTE FOR SAY ON PAY |
PROPOSAL NO. 5 | ||||||||||||||||
SAY ON PAY FREQUENCY | PAGE 68 | YOUR VOTE IS IMPORTANT | ||||||||||||||
We are asking shareholders to vote for a ONE year period, with respect to the advisory vote on the frequency of the advisory vote to approve executive compensation. The Company presently uses a one year period for advisory votes to approve executive compensation. The Board will take into account the outcome of this year’s vote when considering the frequency of future advisory votes to approve executive compensation. THE BOARD RECOMMENDS A VOTE FOR A ONE YEAR PERIOD |
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By internet using your computer | By telephone | |||||||||||||||
By internet using your tablet or smartphone | By mailing your proxy card | |||||||||||||||
Please refer to your proxy card and/or voting instruction form for internet, telephone, smartphone or mail instructions
Certain shareholder votes take place each year at the Annual Meeting of Shareholders. Since most shareholders do not attend the annual meeting, we request your authorization (or your “proxy”) in advance to instruct designated persons (your “proxy holders”) how to vote your shares at the meeting. A proxy statement is a document we are required to give you when requesting your voting authority and instructions. Regulations of the U.S. Securities and Exchange Commission (the “SEC”) also require that we include specific information about the Company in the proxy statement.
All shareholders of MSA Safety Incorporated as of February 12, 2020, the “record date” for this year’s Annual Meeting of Shareholders, are entitled to vote at the meeting. We are furnishing this proxy statement and proxy card, along with our annual report, to all shareholders of record as of the record date.
Shareholders of Record
Shareholders can own stock directly in their own name through our transfer agent, Broadridge Corporate Issuer Solutions. Such shareholders are referred to as shareholders of record. When you are a shareholder of record, we will provide you with the proxy statement and an accompanying proxy card.
Beneficial Owners
Shareholders can also own stock indirectly, through one or more brokers or institutions. Such shareholders are referred to as beneficial owners. When you are a beneficial owner, your stock is registered in the name of your broker or other institution. We mail proxy statements for beneficial owners to the broker or other institution. It is their responsibility to forward you the proxy statement, along with instructions about how to vote your shares. Shareholders can be both shareholders of record for some shares and beneficial owners for other shares, and may own shares through multiple brokerage or institutional accounts. Such shareholders will receive proxy materials for each account.
Important Information for MSA Employees
MSA employees may own stock a number of ways, including but not limited to stock held as shareholder of record or as a beneficial owner as described above, and stock purchased while an employee pursuant to a MSA benefit plan such as the Employee Stock Purchase Plan (ESPP) or the MSA Stock Fund of the MSA Retirement Savings Plan (401(k)). If you hold shares in more than onereceive a notice of these ways, you will receive multiple sets of proxy materials. You must complete each setinternet availability of proxy materials, you receivemay vote by following the instructions contained in order to vote the shares covered by such materials.that notice.
ii | MSA 2023 PROXY STATEMENT |
PROXY SUMMARY | ||||
A proxy card or other voting instructions accompany each setCORPORATE GOVERNANCE HIGHLIGHTS
The MSA Board of proxy materials. When youDirectors places a continued focus on the corporate governance affairs of the Company and acknowledges that good corporate governance is an ongoing process. The Board also recognizes that good corporate governance is important to the Company’s success. Key Company governance practices are a shareholder of record, we send you a proxy card along withdescribed more fully in the proxy statement. When youBelow is a summary of 2022 governance highlights.
2022 Corporate Governance Highlights
Director Independence
Board Leadership
Board Refreshment and Diversity
Evaluation and voting instruction form you receive, or those particular shares will not be voted.Effectiveness
• | Annual Board and Committee self-assessments |
• | Individual director assessments occur two out of every three years providing constructive and candid feedback |
• | Annual assessment of Lead Independent Director |
Director Engagement
• | Directors attended 100% of Board and committee meetings |
• | Board policy limits director membership to a total of three public company boards, including the Company |
• | Director stock ownership guidelines require equity ownership of at least five times the annual director retainer |
ESG Oversight
• | The Board recognizes the importance of proper oversight of the Company’s ESG affairs and has continued to assess its corporate governance framework in the context of the evolving ESG landscape. Details regarding oversight of the Company’s ESG affairs are illustrated in the graphic below. |
OVERSIGHT OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) MATTERS
MSA 2023 PROXY STATEMENT | iii |
PROXY SUMMARY | ||||
Please followCORPORATE SOCIAL RESPONSIBILITY PROGRAM
Corporate Social Responsibility (CSR) is not new to MSA. As a company dedicated to helping protect the voting instructions forworld’s workers, it has been at the center of our mission since 1914. The Company’s CSR programs are incorporated into enterprise-wide programs, driven by the work of each setfunctional team. The Company views CSR efforts on a continuous improvement basis, and each year MSA takes steps to further expand and enhance our programs. More information about the Company’s CSR program can be found by visiting www.MSAsafety.com/corporate-responsibility.
2022 CSR Highlights
ESG Oversight and Programs
○ | Our Products: Continued deployment of new product development efforts to meet customer needs in driving their safety and sustainability programs |
○ | Our People: Ongoing execution of associate engagement, diversity and inclusion, and psychological safety programs |
○ | Our Planet: Continued pursuit of environmental sustainability efforts including continued collection of key data and pursuit of reduction targets |
○ | Governance, Values and Risk: Ongoing steps to continually enhance CSR program governance as well as programs for ethics and legal compliance (including anti-bribery compliance), cybersecurity, data privacy, ERM and crisis management, among others |
Disclosure
Select CSR Data
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• | In 2022, MSA achieved twelve consecutive months without a |
• | Approximately 53% of our U.S. workforce self-identifies as diverse by race or |
• | Women comprise approximately 41% of MSA’s U.S. workforce |
• | MSA made contributions of approximately $1.3 million to charitable giving |
• | More fulsome CSR data will be included in our 2022 annual CSR report, expected to be published later in 2023 |
If you do not completeRecognitions
MSA earned a proxy or voting instruction form(s), then those particular shares will not be voted in director elections or the advisory votevariety of awards reflecting our commitment to approve the executive compensation of the named executive officers.CSR:
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• | Forbes Best Employers for Diversity (2022) |
• | Pittsburgh Post-Gazette’s Top Workplace in the |
iv | MSA 2023 PROXY STATEMENT |
The Company will file the final voting results with the SECVirtual Meeting Information and publish them on our website within four business days following the Annual Meeting of Shareholders.
VIRTUAL MEETING INFORMATION AND QUESTIONSQuestions
MSA will not hold a physical, in-person Annual Meeting of Shareholders in 2020.2023. Instead, due to the uncertain public health impact of coronavirus (“COVID-19”), the Annual Meeting of Shareholders will be held in a virtual meeting format only using an audio webcast.
It is not necessary to attend the meeting to vote your shares. To vote your proxy by mail, mark your vote on the proxy card and follow the mailing directions on the card. To vote your proxy by telephone or electronically using a smartphone, tablet or the internet, follow the instructions on the proxy card. If you received a notice of internet availability of proxy materials, you may vote by following the instructions contained in the notice. Whether or not you expect to attend the virtual meeting, we encourage you to vote by proxy as soon as possible, in case you later decide not to attend the meeting. Shareholders of record as of the record date for the meeting who wish to attend the virtual meeting must use the following link on the day of the meeting:
www.virtualshareholdermeeting.com/MSA2020MSA2023
Upon accessing the link, shareholders must enter the12-digit control number found on their proxy card, voting instruction form or notice.notice of internet availability of proxy materials. Otherwise, admittance to the meeting will not be approved.
How can I vote my shares without attending the meeting?
To vote your shares without attending the virtual meeting, please follow the instructions on the proxy card and/or voting informationinstruction form(s) you received. If you receive a notice of internet availability of proxy materials, you may vote by following the instructions contained in the notice. This way your shares will be represented whether or not you are able to attend the meeting. You are encouraged to vote by proxy in advance of the meeting, in case you later decide not to attend the meeting.
What will I need to do in order to attend the meeting?
You are only entitled to attend the virtual meeting if you were a shareholder of record as of the record date for the meeting or you hold a valid proxy for the meeting. You may attend the meeting and submit a question during the meeting by visiting the website above and using your control number to enter the meeting.
How can I attend at the meeting?
While it is not necessary for you to attend the meeting in order to vote your shares, shareholdersyou may attend the meeting and submit a question during the meeting by visiting the website listed above. To participate in the meeting, you will need theabove and using your 12-digit control number included on your proxy card, notice of internet availability of proxy materials or on the instructions that accompanied your proxy materials. voting instructions.
During the meeting, you will participate in an audio webcast as a “listen only” participant. Shareholders may submit written questions either in advance of or while participating in the meeting, using the virtual meeting website. The meeting will start at 9:00 A.M.a.m., Eastern Time on May 12, 2020.2023. We encourage you to access the meeting website prior to the start time. If you encounter any difficulties accessing the virtual meeting duringon the check-in orday of the meeting, time, please contact the technical support number that will be posted on the website log-in page. We will follow established meeting rules and procedures which afford the same treatment to all participating shareholders. Additionally, we will use software that verifies the identity of each participating shareholder and ensures they are granted the same access rights they would have at an in-person meeting.
2019 ENVIRONMENTAL, SOCIAL AND GOVERNANCE HIGHLIGHTS
As a company whose mission has been dedicated to protecting worker health and safety for over 105 years, social responsibility is deeply embedded into the culture of the Company. The Company maintains a Corporate Social Responsibility program to more formally address key ESG matters. More information about the Company’s program can be found by visiting www.msasafety.com/corporate-responsibility. The following are highlights of the Company’s ESG activities. To obtain specific data on the categories reviewed below, please consult the Company’s 2020 Corporate Social Responsibility Report, which can be found by visiting the website above.
ENVIRONMENTAL
MSA is committed to conducting its business in a manner that is environmentally sustainable, that protects the natural resources of our environment, and that complies with applicable laws and regulations. The Company views its environmental efforts as a continuous improvement effort, and each year MSA takes steps to further expand and enhance its environmental programs. In 2019, the Company completed a variety of actions as part of its commitment to the environment, including those listed in the table below. Further enhancements are planned for 2020.
MSA 2023 PROXY STATEMENT | v |
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SOCIALMSA SAFETY INCORPORATED
MSA is steadfastly committed to corporate citizenship, which the Company defines to include a responsibility to employees and the communities in which the Company operates. MSA takes great pride in the numerous programs it maintains, highlights of which are summarized in the following table.Proxy Statement
Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to be held on May 12, 2023 | ||
The 2023 Proxy Statement and the Annual Report to Shareholders for the year ended December 31, | ||
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GOVERNANCE
The MSA Board of Directors places a continued focus on the corporate governance affairs of the Company and acknowledges that good corporate governance is an ongoing process. The Board also recognizes that good corporate governance is important to the Company’s success. Key Company governance practices are described more fully in the proxy statement that follows this introduction. Below is a summary of key governance characteristics.www.proxyvote.com
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Scan the QR Code below to access the MSA CSR Report through any internet enabled smart device
MSA SAFETY INCORPORATED
Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting
to be held on May 12, 2020
The 2020 Proxy Statement and the Annual Report to Shareholders for the year ended December 31, 2019
are also available at www.proxyvote.com
The 2020 Annual Meeting of Shareholders for the year ended December 31, 2019 will convene via webcast at www.virtualshareholdermeeting.com/MSA2020
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of MSA Safety Incorporated (the “Company” or “MSA”) of proxies in the accompanying form to be voted at the Annual Meeting of Shareholders of the Company to be held on Tuesday,Friday, May 12, 2020,2023, and at any and all adjournments thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
Instead of mailing printed proxy materials on March 30, 2023, we mailed a Notice of Internet Availability of Proxy Materials advising shareholders to view our Proxy Statement, Proxy Card and 2022 Annual Report free of charge online at www.proxyvote.com, or to request paper or email copies. Only shareholders who have requested printed materials will receive them. We encourage all shareholders to access the Company’s proxy materials online to reduce the environmental impact and costs associated with paper copies. To vote your proxy by mail, mark your vote on the proxy card, and follow the mailing directions on the card. To vote your proxy by telephone or electronically using a smartphone, tablet or the internet, follow the instructions on the proxy card. If you received a notice of internet availability of proxy materials, you may vote by following the instructions contained in the notice. The proxy holders will vote your shares according to your directions. If you sign and return your proxy card but do not mark any selections, your shares represented by that proxy will be voted as recommended by the Board.
We encourage you to vote by proxy as soon as possible. A shareholder giving the accompanying proxy by mail has the power to revoke or change it at any time prior to its exercise upon written notice given to the Secretary of the Company. Please note that, in order to be effective, the revocation or change must be received by the Company by 11:59 p.m. EDTEastern Time on May 11, 2020.2023. The mailing address of the principal executive offices of the Company is 1000 Cranberry Woods Drive, Cranberry Township, PA 16066. A shareholder voting the proxy by telephone or internet has the power to revoke or change such proxy vote by voting again and following the instructions and meeting the deadlines for such vote as set forth on the proxy card.
VOTING SECURITIES AND RECORD DATEVoting Securities and Record Date
As of February 12, 2020,14, 2023, the record date for the Annual Meeting, 38,858,32139,213,542 shares of Common Stock were issued and outstanding.
Only holders of Common Stock of the Company of record on the books of the Company at the close of business on February 12, 2020,14, 2023, are entitled to notice of and to vote at the Annual Meeting and at any adjournment thereof. Such holders are entitled to one vote for each share held and do not have cumulative voting rights with respect to the election of directors. Holders of outstanding shares of the Company’s 41/2% Cumulative Preferred Stock are not entitled to vote at the meeting.
See “Stock Ownership” on page 4964 below for information with respect to share ownership by the directors and executive officers of the Company and the beneficial owners of 5% or more of the Company’s Common Stock.
MSA 2023 PROXY STATEMENT |
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ELECTION OF DIRECTORS
At the Annual Meeting, three directors will be elected to serve until the Annual Meeting in 2023.2026. Mr. William M. Lambert, Ms. Diane M. Pearse and Mr. Nishan J. Vartanian were nominated by the Board for election in the Class of 2023.The Board of Directors and its Nominating and Corporate Governance Committee recommend a vote FOR the election of the nominees, each of whom has consented to be named as a nominee and to serve if elected.2026. Properly submitted proxies that are timely received will be voted for the election of the nominees named below, unless otherwise directed thereon, or for a substitute nominee designated by the Nominating and Corporate Governance Committee in the event a nominee named becomes unavailable for election.
The Board and the Nominating and Corporate Governance Committee have determined that the nominees possess a balanced mix of qualifications and experiences relevant to the effective governance and oversight of our business. The tables beginning on the following table setspage set forth certain information about theour nominees, all of whom are currently members of the Board and about the other directors whose terms of office will continue after the Annual Meeting.
Nominees for terms expiring in 2023
BOARD SNAPSHOT | ||||||||||||
DIRECTOR SKILLS, EXPERIENCE AND EXPERTISE | ||||||
Leadership | ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ | 10 | ||||
Business oversight experience as a CEO, President, or other senior executive | ||||||
$ | Financial Oversight | ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ | 10 | |||
Background and substantial experience with finance, accounting and financial reporting matters | ||||||
Designated Financial Expertise | ∎ ∎∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ | 2 | ||||
SEC Rule 10A-3 Financial Expert | ||||||
Legal, Risk and Public Policy | ∎ ∎∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ | 2 | ||||
Significant global expertise with legal and risk management matters and public policy development and advocacy | ||||||
Operations | ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎∎ | 9 | ||||
Experience in manufacturing supply chains and logistics | ||||||
Global Business Expertise | ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎∎ | 9 | ||||
International background or global experience including in growth markets | ||||||
Sustainability | ∎ ∎∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎ | 2 | ||||
Experience in the oversight of corporate social responsibility, sustainability, or related programs | ||||||
Safety Products Industry | ∎ ∎ ∎∎ ∎ ∎ ∎ ∎ ∎ ∎ | 3 | ||||
Experience in the safety products business | ||||||
Mergers and Acquisitions | ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎∎ ∎ | 8 | ||||
Background and experience in mergers and acquisitions | ||||||
Industrial Sales, Marketing and/or Distribution | ∎ ∎ ∎ ∎ ∎ ∎ ∎ ∎∎ ∎ | 8 | ||||
Experience in developing and executing strategies for sales, marketing and distribution |
MSA 2023 PROXY STATEMENT |
PROPOSAL NO. 1- ELECTION OF DIRECTORS | ||||
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THE BOARD RECOMMENDS YOU VOTE “FOR” THE FOLLOWING DIRECTOR NOMINEES. |
NOMINEES FOR TERMS EXPIRING IN 2026
William M. Lambert
Qualifications: As a former CEO | ||||
Age: 65 Director Since: 2007 Committees: Law |
• Served as Chairman and later, Non-Executive Chairman of the Board from May 2018 to May 2020. • Employed at MSA for over 35 years, joining the Company as a design engineer and worked in a number of executive roles for more than 20 years. Other Current Public Directorships: • Kennametal Inc. |
Diane M. Pearse
Qualifications: Ms. Pearse brings extensive financial, accounting, and operational expertise to the Company’s board given her substantial financial oversight experience and business leadership | ||||
Age: 65 Director Since: 2004
Committees: Audit; Finance (Chair); Law |
• Former Chief Operating Officer of Garrett Brands, LLC (a provider of handcrafted and artisanal popcorn) from May 2015 to May 2016. • Previously served as Senior Vice President, Operations and Merchandising for Redbox Automated Retail, LLC, a fully automated DVD rental company. Other Current Public Directorships: • None |
MSA 2023 PROXY STATEMENT |
PROPOSAL NO. 1- ELECTION OF DIRECTORS | ||||
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Nishan J. Vartanian Qualifications: Mr. Vartanian joined the Company as a sales representative over 36 years ago and has worked in a number of executive management roles for over nine years. As the Company’s President and Chief Executive Officer and given his multitude of operational roles with the Company, Mr. Vartanian brings extensive knowledge of the Company’s business and industry. He offers executive experience in the oversight and execution of the Company’s business strategy as well as product development, marketing, sales, finance and the global safety products industry. | ||||||
Age: 63 Director Since: 2017 Committees: None | Professional Highlights: • Chairman, President and Chief Executive Officer of the Company since May • Previously served as President and Chief Executive Officer of the Company from May 2018 to May 2020. • Prior
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Continuing Directors with terms expiring in 2021CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2024
Sandra Phillips Rogers Qualifications: Given her substantial legal experience, including her experience with a large manufacturing company, along with her experience leading enterprise-level diversity and inclusion efforts, Ms. Rogers offers the board strong expertise in the legal, human capital, sustainability and operational aspects of managing a large manufacturing company. | ||||
Age: 57
Director Since: 2017
Audit;
Corporate Governance |
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• Served as Group Vice President, General Counsel, Chief Legal Officer and Chief Diversity Officer for TMNA from January 2019 to June 2022; Group Vice President, General Counsel, Chief Legal Officer and Corporate Secretary for TMNA from April 2017 to January 2019; and Group Vice President, General Counsel and Chief Legal Officer of TMNA from April 2015 to April • Prior to joining Toyota, Ms. Rogers was a partner at the global law firm of Morgan, Lewis & Bockius.
• The Chemours Company |
Committees: Audit; Law (Chair)
Age:54
Director Since:2017
MSA 2023 PROXY STATEMENT |
PROPOSAL NO. 1- ELECTION OF DIRECTORS | ||||
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John T. Ryan III
Qualifications: Mr. Ryan joined MSA in 1969 and held numerous executive positions throughout his tenure with the Company. He retired as Chief Executive Officer in 2008 after four decades of employment with the Company. Mr. Ryan remains on the board as a director. As the former CEO and long tenured senior executive for the Company, Mr. Ryan brings to the board extensive leadership experience and specific expertise in corporate strategy oversight and execution, as well as extensive safety products industry expertise, particularly in international markets. | ||
Age: 79 Director Since: 1981
Committees: Finance; Law | Professional Highlights: • Former Chief Executive Officer and Chairman of the Company until his retirement in 2008. • Served as Non-Executive Chairman from May 2008 to May 2015. Other Current Public Directorships: • None |
Qualifications: As the CEO of a publicly traded company, Mr. Savi brings to the board extensive experience in managing a large global business, along with specific expertise in industrial manufacturing, strategy development, growth and innovation, and international business operations. | ||
Age: 57 Director Since: Committees: Compensation | Professional Highlights: • Chief Executive Officer and President of ITT Inc., a diversified manufacturer of highly engineered critical components and customized technology solutions for the transportation, industrial, and energy markets since January 2019. • Previously served ITT Inc. as President and Chief Operating Officer beginning in August 2018, and before that as Executive Vice President of the Industrial Process and Motion Technologies business. • Before joining ITT Inc. in 2011, Mr. Savi served as Chief Operating Officer for Comau Body Welding at Comau, a subsidiary of the Fiat Group, and as Chief Executive Officer of Comau North America. Other Current Public Directorships: • ITT Inc. |
MSA 2023 PROXY STATEMENT |
Continuing Directors with terms expiring in 2022
PROPOSAL NO. 1- ELECTION OF DIRECTORS | ||||
6 |
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2025
Robert A. Bruggeworth
Qualifications: As the CEO of a publicly traded international corporation, Mr. Bruggeworth brings to the
| ||||
Age: 61 Director Since: 2007 Lead Independent Committees: Compensation; Nominating and Corporate |
• President and CEO of RF Micro Devices, Inc. prior to the merger of RF Micro Devices, Inc. and TriQuijnt Semiconductor, Inc. to form Qorvo, Inc. Other Current Public Directorships: • Qorvo, Inc • Seagate Technology Holdings plc |
Gregory B. Jordan Qualifications: As the General Counsel and Chief Administrative Officer of a large publicly traded corporation, Mr. Jordan brings extensive legal, operational, risk management and corporate governance expertise to the board. He also gained significant international experience through his service in managing and overseeing the strategic and financial matters as managing partner of a global law firm. | ||||
Age: 63 Director Since: 2019 Committees: Law (Chair) | ||||
• Executive Vice President, General Counsel and Chief Administrative Officer of The PNC Financial Services Group, Inc. • Upon commencement of employment with The PNC Financial Services Group, Inc. in October 2013 served as Executive Vice President and General • Prior to his roles with The PNC Financial Services Group, Inc., Mr. Jordan was the global managing partner of Reed Smith LLP and
• None |
Committees: Law
Age:60
Director Since:2019
MSA 2023 PROXY STATEMENT |
PROPOSAL NO. 1- ELECTION OF DIRECTORS | ||||
7 |
Rebecca B. Roberts Qualifications: Ms. Roberts brings significant international business management, operational and workplace safety expertise to the board. Ms. Roberts also provides extensive oil, gas and petrochemical industry experience and an informed perspective on regulatory, operational and sustainability matters faced by a complex international company. | ||
Age: 70 Director Since: 2013 Committees: Compensation (Chair); Nominating and Corporate | Professional Highlights: • Former President of Chevron Pipe Line Company • Previously served as President of Chevron Global Power Generation Other Current Public Directorships: • AbbVie Inc. • Black Hills Corporation |
Qualifications: As the former President of a large oil and gas company, combined with her prior international executive leadership positions, Ms. Roberts brings to the Company’s board significant international business management, operations and workplace safety expertise, along with extensive oil, gas and petrochemical industry expertise.
Committees: Compensation (Chair); Nominating and Corporate Governance
Age:67
Director Since:2013
William R. Sperry
Qualifications: Mr. Sperry brings expertise in public company accounting, risk management, disclosure and financial system management as the Chief Financial Officer of a publicly traded international corporation and as a former investment banking | ||||
Age: 61 Director Since: 2019
Committees: Audit (Chair); Finance | Professional Highlights: • Executive Vice President and Chief Financial Officer of Hubbell Incorporated since 2012. • Previously served as Vice President, Corporate Strategy and Development and Head of Investor Relations of Hubbell Incorporated. • Employed in various roles in the investment banking, financial services and consulting industries prior to his positions with Hubbell Incorporated. Other Current Public Directorships: • None |
MSA 2023 PROXY STATEMENT |
PROPOSAL NO. 1- ELECTION OF DIRECTORS | ||||
8 |
|
In the election of directors for terms expiring in 2026, the three candidates receiving the highest numbers of votes cast by the holders of Common Stock voting at the meeting or by proxy will be elected as directors, subject to the resignation policy described in the Corporate Governance Matters section below.
A proxy vote indicated as withheld from a nominee will not be cast for such nominee but will be counted in determining whether a quorum exists for the meeting. Shares for which neither a vote “for” or “withheld” is selected (e.g., broker non-votes) will not be counted in determining the total votes cast for this matter.
The Company’s Restated Articles require that any shareholder intending to nominate a candidate for election as a director must give written notice, containing specified information, to the Secretary of the Company not later than 90 days in advance of the meeting at which the election is to be held. No such notices were received with respect to the 2023 Annual Meeting. Therefore, only the nominees named above will be eligible for election at the meeting.
The Board of Directors and its Nominating and Corporate Governance Committee recommend a vote FOR the election of the nominees, each of whom has consented to be named as a nominee and to serve if elected. Properly submitted proxies which are timely received will be voted for the election of the nominees named below, unless otherwise directed thereon, or for a substitute nominee designated by the Nominating and Corporate Governance Committee in the event a nominee named becomes unavailable for election.
| MSA 2023 PROXY STATEMENT |
9 |
The Board places a continued focus upon the corporate governance affairs of the Company and acknowledges that good corporate governance is an ongoing process. The Board also recognizes that good corporate governance is important to the Company’s success. Key Company governance practices are described below.
CORPORATE GOVERNANCE OVERVIEW
Corporate Governance Guidelines
The Board has determined that eachadopted Corporate Governance Guidelines, which cover a wide range of directors Bruggeworth, Giacomini, Jordan, Pearse, Roberts, Rogers, Ryansubjects, such as the role of the Board and Sperry is an independent director. Anits responsibilities, Board composition and election, operations and committees, chairman and lead independent director is aresponsibilities, director who has no material relationshipcompensation, director retirement, Board and management evaluation and succession planning, director orientation and training, and shareholder communications with the Company, either directly orBoard. The Corporate Governance Guidelines, as a partner,well as the charters of the Board’s Audit, Compensation and Nominating and Corporate Governance Committees and the Company’s Global Code of Business Conduct for directors, officers and employees, are available in the Corporate Governance section of the Company’s internet website at www.MSAsafety.com. Such material will also be furnished without charge to any shareholder or officer of an organization that has a relationship withupon written request to the Company. The independent directors have specifically considered and determined that Mr. Ryan, who retired as CEOSecretary of the Company over ten years ago, is an independent director. One reason for this is that, given Mr. Ryan’s substantial ownership interest in MSA (see Stock Ownership,at the address appearing on page 49 below), he is particularly aligned in independently representing the interests of shareholders.one above.
Director Independence
| The Board has determined that each of directors Bruggeworth, Jordan, Lambert, Pearse, Roberts, Rogers, Ryan, Savi and Sperry is an independent director. An independent director is a director who has no material relationship with the Company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company. The independent directors have specifically considered and determined that Mr. Ryan, who retired as CEO of the Company approximately 15 years ago, is an independent director. One reason for this is given Mr. Ryan’s substantial ownership interest in MSA (see Stock Ownership, page 64), he is particularly aligned in independently representing the interests of shareholders. | |
• All Board Committees are comprised solely of independent directors • The Board maintains a Lead Independent Director with a clearly identified role and responsibilities |
In making its annual independence determinations, the Board reviewed the director’s individual circumstances, the corporate governancelisting standards of the New York Stock Exchange and the Board’s independence standards. These standards are available in the Corporate Governance section of the Company’s internet website at www.MSAsafety.com. They are summarized below.
Disqualifying Relationships
The followingwww.MSASafety.com and, among other things, consider employment and compensatory relationships, are considered to be material relationships that would impair a director’s independence:
If a director is an employee or has an immediate family member who is an executive officer of the Company, the director is not independent until three years after the end of the employment relationship.
If a director or an immediate family member receives more than $120,000 per year in direct compensation from the Company, the director is not independent until three years after the director or family member ceases to receive such compensation. Disqualifying compensation does not include directorwith our auditors and committee fees, pension or deferred compensation for prior service or compensation received by an immediate family member for service as anon-executive officer employee.
If:
the director is a partner of or employed by, or the director’s immediate family member is a partner of, the firm that is the present internal or external auditor of the Company;
the director’s immediate family member is employed by the firm that is the present internal or external auditor of MSA and such family member personally works on the Company’s audit; or
the director, or the director’s immediate family member, was within the last three years a partner or employee of the present internal or external auditor of MSA and personally worked on the Company’s audit within that time.
If a director or an immediate family member is an executive officer of another company, and any of the Company’s present executives serves on that company’s compensation committee, the director is not independent until three years after the end of such employment or service.
If a director is an employee or an immediate family member is an executive officer of a company that makes payments to or receives payments from the Company for property or services, and the amount of such payments in a fiscal year exceeds the greater of $1 million or 2% of the other company’s consolidated gross revenue, the director is not independent until three years thereafter.
Non-Disqualifying Relationships
The following relationships are not considered to be material relationships that would impair a director’s independence:
A director is an executive officer of another company that is indebted to the Company, or to which the Company is indebted, in an amount less than 5% of the other company’s total consolidated assets;
A director is an executive officer of another company in which the Company owns a common stock interest less than 5% of the other company’s total shareholders’ equity;
A director serves as an executive officer of a charitable organization, and the Company’s discretionary contributions to the organization are less than 2% of the organization’s annual revenue; or
A director is an executive officer of another company that owns a common stock interest in the Company.
Other Relationships
The Board will annually review commercial and charitable relationships of directors. If a relationship is not one of thenon-disqualifying relationships described above, the determination of whether the relationship is material or not, and therefore whether the director is independent or not, is made by the directors who satisfy the independence guidelines set forth under the two preceding captions.
For example, if a director is the executive officer of a charitable organization, and the Company’s discretionary contributions to the organization are more than 2% of that organization’s annual revenue, the independent directors will determine, after considering all of the relevant circumstances, whether the relationship is material, and therefore whether or not the director should be considered independent. The Company will explain in its proxy statement the basis for any Board determination that a relationship is not material, despite the fact that it does not meet one of the safe-harbors under“Non-Disqualifying Relationships” above.
Independence Determinations for Compensation Committee Members
In affirmatively determining the independence of any director who will serve on the Compensation Committee, the Board will consider all factors specifically relevant to determining whether the director has a relationship to the Company which is material to the director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to (i) the source of compensation of such director including any consulting, advisory or other compensatory fee paid by the Company to such director, and (ii) whether such director is affiliated with the Company, a subsidiary of the Company, or an affiliate of a subsidiary of the Company.
Our Board and Nominating and Corporate Governance MattersCommittee annually review and evaluate the Board’s leadership structure. Currently our Board leadership structure includes a Chairman (who is also our CEO), a lead independent director (or, lead director) and independent committee chairs.
The Board places a continued focus uponbelieves that this structure allows for robust and open communication between the corporate governance affairsBoard’s independent directors and management as they work together to enhance shareholder value. The Board has separated the roles of Chairman and CEO in the past and may choose to do so again in the future depending on which leadership structure best serves the Board, the Company and acknowledges that good corporate governance is an ongoing process. The Board also recognizes that good corporate governance is important to the Company’s success. Key Company governance practices are described below.
Corporate Governance Guidelinesshareholders at a given time.
The Board has adopted Corporate Governance Guidelines which cover a wide range of subjects, such as the role of the Board and its responsibilities, Board composition and election, operations and committees, chairman and lead director responsibilities, director compensation, director retirement, Board and management evaluation and succession planning, director orientation and training, and shareholder communications with the Board. The Corporate Governance Guidelines, as well as the charters of the Board’s Audit, Compensation, Nominating and Corporate Governance, Finance and Law Committees and the Company’s Global Code of Business Conduct for directors, officers and employees, are available in the Corporate Governance section of the Company’s internet website at www.MSAsafety.com. Such material will also be furnished without charge to any shareholder upon written request to the Secretary of the Company at the address appearing on page one.
Board Leadership
The Board presently separates the positions of Chairman of the Board and Chief Executive Officer. Mr. Lambert, who retired as Chief Executive Officer of the Company in May 2018, serves asNon-Executive Chairman. Prior to his retirement, Mr. Lambert wascurrent Chairman and Chief Executive Officer from May 2015.is Mr. Ryan served asNon-ExecutiveVartanian, who was elected Chairman until May 2015. The Chairman is elected annually by the Board at its organizational meeting in May.
The Board periodically reviews its leadership structure and did so in May 2019.2020. The Board believes that Mr. LambertVartanian is presently best positioned to serve asNon-Executive Chairman given his familiarity with the Company’s business, the safety products industry, and his previousthe oversight and execution of the Company’s corporate strategy. The Board also believes that this structure enables Mr. Vartanian, who was elected Chief Executive Officer in May 2018, to focus on managingMore detailed information about the Company. The Board has combined the roles in the pastduties and may choose to do so again in the future. The decision by the Board on whether to combine or separate the roles is based upon the needsresponsibilities of the Company and Board at a given time.
The Board also believes that it is in the best interests of the Company to maintain effective independent board oversight. Accordingly, the Board annually selects a lead independent director (the “lead director”) to further augment its corporate governance practices. Mr. Bruggeworth has served as lead director since May 2017.
The Chairman presides at Board meetings and, among other responsibilities, collaborates with the CEO and lead director to establish the annual Board calendar and set meeting objectives and agendas; is available, when requested by the Board or CEO, and as appropriate, for consultation and direct communication with shareholders and to represent the Board with special groups, government representatives, or community organizations; works with the CEO to ensure that meeting agenda items, goals and objectives are clearly defined and met, and oversees the prioritization and appropriate follow-through on Board requested actions from meeting to meeting; ensures appropriate balance and focus in Board meetings and that time is appropriately managed on topics to be covered; ensures that contributions are made by all directors during Board meetings, that differences of opinion are freely expressed, and that discussion is driven to timely conclusion while building consensus as appropriate; chairs the annual meeting of shareholders; and carries out other responsibilities as may be set forth in the Corporate Governance Guidelines or requested from the Board from time to time.
The lead director serves as a principal liaison between the independent directors and the CEO, including regular communications with directors to obtain their views and advice, working to improve Board performance, facilitating communications among directors, and communicating to the CEO and theNon-Executive Chairman the concerns of the independent directors. The lead director also, among other responsibilities, convenes meetings of the independent directors as necessary, presides at all executive sessions of the Board’s independent directors, and helps to set a balanced tone for director feedback; presides at Board meetings at which theNon-Executive Chairman is not present; facilitates discussion and open dialogue among the independent directors, and as needed,one-on-one discussions between meetings; takes an active role, along with the Nominating and Corporate Governance Committee Chair, to address matters that may arise with respect to specific directors; collaborates with theNon-Executive Chairman and the CEO to prepare and approve schedules and agendas for Board meetings, ensuringlead director can be found on the page that input is received from directors and management; retainsfollows.
MSA 2023 PROXY STATEMENT |
CORPORATE GOVERNANCE MATTERS | ||||
10 |
Lead Independent Director The Board believes that it is in the best interests of the Company to maintain effective independent board oversight. In accordance with the Company’s Corporate Governance guidelines, the Board annually appoints a lead director to further augment corporate governance practices. Mr. Bruggeworth has served as lead director since May 2017 and has substantial experience with corporate governance and public company leadership, in addition to strong knowledge of the Company and its governance practices. Below are key duties and responsibilities of MSA’s lead director, which are determined by the Board: | ||
• Serves as the principal liaison between the independent members of the Board and the Chairman, President and CEO. • Presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors. • Facilitates discussion and open dialogue among the independent directors. • Provides independent Board leadership. • Develops and approves the agenda and board meeting schedules in collaboration with the Chairman, President and CEO. | • Addresses Board effectiveness, performance and composition with input from the Nominating and Corporate Governance Committee. • Is authorized to retain outside advisors and consultants to be engaged by the Board on board-wide matters. • In consultation with the Chair of the Compensation Committee, contributes to the annual performance evaluation of the CEO and participates in its communication to the CEO. | |
Chairman The duties of the Chairman are determined by the Board. Below are key duties and responsibilities of MSA’s Chairman: | ||
• Presides at Board meetings. • Collaborates with the lead director to establish the annual Board calendar and set meeting objectives and agendas. • Works with the lead director to ensure that meeting agenda items, goals and objectives are clearly defined and met, and oversees the prioritization and appropriate follow-through on Board requested actions from meeting to meeting. • Is available, when requested by the Board, and as appropriate, for consultation and direct communication with shareholders and to represent the Board with special groups, government representatives, or community organizations. | • Ensures appropriate balance and focus in Board meetings and that time is appropriately managed on topics to be covered. • Ensures that contributions are made by all directors during Board meetings, that differences of opinion are freely expressed, and that discussion is driven to timely conclusion while building consensus as appropriate. • Chairs the annual meeting of shareholders. |
In addition to the Chairman and the lead director, the Board on board-wide matters, as needed; together with the Chair of the Compensation Committee, contributes to the annual performance evaluation summaryDirectors has five standing committees, each of the CEO and participates in its communication to the CEO; pays particular attention to assuring that the Board adequately addresses long term strategy, long term performance, risk management, and succession planning; and takes an active role, if not the leading role, in CEO succession planning.
The Board maintains an active structure of independent director leadership. In furtherance of this, the Corporate Governance Guidelines provide that itwhich is the Company’s practice for directors to meet at each Board meeting in executive session, with no members of management present. The lead director chairs the executive sessions. The audit, compensation, nominating and corporate governance, finance and law committees are also each comprisedcomposed solely of independent directors as definedand is led by an independent chair. These committees are described more fully beginning on page 13. The Board believes the Company and its shareholders are well-served by this leadership structure. Having a lead director independence standards of the New York Stock Exchangevested with significant authority and the Board’s independence standards.key responsibilities and five independent Board committees chaired by independent directors promotes strong independent oversight.
Board, Committee, Individual Director and Lead Director Assessments
The Nominating and Corporate Governance Committee oversees self-assessment processes for the Board and the audit, compensationAudit, Compensation and nominatingNominating and corporate governanceCorporate Governance committees, along with peer assessments for each director theNon-Executive Chairman, and the lead director. The purpose of the Board and committee assessments is to continually enhance the effectiveness of the Board and its committees. The annual written questionnaires for the Board self-assessment gathers feedback onand committees, which may be periodically revised in the judgment of the Board or a range of topics such asrespective committee, presently include the Board’sfollowing topics:
The purpose of the individual director,Non-Executive Chairman, and lead director peer assessments is to provide feedback to each director, enabling them to continually enhance their performance and to informguide the Nominating and Corporate Governance Committee and Board as to each director’s fitness forre-nomination.
The Board, committee,Non-Executive Chairman, andpurpose of the lead director assessments areassessment is to provide feedback to the incumbent while enabling the continued development and enhancement of performance in the role. The lead director assessment is conducted annually. Theannually while individual director peer assessments are conducted two out of every three years for each director to coincide with the Board’s classified structure.
Director Tenure, Succession and Recruitment
MSA 2023 PROXY STATEMENT |
CORPORATE GOVERNANCE MATTERS | ||||
11 |
1 | Annual Board, Committee and Director Questionnaires The Nominating and Corporate Governance Committee annually reviews and updates tailored questionnaires for each of the Board, individual directors, and the lead director, as well as the committee’s own questionnaire. Questionnaires for the Audit and Compensation Committees are annually reviewed and updated by each of those committees. Questionnaires are designed to include predominately open-ended questions for candid and constructive commentary. | |
2 | Summary of the Completed Questionnaires Summaries of the Board and committee assessments are prepared, which include all responses. Comments are unattributed and shared with the full Board and applicable committee. Summaries of the individual director questionnaires are reviewed by the lead director. A summary of the lead director assessment is reviewed by the Nominating and Corporate Governance Committee (not including the lead director). | |
3 | Assessment Review and Feedback The Chair of the Nominating and Corporate Governance Committee leads a discussion of the written Board assessment results at the committee and Board level. Separately, each committee chair leads a discussion of the applicable committee assessment at each committee meeting and reports on their discussion to the full Board. During these reviews, directors consider areas of strength and opportunities to enhance the operations of the Board and its committees. Results of the lead director assessment are communicated to the lead director by the Nominating and Corporate Governance Committee and focus on the lead director’s performance, strengths and opportunities for continued effectiveness. The lead director confers individually with each director following the individual director peer assessments to address individual director performance and effectiveness. | |
4 | Actions In response to past Board and committee assessments, a variety of actions have been taken to continue enhancing Board and committee governance activities, such as the following: • Ongoing enhancement to the new director onboarding program. • Varying meeting topics while facilitating participation of the appropriate subject matter experts and management personnel. • Overseeing the ongoing evolution of meeting briefing materials, to ensure continued director understanding and preparation in advance of meetings. • Facilitating more in-depth meeting discussion on topics, to ensure active and ongoing participation and engagement between management and the Board during meetings. • Receiving regular education sessions and presentations covering a variety of topics, such as emerging risk areas, corporate governance and competitors. |
MSA 2023 PROXY STATEMENT |
CORPORATE GOVERNANCE MATTERS | ||||
12 |
Director Tenure, Succession and Recruitment The Board periodically considers its own composition and the importance of board refreshment. Presently, five of the Board’s ten directors have served for five years or less, including directors Jordan, Rogers, Savi, Sperry and Vartanian. This current mix of newer and more experienced directors provides the Board with the contribution of new and diverse ideas while ensuring continuity and insight developed through a deeper understanding of the Company and its industry. The Nominating and Corporate Governance Committee is responsible for identifying and reviewing potential director candidates and for recommending nominees to the Board. In preparing its candidate recommendations to the Board, the Committee considers, but does not choose solely on the basis of, the distinctive experiences and perspectives of diverse candidates. In evaluating diversity, the Committee and the Board consider not only race, national origin, gender and other director self-identified diversity characteristics, but also the need for a Board that represents diverse experience at policy |
making levels in business, past professional accomplishments, and acknowledgesother factors when recommending prospective directors for the importance of board refreshment. Presently, five directors have served for less than three years, including directors Giacomini, Jordan, Rogers, Sperry and Vartanian. The current mix of newer and more experienced directors provides the Board with the contribution of new and diverse ideas while ensuring continuity and insight developed through a deep understanding of the Company and its industry.
The Nominating and Corporate Governance Committee is responsible for identifying and reviewing potential director candidates and for recommending nominees to the Board. The Committee will consider director candidate recommendations from a variety of sources, including from a shareholder, anon-management director, the chief executive officer, any other executive officer, a third party search firm, or other appropriate sources.Company. In evaluating all potential candidates, the Committee is guided by an executive skills matrix of the Company’s current directors to identify specific needs, and a defined list of director recruitment criteria maintained by the Committee. The fundamental criterion for selecting a prospective director is the ability to contribute to the well-being of the Company and its shareholders. Good judgment, integrity and a commitment to the mission of the Company are essential. Other criteria include independence under the Board’s independence standards, a commitment to the mission and values of the Company, applicable business and financial experience, current chief executive officer or other executive leadership experience, merger and acquisition experience, additional public company board experience and other criteria. The Committee may revise and/or prioritize itsOur process for director recruitment criteria depending on the current needs of the Board and the Company.selection is highlighted below.
In preparing its candidate recommendations to the Board, the Committee also considers, but does not choose solely on the basis of, the distinctive experiences and perspectives of diverse candidates. In evaluating diversity, the Committee and the Board consider not only race, national origin, gender and other director self-identified diversity characteristics, but also the need for a Board that represents diverse experience at policy making levels in business, past professional accomplishments, and other factors when recommending prospective directors for the Company. The director recruitment criteria described above, including diversity, are considered by the Committee each time a new candidate is reviewed for Board membership.
Candidate Recommendations from: • Independent Search Firms • Outside Advisors • Independent Directors • CEO or Other Executive Officers • Shareholders | » | Candidate Evaluation • Consider skills matrix and identify specific needs • Review director recruitment criteria • Review independence standards, potential conflicts • Evaluate diversity, including diverse experiences and perspectives • Ensure alignment on commitment to integrity and the Company’s mission and values • Meet with directors and select key management | » | Nominating and Corporate Governance Committee Recommendation of Candidate for Election to Board | » | Review by Full Board | » | Elect Director MSA has elected 5 new directors since 2017 |
Director Resignation Policy
The Board has adopted a resignation policy with respect to uncontested director elections. In accordance with this resignation policy, a director nominee who does not receive a majority of the votes cast in an uncontested election of directors must promptly tender a resignation to the Board. The Board’s procedures for identifying an uncontested election of directors, determining the majority of votes cast, and responding to a tender of resignation, are specified in the Corporate Governance Guidelines, which are available in the Corporate Governance section of the Company’s website at www.MSAsafety.com.
Director Retirement
Pursuant to the Board’s existing retirement policy as set forth in the Corporate Governance Guidelines, directors are expected to retire from the Board at the annual meeting of shareholders in the year of their 75th birthday, subject to the authority of the Board to ask a director to serve past the normal retirement date if the Board determines that doing so is in the best interests of the Company. The policy includes an exception, pursuant to which directors beneficially owning five percent or more of the Company’s common stockCommon Stock are exempt from the policy. Only one director presently qualifies for this exception.
Meeting Attendance The Board met six times during 2022. All directors attended 100% of the meetings of the Board | ||||||||
Meeting Attendance
MSA 2023 PROXY STATEMENT |
CORPORATE GOVERNANCE MATTERS | ||||
13 |
The Board met eight times during 2019. All directors attended 100% of the meetings of the Board and of all committees on which they served. Directors are expected to attend the Annual Meeting of Shareholders. All directors attended last year’s annual meeting.
Board CommitteesBOARD COMMITTEES
The Board presently maintains anthe following committees to assist in discharging its duties: Audit, Committee, a Compensation, Committee, a Nominating and Corporate Governance, Committee, a Finance Committee, and a Law Committee. The Board may establish and eliminate committees from time to time based upon the needsCommittees. A brief description of the BoardCommittees, their responsibilities and the Company. Each committee specified below presently consists of the directors listed.current membership is provided below. Committee appointments will expire at the 20202023 organizational meeting of the Board which takes place followingfollows the Annual Meeting of Shareholders.Meeting. At the organizational meeting of the Board, committee appointments will be made for the following year.
Audit Committee | ||||
Chair: William R. Sperry Members: Diane M. Pearse Sandra Phillips Rogers Independence: All members of the Audit Committee are independent directors under the Board’s Independence Standards for Directors, NYSE listing standards and the applicable rules of the Securities and Exchange Commission. Financial Expertise: All members of the Audit Committee satisfy the NYSE’s financial literacy requirement. The Board has determined that directors Pearse and Sperry are each an audit committee financial expert as defined by the rules of the Securities and Exchange Commission. Meetings in 2022: 7 | Overview: | |||
The Audit Committee assists the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements, accounting and financial reporting and disclosure processes, and the adequacy of the systems of disclosure and internal controls established by management. | ||||
Primary Responsibilities: | ||||
• Selects and recommends to the Board and shareholders the Company’s independent registered public accounting firm and evaluates its qualifications, independence, fees and performance, and approves in advance all audit and non-audit services. • Reviews and discusses with management and the independent registered public accounting firm the Company’s financial statements and reports and its internal and disclosure controls and matters relating to the Company’s internal control structure. • Reviews the audit plans for and results of the independent and internal audits. • Oversees the Company’s Global Code of Business Conduct and related processes and programs governing legal and regulatory compliance, including those governing anti-bribery compliance. • Together with the Board, oversees and reviews with management the enterprise risk management program and contingency plans on a bi-annual basis. • Together with the Board, oversees and reviews with management the Company’s cyber security program and contingency plans on a quarterly basis. • Receives periodic reports from management regarding the Company’s disclosure of non-financial ESG metrics. | ||||
Compensation Committee | ||||
Chair: Rebecca B. Roberts Members: Robert A. Bruggeworth Luca Savi Independence: All members of the Compensation Committee are independent directors under the Board’s Independence Standards for Directors and NYSE listing standards. Meetings in 2022: 3 | Overview: | |||
The Compensation Committee oversees the Company’s executive compensation and benefits and related policies and programs. For more information on the responsibilities and role of the Compensation Committee, including the Committee’s processes for determining executive compensation, see the Compensation Discussion and Analysis beginning at page 27. | ||||
Primary Responsibilities: | ||||
• Reviews and recommends (to the independent directors for approval) the annual goals, performance and compensation of the Company’s chief executive officer. • Reviews and approves the compensation of all other executive officers and other key executives. • Monitors the effectiveness of all other employee benefit offerings. • Manages the Company’s overall compensation strategy and plans and assesses any risk inherent in these plans and attempts to ensure that such risk is not excessive and is acceptable to the Company. • Employs, compensates and oversees the Company’s compensation consultant and assures its independence. |
The Audit Committee presently consists of directors Giacomini (Chair), Pearse, Rogers and Sperry. The Audit Committee, which met five times during 2019, assists the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements and financial reporting process. The Committee selects and recommends annually to the Board and the shareholders the independent registered public accounting firm to audit the Company’s financial statements, approves in advance all audit andnon-audit services performed by the independent registered public accounting firm, reviews the plans, findings and recommendations of the independent registered public accounting firm, and reviews and evaluates the performance of the independent registered public accounting firm, its independence and its fees. The Committee reviews and discusses with management and the independent registered public accounting firm the Company’s financial statements and reports and its internal and disclosure controls and matters relating to the Company’s internal control structure. The Committee oversees the Company’s Global Code of Business Conduct and related Company programs governing legal and regulatory compliance, which includes a periodic review with management of the implementation and effectiveness of the Company’s compliance programs. The Committee, along with the Board, also oversees the Company’s enterprise risk management program. Pursuant to this program, the Committee reviews with management the Company’s analyses of risks and contingency plans on abi-annual basis. The Board has determined that each of directors Giacomini and Sperry is an “audit committee financial expert,” as defined by the rules of the Securities and Exchange Commission.
MSA 2023 PROXY STATEMENT |
CORPORATE GOVERNANCE MATTERS | ||||
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Nominating and Corporate Governance Committee | ||||
Chair: Robert A. Bruggeworth Members: Rebecca B. Roberts Sandra Phillips Rogers Independence: All members of the Nominating and Corporate Governance Committee are independent directors under the Board’s Independence Standards for Directors and NYSE listing standards. Meetings in 2022: 3 | Overview: | |||
The Nominating and Corporate Governance Committee oversees and recommends to the Board the Company’s corporate governance policies, procedures and practices. | ||||
Primary Responsibilities: | ||||
• Reviews the composition and structure of the Board and its committees and recommends changes to the Board as necessary. • Establishes the criteria, skills and qualifications for Board membership and recommends nominees for election to the Board. • Reviews director compensation levels and practices and recommends to the Board changes in such compensation and equity ownership levels. • Oversees the formal processes for evaluating the performance of the Board, the Committee, the lead director, and individual directors. • Oversees the Company’s orientation and onboarding program for new directors and the continuing education for current directors. • Reviews the Board’s processes associated with oversight of the Company’s ESG program efforts. |
The Compensation Committee presently consists of directors Bruggeworth, Pearse, and Roberts (Chair). The Compensation Committee, which met three times in 2019, reviews and recommends (toBoard may also add and/or remove other committees from time to time, based upon the independent directors for approval) the annual goals, performance and compensation of the Company’s chief executive officer, reviews and approves the compensation of all other executive officers and other key executives, monitors the effectiveness of all other employee benefit offerings, manages the Company’s overall compensation strategy and compensation plans, assesses any risk inherent in these plans and attempts to ensure that such risk is not excessive and is acceptable to the Company and employs, compensates and oversees the Company’s external compensation consultant and assures its independence. The Compensation Committee also administers the Company’s Amended and Restated 2016 Management Equity Incentive Plan and predecessor equity plans (collectively, the “Management Equity Plans”).
The Nominating and Corporate Governance Committee presently consists of directors Bruggeworth (Chair), Giacomini and Roberts. The Committee, which met three times in 2019, reviews and makes recommendations to the Board regarding the composition and structureneeds of the Board criteria and qualifications for Board membership, director compensation and evaluation of current directors and potential candidates for director. The Committee maintains formal processes for evaluatingat a given time. In addition to the performance ofcommittees described above, the Board the lead director, and the individual directors. It ispresently also responsible for establishing and monitoring policies and procedures concerning corporate governance. The Nominating and Corporate Governancemaintains a Finance Committee and the Board continually assess the Company’s Corporate Governance Guidelines and the corporate governance practices of the Board. Further information concerning the Nominating and Corporate Governance Committee and its procedures appears below.
a Law Committee. The Finance Committee presently consists of directors Pearse (Chair), Ryan and Sperry. The Committee, which met twothree times in 2019,2022, reviews and makes recommendations to the Board regarding the Company’s capital structure, dividend policy, financing activities, hedging policies and practices, funding of the Company’s employee benefit plans, liquidity management, corporate financial plans, and strategic financial analyses as requested by the Board.
The Law Committee presently consists of directors Jordan (Chair), Lambert, Pearse Rogers (Chair) and Ryan. The Committee, which met twosix times in 2019,2022, reviews legal matters that could present significant financial risk to the Company.
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The Board as a whole exercises oversight of the Company’s strategic risks and other risks identified through the Company’s enterprise risk management program. Strategic risks are identified in the course of the Board’s review and approval of the Company’s strategic plans and there is regular monitoring of the Company’s performance against the strategic objectives including customer satisfaction metrics as well as periodic review of the activities of competitors. The Board, directly and through its Audit Committee, also has oversight of the enterprise risk management program which is managed by the Chief Financial Officer. The enterprise risk management program is designed to enable effective and efficient identification and management of critical enterprise risks and to facilitate the incorporation of risk considerations into decision making. The Director of Investor RelationsManagement is responsible for leading the formal risk assessment and reporting process within the Company. Through consultation with the Company’s executive leadership, the Director of Investor Relationsmanagement periodically assesses the major risks facing the Company and works with the executive leadership team and othersfunctional leaders responsible for managing each risk to identify and consider appropriate mitigation elements to each risk, and to develop risk contingency plans, as appropriate. This analysis is reviewed two times each year with the Audit Committee and annually with the full Board, and input from the Board is considered in the analysis. Emerging risks are discussed as needed.
In addition to the Board oversight described above, each committee has various risks that it oversees. For example, the Audit Committee is responsible for reviewing the Company’s risk management policies and procedures, as well as its major financial risk exposures, and the processes management has established to monitor and control such exposures. The Compensation Committee monitors risk inherent in the Company’s compensation policies, compensation practices, and similar matters related to the recruitment and retention of employees, and periodically receives educational legislative and regulatory updates. The Nominating and Corporate Governance Committee monitors risks related to Board performance and the Company’s governance practices. The Law Committee reviews the Company’s product safety program and legal matters that could present significant risk to the Company.
The Compensation Committee has evaluated the risks arising from the Company’s compensation policies and practices for its employees. This included a review of examinations by Pay Governance, LLC, the Compensation Committee’s compensation consultant, of the compensation philosophy, design, governance and administration of compensation policies and practices provided to MSA’s executives. The review also considered information developed by management regarding programs provided to othernon-executive employees. Based on this, the Committee concluded again in 20192022 that the risks arising from the Company’s compensation policies and practices for its employees are not reasonably likely to have a material adverse effect on the Company.
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COMPENSATION OF DIRECTORS
The following table shows the compensation earned by the Company’snon-employee directors for services during 2019:
Name | Fees Earned or Paid in Cash | Restricted Stock Award (1) | Changes in Pension Value (2) | Total | ||||||||||||||||
Robert A. Bruggeworth |
| $114,677 |
| $129,984 |
| — |
| $244,661 | ||||||||||||
Alvaro Garcia-Tunon(3) |
| $ 35,975 |
| — |
| — |
| $ 35,975 | ||||||||||||
Thomas W. Giacomini |
| $ 89,354 |
| $129,984 |
| — |
| $219,338 | ||||||||||||
Gregory B. Jordan(4) |
| $ 67,555 |
| $159,980 |
| — |
| $227,535 | ||||||||||||
William M. Lambert |
| $140,000 |
| $129,984 |
| — |
| $269,984 | ||||||||||||
Diane M. Pearse |
| $ 87,500 |
| $129,984 |
| — |
| $217,484 | ||||||||||||
Rebecca B. Roberts |
| $ 92,500 |
| $129,984 |
| — |
| $222,484 | ||||||||||||
Sandra Phillips Rogers |
| $ 84,677 |
| $129,984 |
| — |
| $214,661 | ||||||||||||
John T. Ryan III |
| $ 80,000 |
| $129,984 |
| $8,742 |
| $218,726 | ||||||||||||
L. Edward Shaw Jr. (3) |
| $ 35,976 |
| — |
| $2,190 |
| $ 38,166 | ||||||||||||
William R. Sperry (4) |
| $ 72,889 |
| $169,979 |
| — |
| $242,868 |
For 2019, the Company paidnon-employee directors a base retainer on a quarterly basis which totaled $80,000 for the year (“Annual Base Retainer”). The Company paid the lead director an additional retainer of $30,000 and paid theNon-Executive Chairman an additional retainer of $60,000. The additional annual retainer for the Audit Committee chair was $15,000, for the Compensation Committee chair was $12,500, and for the Nominating and Corporate Governance LawCommittee annually reviews director compensation and Finance committee chairs was $7,500.seeks to compensate directors in a manner that attracts and retains highly qualified directors and aligns the interests of the Company’s directors with those of the shareholders.
The following table describes the components of the non-employee directors’ compensation for 2022:
Compensation Element | Director Compensation Program | |
Annual Cash Retainer | $85,000 | |
Annual Equity Award | $135,000 in restricted stock awards that vest after one year(1) | |
Board and Committee Fees | None | |
Chair Retainers | $15,000 for the Audit Committee $12,500 for the Compensation Committee $10,000 for the Finance, Law and Nominating and Corporate Governance Committees | |
Lead Independent Director Retainer | $30,000 | |
Stock Ownership Guideline | Ownership of Common Stock or deferred stock units that have a value equivalent to five times the annual cash retainer to be satisfied within five years of joining the Board(2) |
NOTE: Cash and/orand /or equity compensation set forth in the above table has beenwill be prorated for directors who have joined or left the Board or have assumed or left board leadership positions asor committee chairs during the course of 2019.a year.
Non-employee directors are required to meet a share ownership guideline, equivalent to five times the Annual Base Retainer. Presently, all directors exceed the ownership guidelines except for Messrs. Jordan and Sperry, each of whom was recently elected to the Board.
(1) | Non-employee directors have the option to defer the receipt of vested equity compensation until after their departure from the Board. Any director who elects such deferral will receive restricted stock units instead of restricted stock. |
(2) | As of December 31, 2022, each non-employee director satisfied this guideline, with the exception of Mr. Savi, who joined the Board in June 2021. |
Under the 2017Non-Employee Directors’ Equity Incentive Plan and its predecessors, (collectively, the “Director Equity Plans”), the Company grants stock options, restricted stock, or a mix of each, to eachnon-employee director on the third business day following each annual meeting. Pro rataPro-rata awards are authorized under the 2017 plan for directors who join the Board during the period between annual awards. The purposes of the Director Equity Plans are to enhance the mutuality of interests between the Board and the shareholders by increasing the share ownership of thenon-employee directors and to assist the Company in attracting and retaining able persons to serve as directors. The total number of shares that may be issued under the 2017 plan is limited to 150,000 shares of Common Stock.
Stock option grants, if awarded, are made using a Black-Scholes option pricing model. The exercise price of the options is equal to the market value on the grant date. The options become exercisable three years from the grant date and expire ten years from the grant date. If a director resigns or is removed from office for cause, options which have not yet become exercisable are forfeited and exercisable options remain exercisable for 90 days. However, under the 2017 plan, if a director is removed from office for cause, any outstanding option held by the director is forfeited on the date of removal. Otherwise, unexpired options may generally be exercised for five years following termination of service as a director, but not later than the option expiration date. Restricted shares vest on the date of the annual meeting in the year following the grant date. Unvested shares are forfeited if the director terminates service for reasons other than death, disability or retirement.
On May 22, 2019 eachnon-employee director was granted 1,235 shares of restricted stock. Also on May 22, 2019, Messrs. Jordan and Sperry were granted 285 and 380 shares of restricted stock, respectively, based upon their joining the Board in 2019. Stock options were not granted tonon-employee directors in 2019.
It is the practice of the Nominating and Corporate Governance Committee to periodically engage an independent compensation consultant to review the compensation of thenon-employee directors. A consultant was engaged in 2018. Following the Committee’s review of director compensation, the Board determined that director compensation would not change in 2020.
In 2019, the Board adopted the MSA Safety Incorporated Deferred Compensation Program forNon-Employee Directors (the “Program”). Directors. Pursuant to the Program,program and beginning with equity grants made in 2020,non-employee directors will have the option to defer the receipt of vested equity compensation until after their departure from the Board.
On May 18, 2022, each non-employee director who did not elect to defer the receipt of their equity compensation was granted 1,129 shares of restricted stock, and each non-employee director who elected to defer the receipt of their equity compensation was granted 1,129 restricted stock units. Restricted stock units are counted for purposes of determining whether directors meet their stock ownership guideline, but directors do not receive voting rights in restricted stock units.
Prior to April 1, 2001, a director who retired from the Board after completing at least five years of service as a director was entitled to receive a lifetime quarterly retirement allowance under the Retirement Plan for Directors. The amount of the allowance was equal to the quarterly directors’ retainer payable at the time of the director’s retirement. Payment began when the sum of the director’s age and years of service equaled or exceeded 75. Effective April 1, 2001, plan benefits were frozen so that the quarterly retirement allowance, if any, payable to future retirees will be limited to $5,000 (the quarterly retainer amount in April 2001), multiplied by a fraction, of which the numerator is the director’s years of service as of April 1, 2001 and the denominator is the years of service the director would have had at the date the sum of the director’s age and years of service equaled 75.
Other thanThe following table provides information on the amounts earned by Mr. Ryan while he was an employee2022 compensation of non-employee directors who served for all or part of 2022.
Name | Fees Earned or Paid in Cash | Restricted Stock Award(1)(2) | Change in Pension Value(3) | Total | ||||||||||||
Robert A. Bruggeworth | $125,000 | $135,017 | $ — | $260,017 | ||||||||||||
Gregory B. Jordan | $ 85,000 | $135,017 | $ — | $220,017 | ||||||||||||
William M. Lambert | $ 85,000 | $135,017 | $ — | $220,017 | ||||||||||||
Diane M. Pearse | $ 95,000 | $135,017 | $ — | $230,017 | ||||||||||||
Rebecca B. Roberts | $ 97,500 | $135,017 | $ — | $232,517 | ||||||||||||
Sandra Phillips Rogers | $ 95,000 | $135,017 | $ — | $230,017 | ||||||||||||
John T. Ryan III | $ 85,000 | $135,017 | $ — | $220,017 | ||||||||||||
Luca Savi | $ 85,000 | $135,017 | $ — | $220,017 | ||||||||||||
Willam R. Sperry | $100,000 | $135,017 | $ — | $235,017 |
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(1) | Represents the aggregate grant date fair value of the restricted stock awards and stock option awards computed in accordance with FASB ASC Topic 718. |
(2) | Beginning in 2020, non-employee directors have the option to defer the receipt of vested equity compensation until after their departure from the Board. Any director who elects such deferral will receive restricted stock units instead of restricted stock. The restricted stock units have dividend equivalent rights. Messrs. Jordan and Savi and Ms. Pearse elected to defer their 2022 awards. |
(3) | Represents the amount of the aggregate increase for 2022 in the actuarial present value of the director’s accumulated benefits, if any, under the Retirement Plan for Directors described above. Only Mr. Ryan is entitled to benefits under such Plan. |
It is the practice of the Company priorNominating and Corporate Governance Committee to periodically engage an independent compensation consultant to review the Retirement Plan for Directors being frozen as described above, directors who are employeescompensation of the Company ornon-employee directors. The Committee last engaged a subsidiary do not receive other additionalconsultant in 2021. After completing its most recent review of director compensation, the Committee recommended no changes for service as a director.
Compensation Committee Interlocks and Insider ParticipationCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocking relationships, as defined in regulations of the Securities and Exchange Commission, involving members of the Compensation Committee.
Directors Bruggeworth, Giacomini, Pearse,Roberts (Chair) and Roberts (Chair)Savi served as members of the Compensation Committee during 2019.2022. The Board has determined that each of these directors is independent in accordance with the listing standards of the New York Stock Exchange.
Review and Approval or Ratification of Related Party TransactionsREVIEW AND APPROVAL OR RATIFICATION OF RELATED PARTY TRANSACTIONS
The Company has a policy on related party transactions which operates along with the conflicts of interest section of the Company’s Global Code of Business Conduct. Copies of the policy on related party transactions and the Code are available inon the Corporate Governance section of the Company’s internet website at www.MSAsafety.com.
The Company’s directors, officers and other employees must be free from any personal influence, interest or relationship, or appearance thereof, in situations that might conflict with the best interests of the Company. Directors, officers and employees must fully disclose in advance any circumstance that may create a conflict of interest, including a related party transaction, so that an appropriate determination can be made as to whether it would violate the policy on related party transactions or the Code.
In general, the related party transactions policy covers any transaction arrangement or relationship in which the Company is a participant and the amount involved exceeds $120,000, and in which any “related person” had or would have a direct or indirect material interest.
A related person is includes any of the following:
Any officer, director or employee of the Company who is aware of a proposed transaction that may violate the policy must bring suchthe transaction to the noticeattention of the Chief Legal Officer and Chief Financial Officer of the Company. If the Chief Legal Officer or Chief Financial Officer determines that thea proposed transaction could be a related party transaction, the matter will be submitted to the Nominating and Corporate Governance Committee to consider all material facts of the transaction. The Committee is charged with taking a number of items into account as set forth in the policy and determining whether the transaction is indeed a related party transaction and if so, whether it should be approved in any particular case. The types of matters which the Committee will take into account are:
the nature of the related party’s interest in the transaction;
the material terms of the transaction, including the amount and type of the transaction;
the importance of the transaction to the related party;
the importance of the transaction to the Company;
whether the terms of the transaction are comparable to those of similar transactions not involving related parties; and
whether the transaction would impair the judgment of a director or executive officer to act in the best interests of the Company.
for review. The Committee chair will report on any decision at the next meeting of the Board.
The standards applied by the Nominating and Corporate Governance Committee when reviewing transactions with related persons include the following:
Mr. Jordan is the Executive Vice President, General Counsel and Chief Administrative Officer of The PNC Financial Services Group, Inc. (“PNC”), a company with which the CompanyMSA presently maintains certain business dealings, including as a borrower under a ThirdFourth Amended and Restated Credit Agreement pursuant to which PNC serves as administrative agent and a lender and an additional Credit Agreement entered into in 2022 pursuant to which PNC serves as administrative agent and a lender. Total amounts paid by MSA to PNC in 20192023 were approximately 0.019%0.023% of PNC’s 20192022 revenues. The Board of Directors determined that the relationship was not material because, among other things, (a) the amounts paid to PNC were de minimis to the consolidated gross revenues of PNC, (b) the Company’s credit agreementagreements with PNC waswere negotiated at arms-length in the ordinary course of business at market terms, and was completed prior to the Company’s consideration of Mr. Jordan for a position as a member of the Board, and (c) the Company has maintained a relationship with PNC for many years prior to Mr. Jordan’s employment at PNC and prior to his election to the Board.
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Nominating and Corporate Governance Committee ProceduresNOMINATING AND CORPORATE GOVERNANCE COMMITTEE PROCEDURES
The current members of the Nominating and Corporate Governance Committee are directors Bruggeworth (Chair), GiacominiRoberts and Roberts,Rogers, whose terms as Committee members will expire at the 20202023 organizational meeting of the Board to be held on the date of the Annual Meeting of Shareholders.Meeting. The Board has determined that each of the current members of the Committee is independent in accordance with the listing standards of the New York Stock Exchange.
The Committee will consider director candidate recommendations from a variety of sources, including from a shareholder, anon-management director, the chief executive officer, any other executive officer, a third partythird-party search firm, or other appropriate sources. Any shareholder who desires to have an individual considered for nomination by the Committee must submit a recommendation in writing to the Secretary of the Company, at the Company’s address appearing on page one, notno later than 90 days in advance of the annual meeting at which the election is to be held. The recommendation should include the name and address of both the shareholder and the candidate and the qualifications of the candidate recommended.
The Committee determines a process for identifying and evaluating nominees for director on a case by casecase-by-case basis, considering the context in which such nomination is being made. It is not anticipated that the process for evaluating a nominee would differ based on whether the nominee is recommended by a shareholder.
MSA 2023 PROXY STATEMENT |
BOARD RECOMMENDATION AND REQUIRED VOTE
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PROPOSAL NO. 1 ELECTION2
APPROVAL OF DIRECTORSTHE ADOPTION OF THE MSA SAFETY INCORPORATED 2023 MANAGEMENT EQUITY INCENTIVE PLAN
The Company’s 2023 Management Equity Incentive Plan (the “Plan”) was adopted by the Company’s Board of Directors on February 22, 2023 upon recommendation of the Compensation Committee (the “Committee”), subject to approval of the Company’s shareholders. If approved, the Plan will replace the Amended and Restated 2016 Management Equity Incentive Plan (the “2016 Plan”) and increase the total number of shares available for equity awards by 1,400,000 shares.
The principal features of the Plan are summarized below. The summary is qualified in its entirety by the full text of the Plan, which is set forth as Appendix A to this Proxy Statement.
The affirmative vote of the shareholders on or prior to May 12, 2023 is required for approval of the Plan. If the Company’s shareholders do not approve the Plan as proposed in this Proxy Statement, the Plan will not become effective. Accordingly, if the shareholders of the Company do not approve the Plan, the Company will continue to use the 2016 Plan in accordance with its terms and without the increase in the total number of shares available.
THE BOARD RECOMMENDS YOU VOTE “FOR” THE APPROVAL OF THE 2023 MANAGEMENT EQUITY INCENTIVE PLAN. |
Such approval will ensure the Company’s continuing ability to provide a flexible range of compensation awards, including performance-based compensation awards, under the Plan. An increase in the number of shares available for future grants is necessary to permit the Plan to provide incentives to eligible individuals. Unless otherwise specified thereon, proxies received in the accompanying form will be voted in favor of approval of the Plan.
General
The purpose of the Plan is to benefit the Company’s shareholders by:
Employees and consultants of the Company or any subsidiary which has more than half of its voting power beneficially owned by the Company are eligible to receive awards under the Plan. The Committee (as described in “Administration,” below) will determine which employees and consultants will be participants, the types of awards to be made to participants and the terms, conditions and limitations applicable to the awards. It is expected that approximately 300 employees and consultants will be eligible to participate in our annual equity program pursuant through this Plan.
The maximum aggregate number of shares for which awards may be granted under the Plan is limited to the remaining shares of the Company’s common stock, without par value (the “Common Stock”) available for grant under the 2016 Plan immediately prior to your approval of the Plan plus an additional 1,400,000 shares of Common Stock, subject to counting as provided in the Plan and adjustment for stock splits, dividends and similar events. The number of Shares available for granting Incentive Stock Options under the Plan shall not exceed 1,400,000, plus any amounts previously approved for granting of Incentive Stock Options under the 2016 Plan and available as of the effective date of the Plan, all subject to adjustment as provided in the Plan and the provisions of Section 422 or 424 of the Internal Revenue Code of 1986, as amended (the “Code”). Common Stock which is subject to any unexercised or undistributed portion of any terminated, expired, exchanged or forfeited award (or awards settled in cash in lieu of Common Stock) will become available for grant pursuant to new awards. However, shares delivered or withheld in satisfaction of the exercise price of an award or any tax withholding will not become available for grant pursuant to new awards. Stock appreciation rights to be settled in shares of the
MSA 2023 PROXY STATEMENT |
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Company’s Common Stock are counted in full against the number of shares available for award under the Plan regardless of the number of shares issued upon settlement of the stock appreciation right. The Committee may make such additional rules for determining the number of shares of Common Stock granted under the Plan as it deems necessary or appropriate. The Common Stock which may be issued pursuant to an award under the Plan may be treasury shares or authorized but unissued shares or Common Stock acquired, subsequently or in anticipation of the transaction, in the open market or otherwise to satisfy the requirements of the Plan, or any combination of such shares.
The Plan provides for the grant of incentive stock options (“ISOs”), as defined in Section 422 of the Code, which may only be granted to employees, and options which do not qualify as ISOs, known as nonqualified stock options (“NSOs,” and, together with ISOs, “options”). Options granted under the Plan may be accompanied by stock appreciation rights (“Tandem SARs”), and stock appreciation rights may be granted alone (“Stand Alone SARs,” and, together with Tandem SARs, “SARs”). Performance awards (“Performance Awards”) may also be granted under the Plan, which Performance Awards may be contingent on the performance of the Company, a subsidiary, any branch, department, business unit or portion thereof or a participant, or any combination thereof. The Plan also provides for the granting of restricted stock, restricted stock units and other awards. All of the foregoing grants are sometimes referred to herein as “awards,” and the recipient of any award or grant is sometimes referred to herein as a “grantee.” The participants in the Plan will consist of those employees and consultants of the Company and its subsidiaries who are designated as grantees by the Committee administering the Plan, as described below.
The number of shares available under the Plan, and any outstanding awards are automatically adjusted in the event of stock dividends and similar events. In the electionevent the shares of directorsCommon Stock have been affected in such a way that an adjustment of outstanding awards is appropriate in order to prevent the dilution or enlargement of rights under the awards (including, without limitation, any extraordinary dividend or other distribution (whether in cash or in kind), recapitalization, stock split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event), the Committee will make appropriate equitable adjustments, which may include, without limitation, adjustments to any or all of the number and kind of shares of stock (or other securities) which may thereafter be issued in connection with such outstanding awards and adjustments to any exercise price specified in the outstanding awards and will also make appropriate equitable adjustments to the number and kind of shares of stock (or other securities) authorized by, or to be granted under, the Plan.
Awards are subject to forfeiture and recoupment pursuant to the Company’s recoupment policy or if a Plan participant engages in misconduct or violation of any Company policy, and incentive-based compensation otherwise payable or paid to current or former executive officers is forfeited and/or repaid to the Company as may be required pursuant to applicable regulatory requirements.
No awards may be granted under the Plan after May 12, 2033.
Administration
The Plan will be administered by the Compensation Committee (the “Committee”), consisting of not less than two members of the Board. Each member of the Committee must be a “non-employee director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and an independent director under the rules of any stock exchange on which the Common Stock may be listed and under any other applicable regulatory requirements.
A majority of the members of the Committee will constitute a quorum. The vote of a majority of a quorum (or the unanimous written consent of the Committee members) will constitute action by the Committee. The Committee will periodically determine the participants in the Plan and the nature, amount, pricing, timing, and other terms of awards to be made to such individuals. The Committee has the power to interpret and administer the Plan. All questions of interpretation with respect to the Plan, the number of shares of Common Stock or other securities, stock appreciation rights, or units granted, and the terms of any agreements evidencing such awards will be determined by the Committee, and its determination will be final and conclusive upon all parties in interest. In the event of any conflict between an award agreement and the Plan, the terms of the Plan govern. The Committee may delegate to the officers or employees of the Company the authority to execute and deliver such instruments and documents, to do all such ministerial acts and things, and to take all such other ministerial steps deemed necessary, advisable or convenient for the effective administration of the Plan in accordance with its terms expiring inand purpose.
Stock Options
Options which may be granted by the Committee represent a right to purchase a specified number of shares of Common Stock at a specified price during such period of time as the Committee determines. The exercise price per share of Common Stock of any option will be no less than the fair market value per share of the Common Stock subject to the option on the date the option is granted. Fair market value, for purposes of the Plan, is the closing price per share of the Company’s Common Stock on the New York Stock Exchange for the date as of which fair market value is to be determined. On March 1, 2023 the three candidates receivingfair market value of a share of the highest numbersCompany’s Common Stock was $133.48.
An option may be exercised, in whole or in part, by giving written notice of exercise to the Company, specifying the number of shares to be purchased. At the discretion of the Committee, the exercise price of the option may be paid in cash, by the tender of Common Stock already owned by the participant, by cash forwarded through a broker or other agent sponsored exercise or financing program, through a combination of the foregoing, or
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through such other means as the Committee determines are consistent with the Plan’s purpose and applicable law, including the net withholding of shares of stock through relinquishment of options. No fractional shares will be issued or accepted.
For ISOs, the aggregate fair market value (determined on the date of grant) of the shares with respect to which incentive stock options are exercisable for the first time by an employee during any calendar year under all plans of the corporation employing such employee, any parent or subsidiary corporation of such corporation and any predecessor corporation of any such corporation will not exceed $100,000.
Subject to the foregoing and the other provisions of the Plan, stock options granted under the Plan may be exercised at such times and in such amounts and be subject to such restrictions and other terms and conditions, if any, as determined in its discretion by the Committee.
Stock Appreciation Rights
An SAR is a right to receive, upon surrender of the right, an amount payable in cash and/or shares of Common Stock under such terms and conditions as the Committee determines. An SAR may be granted in tandem with part or all of (or in addition to, or completely independent of) an option or any other award under the Plan. An SAR issued in tandem with a stock option may only be granted at the time of grant of the related option. The amount payable in cash and/or shares of Common Stock with respect to each SAR will be equal in value to a percentage (including up to a maximum of 100%) of the amount by which the fair market value per share of Common Stock on the exercise date exceeds the fair market value per share of Common Stock on the date of grant of the SAR. The applicable percentage will be established by the Committee. The exercise price of any SAR will be no less than the fair market value per share of the Common Stock subject to the SAR on the date the SAR is granted. The agreement evidencing the award may state whether the amount payable is to be paid wholly in cash, wholly in shares of Common Stock or partly in each. If the award agreement does not state the manner of payment, the Committee will determine the manner of payment at the time of payment. The amount payable in shares of Common Stock, if any, is determined with reference to the fair market value per share of Common Stock on the date of exercise. Tandem SARs are exercisable only to the extent that the options to which they relate are exercisable. Upon exercise of the Tandem SAR, and to the extent of such exercise, the participant’s underlying option will automatically terminate. Similarly, upon the exercise of the tandem option, and to the extent of such exercise, the participant’s related SAR will automatically terminate.
Repricing Prohibited
The Plan prohibits repricing of options, SARs or other purchase rights without further shareholder approval. Repricing means the grant of a new option or SAR in return for the cancellation, exchange or forfeiture of an award that has a higher grant price than the new award, the amendment of an outstanding award to reduce the grant price, the cancellation or repurchase of an option or SAR at a time when the grant price is greater than the fair market value of the Common Stock or any action that would be treated, for accounting purposes, as a repricing. The grant of a substitute award under the anti-dilution and adjustment provisions explained under “General,” above, is not a repricing.
Other Terms of Options and SARs
No dividend equivalents may be granted in connection with any option or SAR. The term of any option or SAR may not exceed ten years from the date of grant.
Unless otherwise provided in a grantee’s award agreement, the following provisions of this paragraph will apply in the case of a grantee whose employment is terminated. If the employment of a grantee is terminated for reasons other than resignation by a grantee without the consent of the Company, termination for cause, retirement, disability or death, all outstanding options and SARs held by the grantee immediately prior to termination of employment will be exercisable by the grantee (but only to the extent exercisable immediately prior to termination of employment) at any time prior to the expiration date of the option or SAR or within one year following the date of termination, whichever is the shorter period.
Following the death of a grantee during employment, all outstanding options or SARs of the grantee will be exercisable (whether or not so exercisable immediately prior to the death of the grantee) by the person entitled to do so under the Will of the grantee, or, if the grantee fails to make testamentary disposition of the option or SAR or dies intestate, by the legal representative of the grantee, at any time prior to the expiration date of the option or SAR or within five years after the date of death of the grantee, whichever is the shorter period. Following the death of a grantee after ceasing employment and within a period following termination of employment during which an option or SAR remains exercisable, all outstanding options or SARs of the grantee will be exercisable (but only to the extent exercisable immediately prior to the death of the grantee) by the person entitled to do so under the Will of the grantee or, if the grantee shall fail to make testamentary disposition of the option or SAR or dies intestate, by the legal representative of the grantee, at any time prior to the expiration date of the option or SAR or within five years after the date of death of the grantee, whichever is the shorter period.
If the grantee retires or ceases employment due to disability under the terms of the Plan, all outstanding options and SARs will be exercisable (whether or not so exercisable immediately prior to the termination of employment of the grantee) at any time prior to expiration date of the option or SAR or
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within five years following the date of termination, whichever is the shorter period. If a grantee resigns without the consent of the Company or if a grantee ceases to be a consultant for any reason, all outstanding options and SARs will be exercisable (but only to the extent exercisable immediately prior to the termination of employment or service) at any time prior to the expiration date of the option or SAR or within 30 days of the date of termination, whichever is the shorter period. If the employment of a grantee is terminated by the Company for cause, all outstanding options and SARs held by the grantee will terminate as of the date of termination of employment.
Restricted Stock and Restricted Stock Units
Restricted stock is Common Stock that is issued to a participant and restricted stock units are awards denominated in shares, each of which is subject to such terms, conditions and restrictions as the Committee deems appropriate, which may include, but are not limited to, restrictions upon the sale, assignment, transfer or other disposition of the restricted stock or units and the requirement of forfeiture of the restricted stock or units upon termination of employment or service under certain specified conditions, including the failure to achieve performance conditions. The Committee may provide for the lapse of any such term or condition or waive any term or condition based on such factors or criteria as the Committee may determine. Subject to such restrictions as the Committee may impose, the participant will have, with respect to awards of restricted stock, all of the rights of a shareholder of the Company, including the right to vote the restricted stock and the right to receive any dividends on such stock, provided that in no event may any dividends with respect to any award of restricted stock be paid until vesting of such award. Subject to such restrictions as the Committee may impose, the participant will have, with respect to awards of restricted stock units, an adjustment to reflect the deemed reinvestment of dividends that would be paid on shares underlying the restricted stock units, subject to the vesting and other restrictions applicable to the restricted stock units. An awardee of restricted stock units has no rights as a shareholder with respect to the shares underlying the restricted stock units.
Unless otherwise provided in an award agreement, if the grantee of restricted stock or restricted stock units ceases to be an employee or consultant for any reason, any outstanding shares of restricted stock or restricted stock units held by the grantee will vest or be forfeited according to the following provisions:
(i) If a grantee ceases to be an employee by reason of retirement, disability or death, any shares of restricted stock or restricted stock units held by the grantee at the time of retirement will immediately vest; and
(ii) If a grantee ceases to be an employee for any reason other than retirement, disability or death, any shares of restricted stock or restricted stock units held by the grantee at the time of termination of employment will be immediately forfeited.
Performance Awards
Performance Awards may be granted under the Plan from time to time based on such terms and conditions as the Committee deems appropriate, consistent with the terms and purposes of the Plan. Performance Awards are awards the payment or vesting of which is contingent upon the achievement of specified levels of performance under specified “Performance Criteria” during a “Performance Period” by the Company, a subsidiary or subsidiaries, a branch, department, business unit or other portion thereof or the participant individually, or a combination of absolute or relative values of change, and on a gross or net basis and/or upon a comparison of such performance with the performance of a peer group of corporations, prior Performance Periods or other measure selected or defined by the Committee at the time the Performance Award is granted. Performance Awards may be in the form of performance units, performance shares and such other forms of Performance Awards as the Committee determines.
The Performance Criteria to be used in determining whether a Performance Award has been earned, the level of achievement of such Performance Criteria necessary for the Performance Award to be earned in whole or in part, and the Performance Period over which such performance will be measured will be determined by the Committee at the time a Performance Award is granted. Such Performance Criteria may be based on one or more of the following preestablished objective measures of performance during the Performance Period:
• | Income statement components, and ratios between them or other measures, including income (which includes operating and net income and on a pre-tax or after-tax basis), consolidated net income, net income growth, margins (including gross profit, operating margin, pre-tax and net income margins), earnings, earnings before interest and taxes (“EBIT”), earnings before interest, taxes, depreciation and amortization (“EBITDA”), earnings before interest, taxes and depreciation (“EBITD”), earnings before interest, taxes and amortization (“EBITA”), economic value added, income from continuing operations, income before extraordinary items, income from continuing operations before extraordinary items, earnings per share and earnings per share growth; |
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• | Operating measures, and ratios between them or other measures, including products shipped, capacity, availability, productivity, funds from operations, product quality, market share, margin and sales volumes, number of accounts, workers’ compensation claims, budget performance, costs, cost per hire, turnover rate, training costs, and expenses, charge-offs and non-performing assets; |
The Committee may in its discretion also determine to use other performance measures as Performance Criteria.
Unless otherwise provided in an award agreement, the following provisions apply if the recipient of a Performance Award ceases to be an employee or consultant for any reason prior to payment of the Performance Award:
(i) If a grantee ceases to be an employee by reason of retirement, disability or death, the employee will be entitled to a pro-rata portion of the Performance Award based upon the number of whole and partial months of employment during the Performance Period, contingent upon achievement of the performance goals and subject to any negative discretion retained by the Committee; and
(ii) If a grantee ceases to be an employee for any reason other than retirement, disability or death, or ceases to be a consultant for any reason, any Performance Award shall be immediately forfeited.
Minimum Vesting Requirements
The Plan provides that awards granted under the Plan may vest no earlier than the first anniversary of the grant date, subject to certain exceptions set forth in the Plan relating to (i) substitute awards granted in a corporate transaction, (ii) shares of Common Stock delivered in lieu of fully vested cash obligations, and (iii) additional awards granted by the Committee up to a maximum of five percent of the available share reserve authorized for issuance under the Plan. The foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any award, including in cases of retirement, separation from service, death, disability or a Change in Control, in the terms of the award agreement or otherwise.
Effect of Change in Control
Notwithstanding any other provision of the Plan to the contrary, and unless the award agreement otherwise provides, in the event the employment of a Plan participant is terminated by the Company and its affiliates without “cause” within two years following the occurrence of a Change in Control of the Company (as defined in Section 17(g) of the Plan), (i) all options and Stand-Alone SARs which are then outstanding will become fully vested and exercisable and (ii) all restrictions with respect to shares of restricted stock or restricted stock units which are then outstanding will lapse, and such shares or units will be fully vested and nonforfeitable. Notwithstanding any other provision of the Plan to the contrary, and unless the award agreement provides otherwise, if a Change in Control of the Company occurs prior to the end of the Performance Period, with respect to all Performance Awards which are then outstanding, all uncompleted Performance Periods will be deemed to have been completed, the target level of performance set forth with respect to each Performance Criterion under such Performance Awards will be deemed to have been attained and a pro-rata portion (based on the ratio of (a) the number of full and partial months which have elapsed from the beginning of the Performance Period through the Change in Control to (b) the number of months originally contained in the Performance Period) of each such Performance Award will become payable to the participant, with the remainder of the Performance Award converted into outstanding restricted stock units, subject to forfeiture unless the participant continues to be actively employed by the Company through the end of the original Performance Period, and subject to exception in the case of a termination of employment by the Company without “Cause”, as defined in the Plan, and such other exceptions as may be provided by the Committee. Further, after a Change in Control, no administrative power given the Committee can be used to affect detrimentally the rights of any grantee with respect to any award which is outstanding immediately prior to the Change in Control.
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Transferability
The Plan provides that the agreement evidencing an award must contain a provision stating that the relevant award cannot be assigned, pledged or otherwise transferred except by Will or by the laws of descent and distribution and that during the lifetime of a participant the award can be exercised only by such participant or by the participant’s guardian or legal representative. However, in the Committee’s discretion, an award agreement may expressly provide for specifically limited transferability, other than for value, of awards other than ISOs.
Possible Anti-Takeover Effect
The provisions of the Plan providing for the acceleration of the exercise date of stock options and SARs and the lapse of restrictions applicable to restricted stock and restricted stock units upon the occurrence of a termination of employment following a Change in Control, and the deemed achievement of Performance Criteria following a Change in Control may be considered as having an anti-takeover effect.
Amendment and Termination
The Board may at any time amend, suspend or terminate the Plan. The Committee may at any time alter or amend any or all award agreements under the Plan to the extent permitted by law. However, no such action by the Board or by the Committee may impair the rights of participants under outstanding awards without the consent of the participants affected thereby. Further, the Board may not amend the Plan without the approval of the Company’s shareholders to the extent such approval is required by law, agreement or the rules of any exchange upon which the Common Stock is listed.
Payment of Taxes
The Plan provides that the agreement evidencing an award must contain a provision requiring the withholding of applicable taxes required by law from all amounts paid to the participant in satisfaction of an award. In the case of an award paid in cash, the withholding obligation will be satisfied by withholding the applicable amount and paying the net amount in cash to the participant. In the case of awards paid in shares of Common Stock or other securities of the Company, (i) a participant may satisfy the withholding obligation by paying the amount of any taxes in cash, or (ii) with the approval of the Committee (or, in case of deduction, by the unilateral action of the Committee), shares of Common Stock or other securities may be deducted by the Company from the payment or delivered to the Company by the participant to satisfy the obligation in full or in part, as long as such withholding or delivery of shares of Common Stock or other securities does not violate any applicable laws, rules or regulations of federal, state or local authorities or Company policies. The number of shares or other securities to be deducted or delivered will be determined by reference to the fair market value of such shares or securities on the applicable date.
New Plan Benefits
The actual amount of awards to be received by or allocated to participants or groups under the Plan is not determinable in advance because the selection of participants who receive awards under the Plan, and the size and type of awards to such individuals and groups are generally determined by the Committee in its discretion.
Equity Compensation Plans
The following table sets forth information as of December 31, 2022 concerning Common Stock issuable under the Company’s equity compensation plans.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities (a)(c) | |||
Equity compensation plans approved by security holders | 58,156 | $46.48 | 675,703* | |||
Equity compensation plans not approved by security holders | None | — | None | |||
Total | 58,156 | $46.48 | 675,703 |
* | Includes 598,813 shares available for issuance under the 2016 Management Equity Incentive Plan and 76,890 shares available for issuance under the 2016 Non-Employee Directors’ Equity Incentive Plan. |
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Federal Income Tax Consequences
The following is a brief summary of the principal Federal income tax consequences of the grant and exercise of awards under present law.
Incentive Stock Options. An optionee will not recognize any taxable income for Federal income tax purposes upon receipt of an incentive stock option or, generally, at the time of exercise of an incentive stock option. The exercise of an incentive stock option generally will result in an increase in an optionee’s taxable income for alternative minimum tax purposes.
If an optionee exercises an incentive stock option and does not dispose of the shares received in a subsequent “disqualifying disposition” (generally, a sale, gift or other transfer within two years after the date of grant of the incentive stock option or within one year after the shares are transferred to the optionee), upon disposition of the shares any amount realized in excess of the optionee’s tax basis in the shares disposed of will be treated as a long-term capital gain, and any loss will be treated as a long-term capital loss. In the event of a “disqualifying disposition,” the difference between the fair market value of the shares received on the date of exercise and the option price (limited, in the case of a taxable sale or exchange, to the excess of the amount realized upon disposition over the optionee’s tax basis in the shares) will be treated as compensation received by the optionee in the year of disposition. Any additional gain will be taxable as a capital gain and any loss as a capital loss, which will be long-term or short-term depending on whether the shares were held for more than one year. Under regulations, special rules apply in determining the compensation income recognized upon a disqualifying disposition if the option price of the incentive stock option is paid with shares of the Company’s Common Stock. If shares of the Company’s Common Stock received upon the prior exercise of an incentive stock option are transferred to the Company in payment of the option price of an incentive stock option within either of the periods referred to above, the transfer will be considered a “disqualifying disposition” of the shares transferred, but, under regulations, only compensation income determined as stated above, and no capital gain or loss, will be recognized.
Neither the Company nor any of its subsidiaries will be entitled to a deduction with respect to shares received by an optionee upon exercise of an incentive stock option and not disposed of in a “disqualifying disposition.” Except as described in “Other Tax Matters” below, if an amount is treated as compensation received by an optionee because of a “disqualifying disposition,” the Company or one of its subsidiaries generally will be entitled to a corresponding deduction in the same amount for compensation paid.
Nonqualified Stock Options. An optionee will not recognize any taxable income for Federal income tax purposes upon receipt of a nonqualified stock option. Upon the exercise of a nonqualified stock option the amount by which the fair market value of the shares received, determined as of the date of exercise, exceeds the option price will be treated as compensation received by the optionee in the year of exercise. If the option price of a nonqualified stock option is paid in whole or in part with shares of the Company’s Common Stock, no income, gain or loss will be recognized by the optionee on the receipt of shares equal in value on the date of exercise to the shares delivered in payment of the option price. The fair market value of the remainder of the shares received upon exercise of the nonqualified stock option, determined as of the date of exercise, less the amount of cash, if any, paid upon exercise will be treated as compensation income received by the optionee on the date of exercise of the stock option.
Except as described in “Other Tax Matters” below, the Company or one of its subsidiaries generally will be entitled to a deduction for compensation paid in the same amount treated as compensation received by the optionee.
Stock Appreciation Rights. An awardee will not recognize any taxable income for Federal income tax purposes upon receipt of stock appreciation rights. The value of any Common Stock or cash received in payment of stock appreciation rights will be treated as compensation received by the awardee in the year in which the awardee receives the Common Stock or cash. The Company generally will be entitled to a corresponding deduction in the same amount for compensation paid.
Restricted Stock. An awardee of restricted stock will not recognize any taxable income for Federal income tax purposes in the year of the award, provided the shares are subject to restrictions (that is, they are nontransferable and subject to a substantial risk of forfeiture). However, an awardee may elect under Section 83(b) of the Code to recognize compensation income in the year of the award in an amount equal to the fair market value of the shares on the date of the award, determined without regard to the restrictions. If the awardee does not make a Section 83(b) election, the fair market value of the shares on the date the restrictions lapse will be treated as compensation income to the awardee and will be taxable in the year the restrictions lapse. Except as described in “Other Tax Matters” below, the Company or one of its subsidiaries generally will be entitled to a deduction for compensation paid in the same amount treated as compensation income to the awardee.
Restricted Stock Units and Performance Stock Units. An awardee who receives restricted stock units or performance stock units will not recognize any taxable income for Federal income tax purposes upon receipt of the award. Any cash or shares of stock received pursuant to the award will be treated as compensation income received by the awardee generally in the year in which the awardee receives such cash or shares of stock. Except as described in “Other Tax Matters” below, the Company or one of its subsidiaries generally will be entitled to a deduction for compensation paid in the same amount treated as compensation income to the awardee.
Performance Awards. An awardee who receives performance shares will not recognize any taxable income for Federal income tax purposes upon receipt of the shares. The fair market value of the shares on the date the performance condition is determined to be achieved will be treated as compensation income to the awardee and will be taxable in the year the performance condition is achieved (if the awardee does not make a
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Section 83(b) election upon the receipt of the performance shares, in which case the awardee would recognize compensation income on the date of the award). Except as described in “Other Tax Matters” below, the Company or one of its subsidiaries generally will be entitled to a deduction for compensation paid in the same amount treated as compensation income to the awardee.
Other Tax Matters. The exercise by an awardee of a stock option or stock appreciation right, the lapse of restrictions on restricted stock or restricted stock units, or the achievement or fulfillment of performance awards following the occurrence of a Change in Control, in certain circumstances, may result in (i) a 20% Federal excise tax (in addition to Federal income tax) to the awardee on certain payments of the Company’s Common Stock or cash resulting from such exercise or deemed achievement or fulfillment of performance awards or, in the case of restricted stock or restricted stock units on all or a portion of the fair market value of the shares or units on the date the restrictions lapse and (ii) the loss of a compensation deduction which would otherwise be allowable to the Company or one of its subsidiaries as explained above. The Company and its subsidiaries may lose a compensation deduction, which would otherwise be allowable, for all or a part of compensation paid in the form of awards under the Plan, if, the employee is the Chief Executive Officer or Chief Financial Officer of the Company (or acts in such capacity) or is another “covered employee” as defined under the Code or was such an employee beginning in any year after 2017, if the total compensation paid to such employee exceeds $1,000,000.
THE BOARD RECOMMENDS YOU VOTE “FOR” PROPOSAL NO. 2: APPROVAL OF THE ADOPTION OF THE MSA SAFETY INCORPORATED 2023 MANAGEMENT EQUITY INCENTIVE PLAN. |
The Board of Directors recommends a vote FOR approval of the 2023 Management Equity Incentive Plan. Properly executed proxies timely received in the accompanying form will be so voted, unless otherwise directed thereon. Approval of this proposal requires the affirmative vote of a majority of the votes cast (which excludes abstentions and failures to vote (e.g., broker non-votes)) by the holders of Common Stock present and voting at the meetingin person or by proxy, will be elected as directors, subject towith a quorum of a majority of the resignation policy described above.outstanding shares of Common Stock being present or represented at the Annual Meeting.
A proxy vote indicated as withheld from a nominee will not be cast for such nominee but will be counted in determining whether a quorum exists for the meeting. Shares for which neither a vote “for” or “withheld” is selected (e.g., brokernon-votes) will not be counted in determining the total votes cast for this matter.
The Company’s Restated Articles require that any shareholder intending to nominate a candidate for election as a director must give written notice, containing specified information, to the Secretary of the Company not later than 90 days in advance of the meeting at which the election is to be held. No such notices were received with respect to the 2020 Annual Meeting. Therefore, only the nominees named above will be eligible for election at the meeting.
The Board of Directors and its Nominating and Corporate Governance Committee recommend a vote FOR the election of the nominees, each of whom has consented to be named as a nominee and to serve if elected. Properly submitted proxies which are timely received will be voted for the election of the nominees named below, unless otherwise directed thereon, or for a substitute nominee designated by the Nominating and Corporate Governance Committee in the event a nominee named becomes unavailable for election.
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Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
In this section, we will describe the material components of our executive compensation program for our “Named Executive Officers,” referred to herein as “Named Officers,” whose compensation is set forth in the 20202023 Summary Compensation Table and other compensation tables contained in this proxy statement:
Nishan J. Vartanian, Chairman, President and Chief Executive Officer
Steven C. Blanco, Senior Vice President and President, MSA Americas
Douglas K. McClaine, Senior Vice President, Secretary and Chief Legal Officer
Bob W. Leenen, Senior Vice President and President, MSA International
We will also provide an overview of our executive compensation philosophy and our executive compensation program. In addition, we explain how and why the Compensation Committee of the Board (the “Committee”) arrives at specific compensation policies and decisions involving the Named Officers. These programs and processes are driven by the Committee’s desire to continually increase shareholder value while assuring sound corporate governance, transparency and alignment with MSA’s Vision and Values.
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Our Business
Established in 1914, MSA Safety Incorporated is the global leader in the development, manufacture and supply of safety products that protect people and facility infrastructures. Recognized for market leading innovation, many MSA products integrate a combination of electronics, mechanical systems and advanced materials to protect users against hazardous or life-threatening situations. Our comprehensive product line, which is governed by rigorous safety standards across highly regulated industries, is used by workers around the world in a broad range of markets, including the oil, gas and petrochemical industry, fire service, construction, industrial manufacturing applications, utilities and mining. Our core products include breathing apparatus where self-contained breathing apparatus (“SCBA”) is the principal product, fixed gas and flame detection systems, portable gas detection instruments, industrial head protection products, firefighter helmets and protective apparel and fall protection devices.2022 Executive Compensation Overview
The primary goalobjectives of the Company isMSA’s executive compensation programs are to increaseimprove shareholder value over the long-term.long-term by attracting, retaining and motivating executives who will drive financial and operational performance and enable the Company to achieve its goals. Our programs are guided by a philosophy that strives to align target compensation at the middle (50th percentile) of the market. The primary elements of total compensation include salary, performance-based cash incentives and equity incentives. We also provide limited perquisites and retirement and benefit plans.
Our programs are designed to provide an above-market compensation opportunity for performance exceeding annual budget and peer group norms. We believe that this is best accomplished by achieving our vision “to be the world’s leading provider of safety solutions that protect workers when life is on the line;” continually improving our financial performance; and maintaining a productive, diverse, and engaged workforce. The role of our management team is to develop and implement effective long-range strategic plans and annual operating plans to achieve these goals. Compensation programs and performance-based incentives are designed to target the median market compensation for executives when these plans are met, above median compensation when they are exceeded, and below median compensation when they are not met.
For 2019, reported revenues were $1.4 billion, increasing 3% from 2018. Net income attributable to MSA Safety Incorporated was $136 million in 2019, compared to $124 million in 2018. The Company also disclosed in its earnings release, which is included in a Form8-K dated February 20, 2020, an “adjusted earnings” calculation which shows an increase of 7% in adjusted earnings to $188 million in 2019. The details of the GAAP earnings as compared to the adjusted earnings are set forth in the Form8-K.Mid-single digit revenue growth, higher gross profit margins attributable to new product launches and pricing initiatives, and strong leverage over operating expenses were the key drivers of earnings growth in 2019. Cash flow from operating activities was $165 million compared to $264 million a year ago, reflecting higher collections of insurance receivables in 2018. In 2019, the company invested more than $57 million in research and development, deployed $33 million for the Sierra Monitor acquisition, and funded $64 million of dividends to shareholders. Dividend payments increased 11% from a year ago, continuing the Company’s long history of raising its dividend annually for more than 50 consecutive years.
2019 Executive Compensation Overview
The Committee has developed executive compensation programs comprised of three primary components: salary, performance-related annual incentive, and equity grants which are also largely performance related. In establishing the performance metrics for the 2019 annual incentive plan, the Committee recognized that MSA would have to continue navigating a challenging economic environment while achieving profitable growth and advancing its competitive position through strategic initiatives. The 2019 business plan was designed to positionphilosophy enables the Company to grow profitablyattract and enter 2020retain executive talent by providing the opportunity to work in a competitive position for the years ahead.highly ethical, growing and team-oriented Company.
The Company had several key areas of focus in 20192022 including:
Financial performance goals
Regional business transformation goals
Profitable growth
The above areas of focus correlate with the Named Officers’ performance metrics within the cash incentive plan and contribute to driving working capital, operating profits, revenue targets and consolidated net income.Environmental, Social and Governance (“ESG”) performance. Demonstrating the strong correlation between the Company’s performance incentive plans and actual results, our Named Officers earned cash incentive awards pursuant to our annual incentive program, ranging between 93%102% and 120%140% of target.
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To emphasize the importance of“pay-for-performance” in our compensation philosophy, and our Company’s culture, the Company’s incentive arrangements are based on the achievement of specific performance goals that support our business strategy. Our annual incentive program focuses on achieving key performance metrics such as those mentioned above. Our long-term incentive program includes performance-based stock units and time-vesting restricted stock units. Our performance stock unit program metrics are adjusted EBITDA margin percentage and revenue growth, modified by total shareholder return (“TSR”) compared to our peer group. Time-vesting restricted stock units vest after three years of continued employment, providing the Company with a valuable retention incentive and alignment with shareholders’ rewards for increases in stock price. Grants made in 2018 and 2019 have increased in value and remain unvested, thereby providing the Company with important retention benefits.
During 2019,2022, the Committee reviewed the design and administration of all executive compensation programs to ensure that those programs continue to meet our performance requirements and to deliver on our “Core Principles,Principles.” and do not promote unnecessary risk-taking. The Committee also reviewed policies such as stock ownership requirements and compensation recoupment.assessed its short-term incentive goals. In addition, long-term incentive vesting provisions, capped incentive awards, and an emphasis on team-based short-term
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metrics that align with shareholder value creation serve to mitigate risk. As a result, theThe Committee concluded that the risks arising from the Company’s executive compensation programs effectively accomplish their intended goals and doare not promote unwanted risk taking that could be detrimentalreasonably likely to have a material adverse effect on the Company.
At the annual shareholders’ meeting in May 2019,2022, the executive compensation of the Company’s Named Officers was approved by our shareholders, with 99%97.2% of the votes cast voting in favor of the proposal. The Committee considered this vote in connection with its determination of compensation policies and decisions and has concluded that the Company will maintain its existing compensation philosophy for 2020.2023.
Philosophy and ObjectivesComponents of the Executive Compensation Program
The objectives of MSA’s executive compensation programs which cover not only the Named Officers in the Summary Compensation Table, but all key executives of the Company, are to improve shareholder value over the long-term by attracting, retaining and motivating superior executive talent who will drive robust financial and operational performance and enable the Company to achieve its goals. Our program is guided by a philosophy that strives to align target compensation at the middle (50th percentile) of the market for total direct compensation. Elements of total compensation include salary, performance-based cash, and equity incentives and benefits.incentives. Our program is designed to provide an above-market compensation opportunity for performance exceeding annual budgettargets and peer group norms. We believe that this philosophy enables the Company to attract and retain superior executive talentexecutives by providing the opportunity to work in a highly ethical, growing and team-oriented Company.
The design of our compensation programs is driven by the following “Core Principles” which support our objectives:
CORE PRINCIPLES | OBJECTIVE | |
• Executive compensation should be aligned to the achievement of corporate goals and objectives and provide line of sight to annual and long-term corporate strategies without promoting unacceptable levels of risk to the Company. | Improve shareholder value | |
• A significant portion of an executive’s compensation should be “performance-based” and should hold executives accountable for the achievement of strategic corporate objectives and increases in shareholder value. | Improve shareholder value | |
• The compensation program should promote an “ownership culture” through the use of stock-based compensation and ownership guidelines that clearly define expected levels of ownership in MSA’s stock. | Improve shareholder value | |
• The compensation program should reward each executive’s individual performance and unique responsibilities while assuring a fair and competitive approach. | Attract, retain and motivate superior talent | |
• The compensation program should recognize and reward an executive’s loyalty and tenure with the Company by providing financial security following retirement. | Attract, retain and motivate superior talent |
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Components of Executive Compensation Program
Building on these core principles, our executive compensation program contains both cash and stock-based components designed to meet specific objectives of the Committee.objectives. The Committee considers both annual and long-term Company goals and strives to develop incentives that motivate executives to achieve these goals. Cash payments are provided through an executive’s base salary and a performance-based annual incentive. Company stock is provided through the use of performance-based stock units and time-vesting restricted stock units. The Committee has chosen to align its cash incentive programs with the achievement of annual internal financial and strategic goals, and its performance-based stock units with long-term internal goals based on adjusted EBITDA margin percentage and revenue growth modified by TSR performance relative to our peer group.
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U.S. based executives participate in a retirement plan that provides for post-employment financial security, and some executives are provided with a limited number of perquisites (company vehicle or vehicle allowance, financial counseling, executive physicals, and limited club memberships for business use) that the Committee believes serve a business purpose, are common in the market and are of modest cost to the Company. Executives also participate in a severance plan that provides certain benefits to executives should their jobsemployment be terminated following a change in control of the Company. The specific rationale for why the Committee has chosen to provide each element of compensation is as follows:
COMPENSATION COMPONENT | KEY CHARACTERISTICS | PURPOSE | PRINCIPAL | |||
Base Salary | Fixed cash compensation component. Reviewed annually and adjusted, if and when appropriate. | Intended to compensate an executive fairly for the responsibility level of the position held. | ||||
Annual Incentive Awards | Variable cash compensation component. Payable based on corporate and business unit performance. | Intended to motivate and reward executives for achieving our annual business objectives that drive overall performance. | The Named Officers received annual incentive awards in | |||
Long-Term Incentive Awards | Variable stock component. Actual amounts earned vary based on corporate and share price performance. | Intended to motivate executives to achieve our | The Named Officers received long-term incentive awards in February | |||
Health and Welfare Plans and Retirement Plans | Fixed compensation component. | Intended to provide benefits that promote employee health and support employees in attaining financial security. | No changes to programs in | |||
Perquisites and Other Personal Benefits | Fixed compensation component. | Intended to provide a business-related benefit to our Company, and to assist in attracting and retaining executives. | No changes to programs in | |||
Post-Employment Compensation | Fixed compensation component. | Intended to provide temporary income following an executive’s involuntary termination of employment and, in the case of a change of control, to also provide continuity of management. | No changes to programs in |
Note: Jonathan D. Buck is excluded from the above table because he was not a Named Officer when his salary, annual incentive award and long-term incentive award were determined.
(1) | The salary of Stephanie L. Sciullo is not included because her salary in 2022 was affected by a promotion. |
(2) | The annual incentive award for Kenneth D. Krause is not included because due to his departure from the Company, he did not receive an award. In calculating the performance range and percentages of target, the amount of Lee B. McChesney’s award was annualized. |
(3) | Mr. McChesney joined the Company in October 2022 and did not receive a long-term incentive award, and thus he is not included in the Named Officers for this purpose. |
The Committee believes that these components, taken as a whole, provide an attractive compensation package that aligns with the Company’s annual and long-term goals and enables the Company to attract, retain and motivate superior executive
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talent. As a means of mitigating risk, the Committee has adopted policies such as share ownership guidelines, which require executives to maintain a certain level of ownership of MSA stock, and a compensation recoupment policy that provides the Committee with the ability to recoup certain awards previously paid or earned based on financial results that were later restated downward, financial irregularities causing a revision of performance metrics upon which compensation was based, and discretionary authority held by the Committee that allows modification of any payouts from any plan, in the event of any other misconduct that results in substantial financial or reputational harm to the Company.
MSA 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
30 |
Performance-Based Incentives. The Committee believes that a significant portion of a Named Officer’s compensation should be delivered through performance-based incentive compensation components. The Committee has identified meaningful financial and shareholder performance objectives that align with the business, are measurable, and are used by management on aday-to-day basis to pursue its business strategy. The Committee has chosen the following measures for use in the Company’s incentive arrangements that support and align with the Company’s business strategy:
PERFORMANCE MEASURE | ANNUAL CASH INCENTIVE PLAN | LONG-TERM INCENTIVE PLAN | RATIONALE FOR USE | |||
Stock Price | X | Indicator of shareholder value creation | ||||
Total Shareholder Return | X | Indicator of shareholder value creation | ||||
Revenue Growth | X | Encourages both organic sales growth and sales growth by acquisition | ||||
Net Income | X | Encourages bottom-line profitability | ||||
Adjusted EBITDA Margin Percentage | X | X | Encourages operating profitability and expense management | |||
Net Sales | X | Encourages revenue growth | ||||
Working Capital as a Percentage of Sales | X | Encourages activities that increase the cash available for investment in the business, dividends, and debt repayment |
In summary, the Committee believes that the best way to reward executives is to combine a program of cash incentives (based on annual financial performance goals) with stock incentives (based on increases in the Company’s stock price and, in part, on performance versusmeasured against long-term financial performance metrics).
The Company’s incentive plans (annual and long-term) are targeted to reward executives at the middle (50th percentile) of the market for achieving expected or targeted performance levels. For example, our annual incentive plan is designed to pay above the targeted level and, therefore, above the middle of the market if the Company’s performance exceeds our goals and expectations, up to a cap upon maximum performance. If the Company’s performance falls below our goals and expectations, the annual incentive plan is designed to pay below the targeted level. If actual performance falls below certain threshold levels, our annual incentive plan is designed to pay nothing. This variable aspect of our annual incentive arrangement is also present in our long-term incentive plan. For instance, a significant portion of our long-term incentive plan consists of performance-based stock units. At the date of grant, a target number of shares is established based on the share value at the time of the award and present dollar value of the compensation intended to be delivered. Ultimately the number of shares awarded at the end of the performance period varies based on the achievement of corporate goals. Our performance-based restricted stock units also incorporate a performance threshold below which no payments are made. The 20182021 and 20192022 equity grants under the long-term incentive plan remain unvested, thereby providing the Company with important retention benefits.
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The following table shows the allocation of performance-based versus fixed compensation components for our Named Officers at targeted levels as of the end of 2019:2022:
PERCENT OF COMPENSATION AT RISK
Named Officer | Performance- Based (1) | Fixed (2) | ||||||||||||||||
Named Executive Officers | Performance Based (1) | Fixed(2) | ||||||||||||||||
Nishan J. Vartanian | 69.3 | % | 30.7 | % | 83.6% | 16.4% | ||||||||||||
Lee B. McChesney | 42.1% | 57.9% | ||||||||||||||||
Jonathan D. Buck | 32.6% | 67.4% | ||||||||||||||||
Kenneth D. Krause | 59.7 | % | 40.3 | % | 61.8% | 38.2% | ||||||||||||
Steven C. Blanco | 58.3 | % | 41.7 | % | 59.2% | 40.8% | ||||||||||||
Douglas K. McClaine | 57.8 | % | 42.2 | % | ||||||||||||||
Bob W. Leenen | 48.6% | 51.4% | ||||||||||||||||
Bob W. Leenen | 45.4 | % | 54.6 | % | ||||||||||||||
Stephanie L. Sciullo | 49.5% | 50.5% |
(1) | Based on the target value of | 2022. |
(2) | Based on annual base salary as of December 31, |
MSA 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
31 |
COMPENSATION OVERSIGHT PROCESS
Role of the Committee. The Committee has responsibility for the oversight and decision-making regarding executive compensation except for Chief Executive Officer (“CEO”) compensation, which is recommended by the Committee but approved by the independent directors as described below. The Committee has engaged an outside compensation consultant, Pay Governance, LLC (“Pay Governance”) to provide assistance and guidance on executive compensation matters. The consultant provides management and the Committee with relevant information pertaining to market compensation levels, alternative compensation plan designs, market trends and best practices. Pay Governance is considered to be independent by the Committee. During 2019,2022, the consultant provided only executive compensation consulting services to the Committee. Further, the Committee has not discovered any conflicts of interest that were raised by the work of the consultant involved in determining or recommending executive compensation.
At its meetings, the Committee regularly holds executive sessions, which exclude management and, subject to the Committee’s desire, may include its independent consultant. Management assists in the coordination and preparation of the meeting agenda and materials for each meeting, which are reviewed and approved by the Committee Chair. Meeting briefing materials are provided to Committee members for review approximately one week in advance of each meeting. The Committee met three times in 20192022 and held an executive session at all three of the meetings.
For the CEO’s compensation, the Committee develops proposals and presents them to the independent directors of the Board for their approval. Compensation decisions regarding all other executives are approved by the Committee, which takes into consideration the recommendations of the CEO.
Role of the Compensation Consultant. The Committee has retained Pay Governance, LLC as its executive compensation consultant. The compensation consultant reports directly to the Committee and the Committee may replace the compensation consultant or hire additional consultants at any time. The compensation consultant attends meetings of the Committee, as requested, and communicates with the Committee Chair between meetings.
The compensation consultant provides various executive compensation services to the Committee pursuant to a written consulting agreement approved by the Committee Chair. Generally, these services include advising the Committee on the principal aspects of our executive compensation program and evolving industry practices and providing market information and analysis regarding the competitiveness of our program design and our award values in relationshiprelation to performance.
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During 2019,2022, the compensation consultant performed the following specific services for the Committee:
Provided presentations on executive compensation trends and external developments.
Provided an annual competitive evaluation of total compensation for the Named Officers, as well as our overall compensation program.
Provided recommendations on the total compensation for the new CEO.
Reviewed Committee agendas and supporting materials in advance of each meeting and raised questions/issues with management and the Committee Chair, as appropriate.
Reviewed drafts and commented on the compensation discussion and analysis for the proxy statement and the related compensation tables.
In addition, the compensation consultant attended meetings of the Committee during 20192022 as requested by the Committee Chair.
The Committee retains sole authority to hire the compensation consultant, approve its annual fees, determine the nature and scope of its services, evaluate its performance, approve all invoices for payment of services and terminate its engagement.
Use of Competitive Data. The Committee reviews data related to compensation levels and programs of other companies prior to making its decisions. The Committee engages its consultant to perform a comprehensive assessment of compensation levels provided to executives among a peer group of companies. These companies are selected based on the following criteria:
Annual revenues that range from approximately half to double our annual revenues (approximately $700 million to $3 billion in 2019)
Manufacturing processes similar to various MSA industry sectors and technologies
Global operations and customer base
For 2019,2022, the peer group consisted of the following 2120 companies:
Albany International Barnes Group Inc. Brady Corporation Donaldson Company, Inc. ESCO Technologies Inc. Federal Signal Corporation
Franklin Electric Co., Inc. | Gentex Corporation Graco Inc. IDEX Corporation Lincoln Electric Holdings, Inc. Littelfuse, Inc. Matthews International Corporation Masimo Corporation | MKS Instruments, Inc. | Nordson Corporation
Simpson Manufacturing Company Inc. Standex International Corporation
TriMas Corporation Waters Corporation |
The Committee reassesses the peer group composition annually and may periodically make changes usually by adding companies that may better meet our selection criteria and/or by removing companies that may have experienced change, such as an acquisition, or no longer fit our selection criteria. In 2019,2022, the Committee, through its consultant, conducted a review of the peer companies which resulted in the conclusion that, for 2019,2022, the peer group should be adjusted to reflectremain the group set forth above. As a result, two companies were removed and three companies were added. Specifically, Invacare Corporation was removed due to a significant decreasesame as in its market capitalization and Actuant Corporation was removed due to the sale of a signification portion of the company’s assets. Barnes Group Inc. Franklin Electric Co., Inc and TriMas Corporation, each of which are commonly used as peer companies among other peer group members and ISS, were added to the group.
MSA 2023 PROXY STATEMENT |
| COMPENSATION DISCUSSION AND ANALYSIS | |||
32
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The consultant conducts an annual analysis of the most recent proxy disclosures for the peer group companies in order to understand the compensation ranges for base salary, and the annual and long-term incentives provided to the peer group named executive officers. In addition, regression analysis is applied to data from compensation surveys conducted by Willis Towers Watson representing nearly 1,000 general industry companies. The Committee believes that the combination of these comprehensive data sources allows it to understand the market compensation ranges for both the Named Officers and positions below the Named Officersother key executives based on the duties and responsibilities of each position and to determine the level of compensation needed to target the middle (50th percentile) of the market.
The market compensation data is further used to develop a market compensation structure which includes salary grades with midpoints. Each U.S. based executive is assigned to a salary grade where the midpoint of the grade approximates the median (50th percentile) of the market salary level for that position. Each salary grade has a salary range around the midpoint and has corresponding annual and long-term incentive award opportunities that are percentages of the midpoint, and which also align to market basedmarket-based values. In assigning an executive to a salary grade, the Committee also considers internal factors that may, in a limited number of instances, impact the grade assignment of an executive.
In addition to the market data, the Committee considers the following factors when making compensation decisions:
Individual and Company performance
Experience in the position
Current compensation relative to market median
An assessment of these factors could result in actual compensation being positioned modestly above or below the desired middle (50th percentile)median of the market positioning. The Committee does not consider amounts earned from prior performance-based compensation, such as prior bonus awards or realized or unrealized stock award gains, in its decisions to increase or decrease compensation for the following year. The Committee believes that this would not be in the best interest of retaining and motivating its executives.
In order to assess the impact of its executive compensation decisions, the Committee reviews a summary report – or “tally sheet” – of total compensation prepared for the CEO. The tally sheet includes the total dollar value of annual compensation, including salary, annual and long-term incentive awards, annual increase in retirement accruals and the value of other benefits and perquisites. The tally sheet also provides the Committee with information pertaining to equity ownership, future retirement benefits, and benefits the Company is required to provide to the CEO under various termination scenarios. The Committee’s review of the tally sheet information is an integral part of its decision makingdecision-making process each year.
DETERMINATION OF EXECUTIVE COMPENSATION AMOUNTS
Fixed Cash Base Salary. The Company provides executives with a base salary in order to attract and retain executive talent. Base salary is designed to be competitive with other organizations and is sensitive to the skill level, responsibility and experience of the executive. Base salary for each executive is determined through our external benchmarking process and an internal comparison to other executives at the Company to ensure internal equity. Base salary levels are targeted to the middle (50th percentile) of the market median, although the Committee considers base salary levels that fall within plus or minus 10% of the market median to be competitive.
Base salary adjustments are considered and are affected by each executive’s individual performance assessment based on a rigorous performance review process. This individual process details an executive’s annual accomplishments compared to performance expectations established at the outset of each year and also assesses the individual’s behaviors used to achieve the performance level. The CEO develops and recommends to the Committee annual base salary adjustments for each executive primarily by evaluating the value and impact that each executive has had on the Company’s performance during the year.
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The Committee performs a similar comprehensive evaluation of the CEO’s performance against predetermined annual operational and strategic goals previously approved by the independent directors of the Board and determines a recommended annual base salary increase based on the outcome of this evaluation. This salary recommendation is then also approved by the independent directors of the Board. At its February 20202023 meeting, the Committee approved salary increases ranging from 0%3% to 8.24%9% for the Named Officers.Officers and certain other key executives. Following these adjustments, salary levels were positioned as follows relative to the market median targeted level: Mr. Vartanian, 2% below22% above median; Mr. Krause, atMcChesney, 7% above median; Mr. Blanco 4% below1% above median; Mr. Leenen, 12% below medianat median; and Mr. McClaine, 2%Ms. Sciullo, 9% above median.
Performance-Based Annual Cash Incentive. The Company provided executives with an annual cash incentive during 20192022 based on (a) the MSANon-CEO Executive Incentive Plan (NCEIP)(EIP), which directly rewards the accomplishment of key corporate and/or geographical or business unit performance goals, and (b) the CEO Annual Incentive Award Plan (AIAP) which has been approved by shareholders.goals. Additionally, each executive, including the CEO, is eligible for a program known as the “Enhanced Bonus” that rewards participants only when the Company’s actual consolidated net income exceedspre-set board-approved targets. Under the Enhanced Bonus feature, annual incentive awards earned under the NCEIP or AIAP,EIP, which are each limited to a maximum payout of 150% of target, may be increased from 0% to 50% if the Company’s consolidated net income exceeds the target. The enhancement is interpolated at performance levels between target and 125% of target. For each 1% increase in actual consolidated net income above target, earned awards under the NCEIP and AIAPEIP are increased by 2%. For example, at performance of 105% of net income target, the incentive is increased by 10%. The incentive is increased by 50% if the Company exceeds the net income target by 25% or more, resulting in a total bonus opportunity which is capped at 200% of target should performance achieve or exceed maximum levels. The Committee believes that the increased performance leverage that the Enhanced Bonus is designed to provide is in the best interests of our shareholders by motivating our senior management to exceed bottom line profitability targets in addition to important Company and business unit performance metrics. For 2020, the NCEIP and AIAP were combined into the MSA Executive Incentive Plan.
MSA 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
33 |
The following chart illustrates how the enhanced bonus feature rewards performance that exceeds targets under the NCEIP and AIAP,EIP, thereby assuring that executive reward is aligned to shareholder value. The “Example of Highly Leveraged Plan” in the chart is based upon Pay Governance, LLC research. The Committee limits the total possible payout to 200% of the target for 2020.
Under the NCEIP and AIAP,EIP, the target incentive opportunity (paid for achieving target performance) for each Named Officer is aligned with the executive’s salary midpoint which approximates the middle (50th percentile) of the market median as determined
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through our external benchmarking process, although the Committee generally considers target incentive opportunities between plus or minus 5 percentage points of the market median to be competitive. If actual performance drops below a predefined performance threshold, payout drops to zero.
The following table shows the target bonus percent and dollar amount of incentive that would be earned if actual performance for 20192022 was equal to targeted performance.performance:
20192022 TARGET CASH INCENTIVE AWARD
Percent of Salary Midpoint(1) | EIP Target Award(2) | |||||||||||||||||
Named Officer | Percent of Salary Midpoint (1) | NCEIP/AIAP Target Award (2) | ||||||||||||||||
Nishan J. Vartanian | 100 | % | $820,000 | 100% | $920,000 | |||||||||||||
Lee B. McChesney(3) | 75% | $ 80,311 | ||||||||||||||||
Jonathan D. Buck | 40% | $115,251 | ||||||||||||||||
Kenneth D. Krause | 65 | % | $309,303 | 70% | $356,936 | |||||||||||||
Steven C. Blanco | 65 | % | $281,125 | 70% | $324,431 | |||||||||||||
Douglas K. McClaine | 50 | % | $196,700 | |||||||||||||||
Bob W. Leenen(4) | 65% | $373,764 | ||||||||||||||||
Bob W. Leenen (3) | 60 | % | $263,147 | |||||||||||||||
Stephanie L. Sciullo(5) | 60% | $248,034 |
(1) | Reflects the percentage of the |
(2) |
(3) |
(4) | EIP Target Award for non U.S. based executive Mr. |
(5) | Ms. Sciullo’s EIP Target Award amount reflects a mid-year increase of both her target |
Actual NCEIPEIP award payments are based primarily on the achievement of a variety of Company financial andnon-financial goals, butincluding goals established for ESG. In 2022, the Committee approved an ESG scorecard pursuant to which the achievement of established goals would enable the Named Officers and certain other executives to receive up to a 5% modifier (plus or minus) to their annual cash incentive. ESG scorecard goals included environmental, social and program governance elements intended to drive the Company’s continued enhancement of ESG activities. Annual cash incentive award payments also have a discretionary personal performance factor applied based on the value and impact that each executive has had on the Company’s performance during the year. When making recommendations for the 2019 discretionary personal performance factor, the CEO may increase or decrease the calculated NCEIP annual cash incentive amount by up to 20% in 10% increments.
Actual AIAPEIP award payments for the CEO for 20192022 were based 50% on achievement of consolidated net sales, 25%30% on consolidated EBITDA Margin %,Percentage and 25%20% on achievement of consolidated working capital as a percentage of sales, all relative to the predetermined goals established and approved by the
MSA 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
34 |
Committee. The Committee also recommends for Board approval annual operational and strategic goals for the CEO. The independent directors of the Committee may use their discretion to reduceadjust the size of the CEO’s calculated award based on his performance relative to his individual goals but may not increase it.goals.
If performance is below the minimum threshold level, the payout goes to zero. In addition to these opportunities, the Enhanced Bonus feature may add up to 50% to the calculated NCEIP or AIAP award depending on the level of consolidated net income performance above target. The maximum award opportunity under all plans combined is 200% of target for each executive including the CEO. Actual awards paid for 20192022 performance are included in theSummary Compensation Table on page 3443 under the columnNon-Equity Incentive Plan Compensation.Compensation. Award opportunities for each Named Officer under the combined plans for 20192022 at threshold, target and maximum are included in theGrants of Plan-Based Awards table on page 3544 under the columnsEstimated Possible Payouts UnderNon-Equity Incentive Plan Awards.Awards.
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In 2019,2022, the annual cash incentive returned to a full year performance measures and goals were approved by the Committee at its February meeting.period. For the CEO and the other Named Officers, the Committee and, in the case of the CEO, independent directors of the Board, approved the following performance targets:
PERFORMANCE TARGETS FOR ANNUAL CASH INCENTIVE
President and Chief Executive Officer – Nishan J. Vartanian
(Dollars in millions)
2019 Actual Performance |
Pre-Established 2019 Annual | |||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | ||||||
Consolidated Net Sales | 50.00% | $1,411 | $1,260 | $1,400 | $1,540 | |||||
Consolidated EBITDA Margin (%) | 25.00% | 20.72% | 17.87% | 21.02% | 24.17% | |||||
Consolidated Working Capital as a % of Sales | 25.00% | 24.70% | 28.18% | 24.50% | 20.83% |
Note: As a result of 2019 performance, and a 1.00 % personal performance factor, 100% of target incentive was earned for 2019.
Chairman, President and Chief Executive Officer – Nishan J. Vartanian (Dollars in millions)
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2022 Actual | Pre-Established 2022 Incentive Goals | |||||||||||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | ||||||||||||||||
Consolidated Net Sales | 50% | $ | 1,578,227 | $ | 1,216,019 | $ | 1,520,024 | $ | 1,824,029 | |||||||||||
Consolidated EBITDA Margin (%) | 30% | 22.91% | 17.63% | 22.04% | 26.45% | |||||||||||||||
Consolidated Working Capital as a % of Net Sales | 20% | 34.34% | 35.52% | 29.60% | 23.68% | |||||||||||||||
Note: As a result of 2022 performance 100% of the 2022 target incentive was earned. Along with the achievement of the Enhanced Bonus described on page 33 above, a 10% discretionary performance factor and a 5% modifier based on achievement of ESG scorecard goals, 134% of target incentive was earned for 2022. The discretionary performance factor was awarded based on outstanding results including record sales and margin expansion, while working safely and reducing organizational risk. These were significant accomplishments noted in the Committee’s review of the CEO’s performance in 2022 against personal goals it had approved at the start of 2022. |
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Senior Vice President and Chief Financial Officer – Lee B. McChesney (Dollars in millions)
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2022 Actual | Pre-Established 2022 Incentive Goals | |||||||||||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | ||||||||||||||||
Consolidated Net Sales | 50% | $ | 1,578,227 | $ | 1,216,019 | $ | 1,520,024 | $ | 1,824,029 | |||||||||||
Consolidated EBITDA Margin (%) | 30% | 22.91% | 17.63% | 22.04% | 26.45% | |||||||||||||||
Consolidated Working Capital as a % of Net Sales | 20% | 34.34% | 35.52% | 29.60% | 23.68% | |||||||||||||||
Note: As a result of 2022 performance 100% of the 2022 target incentive was earned. Along with the achievement of the Enhanced Bonus described on page 33 above, and a 5% modifier based on achievement of ESG scorecard goals, 122% of target incentive was earned for 2022. |
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Chief Accounting Officer (Interim Chief Financial Officer) – Jonathan D. Buck (Dollars in millions)
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2022 Actual | Pre-Established 2022 Incentive Goals | |||||||||||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | ||||||||||||||||
Consolidated Net Sales | 50% | $ | 1,578,227 | $ | 1,216,019 | $ | 1,520,024 | $ | 1,824,029 | |||||||||||
Consolidated EBITDA Margin (%) | 30% | 22.91% | 17.63% | 22.04% | 26.45% | |||||||||||||||
Consolidated Working Capital as a % of Net Sales | 20% | 34.34% | 35.52% | 29.60% | 23.68% | |||||||||||||||
Note: As a result of 2022 performance 100% of the 2022 target incentive was earned. Along with the achievement of the Enhanced Bonus described on page 33 above and a 5% discretionary performance factor, 122% of target incentive was earned for 2022. |
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Senior Vice President, Chief Financial Officer and Treasurer – Kenneth D. Krause (Dollars in millions)
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2022 Actual | Pre-Established 2022 Incentive Goals | |||||||||||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | ||||||||||||||||
Consolidated Net Sales | 50% | $ | 1,578,227 | $ | 1,216,019 | $ | 1,520,024 | $ | 1,824,029 | |||||||||||
Consolidated EBITDA Margin (%) | 30% | 22.91% | 17.63% | 22.04% | 26.45% | |||||||||||||||
Consolidated Working Capital as a % of Net Sales | 20% | 34.34% | 35.52% | 29.60% | 23.68% | |||||||||||||||
Note: Resigned prior to year-end; will not receive an annual cash incentive. |
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Senior Vice President, Chief Financial Officer and Treasurer – Kenneth D. Krause
(Dollars in millions)
2019 Actual |
Pre-Established 2019 Annual | ||||||||||||||||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | |||||||||||||||||||||
Consolidated Net Sales | 50.00% | $1,411 | $1,260 | $1,400 | $1,540 | ||||||||||||||||||||
Consolidated EBITDA Margin (%) | 25.00% | 20.72% | 17.87% | 21.02% | 24.17% | ||||||||||||||||||||
Consolidated Working Capital as a % of Sales | 25.00% | 24.70% | 28.18% | 24.50% | 20.83% |
Note: As a result of 2019 performance, and a 1.20% personal performance factor, 120% of target incentive was earned for 2019.
Vice President and President MSA Americas – Steven C. Blanco
(Dollars in millions)
2019 Actual |
Pre-Established 2019 Annual | |||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | ||||||||
Americas Net Sales1 | 50.00% | $910 | $806 | $896 | $985 | |||||||
Americas EBITDA Margin (%) | 25.00% | 34.60% | 28.75% | 33.82% | 38.89% | |||||||
Consolidated Working Capital as a % of Sales | 25.00% | 24.70% | 28.18% | 24.50% | 20.83% |
Note: As a result of 2019 performance, and a 1.10% personal performance factor, 116% of target incentive was earned for 2019.
Senior Vice President, Secretary and Chief Legal Officer – Douglas K. McClaine
(Dollars in millions)
2019 Actual |
Pre-Established 2019 Annual | ||||||||||||||||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | |||||||||||||||||||||
Consolidated Net Sales | 50.00% | $1,411 | $1,260 | $1,400 | $1,540 | ||||||||||||||||||||
Consolidated EBITDA Margin (%) | 25.00% | 20.72% | 17.87% | 21.02% | 24.17% | ||||||||||||||||||||
Consolidated Working Capital as a % of Sales | 25.00% | 24.70% | 28.18% | 24.50% | 20.83% |
Note: As a result of 2019 performance, and a 1.00% personal performance factor, 100% of target incentive was earned for 2019.
MSA 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS |
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Vice President and President MSA International – Bob W. Leenen
(Dollars in millions)
2019 Actual Performance |
Pre-Established 2019 Annual | |||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | ||||||||
International Net Sales1 | 50.00% | $502 | $458 | $509 | $560 | |||||||
International EBITDA Margin (%) | 25.00% | 20.44% | 18.08% | 21.27% | 24.46% | |||||||
Consolidated Working Capital as a % of Sales | 25.00% | 24.70% | 28.18% | 24.50% | 20.83% |
Note: As a result of 2019 performance, and a 1.00% personal performance factor, 93% of target incentive was earned for 2019.
1 For geographic business metrics and certain consolidated metrics, currency-adjusted actual results will be used to compute the annual incentive payment.
Senior Vice President and President MSA Americas – Steven C. Blanco (Dollars in millions)
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2022 Actual | Pre-Established 2022 Incentive Goals | |||||||||||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | ||||||||||||||||
Americas Net Sales | 50% | $ | 996,477 | $ | 757,486 | $ | 946,857 | $ | 1,136,228 | |||||||||||
Americas EBITDA Margin (%) | 30% | 34.57% | 25.52% | 31.90% | 38.28% | |||||||||||||||
Consolidated Working Capital as a % of Net Sales | 20% | 34.34% | 35.52% | 29.60% | 23.68% | |||||||||||||||
Note: As a result of 2022 performance 105% of the 2022 target incentive was earned. Along with the achievement of the Enhanced Bonus described on page 33 above, a 10% discretionary performance factor and a 5% modifier based on achievement of ESG scorecard goals, 140% of target incentive was earned for 2022. |
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Senior Vice President and President MSA International – Bob W. Leenen (Dollars in millions)
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2022 Actual | Pre-Established 2022 Incentive Goals | |||||||||||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | ||||||||||||||||
International Net Sales 1 | 50% | $ | 513,886 | $ | 411,142 | $ | 513,928 | $ | 616,714 | |||||||||||
International EBITDA Margin (%) 1 | 30% | 21.99% | 19.74% | 24.68% | 29.62% | |||||||||||||||
Consolidated Working Capital as a % of Net Sales | 20% | 34.34% | 35.52% | 29.60% | 23.68% | |||||||||||||||
Note: As a result of 2022 performance 84% of the 2022 target incentive was earned. Along with the achievement of the Enhanced Bonus described on page 33 above, and a 5% modifier based on achievement of ESG scorecard goals, 102% of target incentive was earned for 2022. 1 For geographic business metrics and certain consolidated metrics, currency-adjusted actual results will be used to compute the annual incentive payment. |
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Senior Vice President and Chief Legal Officer – Stephanie L. Sciullo (Dollars in millions)
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2022 Actual | Pre-Established 2022 Incentive Goals | |||||||||||||||||||
Performance Measure | Weighting | Threshold | Target | Maximum | ||||||||||||||||
Consolidated Net Sales | 50% | $ | 1,578,227 | $ | 1,216,019 | $ | 1,520,024 | $ | 1,824,029 | |||||||||||
Consolidated EBITDA Margin (%) | 30% | 22.91% | 17.63% | 22.04% | 26.45% | |||||||||||||||
Consolidated Working Capital as a % of Net Sales | 20% | 34.34% | 35.52% | 29.60% | 23.68% | |||||||||||||||
Note: As a result of 2022 performance 100% of the 2022 target incentive was earned. Along with the achievement of the Enhanced Bonus described on page 33 above, a 10% discretionary performance factor and a 5% modifier based on achievement of ESG scorecard goals, 134% of target incentive was earned for 2022. |
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The Committee chose consolidated net sales as the most significant corporate performance goal for 2019 for all Named Officers, except for Messrs. Blanco and Leenen, for whom the Committee instead used applicable geographic net sales. All Named Officers are also measured by other performance goals appropriate to their job duties. The Committee believes that thesethe selected measures above are the best indicators of performance produced as a result of our executives’ efforts and is reflective of their individual areas of responsibility.
Long-Term Incentive Compensation. Our long-term incentive program represents a significant portion of an executive’s total compensation package. Awards under this program are considered “at risk,” which means they can increase or decrease in value based on fluctuations in our stock price. In selecting the appropriate long-term incentive vehicles, the Committee made its decisions based on its desire to reward for long-term stock price appreciation, to promote loyalty and tenure with the Company and to increase executives’ alignment with shareholders. Performance basedPerformance-based stock units and time-vesting restricted stock units were chosen to meet these attributes. These awards are granted under the shareholder-approvedshareholder approved Amended and Restated 2016 Management Equity Incentive Plan. In 20192022 the mix was 100% performance stock units for officers who are eligible for the MSA Supplemental Pension Plan, have reached retirement eligibility and hadhave achieved their ownership guidelines. This particular mix of awards positions these retirement-eligible officers’officers to have more equity “at risk” and provides better alignment to performance. For officers who are eligible for the MSA Supplemental Pension Plan and have achieved their ownership guideline but who have not yet reached retirement eligibility, and for officers who have reached retirement eligibility but have not yet reached their ownership guideline, the mix is 80% performance stock units and 20% time-vesting restricted stock units. For other officers who are not eligible for the MSA Supplemental Pension Plan, the mix istwo-thirds performance stock units andone-third time-vesting restricted stock units, recognizing the need to have a greater portion of equity compensation delivered in restricted stock units.units that are based solely upon time vesting.
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The following table illustrates the calculation and allocation of the long-term incentive compensation. This table and the table of Grants of Plan-Based Awards use the amounts computed in accordance with FASB ASC Topic 718.
LONG-TERMLONG TERM INCENTIVE COMPENSATION
Allocated to | ||||||||||||||||||||||||
1/1/2019 (1) | 2019 (2) | Restricted (3) | Performance Units (4) | Restricted (1) x (3) | Performance (1) x (4) | |||||||||||||||||||
Nishan J. Vartanian (5) | $ | 820,000 | 360 | % | 72 | % | 288 | % | $ | 590,400 | $ | 2,361,600 | ||||||||||||
Kenneth D. Krause | $ | 475,850 | 155 | % | 31 | % | 124 | % | $ | 147,514 | $ | 590,054 | ||||||||||||
Steven C. Blanco | $ | 432,500 | 135 | % | 27 | % | 108 | % | $ | 116,775 | $ | 467,100 | ||||||||||||
Douglas K. McClaine | $ | 393,400 | 90 | % | 0 | % | 90 | % | $ | 0 | $ | 354,060 | ||||||||||||
Bob W. Leenen (5) | $ | 431,741 | 60 | % | 20 | % | 40 | % | $ | 86,348 | $ | 172,696 |
Allocated To | ||||||||||||||||||||||||
2022 Salary Midpoint(1) (1) | 2022 Stock Multiplier(2) (2) | Restricted Stock Units (3) | Performance Stock Units (4) | Restricted Stock Units Award Value(3) (1) x (3) | Performance Stock Units Award Value(4) (1) x (4) | |||||||||||||||||||
Nishan J. Vartanian | $ | 920,000 | 410% | —% | 410% | $ | — | $ | 3,772,000 | |||||||||||||||
Lee B. McChesney (5) | $ | — | —% | —% | —% | $ | — | $ | — | |||||||||||||||
Jonathan D. Buck (6) | $ | 288,127 | 45% | 23% | 23% | $ | 64,829 | $ | 64,829 | |||||||||||||||
Kenneth D. Krause | $ | 509,909 | 195% | 39% | 156% | $ | 198,865 | $ | 795,458 | |||||||||||||||
Steven C. Blanco | $ | 463,472 | 165% | 33% | 132% | $ | 152,946 | $ | 611,783 | |||||||||||||||
Bob W. Leenen (7) | $ | 544,670 | 75% | 23% | 53% | $ | 122,551 | $ | 285,952 | |||||||||||||||
Stephanie L. Sciullo (8) | $ | 421,553 | 115% | 35% | 81% | $ | 145,436 | $ | 339,350 |
1 Reflects salary midpoint for U.S. based Named Officers (see note 5 below) at the time of the award in February 2019.
(1) | Reflects salary midpoint for U.S. based Named Officers at the time of the award in February 2022. The target awards shown above reflect 2022 midpoints at the time of grant. |
| Stock multiplier is the plan percentage effective in February 2022. Columns 3 and 4 percentages reflect the split of the stock multiplier into restricted stock units and performance stock units in accordance with the discussion above. |
(3) | Actual Restricted Stock Units awarded = Restricted Stock Units Award Value divided by the closing stock price on the date of the award. Actual amount may vary due to rounding to nearest share value. |
(4) | Actual Performance Stock Units awarded = Performance Stock Units Award Value divided by the closing stock price on the date of the award. Actual amount may vary due to rounding to nearest share value. Amounts shown in this column may differ from amounts shown in the compensation tables contained in this proxy statement due to differences in the method of calculating fair market value in compensation tables in accordance with FASB ASC Topic 718. |
(5) | Mr. McChesney was hired after the annual grant date in 2022 and thus did not receive a 2022 Annual Grant. |
(6) | In addition to the annual grant, Mr. Buck received a Restricted Stock Unit retention grant in connection with his appointment as Interim Chief Financial Officer not reflected in the values above. That grant was valued at $175,000 at the time of issuance. |
(7) | Reflects actual salary converted to USD for Mr. Leenen, who is a non-U.S. based Named Officer. The target awards shown above reflect Mr. Leenen’s salary at the time of grant. |
(8) | In addition to the annual grant, Ms. Sciullo received a Restricted Stock Units retention grant not reflected in the values above. That grant was valued at $1,000,000 at the time of issuance. |
2 Stock multiplier is the plan percentage effective in February 2019. Columns 3 and 4 percentages reflect the split of the stock multiplier into restricted stock units and performance stock units in accordance with the discussion above.
3 Actual Restricted Stock Units awarded = Restricted Stock Units Award Value divided by the closing stock price on the date of the award. Actual amount may vary due to rounding to nearest share value.
4 Actual Performance Stock Units awarded = Performance Stock Units Award Value divided by the closing stock price on the date of the award. Actual amount may vary due to rounding to nearest share value. Amounts shown in this column may differ from amounts shown in the compensation tables contained in this proxy statement due to differences in the method of calculating fair market value in compensation tables in accordance with FASB ASC Topic 718.
5 Reflects actual salary converted to USD for Mr. Leenen, who is anon-U.S. based Named Officer.
NOTE: A stock multiplier is the percentage of the U.S. based Named Officer’s salary midpoint, or thenon-U.S. based Named Officer’s actual salary, that is awarded in annual equity grants as long-term incentives. Stock multipliers are market based and determined with the assistance of the Committee’s outside compensation consultant.
Long-term incentive opportunities are developed for each executive salary grade based on the middle (50th percentile) of the market.market median. While the Committee reviews these long-term incentive opportunities annually, it typically only adjusts the individual opportunities periodically as market median long-term incentive data tends to be volatile, increasing or decreasing for certain positions more frequently than salary or annual incentive data.
Performance Stock Units. The Company uses this type of equity grant to incentivize the achievement of one or more specific goals promoting long-term shareholder value. At the date of grant, a target number of shares is established based on the share value at the time of the award and present dollar value of the compensation intended to be delivered. Ultimately, theThe number of shares awarded at the end of the performance period ultimately varies based on the achievement of corporate goals. Even if performance conditions are met, the performance stock units will not vest until the completion of a time-vesting period is achieved that requires the recipient to remain employed by the Company (generally three years from the grant). The value assigned to performance stock units is the fair market value of the shares of Common Stock to which such performance stock units relate on the date of grant, and the recipient is charged with income for Federal income tax purposes in the year of delivery of the shares at the market value as of the date of delivery, which is generally upon vesting.
The target number of shares will vestbe earned if the target performance goals are met. If “excellence” goals are met, the number of shares vestedearned will be doubled. If only the minimum “threshold” performance is achieved, one half of the target number of shares will vest.be earned. If performance is below “threshold,” the entire award will be forfeited. At performance levels between threshold, target and excellence, awards will be interpolated. There are no shares issued until the performance goals have been met.met and the time-vesting period has been achieved. Therefore, there are no dividend rights or voting rights associated with this form of long-term incentive until the shares are actually issued upon performance goals being met.issued.
For 2017 grants, the long-term performance stock unit incentive award included two internal financial metrics to measure performance, with the final results modified based on TSR as compared to a peer group. The internal financial metrics were based on Operating Margin percentage (weighted at 60%)2020, 2021 and Revenue Growth (weighted at 40%). The use of the TSR modifier is intended to align officer and other key executives’ rewards with changing shareholder value. Operating Margin percentage and Revenue Growth will be adjusted based onpre-determined items. There will be no interim shares earned. The performance for the entire grant was determined at the end of the performance period on December 31, 2019.
For 2018 and 20192022 grants, the long-term performance stock unit incentive award included two internal financial metrics to measure performance, with the final results modified based on TSR as compared to a peer group. The internal financial metrics were based on Adjusted EBITDA Margin percentage (weighted at 50%) and Revenue Growth (weighted at 50%). The use of the TSR modifier is intended to align officer and other key executives’ rewards with changing shareholder value. Adjusted EBITDA Margin percentage and Revenue Growth will be adjusted based on
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pre-determined items. ThereFor the 2021 grant, 25% of the target performance was earned in year one; 12.5% of target performance was earned since revenue was achieved at 99% or higher as compared to the 2021 revenue plan and 12.5% of target performance was earned since EBITDA margin was 95% or higher as compared to the EBITDA margin plan. An additional 25% of the target performance was earned in year two; an additional 12.5% of target performance was earned since revenue was achieved at 98% or higher as compared to the cumulative 2021-2022 revenue plan, and an additional 12.5% of target performance was earned since EBITDA margin was 95% or higher of the EBITDA margin plan. For the 2022 grant, 25% of the target performance was earned in year one; 12.5% of target performance was earned since revenue was achieved at 98% or higher as compared to the 2022 revenue plan and 12.5% of target performance was earned since EBITDA margin was 98% or higher as compared to the EBITDA margin plan. Up to an additional 25% of the target performance can be earned in year two; an additional 12.5% of target performance will be no interimearned if revenue is achieved at 98% or higher as compared to the cumulative 2022-2023 revenue plan, and an additional 12.5% of target performance will be earned if EBITDA margin is 98% or higher of the EBITDA margin plan. Final performance for the 2021 and 2022 grants will be calculated as of the end of their respective year three and will reflect shares earned.already earned in years one and two. Shares earned in years one and two will not be forfeited in the case of any failure to meet performance targets for the full three-year period. The performance for the entire 20182020 grant will bewas determined atas of the end of the performance period on December 31, 2020. The performance for the entire 2019 grant will be determined at the end of the performance period on December 31, 2021.2022.
At target performance, 100% of the target number of shares will be awarded. At threshold performance, 50% of the target number of shares will be awarded. At the excellence level of performance, 200% of the target number of shares will be awarded. Results between threshold and target, and between target and excellence, will be interpolated.interpolated; however, when calculating performance vesting on an interim basis for the 2021 and 2022 awards, no interpolation will be used. Any amountnumber of shares which are determined to be awarded will be further adjusted by the TSR modifier described below.
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If MSA’s percentile ranking for TSR versus our peer group is at the 40th percentile to the 60th percentile, the TSR modifier will be 1.0. The TSR modifier for a ranking greater than the 60th percentile but less than the 75th percentile will be 1.10. The TSR modifier for a ranking greater at the 75th percentile or above will be 1.20. The TSR modifier for a ranking greater than the 25th percentile but less than the 40th percentile will be 0.90. The TSR modifier for a ranking greater at the 25th percentile or below will be 0.80.
At the end of the three yearthree-year period, the 20172020 grant performed atabove threshold but below the excellencetarget level against the OperatingEBITDA Margin percentage goal, and above target but below the excellence level against the Revenue Growth goal, and had relative TSR performance atin the 85.840th percentile, resulting in a multiplier of 20%,1.0, which resulted in a total payout of 135.7%94.9% of target.
The shares related to the 20182021 and 20192022 annual performance stock unit grants will vest on March 8, 20212024 and March 8, 2022,2025, respectively, and are subject to determination by the Compensation Committee of the actual performance achieved. The 2021 grant earned 50% of target performance through year two of the award. The 2022 grant earned 25% of target performance in year one of the performance period.
Time-Vesting Restricted Stock Units. The Committee selected time-vesting restricted stock units in order to create and encourage an ownership culture and to serve as a retention tool. Restricted stock units vest 100% on or about the third anniversary following the date of grant. The value assigned to restricted stock units is the fair market value of the shares of Common Stock to which such restricted stock units relate on the date of grant, and the recipient is charged with income for Federal income tax purposes in the year of vesting at the market value as of the date that the restrictions lapse. The restricted units do not include voting rights or the right to dividends or dividend equivalents during the period prior to vesting.
ADDITIONAL CONSIDERATIONS RELATING TO THE CEO
In 2019,2022, Mr. Vartanian’s base pay was adjusted by amounts which conform to the Company’s merit increase guidelines for U.S. payroll. The increase for 20192022 in Mr. Vartanian’s salary was 7.2%5.14%.
CEO Pay For Performance.During 2019,2022, the Committee, with the assistance of its independent compensation consultant, Pay Governance, conducted several analyses to assess the alignment of the CEO’s pay relative to the performance of the Company. Company performance was defined as either our TSR or a composite of performance metrics. This composite consists of the average ranking relative to our peers of our TSR, Net Income Growth, RONA and Operating Income Margin. These analyses considered the CEO’s total direct compensation (TDC) which includes:includes base salary, actual cash bonus earned and value of equity incentives. Equity incentives were considered using two separate methodologies:
1. | Expected value method:this method considered the grant date fair value of equity awards and is the same value as stated in our proxy statement summary compensation table. |
2. | Realizable compensation method:this method examines the aggregate value of previously granted equity awards at a point in time, including: |
a. | thein-the-money intrinsic value of stock option grants made during the period, |
b. | the end of period value of restricted stock grants made during the period, and |
c. | for performance awards, the actual payouts for awards beginning and ending during the three-year performance period and the end of period estimated payout for unvested awards granted during the three-year performance period ended December 31, |
During 2019,2022, the Committee reviewed and discussed the results of the following independent analyses and was satisfied that the executive compensation program was aligned with the performance of the Company.
MSA 2023 PROXY STATEMENT |
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20182021 CEO Actual Annual Cash Incentive Earned Relative to Peers versus 20182021 Composite Performance Relative to Peers
This analysis compares our CEO’s 20182021 actual bonus earned (and paid in early 2019)2022) to the composite performance metrics, which are a collection of metrics used in our incentive arrangements. Both the CEO’s bonus information and the composite performance results were compared to the same data of our peers and considered on a percentile rank basis. The Committee concluded that the CEO’s annual incentive payment, when evaluated in terms of absolute dollar value, was reasonably aligned with the relative performance of the Company.
2021 CEO ACTUAL BONUS PAYMENT | BONUS RELATIVE TO PEERS | PERFORMANCE RELATIVE TO PEERS | ALIGNMENT OF BONUS AND PERFORMANCE | ||||||||||||
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Bonus Earned (Dollar Value) | Reasonable |
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20182021 CEO Realizable Compensation Relative to Peers versus 20182021 Composite Performance Relative to Peers
This analysis compares our CEO’s realizable compensation(realizable compensation method, described above) over the three-year period 20162019 through 20182021 relative to the composite performance metrics, which are a collection of metrics used in our incentive arrangements. Both the CEO’s realizable compensation information and the composite performance results were compared to the same data of our peers and considered on a percentile rank basis. The Committee concluded that the CEO’s three-year realizable compensation, when evaluated in terms of absolute dollar value, was reasonably aligned with the relative performance of the Company.
REALIZABLE RELATIVE TO PEERS | PERFORMANCE RELATIVE TO | ALIGNMENT OF REALIZABLE AND PERFORMANCE | ||||
CEO Realizable Compensation (Value) | Reasonable |
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CEO Realizable Compensation as a Percent of Expected Value Relative to Company TSR Performance
This analysis examines the percent difference in compensation granted to our CEO in a particular year expressed on an expected value basis (note 1 below) versus the same compensation expressed on a realizable value basis (note 2 below) at the end of 2019.2021. This percent difference is compared to the change in actual Company TSR for the same time periods to understand if the difference in expected value pay and realizable pay is directionally similar to our TSR performance. For example, if our stock price falls over a period of time, we would expect our CEO’s realizable compensation to be less than the expected value at the time the compensation was granted. In evaluating this analysis, the Committee was satisfied that the CEO’s realizable compensation was directionally similar to changes in our TSR.
Year | MSA CEO Target TDC at Grant (1) | MSA CEO Realizable Value (2) | Measurement Period | Change in Pay Value (3) | Change in MSA TSR (4) | Alignment | ||||||||||||||
2017 | $ 4,192,457 | $ 6,850,981 | 2017 - 2019 | 63% | 92% | Reasonable | ||||||||||||||
2018 | $ 2,504,543 | $ 2,971,371 | 2018 - 2019 | 19% | 68% | Reasonable | ||||||||||||||
2019 | $ 4,491,247 | $ 5,226,975 | 2019 | 16% | 36% | Reasonable | ||||||||||||||
Total | $11,188,247 | $15,049,327 | 2017 - 2019 | 35% | 92% | Reasonable |
Year | MSA CEO Target TDC at Grant (1) | MSA CEO Realizable Value (2) | Measurement Period | Change in Pay Value (3) | Change in MSA TSR (4) | Alignment | ||||||||||||||||
2020 | $ | 5,190,407 | $ | 5,275,344 | 2020 – 2022 | 2% | 18% | Reasonable | ||||||||||||||
2021 | $ | 5,226,137 | $ | 4,764,039 | 2021 – 2022 | -9% | -1% | Reasonable | ||||||||||||||
2022 | $ | 5,748,054 | $ | 6,072,467 | 2022 | 6% | -3% | Reasonable | ||||||||||||||
Total | $ | 16,164,598 | $ | 16,111,850 | 2020 – 2022 | 0% | 18% | Reasonable |
(1) | Target TDC at Grant includes for each particular year the CEO’s base salary, target bonus and the grant date fair value of equity awards granted. |
(2) | Realizable value includes for each particular year the CEO’s base salary, actual bonus earned and the realizable value of equity awards granted during that particular year using our December 31, |
(3) | Change in Pay Value is the change in the CEO’s compensation from the time it was granted to December 31, |
(4) | MSA TSR is calculated on apoint-to-point basis using the final trading day of each year. |
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OTHER COMPENSATION AND RETIREMENT POLICIES
In addition to the other components of our executive compensation program, we maintain the compensation policies described below. These policies are consistent with evolving best practices and help ensure that our executive compensation program does not encourage our officers to engage in risk taking beyond our ability to effectively identify and manage.
U.S. Post-Employment Retirement Benefits. Retirement related compensation is designed to provide financial security following retirement from the Company and to reward for loyalty and tenure. Retirement benefits for U.S. based Named Officers fall into three major elements which include pension, 401(k) andnon-qualified nonqualified retirement plans. All of these programs exist to help attract, retain, and motivate key executives. The programs listed below are designed to be competitive and are compared periodically to representative peer companies. Plan design and provisions are reviewed periodically to determine if the total retirement package is competitive. Retirement-related compensation programs do not have a direct linkage to performance but rather a link to a long-term commitment to MSA, as do all other welfare benefits.
Pension – offered as part of a retirement package that helps the Company recruit employees and provides security and peace of mind for future retirement, enabling executives and other employees to exit the workforce at retirement age. Pension amounts are based on final average pay, years of service, age, and apre-determined plan formula.
• | Pension – offered as part of a retirement package that helps the Company recruit employees and provides security and peace of mind for future retirement, enabling executives and other employees to exit the workforce at retirement age. Pension amounts are based on final average pay, years of service, age, and a pre-determined plan formula. |
401(k) – offered as part of our benefits package to encourage employees to save for their own retirement and future financial security. MSA matches 100% of the first 1% of employee contributions and 50% of the next 6% for a total match of 4% on 7% of compensation. Beginning in 2020, MSA will match 100% of the first 5% of employee contributions.
Non-qualifiedNonqualified retirement plans – provide additional retirement benefits for executives whose accumulations and contributions in the qualified plans are limited by the Internal Revenue Code. MSA maintains threetwo such plans. The MSA 2005 Supplemental Retirement Savings Plan provides benefits beyond the limitations imposed on 401(k) plans. The MSA Supplemental Pension Plan provides benefits beyond the limitations imposed on defined benefit pension plans. The Company ceased providing benefits under the Supplemental Pension Plan for any employees who are newly hired or
Non-U.S. Post-Employment Retirement Benefits.
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| Pension – offered as a retirement benefit with a lump sum withdrawal option that provides security and peace of mind for future retirement, enabling executives and other employees to exit the |
Non-U.S. Post-Employment Retirement Benefits:
Pension – offered as a retirement benefit with a lump sum withdrawal option that provides security and peace of mind for future retirement, enabling executives and other employees to exit the workforce at retirement age. Pension amounts are based on employee contributions, employer contributions, years of service, age, and apre-determined plan formula.
Stock Ownership Guideline Policy. All Named Officers are expected to hold a number of shares equal in value to their actual salary as ofyear-end, multiplied by a stock multiplier ranging from 2.25 up to 5.5 for the CEO. Prior to achieving the stock ownership guidelines mentioned above, the executive must retain 100% of all equity awards through the Company’s compensation program (net of exercise costs and taxes). The specified ownership amount is expected to be retained thereafter as long as a Named Officer remains an active employee. The Company also maintains similar stock ownership guidelines for other key executives, including appropriate multipliers.
Messrs. Krause,Vartanian, Buck, Blanco, McClaine and VartanianLeenen and Ms. Sciullo exceeded their stock ownership guideline requirements as of December 31, 2019.2022. Mr. LeenenMcChesney has not yet met his stock ownership guideline requirements as of December 31, 2019,2022, due to his limited tenure inrecent appointment to his current role.
The stock ownership requirements for each Named Officer are as follows:
STOCK OWNERSHIP REQUIREMENTS
Name | Title | Salary as of 12/31/2019 | 2019 Stock Multiplier | Ownership Requirement | Title | Salary as of 12/31/2022 | 2022 Stock Multiplier | Ownership Requirement | ||||||||||||||||||||||||||||||||||||
Nishan J. Vartanian | President and Chief Executive Officer | $820,000 | x | 5.50 | = | $4,510,000 | Chairman, President and Chief Executive Officer | $ | 920,000 | x | 5.50 | = | $ | 5,060,000 | ||||||||||||||||||||||||||||||
Kenneth D. Krause | Senior Vice President, Chief Financial Officer and Treasurer | $460,013 | x | 3.50 | = | $1,610,046 | ||||||||||||||||||||||||||||||||||||||
Lee B. McChesney | Senior Vice President and Chief Financial Officer | $ | 525,000 | x | 3.50 | = | $ | 1,837,500 | ||||||||||||||||||||||||||||||||||||
Jonathan D. Buck | Interim Chief Financial Officer, Chief Accounting Officer | $ | 306,990 | x | 0.75 | = | $ | 230,243 | ||||||||||||||||||||||||||||||||||||
Kenneth D. Krause(1) | Senior Vice President, Chief Financial Officer and Treasurer | $ | — | x | 0.00 | = | $ | — | ||||||||||||||||||||||||||||||||||||
Steven C. Blanco | Vice President and President MSA Americas | $418,000 | x | 2.25 | = | $ 940,500 | Vice President and President MSA Americas | $ | 493,000 | x | 2.25 | = | $ | 1,109,250 | ||||||||||||||||||||||||||||||
Douglas K. McClaine | Senior Vice President, Secretary and Chief Legal Officer | $402,675 | x | 2.25 | = | $ 906,019 | ||||||||||||||||||||||||||||||||||||||
Bob W. Leenen | Vice President and President MSA International | $ | 575,021 | x | 2.25 | = | $ | 1,293,797 | ||||||||||||||||||||||||||||||||||||
Bob W. Leenen | Vice President and President MSA International | $438,579 | x | 2.25 | = | $ 986,803 | ||||||||||||||||||||||||||||||||||||||
Stephanie L. Sciullo | Vice President and Chief Legal Officer | $ | 455,000 | x | 2.25 | = | $ | 1,023,750 |
(1) | Mr. Krause was no longer employed as of December 31, 2022; therefore, no requirements are shown. |
The following forms of share ownership apply toward the stock ownership requirements: shares purchased; vested and unvested restricted stock units; shares retained following the exercise of stock options; and other shares acquired through any other lawful means. Performance basedPerformance-based restricted stock or stock units that have not yet met the performance tests are not applied toward the stock ownership requirements. Share ownership of spouses who
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live in the same household as the Named Officer are counted in the totals. All executives understand these requirements, and the Committee may use its discretion to reduce or eliminate future long-term incentive grants, or take such other actions as it deems appropriate, as motivation to meet the ownership guidelines. These ownership guidelines help drive a culture of ownership and accountability among the executive team.
Hedging and Pledging. The Company maintains an insider trading policy that restricts the trading of Company stock. That policy specifically prohibits directors, officers and employees who receive equity awards from the Company from hedging or pledging their Company stock. The policy prohibits short-sales of Company securities, the purchase of puts, calls or other derivative hedging transactions against Company securities, and pledging Company securities as collateral for a loan.
Recoupment Policy. The Company has a recoupment policy applicable to officers and other Company employees. In the event of a restatement of MSA’s financial results or financial irregularities causing a revision of performance metrics upon which compensation was based, or a determination of other misconduct that results in substantial financial or reputational harm to
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the Company, the Board will review the circumstances that caused the restatement and consider issues of accountability for those who bore responsibility for the events. As part of that review, consideration would also be given to any appropriate action regarding compensation that may have been awarded to such persons. In particular, it would be appropriate to consider whether any compensation was awarded on the basis of having achieved specified performance targets, whether a person engaged in misconduct that contributed to the restatement and whether such compensation would have been reduced had the financial results been properly reported. Depending on the outcome of that review, appropriate action could include reducing compensation in the year the restatement was made or in future years, seeking repayment of any incentives received for the period restated or any gains realized as a result of exercising an option awarded for the period restated, or canceling any unvested equity compensation awarded for the period restated.
The Company intends to modify its recoupment policy to meet the new requirements that will be issued by the New York Stock Exchange, in response to the SEC’s adoption of Rule 10D-1 under Section 10D of the Securities Exchange Act of 1934, as amended.
Perquisites.The Company provides executives with a limited number of perquisites in order to strengthen business relationships and maximize the use of our executives’ time. Our perquisites have been benchmarked to the market and are considered ordinary, customary, and minimal for each executive’s position. The following are available to the Named Officers:
AutomobileVehicle – each Named Officer is provided a Company leased vehicle or vehicle allowance to facilitate travel among MSA’s various locations and for other business travel. Personal use of a Company leased vehicle is calculated and imputed as income for each executive.
Club memberships – country club memberships are provided to our CEO to facilitate customer contact and a business club is provided to our CEO, Chief Financial Officer and CFOChief Legal Officer to afford a downtown Pittsburgh location for business meetings.
Financial planning and tax return assistance – provides advice and guidance to executives on investment and income tax issues in order to maximize the use and understanding of our executive compensation program and minimize time otherwise required for taxation issues.
The Company does not own or lease an aircraft, nor does the Company have fractional ownership in any aircraft, nor does it pay for executives’ personal travel.
Each Named Officer is offered a comprehensive annual executive physical to encourage executives to proactively manage their health.
Severance Policy. The Company has a severance pay policy that applies to the U.S. based Named Officers as well as other eligible salaried employees. The policy applies to a permanent termination of the employment relationship when initiated by the Company and when other conditions are satisfied. A schedule of benefits determines the separation benefit ranging from four weeks to a maximum offifty-two weeks of severance pay based on final salary.
Tax Implications of Executive Compensation. Section 162(m) of the Internal Revenue Code currently imposes a $1 million limit on the amount that a public companythe Company may deduct for compensation paid to an employee who is chief executive officer, chief financial officer, or another “covered employee” (as defined by Section 162(m)), or was such an employee beginning in any year after 2017. Prior to 2018, the Compensation Committee designed certain payments and awards intended to be exempt from this deduction limit as “performance-based compensation” and various plans, including the AIAP, were structured to comply with the Section 162(m) performance-based compensation requirements. The Tax Cuts and Jobs Acts, however, eliminated the “performance-based compensation” exception under Section 162(m) effective January 1, 2018, subject to a special rule that “grandfathers” certain awards or arrangements that were in effect on or before November 2, 2017. There can be no assurance that compensation structured prior to 2018 with the intent of qualifying as performance-based compensation will be deductible under Section 162(m), depending on the application of the grandfather rule. Additionally, compensation awarded in 2018 and future years to covered employees in excess of $1 million also will generally not be deductible.. The Compensation Committee retains the discretion to establish the compensation paid or intended to be paid or awarded to the Named Officers as the Committee may determine is in the best interest of the Company and its shareholders, and without regard to any limitation provided in Section 162(m). This discretion is an important feature of the Committee’s compensation practices because it provides the Committee with sufficient flexibility to respond to specific circumstances facing the Company.
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Change in Control. The Company has entered into change in control employment agreements with each of the Named Officers. These agreements provide Named Officers up to threetwo years income and benefits following a change in control of the Company. These agreements are intended to retain executives, provide continuity of management in the event of an actual or threatened change in control and enable executives to remain financially indifferent when evaluating opportunities that may be beneficial to shareholders yet could negatively impact the continued employment of the executive. Cash severance payments are payable and accelerated vesting of unvested equity awards occurs only in the event of both a change in control and termination of employment other than for cause, death or disability (commonly known as a “double trigger”). There are no taxgross-up provisions in the change in control agreements.
Equity Granting Process. The Company grants equity awards for executives and all other eligible associates at the first regularly scheduled Compensation Committee meeting of each calendar year. The Committee makes its grants effective on the later of the date of the Compensation Committee meeting at which the grant was made or the third business day after the Company’syear-end earnings release.
MSA 2023 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||
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Adjustments or Recovery of Prior Compensation. As described above under “Recoupment Policy,” the Company maintains a recoupment policy to facilitate the recovery or adjustment of amounts previously awarded or paid to a Named Officer, in the event of a restatement of MSA’s financial results, financial irregularities causing a revision of performance metrics, or a determination of other misconduct that results in substantial financial or reputational harm to the Company. Additionally, the Sarbanes-Oxley Act of 2002 provides that if the Company is required to restate its financial results due to substantial noncompliance with financial reporting requirements as a result of misconduct, the Chief Executive Officer and the Chief Financial Officer must reimburse the Company for any bonus, incentive or equity-based compensation received, and any profits realized from the sale of Company securities, during the twelve months following the issuance or filing of the noncompliant results.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has reviewed the Compensation Discussion and Analysis and has discussed it with management. Based upon its review and those discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Robert A. Bruggeworth
Rebecca B. Roberts, Chair
Luca Savi
MSA 2023 PROXY STATEMENT |
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Summary Compensation TableTables
SUMMARY COMPENSATION TABLE
The following table shows the compensation for 2019, 20182022, 2021, and 20172020 of the Company’s principal executive officer, the Company’s three principal financial officer,officers during the year, and the other three executive officers of the Company as of December 31, 20192022, with the highest total compensation for 20192022 (collectively, the “Named Officers”):
Name and Principal Position | Year | Salary | Stock (1) | Stock option awards (2) | Non-equity incentive plan compensation (3) | Change in pension value (4) | All other compensation (5) | Total | ||||||||||||||||||||||||||||||||
Nishan J. Vartanian |
| 2019 | $ | 805,192 | $ | 2,866,056 | $ | — | $ | 820,902 | $ | 2,030,572 | $ | 134,158 | $ | 6,656,880 | ||||||||||||||||||||||||
President and Chief Executive |
| 2018 | $ | 665,385 | $ | 974,543 | $ | — | $ | 733,013 | $ | 377,809 | $ | 62,803 | $ | 2,813,553 | ||||||||||||||||||||||||
Officer |
| 2017 | $ | 452,399 | $ | 1,432,329 | $ | — | $ | 322,809 | $ | 605,281 | $ | 43,965 | $ | 2,856,783 | ||||||||||||||||||||||||
Kenneth D. Krause |
| 2019 | $ | 453,279 | $ | 716,087 | $ | — | $ | 363,218 | $ | 358,647 | $ | 57,567 | $ | 1,948,798 | ||||||||||||||||||||||||
Senior Vice President, Chief Financial |
| 2018 | $ | 424,231 | $ | 593,446 | $ | — | $ | 372,196 | $ | 52,002 | $ | 55,232 | $ | 1,497,107 | ||||||||||||||||||||||||
Officer and Treasurer |
| 2017 | $ | 391,635 | $ | 510,544 | $ | — | $ | 242,521 | $ | 141,956 | $ | 48,183 | $ | 1,334,839 | ||||||||||||||||||||||||
Steven C. Blanco (6) |
| 2019 | $ | 407,769 | $ | 566,834 | $ | — | $ | 317,928 | $ | 224,057 | $ | 41,308 | $ | 1,557,896 | ||||||||||||||||||||||||
Vice President and President |
| 2018 | $ | 375,719 | $ | 501,253 | $ | — | $ | 315,202 | $ | 37,453 | $ | 41,231 | $ | 1,270,859 | ||||||||||||||||||||||||
MSA Americas |
| 2017 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||
Douglas K. McClaine |
| 2019 | $ | 399,263 | $ | 591,147 | $ | — | $ | 196,916 | $ | 909,909 | $ | 43,238 | $ | 2,140,473 | ||||||||||||||||||||||||
Senior Vice President, Secretary |
| 2018 | $ | 385,962 | $ | 347,024 | $ | — | $ | 244,156 | $ | — | $ | 42,838 | $ | 1,019,980 | ||||||||||||||||||||||||
and Chief Legal Officer |
| 2017 | $ | 372,682 | $ | 340,367 | $ | — | $ | 186,554 | $ | 484,597 | $ | 42,902 | $ | 1,427,102 | ||||||||||||||||||||||||
Bob W. Leenen (6) |
| 2019 | $ | 425,682 | $ | 252,794 | $ | — | $ | 243,675 | $ | 111,153 | $ | 26,142 | $ | 1,059,446 | ||||||||||||||||||||||||
Vice President and President |
| 2018 | $ | 375,879 | $ | 211,641 | $ | — | $ | 288,729 | $ | 144,549 | $ | 25,798 | $ | 1,046,597 | ||||||||||||||||||||||||
MSA International |
| 2017 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
Name and Principal Position | Year | Salary | Stock Awards(1) | Stock Option Awards(2) | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value(4) | All Other Compensation(5) | Total | ||||||||||||||||||||||||
Nishan J. Vartanian | 2022 | $908,923 | $ 3,919,131 | $ | — | $1,228,310 | $ | — | $ 112,504 | $ | 6,168,869 | |||||||||||||||||||||
Chairman, President and Chief Executive Officer | 2021 | $863,062 | $ 3,488,075 | $ | — | $ 963,683 | $ | 1,381,941 | $ 97,259 | $ | 6,794,020 | |||||||||||||||||||||
2020 | $874,956 | $ 3,464,701 | $ | — | $ 677,835 | $ | 2,452,588 | $ 105,647 | $ | 7,575,727 | ||||||||||||||||||||||
Lee B. McChesney(6) Senior Vice President and Chief Financial Officer | 2022 | $111,058 | $ — | $ | — | $ 97,900 | $ | 5,149 | $ 3,779 | $ | 217,886 | |||||||||||||||||||||
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Jonathan D. Buck(6) Chief Accounting Officer (Interim Chief Financial Officer) | 2022 | $301,393 | $ 307,131 | $ | — | $ 140,493 | $ | — | $ 31,925 | $ | 780,941 | |||||||||||||||||||||
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Kenneth D. Krause | 2022 | $329,043 | $ 1,025,302 | $ | — | $ — | $ | — | $ 44,701 | $ | 1,399,045 | |||||||||||||||||||||
Senior Vice President, Chief Financial Officer and Treasurer | 2021 | $481,029 | $ 965,361 | $ | — | $ 381,662 | $ | 148,470 | $ 58,127 | $ | 2,034,649 | |||||||||||||||||||||
2020 | $488,215 | $ 837,072 | $ | — | $ 262,950 | $ | 456,997 | $ 67,845 | $ | 2,113,079 | ||||||||||||||||||||||
Steven C. Blanco | 2022 | $485,094 | $ 788,572 | $ | — | $ 455,215 | $ | — | $ 48,142 | $ | 1,777,023 | |||||||||||||||||||||
Senior Vice President and President MSA Americas | 2021 | $450,041 | $ 674,960 | $ | — | $ 333,143 | $ | 134,081 | $ 38,550 | $ | 1,630,775 | |||||||||||||||||||||
2020 | $449,993 | $ 626,536 | $ | — | $ 230,473 | $ | 263,940 | $ 58,249 | $ | 1,629,191 | ||||||||||||||||||||||
Bob W. Leenen(7) | 2022 | $568,933 | $ 419,701 | $ | — | $ 382,856 | $ | 281,401 | $ 40,856 | $ | 1,693,747 | |||||||||||||||||||||
Senior Vice President and President MSA International | 2021 | $521,135 | $ 360,597 | $ | — | $ 357,017 | $ | 174,123 | $ 40,923 | $ | 1,453,795 | |||||||||||||||||||||
2020 | $505,335 | $ 266,247 | $ | — | $ 300,429 | $ | 243,165 | $ 36,087 | $ | 1,351,263 | ||||||||||||||||||||||
Stephanie L. Sciullo | 2022 | $414,112 | $ 1,497,888 | $ | — | $ 331,156 | $ | — | $ 53,051 | $ | 2,296,178 | |||||||||||||||||||||
Senior Vice President and Chief Legal Officer | 2021 | $362,986 | $ 429,739 | $ | — | $ 272,707 | $ | 7,337 | $ 51,152 | $ | 1,123,921 | |||||||||||||||||||||
2020 | $364,865 | $ 406,017 | $ | — | $ 183,943 | $ | 70,799 | $ 49,368 | $ | 1,074,992 |
(1) | Represents the aggregate grant date fair value of the restricted stock unit awards and performance stock unit awards computed in accordance with FASB ASC Topic 718. For the performance stock unit awards, the amounts disclosed in the table are based upon the target amount of shares granted. If maximum share payouts were achieved for such units, the aggregate grant date fair value for such units would be twice the amount disclosed in each year in the table related to such performance stock units. In the event of such maximum payouts the totals in the stock awards column would be: (i) for |
(2) | Represents the aggregate grant date fair value of the stock option awards, computed in accordance with FASB ASC Topic 718. |
(3) | Represents the aggregate amount of incentive awards earned by the Named Officer under the |
(4) | Represents the amount of the aggregate increase for |
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
44 |
(5) | The following table describes the |
Name | Perquisites and personal benefits (A) | Company contributions to defined contribution plans | Insurance premiums | Other | Total | Perquisites (A) | Company Contributions to Defined Contribution Plans | Insurance Premiums | Other | Total | |||||||||||||||||||||||||||||||||||
Nishan J. Vartanian | $ | 72,630 | $ | 61,528 | $ | — | $ | — | $ | 134,158 | $18,874 | $93,630 | $ | — | $ | — | $ | 112,504 | |||||||||||||||||||||||||||
Lee B. McChesney | $ 2,769 | $ 1,010 | $ | — | $ | — | $ | 3,779 | |||||||||||||||||||||||||||||||||||||
Jonathan D. Buck | $ — | $31,925 | $ | — | $ | — | $ | 31,925 | |||||||||||||||||||||||||||||||||||||
Kenneth D. Krause | $ | 24,548 | $ | 33,019 | $ | — | $ | — | $ | 57,567 | $17,691 | $27,010 | $ | — | $ | — | $ | 44,701 | |||||||||||||||||||||||||||
Steven C. Blanco | $ | 12,389 | $ | 28,919 | $ | — | $ | — | $ | 41,308 | $23,887 | $24,255 | $ | — | $ | — | $ | 48,142 | |||||||||||||||||||||||||||
Douglas K. McClaine | $ | 12,726 | $ | 25,737 | $ | 4,776 | $ | — | $ | 43,238 | |||||||||||||||||||||||||||||||||||
Bob W. Leenen | $ | 26,142 | $ | — | $ | — | $ | — | $ | 26,142 | $40,856 | $ — | $ | — | $ | — | $ | 40,856 | |||||||||||||||||||||||||||
Stephanie L. Sciullo | $37,801 | $15,250 | $ | — | $ | — | $ | 53,051 |
(A) | The amounts for all persons other than Mr. Leenen and Mr. McChesney consist of either the cost of the personal use of a Company |
(6) | Messrs. |
(7) | Mr. Leenen was reimbursed in 2023 for Financial and Tax Assistance expenses incurred in 2020 and 2021; “All Other Compensation” for those years has been updated to reflect those amounts. |
Grants of Plan-Based AwardsGRANTS OF PLAN-BASED AWARDS
The following table shows the grants of plan-based awards made to the Named Officers in 2019:2022:
Estimated possible payouts | Estimated possible payouts | Stock and stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant date | Estimated possible payouts under non-equity incentive plan awards(1) | Estimated possible payouts under equity incentive plan awards(2) | Stock and Stock Unit Awards(3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Grant date | Threshold | Target | Maximum | Threshold | Target | Maximum | Number of shares | Grant date fair value | Threshold | Target | Maximum | Threshold | Target | Maximum | Number of Shares or Units | Grant Date Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nishan J. Vartanian | 02/25/2019 | $ | 410,000 | $ | 820,000 | $ | 1,640,000 | $ | 1,137,848 | $ | 2,275,696 | $ | 5,461,670 | 5,699 | $ | 590,359 | 2/22/2022 | $ | 460,000 | $ | 920,000 | $ | 1,840,000 |
| $ | 1,959,566 | $ | 3,919,131 | $ | 9,405,915 |
| — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lee B. McChesney | — | $ | 40,156 | $ | 80,311 | $ | 160,622 |
| $ | — | $ | — | $ | — |
| — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan D. Buck | 2/22/2022 | $ | 57,626 | $ | 115,251 | $ | 230,502 |
| $ | 33,674 | $ | 67,348 | $ | 161,636 |
| 469 | $ | 64,820 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan D. Buck(4) | 8/31/2022 | $ | — | $ | — | $ | — |
| $ | — | $ | — | $ | — |
| 1,472 | $ | 174,962 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kenneth D. Krause | 02/25/2019 | $ | 154,652 | $ | 309,303 | $ | 618,606 | $ | 284,288 | $ | 568,575 | $ | 1,364,580 | 1,424 | $ | 147,512 | 2/22/2022 | $ | 178,468 | $ | 356,936 | $ | 713,872 |
| $ | 413,209 | $ | 826,418 | $ | 1,983,403 |
| 1,439 | $ | 198,884 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven C. Blanco | 02/25/2019 | $ | 140,563 | $ | 281,125 | $ | 562,250 | $ | 225,044 | $ | 450,088 | $ | 1,080,211 | 1,127 | $ | 116,746 | 2/22/2022 | $ | 162,216 | $ | 324,431 | $ | 648,862 |
| $ | 317,787 | $ | 635,574 | $ | 1,525,377 |
| 1,107 | $ | 152,998 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Douglas K. McClaine | 02/25/2019 | $ | 98,350 | $ | 196,700 | $ | 393,400 | $ | 170,593 | $ | 341,185 | $ | 818,844 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bob W. Leenen | 2/22/2022 | $ | 186,882 | $ | 373,764 | $ | 747,528 |
| $ | 148,554 | $ | 297,108 | $ | 713,060 |
| 887 | $ | 122,592 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Douglas K. McClaine (4) | 02/25/2019 | — | — | — | — | $ | 249,963 | $ | 249,963 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stephanie L. Sciullo | 2/22/2022 | $ | 124,017 | $ | 248,034 | $ | 496,068 |
| $ | 176,269 | $ | 352,538 | $ | 846,091 |
| 1,052 | $ | 145,397 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bob W. Leenen | 02/25/2019 | $ | 129,523 | $ | 259,045 | $ | 518,090 | $ | 83,200 | $ | 166,400 | $ | 399,360 | 834 | $ | 86,394 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stephanie L. Sciullo(5) | 9/1/2022 | $ | — | $ | — | $ | — |
| $ | — | $ | — | $ | — |
| 8,503 | $ | 999,953 |
(1) | Represents the amounts which could have been earned by the Named Officer through |
(2) | Represents the amount that could be earned by the Named Officer at the threshold, target and maximum levels of shares to be issued with respect to the performance stock units granted to the Named Officer under the Company’s Amended and Restated 2016 Management Equity Incentive Plan. The performance period runs through December 31, |
(3) |
(4) | Represents |
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
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(5) | Represents time-vesting restricted stock unit awards granted to Ms. Sciullo under the Company’s Amended and Restated 2016 Management Equity Incentive Plan. To earn the award, the officer must remain employed by the Company or a subsidiary through the third anniversary of the |
Outstanding Equity Awards at FiscalYear-EndOUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table shows the outstanding equity awards held by the Named Officers at December 31, 2019:2022:
Name | Option Awards | Stock Awards | Performance Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number exerciseable | Number un-exerciseable | Date exercisable | Option exercise price | Expiration date | Number of shares or stock units that have not vested | Vesting date | Market value of shares or stock units that have not vested(1) | Number of shares or stock units awarded that have not vested | Vesting date(2) | Market value of shares or stock units that have not vested(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nishan J. Vartanian | — | — | — | $ | — | — | — | — | $ | — | 27,204 | 3/8/2023 | $ | 3,922,545 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | $ | — | — | — | — | $ | — | 20,371 | 3/8/2024 | $ | 2,937,294 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Option | Stock Awards | Performance Stock Unit Awards | — | — | — | $ | — | — | — | — | $ | — | 27,292 | 3/8/2025 | $ | 3,935,233 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number exercisable | Number un-exercisable | Date exercisable | Option exercise price | Expiration date | Number of shares or stock units that have not vested | Vesting date | Market value of shares or stock units that have not vested (1) | Number of not vested | Vesting Date (2) | Market value of unearned stock units that have not vested (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nishan J. Vartanian |
| 2,535 |
| — |
| 2/17/2015 | $ | 36.690 |
| 2/17/2022 |
| 6,306 |
| 6/26/2020 | $ | 796,826 |
| 6,017 |
| 3/8/2020 | $ | 760,308 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lee B. McChesney | — | — | — | $ | — | — | — | — | $ | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan D. Buck | — | — | — | $ | — | — | 329 | 3/8/2023 | $ | 47,439 | 658 | 3/8/2023 | $ | 94,877 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3,402 |
| — |
| 2/20/2016 | $ | 48.950 |
| 2/20/2023 |
| 5,699 |
| 3/8/2022 | $ | 720,126 |
| 6,306 |
| 3/8/2020 | $ | 796,826 | — | — | — | $ | — | — | 368 | 3/8/2024 | $ | 53,062 | 368 | 3/8/2024 | $ | 53,062 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,160 |
| — |
| 2/26/2017 | $ | 51.690 |
| 2/26/2024 |
| — |
| — |
| — |
| 11,660 |
| 3/8/2021 | $ | 1,473,358 | — | — | — | $ | — | — | 100 | 2/22/2025 | $ | 14,419 | — | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 11,623 |
| — |
| 2/25/2018 | $ | 48.640 |
| 2/25/2025 |
| — |
| — |
| — |
| 22,798 |
| 3/8/2022 | $ | 2,880,755 | — | — | — | $ | — | — | 469 | 3/8/2025 | $ | 67,625 | 469 | 3/8/2025 | $ | 67,625 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12,744 |
| — |
| 3/1/2019 | $ | 44.500 |
| 3/1/2026 |
| — |
| — |
| — |
| — |
| — |
| — | — | — | — | $ | — | — | 1,472 | 8/31/2025 | $ | 212,248 | — | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kenneth D. Krause |
| 1,685 |
| — |
| 2/25/2018 | $ | 48.640 |
| 2/25/2025 |
| 1,413 |
| 3/8/2020 | $ | 178,547 |
| 5,651 |
| 3/8/2020 | $ | 714,060 | — | — | — | $ | — | — | — | — | $ | — | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10,620 |
| — |
| 3/1/2019 | $ | 44.500 |
| 3/1/2026 |
| 1,420 |
| 3/8/2021 | $ | 179,431 |
| 5,680 |
| 3/8/2021 | $ | 717,725 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
| — |
| — |
| — |
| — |
| 1,424 |
| 3/8/2022 | $ | 179,937 |
| 5,696 |
| 3/8/2022 | $ | 719,747 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven C. Blanco |
| 3,571 |
| — |
| 2/20/2016 | $ | 48.950 |
| 2/20/2023 |
| 714 |
| 3/8/2020 | $ | 90,221 |
| 2,855 |
| 3/8/2020 | $ | 360,758 | — | — | — | $ | — | — | 987 | 3/8/2023 | $ | 142,316 | 3,950 | 3/8/2023 | $ | 569,551 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,217 |
| — |
| 2/26/2017 | $ | 51.690 |
| 2/26/2024 |
| 1,199 |
| 3/8/2021 | $ | 151,506 |
| 4,798 |
| 3/8/2021 | $ | 606,275 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,341 |
| — |
| 2/25/2018 | $ | 48.640 |
| 2/25/2025 |
| 1,127 |
| 3/8/2022 | $ | 142,408 |
| 4,509 |
| 3/8/2022 | $ | 569,757 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8,691 |
| — |
| 3/1/2019 | $ | 44.500 |
| 3/1/2026 |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Douglas K. McClaine (3) |
| 6,383 |
| — |
| 2/26/2017 | $ | 51.690 |
| 2/26/2024 |
| — |
| — |
| — |
| 4,709 |
| 3/8/2020 | $ | 595,029 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10,461 |
| — |
| 2/25/2018 | $ | 48.640 |
| 2/25/2025 |
| — |
| — |
| — |
| 4,152 |
| 3/8/2021 | $ | 524,647 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 14,337 |
| — |
| 3/1/2019 | $ | 44.500 |
| 3/1/2026 |
| — |
| — |
| — |
| 3,418 |
| 3/8/2022 | $ | 431,898 | — | — | — | $ | — | — | 788 | 3/8/2024 | $ | 113,622 | 3,153 | 3/8/2024 | $ | 454,631 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
| — |
| — |
| — |
| 2,413 |
| 2/1/2020 | $ | 304,907 | — | — | — | $ | — | — | 1,107 | 3/8/2025 | $ | 159,618 | 4,426 | 3/8/2025 | $ | 638,185 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bob W. Leenen |
| 1,909 |
| — |
| 3/1/2019 | $ | 44.500 |
| 3/1/2026 |
| 436 |
| 3/8/2020 | $ | 55,093 |
| 872 |
| 3/8/2020 | $ | 110,186 | — | — | — | $ | — | — | 701 | 3/8/2023 | $ | 101,077 | 1,402 | 3/8/2023 | $ | 202,154 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| — |
| — |
| — |
| — |
| — |
| 844 |
| 3/8/2021 | $ | 106,648 |
| 1,688 |
| 3/8/2021 | $ | 213,296 | — | — | — | $ | — | — | 702 | 3/8/2024 | $ | 101,221 | 1,404 | 3/8/2024 | $ | 202,443 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | 834 | 3/8/2022 | $ | 105,384 | 1,667 | 3/8/2022 | $ | 210,642 | — | — | — | $ | — | — | 887 | 3/8/2025 | $ | 127,897 | 2,069 | 3/8/2025 | $ | 298,329 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stephanie L. Sciullo | — | — | — | $ | — | — | 1,069 | 3/8/2023 | $ | 154,139 | 2,138 | 3/8/2023 | $ | 308,278 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | $ | — | — | 837 | 3/8/2024 | $ | 120,687 | 1,673 | 3/8/2024 | $ | 241,230 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | $ | — | — | 1,052 | 3/8/2025 | $ | 151,688 | 2,455 | 3/8/2025 | $ | 353,986 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | $ | — | — | 8,503 | 09/01/2025 | $ | 1,226,048 | — | — | $ | — |
(1) | Based on the |
(2) | The final vesting date of these performance stock units will be on March 8th of the third year after the units were awarded, assuming that the Compensation Committee determines whether, and to what extent, the performance requirements related to the awards have been met, subject, as to the awards shown in the table as vesting on March 8, 2024 and March 8, 2025, to the earlier vesting of the performance conditions of a percentage of the awards if applicable annual performance tests are met, in which case the final (time-based) vesting date for such percentage of awards will be March 8, |
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
46 |
Option Exercises and Stock VestedOPTION EXERCISES AND STOCK VESTED
The following table shows the stock options exercised by the Named Officers and the restricted stock unit awards vested for the Named Officers during 2019:2022:
Option awards | Stock awards | |||||||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Name | Number of shares acquired on exercise | Value realized on exercise (1) | Number of shares acquired on vesting | Value realized on vesting (2) | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting | Value Realized on Vesting(2) | ||||||||||||||||||||||||||||||||
Nishan J. Vartanian | 7,551 | $ | 536,354 | 9,629 | $ | 984,758 | — | $— |
| 20,328 | $2,614,994 | |||||||||||||||||||||||||||||
Lee B. McChesney | — | $— |
| — | $ — | |||||||||||||||||||||||||||||||||||
Jonathan D. Buck | — | $— |
| 628 | $ 80,786 | |||||||||||||||||||||||||||||||||||
Kenneth D. Krause | 1,488 | $ | 111,213 | 20,514 | $ | 2,371,015 | — | $— |
| 5,079 | $ 653,363 | |||||||||||||||||||||||||||||
Steven C. Blanco | — | $ | — | 6,566 | $ | 671,505 | — | $— |
| 4,020 | $ 517,133 | |||||||||||||||||||||||||||||
Douglas K. McClaine | 24,584 | $ | 2,019,829 | 8,948 | $ | 915,112 | ||||||||||||||||||||||||||||||||||
Bob W. Leenen | — | $— |
| 1,904 | $ 244,931 | |||||||||||||||||||||||||||||||||||
Bob W. Leenen | 1,909 | $ | 118,196 | 2,297 | $ | 234,914 | ||||||||||||||||||||||||||||||||||
Stephanie L. Sciullo | — | $— |
| 571 | $ 73,453 |
(1) | Represents the difference between the market value on the date of exercise of the shares acquired and the option exercise price. |
(2) | Represents the market value of the restricted |
Pension BenefitsPENSION BENEFITS
The following table provides information concerning the value of the Named Officers’ accumulated benefits under the Company’s defined benefit retirement plans as of December 31, 2019:2022:
Name | Plan name | Number of years credited service | Present value of accumulated benefit | Payments during last fiscal year | Plan | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | |||||||||||||||||||||||
Nishan J. Vartanian | MSA Pension Plan |
| 34.5 | $ | 1,286,149 |
| — | MSA Pension Plan | 37.5 | $1,262,292 | $ | — | |||||||||||||||||||
MSA Supplemental Pension Plan |
| 34.5 | $ | 3,710,891 |
| — | MSA Supplemental Pension Plan | 37.5 | $6,829,896 | $ | — | ||||||||||||||||||||
Lee B. McChesney | MSA Pension Plan | 0.2 | $ 5,149 | $ | — | ||||||||||||||||||||||||||
MSA Supplemental Pension Plan | — | $ — | $ | — | |||||||||||||||||||||||||||
Jonathan D. Buck | MSA Pension Plan | 11.6 | $ 107,886 | $ | — | ||||||||||||||||||||||||||
Supplemental Executive Retirement Plan |
| 34.5 |
| — | MSA Supplemental Pension Plan | — | $ — | $ | — | ||||||||||||||||||||||
Kenneth D. Krause | MSA Pension Plan |
| 13.3 | $ | 285,504 |
| — | MSA Pension Plan | 15.9 | $ 237,813 | $ | — | |||||||||||||||||||
MSA Supplemental Pension Plan |
| 13.3 | $ | 447,451 |
| — | MSA Supplemental Pension Plan | 15.9 | $ 532,974 | $ | — | ||||||||||||||||||||
Supplemental Executive Retirement Plan |
| 13.3 |
| — | |||||||||||||||||||||||||||
Steven C. Blanco | MSA Pension Plan |
| 7.7 | $ | 223,493 |
| — | MSA Pension Plan | 10.7 | $ 253,369 | $ | — | |||||||||||||||||||
MSA Supplemental Pension Plan |
| 7.7 | $ | 306,542 |
| — | MSA Supplemental Pension Plan | 10.7 | $ 495,381 | $ | — | ||||||||||||||||||||
Bob W. Leenen(1) | MSA Pension Plan | 8.2 | $1,167,955 | $ | — | ||||||||||||||||||||||||||
Supplemental Executive Retirement Plan |
| 7.7 |
| — |
| — | MSA Supplemental Pension Plan | — | $ — | $ | — | ||||||||||||||||||||
Douglas K. McClaine | MSA Pension Plan |
| 35.3 | $ | 1,508,934 |
| — | ||||||||||||||||||||||||
Stephanie L. Sciullo | MSA Pension Plan | 12.6 | $ 118,000 | $ | — | ||||||||||||||||||||||||||
MSA Supplemental Pension Plan |
| 35.3 | $ | 2,157,390 |
| — | MSA Supplemental Pension Plan | — | $ — | $ | — | ||||||||||||||||||||
Supplemental Executive Retirement Plan |
| 35.3 | $ | 492,814 |
| — | |||||||||||||||||||||||||
Bob W. Leenen | MSA Pension Plan (1) |
| 5.2 | $ | 468,749 |
|
| — | |||||||||||||||||||||||
MSA Supplemental Pension Plan |
| 5.2 |
| — |
| — | |||||||||||||||||||||||||
Supplemental Executive Retirement Plan |
| 5.2 |
| — |
| — |
(1) | Mr. Leenen is a participant in the Swiss Life Pension Plan |
Pension Plan
Introduction. The MSA Pension Plan is a retirement plan that covers mostcertain U.S. salaried employees and certain U.S. hourly employees.
To have anon-forfeitable right to a benefit under the Pension Plan, a participant must complete five years of service with the Company or an affiliate or attain age 65 while employed by the Company or an affiliate. The Pension Plan’s normal retirement age is identical to the participant’s “Social Security Retirement Age.” The Social Security Full Retirement Age is established by Federal law and varies from age 65 for persons born before 1938 to age 67 for persons born in 1960 or later years.
Benefits at Normal Retirement Age. A participant who retires upon reaching normal retirement age can begin receiving pension payments as of the first day of the following calendar month, which is referred to as the participant’s “normal retirement date.”
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
47 |
The Pension Plan has a minimum benefit formula that applies to only a small number of lower-paid participants. The majority of participants who begin receiving benefits on their normal retirement date are entitled to receive a monthly benefit equal to the sum of the amounts shown in (a), (b) and (c) below:
(a) | 0.80% | x | Average Monthly Earnings up to Average Social Security Wage Base | x | Credited Service up to 35 Years | |||||||||
plus | ||||||||||||||
(b) | 1.55% | x | Average Monthly Earnings greater than Average Social Security Wage Base | x | Credited Service up to 35 Years | |||||||||
plus | ||||||||||||||
(c) | 1.00% | x | Average Monthly Earnings | x | Credited Service over 35 Years |
For purposes of the normal retirement benefit formula, the following terms have the following meanings:
• | “Average Monthly Earnings” is generally the average of monthly compensation received during the participant’s highest five consecutive calendar years of compensation over the last ten years of employment. Compensation is generally the total cash payments received by a participant for services performed, before any reductions for employee contributions to 401(k) or other employee benefit plans. Compensation does not include any expense reimbursements, income attributable to non-cash benefits, or certain other miscellaneous payments. The compensation that can be taken into account each year is limited by Federal law. The 2022 limit was $305,000, but this number may be adjusted in future years for cost-of-living increases. |
“Average Monthly Earnings” is generally the average of monthly compensation received during the participant’s highest five consecutive calendar years of compensation over the last ten years of employment. Compensation is generally the total cash payments received by a participant for services performed, before any reductions for employee contributions to 401(k) or other employee benefit plans. Compensation does not include any expense reimbursements, income attributable tonon-cash benefits, or certain other miscellaneous payments. The compensation that can be taken into account each year is limited by Federal law. The 2019 limit was $280,000, but this number may be adjusted in future years forcost-of-living increases.
• | “Average Social Security Wage Base” is the average of the Social Security taxable wage bases in effect under Federal law during the 35-year period ending in the calendar year in which the participant attains Social Security Retirement Age. |
“Average Social Security Wage Base” is the average of the Social Security taxable wage bases in effect under Federal law during the35-year period ending in the calendar year in which the participant attains Social Security Retirement Age.
“Credited Service” is a participant’s actual period of service with the Company as an employee in a category of employment that is covered by the Pension Plan.
Benefits at Early Retirement Age. The Pension Plan permits early retirement by participants who have (i) reached age 55 with at least 15 years of service, or (ii) reached age 60 with at least 10 years of service. Messrs.Mr. Vartanian and McClaine areis currently eligible for early retirement. Mr. McClaine has announced that he intends to retire in 2020. Participants who elect early retirement can choose to begin receiving pension benefits immediately, in which case their monthly benefit amount will be reduced to reflect the early start of payments; or they may choose to delay the start of payments until their normal retirement date, at which time they will receive unreduced benefits determined under the normal retirement benefit formula described above.
If a participant takes early retirement and begins receiving pension payments before his or her normal retirement date, the monthly pension benefit will be determined under the normal retirement formula, but will be reduced by (i) 5/9ths of 1% for each of the first 60 months that benefits begin before the normal retirement date, plus (ii) 5/18ths of 1% for each of the next 60 months that benefits begin before the normal retirement date, plus (iii) .345% for each of the next 12 months that benefits begin before the normal retirement date, plus (iv) .3108% for each of the next 12 months that benefits begin before the normal retirement date. Different reduction factors apply to the minimum benefit formula.
Forms of Payment. In general, Pension Plan benefits are paid as a stream of monthly benefits, referred to as an annuity (the only exception is that benefits with a present value of $5,000 or less are automatically paid in a lump sum following termination of employment). The normal form of payment for an unnamedunmarried participant is a “single life annuity” that pays monthly benefits to the participant for his or her life only. The normal form of payment for a married participant is a “qualified joint and survivor annuity” that pays monthly benefits to the participant for life, and, after the participant’s death, pays monthly benefits to the participant’s surviving spouse in an amount equal to 50% of the monthly amount payable during the participant’s lifetime. The Pension Plan also permits a participant to elect from among several optional forms of annuity payment that are of equivalent actuarial value to the normal form of payment.
Even though the Named Officers who participate in the Pension Plan cannot receive a lump sum distribution from the Pension Plan, the pension benefit table is required to show a present value for each individual’s accumulated Pension Plan benefit payable at normal retirement age. That present value was calculated by using an annual interest rate of 3.39%5.25% and the Pri-2012 Private Retirement Plans Mortality Table projected generationally using scale MP-2019.MP-2021.
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
48 |
Supplemental Pension Plan
Supplemental Pension Plan
Introduction. The MSA Supplemental Pension Plan is a nonqualified retirement plan that provides plan participants with pension benefits that they would have received under the Pension Plan except for certain limitations imposed by Federal law, including the limitation on compensation that can be taken into account.
Benefits at Normal Retirement Age. The monthly benefit payable under the Supplemental Pension Plan to a participant who begins receiving benefits on his or her normal retirement date will be equal to the difference between (i) the amount that would have been payable under the Pension Plan on the normal retirement date if there were no limitations placed by law upon compensation taken into account or upon the amount of annual benefit payments, and (ii) the amount that is actually payable to the participant under the Pension Plan.
Benefits at Early Retirement Age. The monthly benefit payable under the Supplemental Pension Plan to a participant who is eligible for early retirement under the Pension Plan and who begins receiving benefits under the Pension Plan before his or her normal retirement date will be equal to the difference between (i) the amount that would have been payable under the Pension Plan if there were no limitations placed by law upon compensation taken into account or upon the amount of annual benefits, and (ii) the amount that is actually payable to the participant under the Pension Plan. Messrs.Mr. Vartanian and McClaine areis currently eligible for early retirement.
Forms of Payment. Benefits payable under the Supplemental Pension Plan are generally payable in the same form that the participant’s benefits are payable under the Pension Plan. However, in the event of a vested participant’s termination within atwo-year period after a corporate change in control (as defined in the Supplemental Pension Plan), the participant will receive a lump sum payment that is actuarially equivalent to the participant’s Supplemental Pension Plan benefit.
Even though the Named Officers who participate in the Supplemental Pension Plan are not eligible to receive a lump sum unless a change in control occurs, the pension benefit table is required to show a present value at December 31, 20192022 for each individual’s accumulated Supplemental Pension Plan benefit. That present value was calculated using an annual interest rate of 3.33%5.20% and the Pri-2012 Private Retirement Plans Mortality Table projected generationally using scale MP-2019MP-2021 with white collar adjustment. This plan was closed to new entrants after December 31, 2012.
Supplemental Executive Retirement Plan
The MSA Supplemental Executive Retirement Plan provides a defined benefit at retirement. Only certain officers of the Company are eligible for this program. No benefit is payable unless the officer stays with the Company until he or she reaches retirement eligibility, that is, age 55 plus a combination of age and service equal to at least 70. The benefit is payable in equal installments over 15 years. The benefit amount for all eligible officers is $600,000. In the event of death of the participant after retirement, remaining payments are paid to the spouse or other beneficiary. No new officers have been added to this plan since its inception on January 1, 2008 and the plan was formally closed to new entrants after August 31, 2013.
Nonqualified Deferred CompensationNONQUALIFIED DEFERRED COMPENSATION
The following table provides information concerning deferrals by the Named Officers of their earned compensation under the Company’s nonqualified deferred compensation plans:
Name | Executive contributions in 2019 (1) | Company contributions in 2019 (2) | Aggregate earnings in 2019 (3) | Aggregate withdrawals/ distributions | Aggregate balance at 12/31/2019 (4) | Executive Contributions in 2022(1) | Company Contributions in 2022(2) | Aggregate Earnings in 2022(3) | Aggregate Withdrawals / Distributions | Aggregate Balance at 12/31/2022(4) | |||||||||||||||||||||||||||||||||||
Nishan J. Vartanian | $ | 88,074 | $ | 50,328 | $ | 114,635 | — | $ | 778,366 | $78,380 | $78,380 | ($149,051 | ) | $ — | $1,256,488 | ||||||||||||||||||||||||||||||
Lee B. McChesney | $ — | $ — | $ — | $ — | $ — | ||||||||||||||||||||||||||||||||||||||||
Jonathan D. Buck | $16,675 | $16,675 | ($ 5,694 | ) | $ — | $ 60,693 | |||||||||||||||||||||||||||||||||||||||
Kenneth D. Krause | $ | 38,183 | $ | 21,819 | $ | 29,360 | — | $ | 192,897 | $34,793 | $11,760 | ($ 81,048 | ) | $ — | $ 427,897 | ||||||||||||||||||||||||||||||
Steven C. Blanco | $ | 31,008 | $ | 17,719 | $ | 49,843 | — | $ | 253,164 | $29,525 | $19,824 | ($ 72,940 | ) | $ — | $ 388,447 | ||||||||||||||||||||||||||||||
Douglas K. McClaine | $ | 25,439 | $ | 14,537 | $ | 139,301 | — | $ | 765,818 | ||||||||||||||||||||||||||||||||||||
Bob W. Leenen(5) | $ — | $ — | $ — | $ — | $ — | ||||||||||||||||||||||||||||||||||||||||
Bob W. Leenen (5) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Stephanie L. Sciullo | $ — | $ — | ($ 30,478 | ) | $ — | $ 136,761 |
(1) | These amounts are included in the amounts reported in the Summary Compensation Table as salary ornon-equity incentive plan compensation, as applicable. |
(2) | These amounts are included in the amounts reported in the Summary Compensation Table under “Other Compensation.” |
(3) | The above table reflects the Company’s Supplemental Retirement Savings Plan. Earnings on deferred compensation under the Supplemental Retirement Savings Plan are not above market or preferential and are therefore not included in the Summary Compensation Table. Participants elect to have their accounts treated as if invested in one or more of a selection of publicly available mutual funds similar to those available under the Company’s Retirement Savings Plan, a qualified 401(k) plan. Accounts are credited with earnings or losses based on the investment results of the funds selected. See Supplemental Retirement Savings Plan discussion immediately below for further information. |
(4) | Of the balances shown, the following amounts represent executive and Company contributions which either were reported in the Summary Compensation Table in the year of the contribution or would have been so reported had the individual been a Named Officer for that year: Mr. Vartanian, |
(5) | As anon-U.S. executive Mr. Leenen is not eligible to participate in the MSA Supplemental Retirement Savings |
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
49 |
Supplemental Retirement Savings Plan
For the Named Officers, the amounts shown in the Nonqualified Deferred Compensation table relate to the MSA 2005 Supplemental Retirement Savings Plan (SSP). The SSP permits the Named Officers and other eligible employees to defer compensation in excess of the limits imposed by the Internal Revenue Code on employee contributions to the Company’s Retirement Savings Plan (RSP), a qualified 401(k) Plan. The Company matches 100% of the first 1%5% of participant deferrals and 50% of up to the next 6% of eligible compensation,employee contributions, whether contributed to the RSP or deferred under the SSP. Beginning in 2020 MSA will match 100% of the first 5% of employee contributions. Participant contributions are vested at all times. Company matching contributions vest upon completion of two years of service, or earlier upon death, attainment of age 65 or a change in control.
Compensation eligible for deferral under the SSP includes salary, annual incentive bonus and other cash remuneration for services rendered. There are certain limits on the percentage of eligible compensation that a participant may defer. Participants may elect to have their SSP accounts treated as if invested in one or more of a selection of publicly available mutual funds similar to those available under the RSP. Accounts are credited with earnings or losses based on the investment results of the funds selected. Participants may change their investment elections, for either new contributions and/or for existing balances, at any time.
Distribution options under the SSP vary depending upon the year in which compensation was deferred. Distribution of amounts deferred prior to 2003 commences upon termination of employment or an earlier change in control and is paid either in a lump sum or in five annual installments, as elected by the participant. For amounts deferred, in 2003 or thereafter, the participant could elect an alternateelects a date for the commencement of distributions, which for subsequent distribution elections in 2005 and thereafter must be at least five years later than the original distribution date. Absent such an election, distributions commence upon the first day of the seventh month following termination of employment. Distributions are made either in a lump sum or in up to 15 annual installments, as elected by the participant. The timing of participant elections, both as to deferrals and as to distributions, is restricted in accordance with Internal Revenue Service requirements.
MSA 2023 PROXY STATEMENT |
Potential Payments upon Termination orChange-in-Control
COMPENSATION TABLES | ||||
50 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
The tables below show the payments and benefits to which each Named Officer would have been entitled if histhe officer’s employment had terminated on December 31, 20192022, for the reasons indicated in the tables. In addition to severance amounts payable in certain circumstances under the plan and agreements described following the tables, the amounts shown in the tables include compensation and retirement and other benefits previously earned through service by the Named Officer as described above.
Nishan J. Vartanian
The following table shows the payments and benefits to which Nishan J. Vartanian would have been entitled if his employment had terminated on December 31, 20192022, for the reasons indicated in the table:
Voluntary termination | Involuntary termination for cause | Involuntary termination without cause | Death | Disability | Change in control termination | |||||||||||||||||||||||||
Cash severance (1) | $ | — | $ | — | $ | 820,000 | $ | — | $ | — | $ | 2,695,822 | ||||||||||||||||||
Disability income (2) | $ | — | $ | — | $ | — | $ | — | $ | 1,536,211 | $ | — | ||||||||||||||||||
Earned award undernon-equity incentive plans (3) | $ | 820,902 | $ | — | $ | 820,902 | $ | 820,902 | $ | 820,902 | $ | 820,902 | ||||||||||||||||||
Equity (4): | ||||||||||||||||||||||||||||||
Restricted stock | $ | 1,036,868 | $ | — | $ | 1,036,868 | $ | 1,516,952 | $ | 1,516,952 | $ | 1,516,952 | ||||||||||||||||||
Unexercisable Options | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Performance Award | $ | 3,990,744 | $ | — | $ | 3,990,744 | $ | 5,911,247 | $ | 5,911,247 | $ | 5,911,247 | ||||||||||||||||||
Retirement benefits: | ||||||||||||||||||||||||||||||
Defined benefit plans (5) | ||||||||||||||||||||||||||||||
Pension Plan | $ | 1,286,149 | $ | 1,286,149 | $ | 1,286,149 | $ | 1,036,866 | $ | 1,286,149 | $ | 1,286,149 | ||||||||||||||||||
Supplemental Pension Plan | $ | 3,710,891 | $ | 3,710,891 | $ | 3,710,891 | $ | 2,941,005 | $ | 3,710,891 | $ | 2,850,427 | ||||||||||||||||||
Supplemental Executive Retirement Plan | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Defined contribution plans (6) | ||||||||||||||||||||||||||||||
401(k) Retirement Savings Plan | $ | 1,588,331 | $ | 1,588,331 | $ | 1,588,331 | $ | 1,588,331 | $ | 1,588,331 | $ | 1,588,331 | ||||||||||||||||||
Supplemental Savings Plan | $ | 778,366 | $ | 778,366 | $ | 788,366 | $ | 778,366 | $ | 778,366 | $ | 778,366 | ||||||||||||||||||
Retiree medical (7) | $ | 178,060 | $ | 178,060 | $ | 178,060 | $ | — | $ | — | $ | 178,060 | ||||||||||||||||||
Other Benefits: | ||||||||||||||||||||||||||||||
Health & Welfare (8) | $ | — | $ | — | $ | — | $ | 93,956 | $ | 178,060 | $ | — | ||||||||||||||||||
Insurance benefits (9) | $ | — | $ | — | $ | — | $ | 1,000,000 | $ | — | $ | — | ||||||||||||||||||
Outplacement assistance | $ | — | $ | — | $ | 25,000 | $ | — | $ | — | $ | 25,000 | ||||||||||||||||||
Total | $ | 13,390,311 | $ | 7,541,797 | $ | 14,235,311 | $ | 15,687,625 | $ | 17,327,109 | $ | 17,651,256 |
Benefit | Voluntary Termination | Involuntary Termination for Cause | Involuntary Termination Without Cause | Death | Disability | Change in Control Termination | ||||||||||||||||||
Cash Severance(1) | $ | — | $ | — | $ | 920,000 | $ | — | $ | — | $ | 3,481,518 | ||||||||||||
Disability Income(2) | $ | — | $ | — | $ | — | $ | — | $ | 979,535 | $ | — | ||||||||||||
Earned award under non-equity incentive plans(3) | $ | 1,228,310 | $ | — | $ | 1,228,310 | $ | 1,228,310 | $ | 1,228,310 | $ | 1,228,310 | ||||||||||||
Equity(4) | ||||||||||||||||||||||||
Restricted Stock | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Unexercisable Options | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Performance Award | $ | 10,795,072 | $ | — | $ | 10,795,072 | $ | 10,795,072 | $ | 10,795,072 | $ | 10,795,072 | ||||||||||||
Other Benefits | ||||||||||||||||||||||||
Retiree medical(5) | $ | 115,510 | $ | 115,510 | $ | 115,510 | $ | — | $ | — | $ | 115,510 | ||||||||||||
Health & Welfare(6) | $ | — | $ | — | $ | — | $ | 65,992 | $ | 115,510 | $ | — | ||||||||||||
Insurance benefits(7) | $ | — | $ | — | $ | — | $ | 50,000 | $ | — | $ | — | ||||||||||||
Outplacement assistance | $ | — | $ | — | $ | 25,000 | $ | — | $ | — | $ | 25,000 | ||||||||||||
Total | $ | 12,138,892 | $ | 115,510 | $ | 13,083,892 | $ | 12,139,374 | $ | 13,118,427 | $ | 15,645,410 |
(1) | Represents the cash severance amount payable under the MSA Salaried Severance Pay Plan or the Change in Control Severance Agreements described below. |
(2) | Represents the present value of the future payments that should be payable under the terms of the Company’s long-term disability plan, which provides an annual benefit of 60% of salary up to a maximum annual benefit of $360,000. |
(3) | Represents the amount earned through completion of the plan year under the Company’snon-equity incentive award plans, as shown in the Summary Compensation Table above. |
(4) | The amount shown is the market value of equity awards held by the Named Officer at December 31, |
(5) |
The Company has a nondiscriminatory plan available generally to |
The amount shown for death represents the present value of the cost of continued dependent medical care coverage under the Company’s health and welfare plan. The amount shown for disability is the present value of the cost of continued medical care coverage for the Named Officer and dependents. |
The amounts payable on death are the death benefits under the Company’s group term life insurance policy, |
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
51 |
Kenneth D. KrauseLee B. McChesney
The following table shows the payments and benefits to which Kenneth D. KrauseLee B. McChesney would have been entitled if his employment had terminated on December 31, 20192022, for the reasons indicated in the table:
Voluntary termination | Involuntary termination for cause | Involuntary termination without cause | Death | Disability | Change in control termination | |||||||||||||||||||
Cash severance (1) | $ | — | $ | — | $ | 150,389 | $ | — | $ | — | $ | 1,534,743 | ||||||||||||
Disability income (2) | $ | — | $ | — | $ | — | $ | — | $ | 3,931,735 | $ | — | ||||||||||||
Earned award undernon-equity incentive plans (3) | $ | 363,218 | $ | — | $ | 363,218 | $ | 363,218 | $ | 363,218 | $ | 363,218 | ||||||||||||
Equity (4): | ||||||||||||||||||||||||
Restricted stock | $ | — | $ | — | $ | — | $ | 537,915 | $ | 537,915 | $ | 537,915 | ||||||||||||
Unexercisable Options | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Performance Award | $ | — | $ | — | $ | — | $ | 2,151,532 | $ | 2,151,532 | $ | 2,151,532 | ||||||||||||
Retirement benefits: | ||||||||||||||||||||||||
Defined benefit plans (5) | ||||||||||||||||||||||||
Pension Plan | $ | 285,504 | $ | 285,504 | $ | 285,504 | $ | 130,337 | $ | 285,504 | $ | 285,504 | ||||||||||||
Supplemental Pension Plan | $ | 447,451 | $ | 447,451 | $ | 447,451 | $ | 200,897 | $ | 447,451 | $ | 252,411 | ||||||||||||
Supplemental Executive Retirement Plan | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Defined contribution plans (6) | ||||||||||||||||||||||||
401(k) Retirement Savings Plan | $ | 591,469 | $ | 591,469 | $ | 591,469 | $ | 591,469 | $ | 591,469 | $ | 591,469 | ||||||||||||
Supplemental Savings Plan | $ | 192,897 | $ | 192,897 | $ | 192,897 | $ | 192,897 | $ | 192,897 | $ | 192,897 | ||||||||||||
Retiree medical (7) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Other Benefits: | ||||||||||||||||||||||||
Health & Welfare (8) | $ | — | $ | — | $ | — | $ | 305,879 | $ | 491,706 | $ | 45,684 | ||||||||||||
Insurance benefits (9) | $ | — | $ | — | $ | — | $ | 1,000,000 | $ | — | $ | — | ||||||||||||
Outplacement assistance | $ | — | $ | — | $ | 25,000 | $ | — | $ | — | $ | 25,000 | ||||||||||||
Total | $ | 1,880,539 | $ | 1,517,321 | $ | 2,055,928 | $ | 5,474,144 | $ | 8,993,427 | $ | 5,980,373 |
Benefit | Voluntary Termination | Involuntary Termination for Cause | Involuntary Termination Without Cause | Death | Disability | Change in Control Termination | ||||||||||||||||||
Cash Severance(1) | $ — | $— | $ 40,385 | $ — | $ — | $1,050,000 | ||||||||||||||||||
Disability Income(2) | $ — | $— | $ — | $ — | $2,984,815 | $ — | ||||||||||||||||||
Earned award under non-equity incentive plans(3) | $97,900 | $— | $ 97,900 | $ 97,900 | $ 97,900 | $ 97,900 | ||||||||||||||||||
Equity(4) | ||||||||||||||||||||||||
Restricted Stock | $ — | $— | $ — | $ — | $ — | $ — | ||||||||||||||||||
Unexercisable Options | $ — | $— | $ — | $ — | $ — | $ — | ||||||||||||||||||
Performance Award | $ — | $— | $ — | $ — | $ — | $ — | ||||||||||||||||||
Other Benefits | ||||||||||||||||||||||||
Retiree medical(5) | $ — | $— | $ — | $ — | $ — | $ — | ||||||||||||||||||
Health & Welfare(6) | $ — | $— | $ — | $ 10,993 | $ 43,666 | $ 43,666 | ||||||||||||||||||
Insurance benefits(7) | $ — | $— | $ — | $ 50,000 | $ — | $ — | ||||||||||||||||||
Outplacement assistance | $ — | $— | $ 25,000 | $ — | $ — | $ 25,000 | ||||||||||||||||||
Total | $97,900 | $— | $163,285 | $158,893 | $3,126,381 | $1,216,566 |
(1) | Represents the cash severance amount payable under the MSA Salaried Severance Pay Plan or the Change in Control Severance Agreements described below. |
(2) | Represents the present value of the future payments that should be payable under the terms of the Company’s long-term disability plan, which provides an annual benefit of 60% of salary up to a maximum annual benefit of $360,000. |
(3) | Represents the amount earned through completion of the plan year under the Company’snon-equity incentive award plans, as shown in the Summary Compensation Table above. |
(4) | The amount shown is the market value of equity awards held by the Named Officer at December 31, |
(5) |
The Company has a nondiscriminatory plan available generally to |
The amount shown for death represents the present value of the cost of continued dependent medical care coverage under the Company’s health and welfare plan. The amount shown for disability is the present value of the cost of continued medical care coverage for the Named Officer and dependents. The amount shown for change in control is the estimated cost to the Company of continuation for 24 months of medical, dental, accident and life insurance benefits, as required by the Change in Control Severance Agreements described below. |
The amounts payable on death are the death benefits under the Company’s group term life insurance policy and an individual life insurance policy, which is payable by the insurer. |
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
52 |
Steven C. BlancoJonathan D. Buck
The following table shows the payments and benefits to which Steven C. BlancoJonathan D. Buck would have been entitled if his employment had terminated on December 31, 20192022, for the reasons indicated in the table:
Voluntary termination | Involuntary termination for cause | Involuntary termination without cause | Death | Disability | Change in control termination | |||||||||||||||||||||||||
Cash severance (1) | $ | — | $ | — | $ | 104,500 | $ | — | $ | — | $ | 1,365,881 | ||||||||||||||||||
Disability income (2) | $ | — | $ | — | $ | — | $ | — | $ | 2,311,156 | $ | — | ||||||||||||||||||
Earned award undernon-equity incentive plans (3) | $ | 317,928 | $ | — | $ | 317,928 | $ | 317,928 | $ | 317,928 | $ | 317,928 | ||||||||||||||||||
Equity (4): | ||||||||||||||||||||||||||||||
Restricted stock | $ | — | $ | — | $ | — | $ | 384,135 | $ | 384,135 | $ | 384,135 | ||||||||||||||||||
Unexercisable Options | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Performance Award | $ | — | $ | — | $ | — | $ | 1,536,790 | $ | — | $ | 1,536,790 | ||||||||||||||||||
Retirement benefits: | ||||||||||||||||||||||||||||||
Defined benefit plans (5) | ||||||||||||||||||||||||||||||
Pension Plan | $ | 223,493 | $ | 223,493 | $ | 223,493 | $ | 107,057 | $ | 223,493 | $ | 223,493 | ||||||||||||||||||
Supplemental Pension Plan | $ | 306,542 | $ | 306,542 | $ | 306,542 | $ | 145,372 | $ | 306,542 | $ | 204,483 | ||||||||||||||||||
Supplemental Executive Retirement Plan | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Defined contribution plans (6) | ||||||||||||||||||||||||||||||
401(k) Retirement Savings Plan | $ | 374,065 | $ | 374,065 | $ | 374,065 | $ | 374,065 | $ | 374,065 | $ | 374,065 | ||||||||||||||||||
Supplemental Savings Plan | $ | 253,164 | $ | 253,164 | $ | 253,164 | $ | 253,164 | $ | 253,164 | $ | 253,164 | ||||||||||||||||||
Retiree medical (7) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Other Benefits: | ||||||||||||||||||||||||||||||
Health & Welfare (8) | $ | — | $ | — | $ | — | $ | 12,521 | $ | 297,207 | $ | 50,142 | ||||||||||||||||||
Insurance benefits (9) | $ | — | $ | — | $ | — | $ | 500,000 | $ | — | $ | — | ||||||||||||||||||
Outplacement assistance | $ | — | $ | — | $ | 25,000 | $ | — | $ | — | $ | 25,000 | ||||||||||||||||||
Total | $ | 1,475,192 | $ | 1,157,264 | $ | 1,604,692 | $ | 3,631,032 | $ | 4,467,690 | $ | 4,735,081 |
Benefit | Voluntary Termination | Involuntary Termination for Cause | Involuntary Termination Without Cause | Death | Disability | Change in Control Termination | ||||||||||||||||||
Cash Severance(1) | $ — | $— | $100,362 | $ — | $ — | $ 639,747 | ||||||||||||||||||
Disability Income(2) | $ — | $— | $ — | $ — | $2,508,663 | $ — | ||||||||||||||||||
Earned award under non-equity incentive plans(3) | $140,493 | $— | $140,493 | $ 140,493 | $ 140,493 | $ 140,493 | ||||||||||||||||||
Equity(4) | ||||||||||||||||||||||||
Restricted Stock | $ — | $— | $ — | $ 394,793 | $ 394,793 | $ 394,793 | ||||||||||||||||||
Unexercisable Options | $ — | $— | $ — | $ — | $ — | $ — | ||||||||||||||||||
Performance Award | $ — | $— | $ — | $ 215,564 | $ 215,564 | $ 215,564 | ||||||||||||||||||
Other Benefits | ||||||||||||||||||||||||
Retiree medical(5) | $ — | $— | $ — | $ — | $ — | $ — | ||||||||||||||||||
Health & Welfare(6) | $ — | $— | $ — | $ 286,107 | $ 48,832 | $ 36,584 | ||||||||||||||||||
Insurance benefits(7) | $ — | $— | $ — | $ 50,000 | $ — | $ — | ||||||||||||||||||
Outplacement assistance | $ — | $— | $ 25,000 | $ — | $ — | $ 25,000 | ||||||||||||||||||
Total | $140,493 | $— | $265,855 | $1,086,957 | $3,308,345 | $1,452,181 |
(1) | Represents the cash severance amount payable under the MSA Salaried Severance Pay Plan or the Change in Control Severance Agreements described below. |
(2) | Represents the present value of the future payments that should be payable under the terms of the Company’s long-term disability plan, which provides an annual benefit of 60% of salary up to a maximum annual benefit of $360,000. |
(3) | Represents the amount earned through completion of the plan year under the Company’snon-equity incentive award plans, as shown in the Summary Compensation Table above. |
(4) | The amount shown is the market value of equity awards held by the Named Officer at December 31, |
(5) |
The Company has a nondiscriminatory plan available generally to |
The amount shown for death represents the present value of the cost of continued dependent medical care coverage under the Company’s health and welfare plan. The amount shown for disability is the present value of the cost of continued medical care coverage for the Named Officer and dependents. The amount shown for change in control is the estimated cost to the Company of continuation for 24 months of medical, dental, accident and life insurance benefits, as required by the Change in Control Severance Agreements described below. |
The amounts payable on death are the death benefits under the Company’s group term life insurance policy and an individual life insurance policy, which is payable by the insurer. |
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
53 |
Douglas K. McClaineSteven C. Blanco
As set forth in a Form8-K filed by the Company on October 4, 2019, Mr. McClaine intends to retire from the Company in 2020. The following table shows the payments and benefits to which Douglas K. McClaineSteven C. Blanco would have been entitled if his employment had terminated on December 31, 20192022, for the reasons indicated in the table:
Voluntary termination | Involuntary termination for cause | Involuntary termination without cause | Death | Disability | Change in control termination | |||||||||||||||||||||||||
Cash severance (1) | $ | — | $ | — | $ | 402,675 | $ | — | $ | — | $ | 1,854,090 | ||||||||||||||||||
Disability income (2) | $ | — | $ | — | $ | — | $ | — | $ | 680,203 | $ | — | ||||||||||||||||||
Earned award undernon-equity incentive plans (3) | $ | 196,916 | $ | — | $ | 196,916 | $ | 196,916 | $ | 196,916 | $ | 196,916 | ||||||||||||||||||
Equity (4): | ||||||||||||||||||||||||||||||
Restricted stock | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Unexercisable Options | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Performance Award | $ | 1,424,583 | $ | — | $ | 1,424,583 | $ | 1,424,583 | $ | 1,424,583 | $ | 1,424,583 | ||||||||||||||||||
Retirement benefits: | ||||||||||||||||||||||||||||||
Defined benefit plans (5) | ||||||||||||||||||||||||||||||
Pension Plan | $ | 1,508,934 | $ | 1,508,934 | $ | 1,508,934 | $ | 1,168,174 | $ | 1,508,934 | $ | 1,508,934 | ||||||||||||||||||
Supplemental Pension Plan | $ | 2,157,390 | $ | 2,157,390 | $ | 2,157,390 | $ | 1,646,540 | $ | 2,157,390 | $ | 1,660,662 | ||||||||||||||||||
Supplemental Executive Retirement Plan | $ | 492,814 | $ | 492,814 | $ | 492,814 | $ | 492,814 | $ | 492,814 | $ | 600,000 | ||||||||||||||||||
Defined contribution plans (6) | ||||||||||||||||||||||||||||||
401(k) Retirement Savings Plan | $ | 2,198,111 | $ | 2,198,111 | $ | 2,198,111 | $ | 2,198,111 | $ | 2,198,111 | $ | 2,198,111 | ||||||||||||||||||
Supplemental Savings Plan | $ | 765,818 | $ | 765,818 | $ | 765,818 | $ | 765,818 | $ | 765,818 | $ | 765,818 | ||||||||||||||||||
Retiree medical (7) | $ | 198,456 | $ | 198,456 | $ | 198,456 | $ | — | $ | — | $ | 198,456 | ||||||||||||||||||
Other Benefits: | ||||||||||||||||||||||||||||||
Health & Welfare (8) | $ | — | $ | — | $ | — | $ | 148,968 | $ | 198,456 | $ | — | ||||||||||||||||||
Insurance benefits (9) | $ | — | $ | — | $ | — | $ | 700,000 | $ | — | $ | — | ||||||||||||||||||
Outplacement assistance | $ | — | $ | — | $ | 25,000 | $ | — | $ | — | $ | 25,000 | ||||||||||||||||||
Total | $ | 8,943,022 | $ | 7,321,523 | $ | 9,370,697 | $ | 8,741,924 | $ | 9,623,225 | $ | 10,432,570 |
Benefit | Voluntary Termination | Involuntary Termination for Cause | Involuntary Termination Without Cause | Death | Disability | Change in Control Termination | ||||||||||||||||||
Cash Severance(1) | $ | — | $ | — | $ | 123,253 | $ | — | $ | — | $ | 1,550,616 | ||||||||||||
Disability Income(2) | $ | — | $ | — | $ | — | $ | — | $ | 1,933,848 | $ | — | ||||||||||||
Earned award under non-equity incentive plans(3) | $ | 455,215 | $ | — | $ | 455,215 | $ | 455,215 | $ | 455,215 | $ | 455,215 | ||||||||||||
Equity(4) | ||||||||||||||||||||||||
Restricted Stock | $ | — | $ | — | $ | — | $ | 415,556 | $ | 415,556 | $ | 415,556 | ||||||||||||
Unexercisable Options | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Performance Award | $ | — | $ | — | $ | — | $ | 1,662,367 | $ | — | $ | 1,662,367 | ||||||||||||
Other Benefits | ||||||||||||||||||||||||
Retiree medical(5) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Health & Welfare(6) | $ | — | $ | — | $ | — | $ | 107,409 | $ | 47,973 | $ | 47,973 | ||||||||||||
Insurance benefits(7) | $ | — | $ | — | $ | — | $ | 50,000 | $ | — | $ | — | ||||||||||||
Outplacement assistance | $ | — | $ | — | $ | 25,000 | $ | — | $ | — | $ | 25,000 | ||||||||||||
Total | $ | 455,215 | $ | — | $ | 603,468 | $ | 2,690,547 | $ | 2,852,592 | $ | 4,156,727 |
(1) | Represents the cash severance amount payable under the MSA Salaried Severance Pay Plan or the Change in Control Severance Agreements described below. |
(2) | Represents the present value of the future payments that should be payable under the terms of the Company’s long-term disability plan, which provides an annual benefit of 60% of salary up to a maximum annual benefit of $360,000. |
(3) | Represents the amount earned through completion of the plan year under the Company’snon-equity incentive award plans, as shown in the Summary Compensation Table above. |
(4) | The amount shown is the market value of equity awards held by the Named Officer at December 31, |
(5) |
The Company has a nondiscriminatory plan available generally to |
Bob W. Leenen
The following table shows the payments and benefits to which Bob W. Leenen would have been entitled if his employment had terminated on December 31, 2019 for the reasons indicated in the table:
Voluntary termination | Involuntary termination for cause | Involuntary termination without cause | Death | Disability | Change in control termination | |||||||||||||||||||||||||
Cash severance (1) | $ | — | $ | — | $ | 109,645 | $ | — | $ | — | $ | 1,259,258 | ||||||||||||||||||
Disability income (2) | $ | — | $ | — | $ | — | $ | — | $ | 3,135,459 | $ | — | ||||||||||||||||||
Earned award undernon-equity incentive plans (3) | $ | 243,675 | $ | — | $ | 243,675 | $ | 243,675 | $ | 243,675 | $ | 243,675 | ||||||||||||||||||
Equity (4): | ||||||||||||||||||||||||||||||
Restricted stock | $ | — | $ | — | $ | — | $ | 267,125 | $ | 267,125 | $ | 267,125 | ||||||||||||||||||
Unexercisable Options | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Performance Award | $ | — | $ | — | $ | — | $ | 534,124 | $ | 534,124 | $ | 534,124 | ||||||||||||||||||
Retirement benefits: | ||||||||||||||||||||||||||||||
Defined benefit plans (5) | ||||||||||||||||||||||||||||||
Pension Plan | $ | 468,749 | $ | 468,749 | $ | 468,749 | $ | 0 | $ | 468,749 | $ | 468,749 | ||||||||||||||||||
Supplemental Pension Plan | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Supplemental Executive Retirement Plan | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Defined contribution plans (6) | ||||||||||||||||||||||||||||||
401(k) Retirement Savings Plan | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Supplemental Savings Plan | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Retiree medical (7) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Other Benefits: | ||||||||||||||||||||||||||||||
Health & Welfare (8) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Insurance benefits (9) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Outplacement assistance | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Total | $ | 712,424 | $ | 468,749 | $ | 822,069 | $ | 1,044,924 | $ | 4,649,132 | $ | 2,772,931 |
(6) |
The amount shown for death represents the present value of the cost of continued dependent medical care coverage under the Company’s health and welfare plan. The amount shown for disability is the present value of the cost of continued medical care coverage for the Named Officer and dependents. The amount shown for change in control is the estimated cost to the Company of continuation for 24 months of medical, dental, accident and life insurance benefits, as required by the Change in Control Severance Agreements described below. |
The amounts payable on death are the death benefits under the Company’s group term life insurance policy, which is payable by the insurer. |
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
54 |
Bob W. Leenen
The following table shows the payments and benefits to which Bob W. Leenen would have been entitled if his employment had terminated on December 31, 2022, for the reasons indicated in the table:
Benefit | Voluntary Termination | Involuntary Termination for Cause | Involuntary Termination Without Cause | Death | Disability | Change in Control Termination | ||||||||||||||||||
Cash Severance(1) | $ | — | $— | $ | 143,755 | $ | — | $ | — | $ | 1,807,488 | |||||||||||||
Disability Income(2) | $ | — | $— | $ | — | $ | — | $ | 3,044,507 | $ | — | |||||||||||||
Earned award under non-equity incentive plans(3) | $ | 382,856 | $— | $ | 382,856 | $ | 382,856 | $ | 382,856 | $ | 382,856 | |||||||||||||
Equity(4) | ||||||||||||||||||||||||
Restricted Stock | $ | — | $— | $ | — | $ | 330,195 | $ | 330,195 | $ | 330,195 | |||||||||||||
Unexercisable Options | $ | — | $— | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Performance Award | $ | — | $— | $ | — | $ | 702,926 | $ | 702,926 | $ | 702,926 | |||||||||||||
Other Benefits | ||||||||||||||||||||||||
Retiree medical | $ | — | $— | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Health & Welfare | $ | — | $— | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Insurance benefits | $ | — | $— | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Outplacement assistance | $ | — | $— | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Total | $ | 382,856 | $— | $ | 526,611 | $ | 1,415,977 | $ | 4,460,484 | $ | 3,223,465 |
(1) | Represents the cash severance amount payable under the MSA Salaried Severance Pay Plan or the Change in Control Severance Agreements described below. |
(2) | Represents the present value of the future payments that should be payable under the terms of the Swiss Life Pension Plan, which provides an annual benefit of 60% of salary. |
(3) | Represents the amount earned through completion of the plan year under the Company’s non-equity incentive award plans, as shown in the Summary Compensation Table above. |
(4) | The amount shown is the market value of equity awards held by the Named Officer at December 31, 2022. Under the terms of the Amended and Restated 2016 Management Equity Incentive Plan, equity awards vest early upon a change in control or upon termination of employment due to death, disability or retirement under a Company retirement plan. |
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
55 |
Stephanie L. Sciullo
The following table shows the payments and benefits to which Stephanie L. Sciullo would have been entitled if her employment had terminated on December 31, 2022, for the reasons indicated in the table:
Benefit | Voluntary Termination | Involuntary Termination for Cause | Involuntary Termination Without Cause | Death | Disability | Change in Control Termination | ||||||||||||||||||
Cash Severance(1) | $ | — | $— | $ | 148,750 | $ | — | $ | — | $ | 1,266,650 | |||||||||||||
Disability Income(2) | $ | — | $— | $ | — | $ | — | $ | 3,861,308 | $ | — | |||||||||||||
Earned award under non-equity incentive plans(3) | $ | 331,156 | $— | $ | 331,156 | $ | 331,156 | $ | 331,156 | $ | 331,156 | |||||||||||||
Equity(4) | ||||||||||||||||||||||||
Restricted Stock | $ | — | $— | $ | — | $ | 1,652,562 | $ | 1,652,562 | $ | 1,652,562 | |||||||||||||
Unexercisable Options | $ | — | $— | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Performance Award | $ | — | $— | $ | — | $ | 903,494 | $ | 903,494 | $ | 903,494 | |||||||||||||
Other Benefits | ||||||||||||||||||||||||
Retiree medical(5) | $ | — | $— | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Health & Welfare(6) | $ | — | $— | $ | — | $ | — | $ | 15,289 | $ | 15,289 | |||||||||||||
Insurance benefits(7) | $ | — | $— | $ | — | $ | 50,000 | $ | — | $ | — | |||||||||||||
Outplacement assistance | $ | — | $— | $ | 25,000 | $ | — | $ | — | $ | 25,000 | |||||||||||||
Total | $ | 331,156 | $— | $ | 504,906 | $ | 2,937,212 | $ | 6,763,809 | $ | 4,194,151 |
(1) | Represents the cash severance amount payable under the MSA Salaried Severance Pay Plan or the Change in Control Severance Agreements described below. |
(2) | Represents the present value of the future payments that should be payable under the terms of the Company’s long-term disability plan, which provides an annual benefit of 60% of salary up to a maximum annual benefit of $360,000. |
(3) | Represents the amount earned through completion of the plan year under the Company’s non-equity incentive award plans, as shown in the Summary Compensation Table above. |
(4) | The amount shown is the market value of equity awards held by the Named Officer at December 31, 2022. Under the terms of the Amended and Restated 2016 Management Equity Incentive Plan, equity awards vest early upon a change in control or upon termination of employment due to death, disability or retirement under a Company retirement plan. |
(5) | The Company has a nondiscriminatory plan available generally to U.S. salaried employees which provides medical benefits to employees who retire under the Company’s Pension Plan until they become eligible for Medicare benefits. The amount shown in the table represents the estimated cost of providing plan benefits to the Named Officer. This plan was closed to new participants effective January 1, 2010. |
(6) | The amount shown for disability is the present value of the cost of continued medical care coverage for the Named Officer and dependents. The amount shown for change in control is the estimated cost to the Company of continuation for 24 months of medical, dental, accident and life insurance benefits, as required by the Change in Control Severance Agreements described below. |
(7) | The amounts payable on death are the death benefits under the Company’s group term life insurance policy and an individual life insurance policy, which is payable by the insurer. |
MSA 2023 PROXY STATEMENT |
COMPENSATION TABLES | ||||
56 |
Salaried Severance Pay Plan
The Company has a severance plan which is available generally to United StatesU.S. salaried employees and which does not discriminate in scope, terms or operation in favor of executive officers. Under this plan, an employee whose employment is involuntarily terminated without cause is entitled to a lump sum separation payment in an amount ranging from four weeks’ base salary for an employee with less than one year of continuous service to 52 weeks’ base salary for employees with 21 or more years of continuous service. The cash severance amount shown under “termination without cause” in the tables above is the amount to which the Named Officer would have been entitled under this plan had his employment been terminated without cause on December 31, 2019.2022. A Named Officer would not receive payments under this plan if the termination qualified for severance benefits under the change in control severance agreements described below.
Change in Control Severance Agreements
The Company has entered into agreements with each of the Named Officers the stated purpose of which is to encourage the officers’ continued attention and dedication to their duties without distraction in the event of an actual or potential change in control of the Company. In the agreements, the officers agree that if a potential change in control, as defined in the agreements, occurs, the officers will remain in the employment of the Company for at least six months or until an actual change in control occurs, unless employment is sooner terminated by the executive for good reason, as defined in the agreement, or due to death, disability or retirement or by the Company. In return, the agreements provide that if within two years after a change in control, as defined in the agreement, the officer’s employment is terminated by the Company without cause, as defined in the agreement, or the officer terminates his employment for good reason, as defined in the agreement, the officer will be entitled to receive:
a lump sum payment equal to up to threetwo times the sum of (i) the officer’s annual salary, plus (ii) the average annual bonus paid to the officer for the preceding two years;
continuation for up to 3624 months of medical, dental, accident and life insurance benefits; and
36 months additional service credit under the Company’s Supplemental Executive Retirement Plan and post-retirement health care programs, for Named Officers who became officers prior to January 1, 2009.
The benefit periods described in the first two bullet points above were shortened to 24 months for officers first entering into change in control severance agreements on or after January 1, 2011.
Unlike many companies, the Company does not“gross-up” the benefits payable to officers for excise taxes. Instead, the benefits payable under the agreements are limited to the amount that can be paid without triggering any excise tax or rendering any amountsnon-deductible under the Internal Revenue Code. The limitation would not apply if the reduced benefit is less than the unreduced benefit after payment of any excise tax.
The “change in control termination” column in the tables above shows the amounts of the payments and benefits each Named Officer would have received if a qualifying termination of employment following a change in control had occurred as of December 31, 2019.2022.
MSA 2023 PROXY STATEMENT |
57 |
Pay Ratio Disclosure
We are providing the following information, as required by Item 402(u) of RegulationS-K:
For 2019,2022, our last completed fiscal year:
the median of the annual total compensation of all our employees (other than Nishan J. Vartanian, Chief Executive Officer) was $62,878;$49,431; and
the annual total compensation of Nishan J. Vartanian, Chief Executive Officer, or based on the Summary Compensation Table and adjusted as described below, was $6,673,945.
Based on this information, the estimated ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees is approximately 106125 to 1.
In determining the 2019 CEO pay ratio, MSA utilized the same population and determination process used in 2018, as described below. However, the 2018 median employee was found to have a material change in compensation related to overtime pay. Therefore, the next to median employee was used for purposes of calculating the 2019 CEO pay ratio.
To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, the methodology and material assumptions, adjustments, and estimates used to identify the median and determine annual total compensation (or any elements of annual total compensation) were as follows:
1. As of October 31, 2018, our employee population consisted of approximately 5,050 individuals working at our parent company and consolidated subsidiaries.
1. | As of December 31, 2022, our employee population consisted of approximately 5,000 individuals working at our parent company and consolidated subsidiaries. |
We selected October 31, 2018, which is a date within the last three months of fiscal 2018, as the date we would use to identify our median employee. This allowed sufficient time to identify the median employee, given the global scope of our operations.
2. | To find the median of the annual total compensation of all our employees (other than our Chief Executive Officer), we gathered year-to-date compensation data, through December 31, 2022 for all individuals employed on December 31, 2022. |
2. To find the median of the annual total compensation of all our employees (other than our Chief Executive Officer), we gatheredyear-to-date compensation data, through October 31, 2018 for all 5,050 individuals.
a) | We used cash compensation paid during the period January 1, 2022 through December 31, 2022 including: base pay, overtime pay, sales incentive pay, and bonus incentive pay as the consistently applied compensation measure by which to determine the median employee. |
a) We used cash compensation paid during the period January 1, 2018 through October 31, 2018 including: base pay, overtime pay, sales incentive pay, and bonus incentive pay as the consistently applied compensation measure by which to determine the median employee.
b) | In performing this calculation, we did not annualize the compensation of any employees who did not work for the Company or its consolidated subsidiaries for the entire fiscal year. |
b) In performing this calculation, we did not annualize the compensation of any employees who did not work for the Company or its consolidated subsidiaries for the entire fiscal year.
c) | We did not make any cost-of-living adjustments in identifying the median employee. |
c) We did not make anycost-of-living adjustments in identifying the median employee.
3. | Using this methodology, we determined that our median employee was a full-time, hourly production employee located in our Cranberry Township, Pennsylvania manufacturing facility with wages, bonus and overtime pay for the 12-month period ending December 31, 2022 in the amount of $42,268. |
3. Using this methodology, we determined that our median employee was a full-time, hourly production employee located in our Murrysville, Pennsylvania manufacturing facility with wages, bonus and overtime pay for the10-month period ending October 31, 2018 in the amount of $34,582.
4. With respect to our median employee, we then identified and calculated the elements of such employee’s compensation for fiscal 2019 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K, resulting in annual total compensation in the amount of $52,514.