Executive Compensation Program Principal Components | |
1 | The Compensation Committee of UTC did not grant Performance stock Units (PSUs) to Carrier executives in early 2020 given the difficulty of establishing long-term performance goals in the face of the Separation. As, a result, 2020 LTI awards to Carrier executives (granted in February 2020) consisted of SARs (50%) and RSUs (50%). 2021 annual equity grants included a mix of SARs (50%) and PSUs (50%) to ensure alignment with the goal of achieving long-term, sustainable growth and further linking interests of executives with shareowners. |
2 | For the calculations above, total target direct compensation for fiscal year 2020 includes annual base salary, the target value of annual bonus compensation and the target value of annual cycle awards of long-term equity-based incentive compensation; but does not include the target value of other special, one-time grants such as sign-on, retention, or Founder’s Grants. |
3 | Data for Mr. McLevish was excluded from the compensation mix calculations in order to reflect only one CFO; Mr. McLevish’s at risk pay comprised 86% of his total target direct compensation. |
Table1For the calculations above, total target direct compensation for 2021 includes annual base salary, the target value of ContentsCompensation Discussionannual bonus compensation and Analysis
the target value of annual LTI awards but does not include the target value of other special, one-time grants (e.g., sign-on equity awards).2020 CEO and NEO Actual Compensation
The compensation program for the CEO and NEOs, and other executives, primarily consists of base salary, annual bonus and long-term incentive compensation.
The overall objective of the compensation program is to encourage and reward the creation of sustainable, long-term shareowner value. The current elements of the executive compensation program directly align the interests of the executives and shareowners, are competitive, motivate achievement of short- and long-term financial goals and strategic objectives and align realized pay with performance.
2020 Base Salary
| | 2020 CEO and NEO Compensation Changes
As previously mentioned, following the Separation, in April 2020, the Committee, along with its Independent Compensation Consultant, reviewed competitive market data and established compensation opportunities (base salary, annual bonus and long-term incentive targets) based on the following factors: expanded role scope and breadth of the CEO’s and NEOs responsibilities, strategic importance of the position, competitive market data, and a desire to ensure long-term retention.
As part of this review, and upon his appointment as President and CEO of the newly independent
| | | |
| 34 | Carrier Global Corporation the Committee increased Mr. Gitlin’s total target compensation opportunity to $11 million. This included an increase in base salary to $12 million, a target bonus opportunity increase to 150% of base salary, and a Long-Term Incentive target award increase to $8 million. |
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - CD&A
2021 Base Salary
To attract and retain talented and qualified executives, we provide competitive base salaries, which we target at the market median. The Committee reviews the CEO’s recommendations for base salary adjustments for the ELT and other executive officers relative to market data for similar roles. The Committee has discretion to modify or approve the CEO’s recommendations, and the CEO has no involvement in the Committee’s determination of his own compensation. Actual salaries may vary from market median based on factors such as job scope and responsibilities, experience in role, tenure, individual performance, retention risk and internal pay equity.
As part of company-wide cost control measures related to In 2021, the COVID-19 pandemic and the related economic downturn, the base salaries of the CEO and NEOs were reduced by 15% between May 1, 2020 and October 31, 2020. The Committee decided to end the temporary salary reductions with effect from November 1, 2020, as it became apparent that the Company was maintaining stronger than expected performance. In addition, planned 2020 annualcommittee increased Mr. Gitlin's base salary increases for NEOs were delayed until November 1, 2020.
to $1.3M based on market analysis of similar positions within our peer group and input from its independent compensation consultant to ensure appropriate external alignment.
The table below shows
both the
fiscal year 2020
and 2021 annual base salary for each NEO.
| | | | |
| NEO | APRIL 3, 2020
BASE SALARY1 | MAY 1, 2020 TEMPORARY
BASE SALARY %
REDUCTION | NOVEMBER 1, 2020
BASE SALARY2 |
| | | | |
| David Gitlin | $1,000,000 | (15%) | $1,200,000 |
| Patrick Goris3 | – | – | $700,000 |
| Kevin J. O’Connor3 | $650,000 | (15%) | $650,000 |
| David Appel | $546,000 | (15%) | $600,000 |
| Christopher Nelson | $600,000 | (15%) | $650,000 |
| Timothy McLevish3 | $800,000 | (15%) | $800,000 |
1 | Base salary at time of the Separation. |
2 | Base salary following reinstatement of base salary reductions and implementation of deferred and approved 2020 increases, with effect from November 1, 2020. |
3 | Mr. Goris’ hire date was November 16th, 2020; Mr. O’Connor was not eligible for a 2020 merit increase due to his hire date of January 2, 2020 Mr. McLevish was not eligible for a 2020 merit increase due to his planned retirement in February 2021. |
42 | Carrier Global Corporation |
| | | | | | | | |
| NEO | Annual Base Salary as of 12/31/2020 | Annual Base Salary as of 12/31/2021 |
| David Gitlin | $1,200,000 | $1,300,000 |
| Patrick Goris | $700,000 | $715,000 |
Timothy White1 | n/a | $600,000 |
| Christopher Nelson | $650,000 | $670,000 |
| Jurgen Timperman | $580,000 | $600,000 |
Table of Contents1Compensation Discussion and Analysis
2020Mr. White joined Carrier in August 2021.
We provide our executive officers the opportunity to earn annual cash incentive compensation under our Annual Bonus
ObjectivesPlan. The Committee believes its methodology for determining annual bonus awards accomplishes the following objectives:
| | |
| • | Establishes challenging but achievable performance goals that are consistent with the Committee’s assessment of opportunities and risks for the upcoming year, as communicated to investors. |
| • | Sets annual bonus targets for executives that are market competitive. |
| • | Allows the Committee to make discretionary adjustments if it determines that measured performance does not fully align with its assessment of overall performance. |
| | |
▪Establishes challenging but achievable performance goals that are consistent with the Committee’s assessment of opportunities and risks for the upcoming year, as communicated to investors;
▪Sets annual bonus targets for executives that are market competitive; and
▪Allows the Committee to assess both overall company performance and individual performance.
The Committee approves annual bonusAnnual Bonus targets based on relevant market data for each NEO’s role including market median levels in context of target total compensation and the scope of the NEOs role. Annual bonusBonus targets are expressed as a percentage of base salary and generally approximate the peer groupCompensation Peer Group median. The 2020 annual bonus targets for each NEO are shown below.
The Committee
elected to increaseincreased the
annual target award percentage for
each of Messrs.Mr. Gitlin
Appel, and Nelsonfrom 150% to 160% in
20202021 based on market analysis and input from its independent compensation consultant to ensure appropriate external alignment based on the scope of
their respective positions.| NEO | PRE-SEPARATION | POST-SEPARATION | 2020 BLENDED |
| | | | |
| David Gitlin | 125% | 150% | 143.75% |
| Patrick Goris | Not eligible for 2020 bonus |
| Kevin J. O’Connor | 80% | 80% | 80% |
| David Appel | 60% | 90% | 82.5% |
| Christopher Nelson | 80% | 90% | 87.5% |
| Timothy McLevish | 100% | 100% | 100% |
Background on Financialthe position. The 2021 annual bonus targets for each NEO are shown below.
| | | | | | | | |
| NEO | 2021 Annual Bonus Target Value (as % of Base Salary) | 2021 Annual Bonus Target Value ($) |
| David Gitlin | 160% | $2,080,000 |
| Patrick Goris | 100% | $715,000 |
| Timothy White | 90% | $540,000 |
| Christopher Nelson | 90% | $603,000 |
| Jurgen Timperman | 90% | $540,000 |
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - CD&A
Annual Bonus Performance Metrics and
Goals*Relative Weighting Our 2021 Annual Bonus Plan was designed to reward NEOs for delivering top- and bottom-line growth and improving free cash flow ("FCF"), the results of which are used to establish a company performance factor as calculated in the "Annual Bonus 2021 Final Company Performance Factor" table (the "Company Performance Factor"), which establishes the overall pool.
| ADJUSTED OPERATING PROFIT | FREE CASH FLOW | | | | | | | | | |
How areFinancial Metric1 | Definition | Weight | Why Did the Committee Select These Metrics? |
| Sales | Sales (a GAAP measure) adjusted for the impact of foreign exchange, acquisitions and/or divestitures. | 40% | The Committee believes sales performance metrics defined for annual bonus purposes?aligns with the company’s focus on organic growth which can be increased by improving market share, introducing new products and services, entering new markets and pricing effectively. |
| Adjusted Operating Profit | Carrier’s adjusted operating profit at constant currency represents operatingOperating profit (a GAAP measure), excluding restructuring costs and other significant items of a non-recurring and/or non-operational nature at a fixedand further adjusted for the impact of foreign currency translation rate.exchange, acquisitions and/or divestitures. | Carrier’s free cash flow40% | The Committee believes that adjusted operating profit is an appropriate operating earnings goal because it measures the effectiveness and efficiency of our core operations. |
Free Cash Flow (FCF), represents net | Net cash flows provided by operating activities (a GAAP measure) less capital expenditures. |
Why did the Committee select these metrics?expenditures and further adjusted for acquisitions, divestitures and related transaction costs. | While this metric was initially adopted by the UTC Compensation Committee, the Carrier Committee believes that adjusted operating profit at Constant Currency is an appropriate Carrier-wide operating earnings goal because it measures the performance of Carrier’s core operations and excludes non-recurring and/or non-operational items and the impact of foreign currency translation.20% | While this metric was initially adopted by the UTC Compensation Committee, theThe Committee believes that FCF performance is a relevant measure of the ability to generate cash to fund operations and key strategic and business investments. |
Why does the Company use non-GAAP financial performance goals for annual bonus purposes? | The Committee believes annual bonuses should not be positively or negatively impacted by short-term decisions made in the best interest of Carrier’s long-term business strategies. Using non-GAAP performance measures encourages decision-making that considers long-term value creation that does not conflict with annual bonus metrics. Adjustments for restructuring; non- recurring and other significant, non-operational items; and acquisitions and divestures provide a more relevant assessment of business performance and aligns compensation opportunities with the non-GAAP financial expectations we communicate to investors. |
1Performance goals and results are based on non-GAAP financial measures and additional adjustments as approved by the Committee. See Appendix A beginning on page 62 for more details.
For the 2021 Annual Bonus, Mr. Gitlin and Mr. Goris were measured on corporate financial metric goals while Messrs. White, Nelson and Timperman were measured on a combination of 50% corporate financial metric goals and 50% of the respective business segment financial metric goals.
| | | | | | | | |
| Corporate NEOs | | Business Segment NEOs |
| | |
| | |
In addition to the financial metrics, NEOs were assigned strategic, operations, and ESG objectives in 2021 in furtherance of Carrier's 2030 ESG goals. As a part of the individual performance evaluation, NEO's performance against these ESG goals can result in upward or downward adjustments to the NEO's calculated bonus payout determined by the financial metrics.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Base Salary $ | x | Annual Bonus Target % | x | Company Performance Factor % (40% Sales, 40% Adjusted Operating Profit, 20% FCF) | x | Individual Performance Factor % | = | Final Annual Bonus Payout $ |
| | | | | | | | |
Table of Contents
Compensation Discussion and Analysis
| ADJUSTED OPERATING PROFIT | FREE CASH FLOW |
How did the UTC Compensation Committee set performance goals in Q1? | An adjusted operating profit at constant currency goal was set to align with the performance expectations communicated to investors for the year. The original goal set by the UTC Compensation Committee was adjusted post-Separation. | The Carrier FCF goal was set to align with the performance expectations communicated to investors for the year. The original goal set by the UTC Compensation Committee was adjusted post-Separation. |
How did the Carrier Compensation Committee set performance goals in the Stub Period (Q2-Q4)? | At the time of the Separation, it was expected that the COVID-19 pandemic would have a dramatic impact on the Company’s 2020 financial results. Accordingly, in order to reflect the anticipated impact of COVID-19 pandemic on the Company, the Committee bifurcated 2020 into two separate performance periods, with one comprised of the first quarter of 2020, for which the pre-spin performance goals established by UTC applied, and one comprised of the remaining three quarters of 2020 (the “Stub Period”), for which the modified performance goals approved by the Committee post-Separation applied. Additionally, in light of the reset plan, the Committee reduced the maximum payout opportunity for the Stub Period by 50%, from 200% to 150%. |
What goals applied for 2020? | Original plan (locked at a fixed currency translation rate) approved by UTC: $2,713M
Q1: $473M;
Stub Period (Q2 – Q4): $2,240M
Revised Q2 – Q4: $1,415M | Original plan approved by UTC: $1,307M
Q1: ($218M)
Stub Period Q2 – Q4: $1,525M
Revised Q2 – Q4: $1,079M |
* | Performance goals and results are based on non-GAAP financial measures, see Appendix A on page 74 for more details. |
As previously mentioned, the calculated payout
The bonus award for
2020 bonus awards was 127.5% against the original 2020 financial targets and reweighted metrics, and 141.5% against the revised plan design and revised financial metrics due to COVID-19 pandemic. The Committee used its discretion to reduce the final payout percentage and ultimately approved a Company Performance Factor of 120% of target, as it desired to reward management for producing results that were significantly ahead of plan and guidance for the Stub Period, while at the same time recognizing that the Company’s overall 2020 performance had been negatively impacted by the effects of the COVID-19 pandemic.Annual Bonus Pool Determination
The funding pool for the Bonus Planeach executive is calculated by first multiplying each executive’s annual bonusbase salary by their Annual Bonus target, value (base salary x annual bonus target)multiplied by the applicable Company performance factorPerformance Factor approved by the Committee.Committee (taking into account segment performance results if applicable). These amounts are then aggregated to determine the total funding pool from which the annual bonusAnnual Bonus for all eligible executives will be paid.
An individual performance factor is then applied, resulting in an executive’s final bonus payout. Annual Bonus payouts cannot exceed 200% of the annual bonus target value.
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| 36 | Carrier Global Corporation |
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - CD&A
Carrier delivered strong 2021 financial results despite continued challenges related to the COVID-19 pandemic, including significant inflationary headwinds and supply chain constraints. Achievement related to the Annual Bonus plan exceeded all key financial performance targets in 2021 with double-digit year over year growth in all three financial metrics.
The financial targets are set in partnership with the Compensation Committee and the Board of Directors and represents the Committee's desire for increases over prior year targets and results. These targets are aligned with shareowner value creation and are intended to be stretch but achievable. The Committee has the authority to reduce the Final Company Performance Factor if it believes measured financial performance does not align with its assessment of overall performance.
Annual Bonus 2021 Final Company Performance Factor
| | | | | | | | | | | | | | | | | | | | |
Financial Metric 1 | Weighting | Threshold
50% Payout | Target
100% Payout | Maximum
200% Payout | Achievement | Company
Performance
Factor |
| | | | | | |
| Sales | 40% | | 197% | 78.8% |
| | | | | | |
| | | | | | |
Adjusted Operating
Profit | 40% | | 163% | 65.2% |
| | | | | | |
| | | | | | |
| Free Cash Flow | 20% | | 200% | 40% |
| | | | | | |
| | Final Company Performance Factor: | 184% |
1Performance goals and results are based on non-GAAP financial measures, see Appendix A beginning on page 62 for more details.
Annual Bonus Individual Performance Factor
NEOs begin the year with individual financial, strategic,
operational, and
operationalESG objectives. Based on the CEO’s assessment of each NEO’s
individual performance, he may recommend that the Committee make
a discretionaryan adjustment to increase or decrease the
annual bonusAnnual Bonus calculated relative to the executive’s individual performance. The Committee considers these recommendations and makes any adjustments it deems appropriate. Mr. Gitlin has no role in the Committee’s determination of his own
annual bonus.Annual Bonus.
| | |
|
Link Between Executive Pay and Performance Against ESG Objectives In 2021, we introduced an ESG component to the individual performance factor assessment portion of the Annual Bonus. All our executives, including our NEOs have priorities tied to critical ESG topics such as Sustainability, Safety, Culture, Engagement, and Diversity. Progress toward these goals is considered when determining the individual performance factor of each NEO. |
|
2021 CEO and NEO Annual Bonus Final Payouts
The final 20202021 Final Company Performance Factor was 120%184%, which was used to determine the total funded pool from which the annual bonusesAnnual Bonuses were paid. The Committee assigned an individual performance factor of 100% for Mr. Gitlin. The CEO, based on his assessment of individual performance, assignedrecommended to the Committee performance factors for each of the NEOs,NEOs.
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| NEO | 2021 Annual Bonus Target Value ($) | | Company Performance Factor 1 | | Individual Performance Factor | | Final Annual Bonus Payout ($) |
| | | | | | | |
| David Gitlin | $2,080,000 | | 184% | | 100% | | $3,827,200 |
| Patrick Goris | $715,000 | | 184% | | 100% | | $1,315,600 |
| Timothy White | $540,000 | X | 158% | X | 100% | = | $853,200 |
| Christopher Nelson | $603,000 | | 192% | | 100% | | $1,157,760 |
| Jurgen Timperman | $540,000 | | 145% | | 100% | | $783,000 |
1For the 2021 Annual Bonus, Mr. Gitlin and Mr. Goris were measured on corporate financial metric goals while Messrs. White, Nelson and Timperman were measured on a combination of which50% corporate financial metric goals and 50% segment financial metric goals, and so the average individual performance factor for all NEOs was 101%.| NAME | TARGET BONUS AMOUNT | COMPANY
PERFORMANCE FACTOR | INDIVIDUAL PERFORMANCE
FACTOR | FINAL 2020 BONUS AWARD
(WITH COMPANY AND INDIVIDUAL
PERFORMANCE FACTOR APPLIED) |
| David Gitlin | $1,725,000 | | 100% | $2,070,000 |
| Patrick Goris1 | — | | — | — |
| Kevin J. O’Connor | $520,000 | 120% | 100% | $624,000 |
| David Appel | $495,000 | | 103% | $611,820 |
| Christopher Nelson | $568,750 | | 108% | $737,100 |
| Timothy McLevish | $800,000 | | 95% | $912,000 |
1 | Mr. Goris was not eligible for 2020 Bonus given his hire | | | | |
| 2022 Proxy Statement | 37 |
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - CD&A
2021 Long-Term Incentives
Long-term incentives are intended to align the interests of NEOs with shareowners by linking a meaningful portion of executive compensation to shareowner value creation over a multi-year period. In 2021, two types of LTI instruments were granted to our NEOs: SARs and PSUs.
| | | | | | | | | | | | | | |
| Metric | Weighting | Rationale | Features |
| SARs | -- | 50% | Stock price appreciation | ▪Three-year cliff vesting ▪10-year life ▪Exercise price equal to the closing price of our common stock on the date of November 16, 2020.grant |
| PSUs | Earnings Per Share (“EPS”) Compound Annual Growth Rate (“CAGR”) | 25% | Stock price appreciation Motivates achievement of long-term business strategy | ▪Three-year cliff vesting ▪Subject to performance measured over a three-year period ▪Final earned awards contingent on achievement of 3-year EPS CAGR targets |
| PSUs | Total Shareholder Return (“TSR”) relative to a subset of the S&P 500 Industrials Index | 25% | Stock price appreciation Motivates achievement of long-term business strategy | ▪Three-year cliff vesting ▪Subject to performance measured over a three-year period ▪Final earned awards contingent on Carrier’s TSR relative to a subset of the S&P 500 Industrials Index |
Stock Appreciation Rights (SARs)
SARs are a regular component of our LTI program. SARs directly align the long-term interests of our executives with those of shareowners and long-term company performance and serve to retain executive talent. SARs provide value to executives only if the price of our common stock increases after the SARs are granted. SARs are granted with an exercise price equal to the closing price of our common stock on the date of grant, generally vest 100% on the third anniversary of the date of grant and expire 10 years from the date of grant.
The number of SARs granted is determined by dividing the targeted U.S. dollar value of SARs by the fair value of one SAR using a binomial lattice option pricing model.
Performance Share Units (PSUs)
The Committee believes PSUs are an integral component of our executive compensation program and no less than 50% percent of an executive’s target LTI award value should be delivered by PSUs. They support the achievement of long-term financial and business goals and promote retention through long-term performance achievement and vesting requirements. The number granted is determined by dividing the target dollar grant value of PSUs by the 20-day average closing price of our common stock prior to the date of grant.
The PSUs paid at the end of the three-year performance period can range from 0% to 200% of the target based upon the achievement of pre-established performance goals. For grants made in 2021, the two performance goals were EPS CAGR and TSR relative to a subset of companies in the S&P 500 Industrials Index.
2021 Annual Long-Term Incentive Target Values for NEOs
The Committee primarily considered the following factors in determining the grant date target value of annual LTI awards granted to each NEO in 2021:
▪Competitive market median levels in the context of target total compensation, which includes base salary, target bonus opportunity and target long-term incentives
▪The scope of responsibility of the NEO relative to the other executives in the LTI program and relative importance of the NEO to the company’s long-term success, and
▪The LTI award recommendations of Mr. Gitlin for NEOs other than himself.
The target values for the SAR and PSU awards differ from the corresponding values reported in the Summary Compensation Table and the Grants of Plan-Based Awards Table due to different methodologies used in assigning the economic value of equity-based awards required for accounting and proxy statement reporting purposes. The Committee makes equity award decisions based on grant date expected value while the accounting and proxy statement values are determined in accordance with GAAP requirements.
| | | | | | | | | | | |
| NEO | Target Value of SARs | Target Value of PSUs | Total Target Value 2021 Annual LTI |
| David Gitlin | $4,500,000 | $4,500,000 | $9,000,000 |
| Patrick Goris | $1,300,000 | $1,300,000 | $2,600,000 |
Timothy White1 | n/a | n/a | n/a |
| Christopher Nelson | $1,050,000 | $1,050,000 | $2,100,000 |
| Jurgen Timperman | $950,000 | $950,000 | $1,900,000 |
1Mr. White was not eligible for 2021 annual LTI award given his hire date of August 16, 2021.
44 | | | | | |
| 38 | Carrier Global Corporation |
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - CD&A
Section IV: 2022 Incentives Table2022 Annual Bonus Plan
In February 2022, the Compensation Committee established corporate performance criteria that will be used to determine the amount of
ContentsCompensation Discussion2022 incentive compensation awards under the Annual Bonus Plan. The Committee set specific Sales, Adjusted Operating Profit and Analysis
2020FCF metrics for the 2022 Annual Bonus Plan. In addition to these quantitative goals, the Committee also may consider other performance factors in determining final awards. These include, but are not limited to, financial, strategic, operational and ESG objectives and progress toward the execution of the company’s growth strategies. The Annual Bonus Plan is capped at 200% payout.
2022 Long-Term
Incentive AwardsThe table below showsIncentives
In February 2022, the
fiscal year 2020Committee also established individual targets and approved grants for the company’s 2022 annual long-term incentive
awardsawards. The 2022 annual award opportunities for
each NEO.NEO | 2020 LONG-TERM INCENTIVE AWARD GRANT
AS APPROVED BY UTC, PRIOR TO SEPARATION |
David Gitlin1 | $8,000,000 |
Patrick Goris2 | — |
Kevin J. O’Connor | $1,700,000 |
David Appel | $703,000 |
Christopher Nelson | $1,700,000 |
Timothy McLevish | $3,500,000 |
1 | Mr. Gitlin originally received a $5 million annual grant in February 2020, approved by UTC and commensurate with his role as a Segment President for UTC. Following the Separation, in May 2020, the Committee, in consultation with the Independent Compensation Consultant, approved a $3 million grant to align Mr. Gitlin to his new annual LTI target of $8 million, in recognition of his increase in scope and responsibility as President and CEO of the newly independent Carrier Global Corporation. |
2 | Mr. Goris was not eligible for 2020 LTI award given his hire date of November 16, 2020. |
the NEOs again took the form of 50% SARs and 50% PSUs. For PSUs, 50% of the actual number of PSUs earned will depend upon Carrier’s EPS CAGR and the remaining 50% will depend upon TSR relative to a subset of companies in the S&P 500 Industrial index. Consistent with historical practices, participants can earn 0% to 200% of the target number of PSUs.
Section V: Other Compensation Elements
Retirement and Deferred Compensation Benefits
In connection with the Separation,
Carrier adoptedmaintains compensation and benefit plans, including deferred compensation, retirement plans and supplemental retirement plans, similar to those that were in effect at UTC before the Separation, except that Carrier did not adopt a defined benefit plan similar to the UTC Pension Plan for non-represented employees.plans. Below are brief descriptions of each retirement and deferred compensation arrangement that Carrier sponsors for its USU.S. employees. See the Pension Benefits and the Nonqualified Deferred Compensation sections on pages 57-58 48-49
for more details. PLAN | DESCRIPTION | | | | |
| Plan | Description |
| Pension Preservation Plan (“PPP”) | An unfunded, nonqualified defined benefit plan that provides retirement benefits that were accrued under the UTC Pension Plan to employees hired prior to January 1, 2010. Participants hired by UTC prior to July 1, 2002 accrued benefits using a final average earnings (“FAE”) formula until December 31, 2014, at which time they transitioned to a cash balance benefits formula that was already in effect for participants hired on or after July 1, 2002. Under the cash balance formula, participants earned two types of credits — pay credits and interest credits. Effective December 31, 2019, benefit accruals under this plan were frozen, other than with respect to the continued accrual of interest credits. |
| Carrier Retirement Savings Plan | A tax-qualified defined contribution plan that permits eligible employees to defer up to 50% of their compensation (22% for highly compensated employees) which consists of base salary plus annual bonus. Non-represented employees, including all NEOs, receive an employer matching contribution equal to 60% of the first 6% of compensation contributed to the plan by the employee. All NEOs are eligible to receive an age-based Companycompany automatic contribution (ranging from 3% to 8% of earnings) to their Carrier Retirement Savings Plan account. |
| Carrier Represented Employee Pension Plan | A tax-qualified defined benefit pension plan for represented employees that is closed to new entrants. Eligible employees receive a pension benefit using benefit formula based on years of service and multiplier negotiated with their respective union. No NEOS are eligible for this plan. |
| Carrier Savings Restoration Plan (“SRP”) | An unfunded, nonqualified plan that permits eligible employees to defer up to 6% of their compensation to the extent such compensation exceeds the IRCInternal Revenue Code ("IRC") compensation limit applicable to the qualified Carrier Retirement Savings Plan. The plan also provides employer matching contributions at the same rate that would have been provided in the Carrier Retirement Savings Plan, if not for the IRC compensation limits. |
| Carrier Company Automatic Contribution Excess Plan (“CACEP”) | An unfunded, nonqualified plan providing the age-based Companycompany automatic contributions eligible employees would have received under the Carrier Retirement Savings Plan, if not for IRC compensation and contribution limits. The plan also provides missed matching contributions for employees whose contributions to the Carrier Retirement Savings Plan are limited by the IRC contribution limits. |
| Carrier Deferred Compensation Plan (“DCP”) | An unfunded, nonqualified plan that allows eligible employees to defer up to 50% of base salary and up to 70% of annual bonus compensation. To the extent that the amounts deferred would have been matched if made under the Carrier Retirement Savings Plan or Carrier Savings Restoration Plan, the plan also provides for employer matching contributions at the same rate. |
| Carrier LTIP PSU Deferral Plan | An unfunded, nonqualified plan that allows eligible employees to defer between 10% and 100% of their vested PSU awards. Upon vesting, the deferred portion of each PSU award is converted into deferred stock units that accrue dividend equivalents. |
2021 | | | | | |
| 2022 Proxy Statement | 45 |
Table of Contents
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation
Discussion and Analysis- CD&A
Perquisites and Other Benefits
We provide the CEO
While they are a relatively small portion of our executives’ total compensation opportunities, perquisites and
NEOs with the followingother executive benefits
which the Committee believes contribute to attraction and retention.
The perquisites and other executive benefits we provide are designed to be competitive with market practices. They were reviewed by the Committee in 2020 and 2021 to ensure that they continue to be market competitive and consistent with Carrier’s overall compensation philosophy. For consistency with prevailing market practice, the Executive Leased Vehicle program that was previously provided to all executives, including NEOs, was eliminated in December 2021.
Details about the perquisites and other executive benefits provided to our NEOs are described below:
PERQUISITE/BENEFITS* | DESCRIPTION | | | | |
Perquisites/Benefits 1 | Description |
| Executive Leased Vehicle | NEOs received an annual allowance toward the cost of a leased vehicle and ancillary vehicle benefits. The value of the allowance varied by NEO. Lease payments above the annual allowance were paid directly by the executive. This benefit was eliminated for all executives, including NEOs, in December 2021. |
| Executive Physical | NEOs are eligible for a comprehensive annual executive physical. |
| Financial Planning | NEOs are eligible to receive an annual financial planning benefit. |
| Life Insurance | NEOs are eligible to participate in the same life insurance program offered to other employees. As part of the Legacy UTC Compensation Arrangements discussed below, Mr. Gitlin also has a grandfathered company-funded life insurance coverage up to three times his base salary at age 62 (projected or actual) (the “CEO Life Insurance Policy”). |
| Long-Term Disability | NEOs are eligible to participate in the same company-funded long-term disability program as other employees, with a basic annual benefit upon disability that is equal to 60% of base salary, and certain buy-up options. Messrs. Gitlin, O’Connor, Appel,Nelson and NelsonTimperman are also eligible for a grandfathered benefit equal to 80% of base salary plus target bonus compensation that was inherited from UTC.compensation. |
Executive Physical | NEOs are eligible for a comprehensive annual executive physical. |
Executive Leased Vehicle | NEOs receive an annual allowance toward the cost of a leased vehicle. The value of the allowance varies by NEO. Lease payments above the annual allowance are paid directly by the executive. |
Financial Planning | NEOs are eligible to receive an annual financial planning benefit. |
| Personal Aircraft Usage | The CEO is allowed personal use of the Corporatecorporate aircraft for up to 50 hours per year. The Committee believes this optimizes the efficient use of the CEO’s time. The CEO can approve personal use of Corporatecorporate aircraft for directors, including the Executive Chairman,Board members and other employees. During the critical period immediately following the Separation when commercial air travel was curtailed and/or compromised as a result of COVID-19 pandemic and Company travel restrictions imposed due to health and safety concerns, the CEO authorized limited use of the Corporate aircraft for employees that were in the process of relocating and needed to travel to Company headquarters for business reasons. The Company worked with its outside tax and legal consultants to ensure that all travel on the corporate aircraft during that time was appropriately classified and reported as imputed income. |
* | See footnote (5) to the Summary Compensation Table on page 51 for more details on these perquisites/benefits. |
1See footnote (6) to the Summary Compensation Table beginning on page 44 for more details on these perquisites/benefits.
Employment Agreements, Severance and Change in Control Arrangements
Carrier has
nonot entered into any employment agreements with any of the NEOs. We also do not have any agreements that would provide automatic “single-trigger” accelerated vesting of equity compensation or excise tax gross-up payments to any NEOs in the event of a change in control of the
Company.company.
Offer Letter to
Patrick Goris, Retirement of Timothy
MclevishWhite
Carrier extended an offer letter to Mr.
Goris, Senior ViceWhite, President,
and Chief Financial Officer of Carrier,Refrigeration, in connection with his commencement of employment on
NovemberAugust 16,
2020.2021. The offer letter provides for an annual compensation package consisting of a base salary of
$700,000,$600,000, a target
annual bonus
compensation award of
100%90% of base salary and a target
20212022 annual equity award opportunity of
$26$1.6 million.
InThe Committee believed that Mr. White was an important addition
to our team, and carefully considered the
appropriate sign-on incentives to attract top talent with experience leading a complex organization in a tight labor market, recognizing the need for him to relocate, and understanding that he stood to lose significant compensation from his prior employer, including repayment of a prior sign-on bonus. As a result, all of the following cash and equity commitments made to Mr. White in his offer letter
provideswere to compensate for
alost compensation from his former employer: sign-on equity award valued at
$4$3.5 million, in the form of 50% RSUs and 50% SARs, which vests
one thirdone-third per year for three years from the award date,
subject to his continued employment; cash payments of $500,000 payable in November of 2021 and
$700,000 in February of 2022, and an additional amount such that, on an after-tax basis, he would be able to pay a
bonus repayment obligation to his prior employer. All of the foregoing cash
sign-on award of $1 millionpayments made to
offset compensation forfeited from his former employer as a result of joining carrier. Mr.
GorisWhite must be repaid by Mr. White if he voluntarily resigns within two years following each payment date. Mr. White also received standard relocation benefits in connection with his relocation to Palm Beach Gardens, Florida.
Mr. McLevish maintained his base Salary through his retirement date, and his annual bonus target and eligibility through the end of 2020.
Legacy UTC Compensation Arrangements
ELG Program Sunset
UTC utilized an “Executive Leadership Group” (“ELG”) program to identify and compensate its most senior executives. As part of the program, ELG members received certain supplemental benefits, including enhanced life and disability insurance benefits, as well as a one-time RSU award upon appointment into the program. The one-time RSU award vests in cases of mutually agreeable separation after three years of ELG service or following a change in control. For purposes of this award, a mutually agreeable separation is deemed to have occurred if: (i) the ELG member’s position has been eliminated or diminished by a divestiture, restructuring, shift in priorities or similar event; (ii) the ELG member retires between age 62 and 65 with the Company’s consent; or (iii) the ELG member retires at age 65 or older.
In 2013 and 2015 respectively, Messrs. Gitlin and Nelson were designated as ELG members, and received the one-time RSU award upon their appointment into the program. Following his hire, and prior to the Separation, Mr. O’Connor was also designated by UTC as an ELG member and was granted the one-time RSU award on January 2, 2020.
46 | Carrier Global Corporation |
Table of Contents
Compensation Discussion and Analysis
The Carrier Compensation Committee has decided to sunset the ELG program for Carrier moving forward and close the program to new entrants, beginning in 2021. However these legacy ELG members retain their one-time RSU awards in Carrier equity which will be paid in the event of their separation from service, subject to the vesting provisions described above and contingent upon the ELG members agreeing to the following post-employment covenants for the protection of the Company: (i) non-competition; (ii) employee non-solicitation; (iii) non-disparagement; (iv) protection of confidential, sensitive and proprietary information; and (v) post-termination cooperation.
Retention Award for David Appel
Prior to the Separation, UTC approved a retention award denominated in UTC RSUs with a grant date fair value of $1 million for Mr. Appel. The grant was subsequently awarded by the Company following the Separation, on June 1, 2020. The award vests three years from the date of the grant subject to Mr. Appel’s continued service with the Company, except in the event of his retirement on or after June 1, 2022, and includes standard post-employment restrictive covenants and separation treatment (as outlined below).
Post-Employment Restrictive Covenants
To discourage
ELT membersexecutives (which includes each of the NEOs) from engaging in activities after termination or retirement that are detrimental to Carrier, such as disclosing proprietary information, soliciting Carrier employees or engaging in competitive activities, the LTI Plan includes clawback provisions that would allow Carrier to
claw backclawback LTI awards
paidissued during the three-year period preceding termination or retirement.
In addition to these clawback provisions, beginning with LTI awards granted in 2022, as a condition to award acceptance (and regardless of whether the award recipient receives any benefits in connection with the award), the Committee will now require all LTI award recipients to agree to the following post-employment covenants for the protection of the company: (i) confidentiality; (ii) non-competition; (iii) employee and customer non-solicitation; and (iv) non-disparagement.
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Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - CD&A
Carrier’s LTI and
Annual Bonus Plans both provide for the clawback, recoupment and/or recovery of awards under certain circumstances. Under the Bonus Plan, Carrier can claw back bonuses if a performance goal is recalculated as a result of the executive’s negligence or misconduct, and the corrected performance goal would have (or likely would have) resulted in a reduced bonus. Under the
2020 LTI Plan, Carrier has the authority to cancel awards, including vested awards, and to recoup any gains realized by participants from previous
long-term incentiveLTI awards if a participant is terminated for
cause.cause including as a result of willful misconduct or negligence that is injurious to the company. Carrier
also may
also claw back
long-term incentiveLTI awards if the participant violates post-employment
competition, solicitation,non-competition, non-solicitation, or non-disparagement covenants, or if it is discovered within three years that the participant could have been terminated for cause.
Severance Plan
On April 19, 2021, the Committee adopted the Senior Executive Severance Plan (the “Severance Plan”) for its executive leadership team, including each of the NEOs.
The Severance Plan provides for the payment of severance and other benefits upon an involuntary termination of employment other than for Cause, Disability (as such terms are defined in the Severance Plan) or death, which are not considered a qualifying termination under the company’s Change in Control Severance Plan
(as described below). Subject to the execution of a release and covenant agreement, which will contain a release of claims, perpetual covenants of confidentiality and non-disparagement and non-competition and non-solicitation covenants that will extend for a period of two years after termination, the Severance Plan provides for the following payments and benefits upon a qualifying termination:
▪A lump-sum payment equal to one-and-a-half times (two times for the company’s Chief Executive Officer) the executive’s annual base salary
▪In the event an executive’s termination of employment occurs during the last fiscal quarter of the annual bonus performance period, a pro-rated bonus for the year of termination, calculated based on target performance for any individual performance goals and actual performance for the full year with respect to all other performance goals
▪Continued healthcare benefits for the executive (and eligible dependents) for up to 12 months at no cost to the executive, and
▪Outplacement services for up to 12 months
The value of the lump-sum payment referenced above will be offset by the value of any RSU award originally granted to the executive in connection with the executive’s appointment as a member of the legacy UTC Executive Leadership Group that vests upon the executive’s termination, as well as by any other severance benefits that the executive is entitled to receive upon termination of employment.
Change in Control Severance Plan
Carrier adopted the Carrier Global Corporation Change in Control Severance Plan (“Change in Control Severance Plan”) which became effective on April 3, 2020. The eligible participants under the Change in Control Severance Plan include the NEOs of Carrier.
Under the Change in Control Severance Plan, a “change in control” generally means the occurrence of any of the following events:
• | Any person becomes the beneficial owner of 20% or more of the combined voting power of Carrier’s outstanding common stock; |
• | Incumbent directors no longer constitute a majority of the Board; |
• | A merger or similar event where Carrier shareowners own less than 50% of the voting shares of the new organization; or |
• | Shareowners approve a plan of complete liquidation or dissolution of Carrier. |
▪Any person becomes the beneficial owner of 20% or more of the combined voting power of Carrier’s outstanding common stock
▪Incumbent directors no longer constitute a majority of the Board
▪A merger or similar event where Carrier shareowners own less than 50% of the voting shares of the new organization, or
▪Shareowners approve a plan of complete liquidation or dissolution of Carrier.
Pursuant to the Change in Control Severance Plan, any
Carrier NEO who is terminated without cause or resigns for good reason on, or within the two years following, a change in control (as defined in the severance plan) of Carrier, would be entitled to receive (subject to the NEO’s execution of a release of claims in favor of Carrier and agreement to a one-year post-termination
noncompetitionnon-competition covenant and a two-year post-termination non-solicitation covenant):
• | a lump sum cash severance payment equal to three times (for the Chief Executive Officer) or two times (for the other NEOs) the sum of (a) the officer’s annual base salary and (b) the officer’s target annual bonus; |
• | a prorated target annual bonus for the year of termination (reduced by any annual bonus payment to which the NEO is entitled for the same period of service); |
• | up to 12 months of healthcare benefit coverage continuation at no premium cost to the officer; |
• | outplacement services for 12 months; and |
• | continued financial planning services for 12 months. |
▪A lump-sum cash severance payment equal to three times (for the CEO) or two times (for the other NEOs) the sum of (a) the officer’s annual base salary and (b) the officer’s target annual bonus
▪A prorated target annual bonus for the year of termination (reduced by any annual bonus payment to which the NEO is entitled for the same period of service)
▪Up to 12 months of healthcare benefit coverage continuation at no premium cost to the officer;
▪Outplacement services for 12 months, and
▪Continued financial planning services for 12 months
The Change in Control Severance Plan provides that, in the event that the payments and benefits to a NEO in connection with a change in control of Carrier, whether pursuant to the
severance planSeverance Plan or otherwise, would be subject to the golden parachute excise tax imposed under Sections 280G and 4999 of the IRC, then the officer will either receive all such payments and benefits and pay the excise tax, or such payments and benefits will be reduced to the extent necessary so that the excise tax does not apply, whichever approach results in a higher after-tax amount of the payments and benefits being retained by the NEO.
2021 | | | | | |
| 2022 Proxy Statement | 47 |
Table of Contents
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation
Discussion and Analysis- CD&A
Section VI: Other Compensation Policies and Practices
Executive
Share Ownership Requirements
To further
align leadershipencourage the alignment of management and shareowner interests,
certain executive are expected to maintain ownership of Company stock equal tothe Board has adopted the following
applicable market valueShare Ownership (as a multipleshare ownership requirements for non-employee directors, the CEO, the CFO, Presidents of base salary)Carrier's business units ("Segment Presidents"), the Chief Human Resources Officer ("CHRO") and the Chief Legal Officer ("CLO"):
| | | | | | | | | | | |
| 6x | 4x5x | 3x(1) |
| 4x | | 3x |
| base salary for CEO | annual cash retainer for non-employee directors | base salary for CFO and Segment Presidents | base salary for
ELG members |
| | CHRO and CLO |
(1) | With the sunset of the ELG Program in 2021, the Carrier Compensation Committee approved share ownership requirements to be defined based on position, as a multiple of the incumbent’s base salary, as follows: CEO – 6x; CFO and Segment Presidents (HVAC, Refrigeration, and Fire & Security) – 4x; SVP & Chief Legal Officer and SVP & Chief Human Resources Officer – 3x. |
What counts: Shares owned outright or jointly by
Under these requirements, non-employee directors are required to own shares of Carrier common stock, including DSUs, that are equal in value to at least five times the
executive,then applicable base annual cash retainer within five years of joining the Board. Similarly, each of the CEO, the CFO, Segment Presidents, the CHRO and the CLO is required to own shares of Carrier common stock, including RSUs and
DSUs.What does not count: StockDSUs but excluding stock options, SARs and PSUs.
The requisite share ownership level must be achievedunvested PSUs, that are equal in value to at least the applicable multiple of their then applicable base salary within five years afterof attaining that position. Non-employee directors and the ownership requirement first applies to the applicable individual. As of December 31, 2020, covered executiveabove-named officers met or were on track towho do not meet the applicableforegoing share ownership requirements within the applicable timeframe.
If the Chief Executive Officer, Chief Financial Officer or other covered executives do not meet the ownership requirement after this five-year period then the applicable individual iswill not be permitted to sell shares of Carrier common stock until achievingsatisfying these requirements. Each of the required ownership level.
Succession Planning
On an annual basis, the President & CEOnon-employee directors and the Senior Vice President & Chief Human Resources Officer provideforegoing executive officers currently comply with their respective ownership requirements or are on track to meet them within the Board with information about the succession planning for key senior leadership roles, including the CEO. Succession plans include a readiness assessment, biographical information and future career development plans. The Board’s views are incorporated into succession plans which are updated annually based on this feedback. This output is the culmination of a broader, bottoms-up, succession planning review and high potential identification process that Carrier conducts across the organization on an annual basis.
five-year period.
No Short Sales, Pledging or Hedging of Carrier Securities and No Option Repricing
Carrier does not allow its directors, officers or executives to enter into short sales of Carrier common stock. Similarly, directors and executive officers may not pledge or assign an interest in Carrier common stock or other equity interests as collateral for a loan. Additionally, transactions in put options, call options or other derivative securities that have the effect of hedging the value of Carrier securities
also are
also prohibited, whether or not those securities were granted to or held, directly or indirectly, by the director, officer or employee. Carrier’s
long-term incentiveLTI plan prohibits repricing of underwater stock options and
stock appreciation rightsSARs without shareowner approval.
Tax Deductibility of Incentive Compensation
For
2020, Internal Revenue Code2021, IRC section 162(m) limited Carrier’s deduction to $1 million for annual compensation paid to covered employees, as defined in section 162(m).
The Committee
also believes that the
Company’scompany’s interests are best served by maintaining flexibility in the way compensation is provided, even if it might result in the non-deductibility of certain compensation under the
Internal Revenue Code.48 | Carrier Global Corporation |
Table of Contents
Compensation Discussion and Analysis
Compensation Risk Assessment
In
2020,2021, the
Carrier Compensation Committee and management, with the assistance of Pearl Meyer, conducted a review of Carrier’s compensation strategies, plans, programs, policies and practices, including executive compensation,
major broad-based compensation programs and sales compensation. The goal of this review was to assess whether any of Carrier’s compensation strategies, plans, programs, policies or practices, either individually or in the aggregate, would encourage executives or employees to undertake unnecessary or excess risks that were reasonably likely to have a material adverse impact on Carrier.
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| 42 | Carrier Global Corporation |
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - Report of the Compensation Committee
The review included compensation strategy
&and philosophy, annual and
long-term incentiveLTI design, sales compensation, severance benefits (both absent a change in control of Carrier and following a change in control of Carrier), corporate governance, compensation policies and practices such as clawback provisions, executive
stockshare ownership requirements, and prohibition on short sales, pledging and hedging of Carrier securities. Based on the review, management and the Committee concluded that Carrier’s compensation strategies, plans, programs, policies and practices did not pose material risk due to a variety of mitigating factors. These factors included:
| | | | | |
| Rigorous Share Ownership Requirements | We maintain significant share ownership requirements for our NEOs and directors. These requirements are intended to reduce risk by aligning the economic interests of executives and directors with those of our shareowners. A significant stake in future performance discourages the pursuit of short-term opportunities that can create excessive risk. See page 4842 for more information. |
| Prohibition on Short Sales, Pledging and Hedging of Carrier Securities | We prohibit our directors, officers and employees from entering into transactions involving short sales of our securities. Further, directors and executive officers are prohibited from pledging or assigning an interest in Carrier stock, stock options or other equity interests as collateral for a loan. Transactions in put options, call options or other derivative securities that have the effect of hedging the value of Carrier securities also are prohibited, whether or not those securities were granted to or held, directly or indirectly, by a director, officer or employee. |
| Clawback Provision in both Annual and Long-Term Incentive Plan and Post- Employment Covenants | We reserve the right to clawback, recoup, and/or recover both annual and long-term incentive and bonus awards from all of our executives in a number ofcertain circumstances (see page 4741 for more details). These provisions allow Carrier to clawback compensation in a number of circumstances, including post-employment activities detrimental to Carrier, such as disclosing proprietary information, soliciting Carrier employees or engaging in competitive activities. |
Report of the Compensation Committee
The Compensation Committee establishes and oversees the design and function of Carrier’s executive compensation program. We have reviewed and discussed the foregoing
Compensation Discussion and AnalysisCD&A with the management of the
Companycompany and have recommended to the Board that the
Compensation Discussion and AnalysisCD&A be included in Carrier’s Proxy Statement for the
20212022 Annual Meeting.
John J. Greisch, Chair
Jean-Pierre Garnier
Charles M. Holley, Jr.
Michael A. Todman
2021 | | | | | |
| 2022 Proxy Statement | 49 |
Table of Contents
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - Compensation Tables
Compensation Tables
Summary Compensation Table
| NAME AND POSITION | YEAR | SALARY
($) | BONUS
($)1 | STOCK
AWARDS
($)2 | OPTION
AWARDS
($)3 | CHANGE
IN PENSION
VALUE AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS
($)4 | ALL OTHER
COMPENSATION
($)5 | TOTAL
($) |
| | | | | | | | | |
| David Gitlin | 2020 | 958,333 | 2,070,000 | 5,803,499 | 5,194,412 | 302,617 | 1,112,090 | 15,440,951 |
| President & Chief Executive Officer | 2019 | 966,667 | 1,200,000 | 2,150,799 | 2,066,540 | 969,211 | 386,063 | 7,739,280 |
| 2018 | 900,000 | 1,300,000 | 2,950,834 | 1,051,810 | — | 239,548 | 6,442,192 |
| Patrick Goris6 | 2020 | 87,500 | 1,000,000 | 2,000,132 | 2,000,926 | — | 41,053 | 5,129,611 |
| Senior Vice President & Chief Financial Officer | | | | | | | | |
| Kevin J. O’Connor7 | 2020 | 598,788 | 624,000 | 3,418,839 | 2,237,347 | — | 544,832 | 7,423,806 |
| Senior Vice President & Chief Legal Officer | | | | | | | | |
| David Appel | 2020 | 514,050 | 611,820 | 2,202,320 | 1,064,780 | 289,619 | 156,578 | 4,839,167 |
| President, Refrigeration | | | | | | | | |
| Christopher Nelson | 2020 | 563,333 | 737,100 | 1,730,133 | 1,491,206 | 84,192 | 162,235 | 4,768,199 |
| President, HVAC | 2019 | 593,750 | 350,000 | 2,346,684 | 2,202,364 | 205,153 | 98,531 | 5,796,482 |
| Timothy McLevish8 | 2020 | 740,000 | 912,000 | 2,594,040 | 2,255,024 | — | 159,353 | 6,660,417 |
| Special Advisor to the President & Chief Executive Officer | 2019 | 203,030 | 165,000 | 1,000,080 | 2,793,945 | — | 18,275 | 4,180,330 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NAME AND POSITION | YEAR | SALARY ($) | BONUS ($)1 | STOCK AWARDS ($)2 | OPTION AWARDS ($)3 | NON-EQUITY INCENTIVE PLAN COMPENSATION ($)4 | CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($)5 | ALL OTHER COMPENSATION ($)6 | TOTAL ($) |
David Gitlin Chairman & Chief Executive Officer | 2021 | 1,275,000 | — | 4,708,211 | 4,359,119 | 3,827,200 | | — | 723,285 | 14,892,815 | |
| 2020 | 958,333 | — | 5,803,499 | 5,194,412 | 2,070,000 | 302,617 | 1,112,090 | 15,440,951 |
| 2019 | 966,667 | — | 2,150,799 | 2,066,540 | 1,200,000 | 969,211 | 386,063 | 7,739,280 |
Patrick Goris Senior Vice President & Chief Financial Officer | 2021 | 711,250 | — | 1,496,298 | 1,385,258 | 1,315,600 | | — | 257,120 | 5,165,526 | |
| 2020 | 87,500 | 1,000,000 | 2,000,132 | 2,000,926 | — | — | 41,053 | 5,129,611 |
Timothy White7 President, Refrigeration | 2021 | 225,000 | 500,000 | 1,791,985 | 1,790,859 | 853,200 | | — | 775,799 | 5,936,843 | |
| | | | | | | | |
Christopher Nelson President, HVAC | 2021 | 665,000 | — | 1,208,429 | 1,118,849 | 1,157,760 | | — | 212,431 | 4,362,469 | |
| 2020 | 563,333 | — | 1,730,133 | 1,491,206 | 737,100 | 84,192 | 162,235 | 4,768,199 |
| 2019 | 593,750 | — | 2,346,684 | 2,202,364 | 350,000 | 205,153 | 98,531 | 5,796,482 |
Jurgen Timperman President, Fire & Security | 2021 | 595,000 | — | 1,093,488 | 1,012,325 | 783,000 | | — | 155,501 | 3,639,314 | |
| 2020 | 475,833 | — | 1,470,255 | 1,292,051 | 657,720 | — | 122,876 | 4,018,735 |
| 2019 | 492,500 | — | 2,052,859 | 1,927,504 | 300,000 | — | 271,144 | 5,044,007 |
1Bonus. For Mr. White, the amount shown for 2021 includes a cash sign-on bonus of $500,000 paid in the fourth quarter of 2021 to offset compensation forfeited from his former employer, which must be repaid if he voluntarily resigns within two years of the payment date. See the “Non-Equity Incentive Plan Compensation” column for performance bonuses paid for the applicable fiscal year.
2Stock Awards. Grant date fair value of the PSUs and RSUs granted during 2021, calculated in accordance with FASB ASC Topic 718, but excluding the effect of estimated forfeitures. The grant date fair values shown for PSU awards granted in 2021 to our named executive officers assume target-level performance. If the PSU awards are valued at two times the target number of shares (the maximum potential payout), then for fiscal 2021 the stock award amount would increase by $4,708,211, $1,496,298, $1,208,429 and $1,093,488 for Messrs. Gitlin, Goris, Nelson and Timperman, respectively. For additional information on awards made in fiscal 2021, see the Grants of Plan-Based Awards Table and Outstanding Equity Awards at Fiscal Year-end Table. The assumptions made in calculating the fair value of the PSUs granted on February 4, 2021 are set forth in Note 14: Stock-Based Compensation to the Consolidated Financial Statements set forth in Carrier’s 2021 Annual Report on Form 10-K.
3Option Awards. Grant date fair value of SARs granted during 2021, calculated in accordance with FASB ASC Topic 718, but excluding the effect of estimated forfeitures. The assumptions made in the valuation of the SARs are set forth in Note 14: Stock-Based Compensation to the Consolidated Financial Statements set forth in Carrier’s 2021 Annual Report on Form 10-K.
4Non-Equity Incentive Plan Compensation. Amounts earned under the 2021 Annual Bonus Plan, based on the achievement of corporate, segment and individual performance objectives. See “Compensation Discussion and Analysis – Section III: 2021 CEO and NEO Compensation – 2021 Annual Bonus” for additional detail regarding the Annual Bonus Plan. Both fiscal 2020 and 2019 annual bonus information was previously reported in the “Bonus” column. Prior amounts have been moved to the "Non-Equity Incentive Plan Compensation" column to be consistent with reporting guidelines and for comparison purposes.
5Change in Pension Value and Nonqualified Deferred Compensation Earnings. The amounts in this column reflect the change, if any, in the year-over-year actuarial present value of each NEO’s accrued benefit under Carrier’s Pension Preservation Plan. Actuarial value computations are based on the assumptions disclosed under "Pension Benefits" below. This year there was a net reduction in actuarial value for Mr. Gitlin and Mr. Nelson because the discount rate used to determine the present value of these benefits increased from 2.25% in 2020 to 2.50% in 2021. In accordance with SEC rules, no amount is reported for the NEOs with a negative value. The total year-over-year decrease in pension benefits for Mr. Gitlin was -$632 and for Mr. Nelson was -$5,149. Carrier’s DCP does not provide above-market rates of return.
6All Other Compensation. The 2021 amounts in this column consist of the following items:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NAME | PERSONAL USE OF CORPORATE AIRCRAFT ($)a | LEASED VEHICLE ($)b | INSURANCE PREMIUMS ($)c | COMPANY CONTRIBUTIONS TO 401(K) PLANS ($)d | COMPANY CONTRIBUTIONS TO NON-QUALIFIED RETIREMENT PLANS ($)e | EXECUTIVE PHYSICAL ($)f | RELOCATION BENEFITS ($)g | FINANCIAL PLANNING ($)h | TAX PREPARATION/ REIMBURSEMENT PAYMENTS ($)i | HEALTH BENEFITS ($)j | MISCELLA- NEOUS ($)k | TOTAL ($) |
| | | | | | | | | | | | |
| D. Gitlin | 64,475 | | 28,807 | | 115,692 | | 23,200 | | 286,340 | | | 150,000 | | 16,000 | | — | 28,495 | | 10,276 | | 723,285 | |
| P. Goris | — | — | — | 14,541 | | 24,578 | | 4,500 | | 175,105 | | 15,000 | | — | 22,208 | | 1,188 | | 257,120 | |
| T. White | — | — | — | 17,550 | | — | | 74,149 | | 6,049 | | 260,740 | | 21,930 | | 395,381 | | 775,799 | |
| C. Nelson | — | 26,796 | | — | 32,594 | | 110,054 | | | — | 16,000 | | — | 22,099 | | 4,888 | | 212,431 | |
| J. Timperman | — | 21,707 | | — | 24,940 | | 66,076 | | | — | 8,976 | | 7,935 | | 21,930 | | 3,937 | | 155,501 | |
aIncremental variable operating costs incurred for personal air travel, which includes fuel (calculated on the basis of aircraft-specific average consumption rates and fleet average fuel costs), fleet average landing and handling fees, additional crew lodging and meal allowances and catering and hourly maintenance contract charges, when applicable. Because fleet-wide aircraft utilization is primarily for business purposes (approximately 93% in 2021), capital and other fixed expenditures are not treated as an incremental cost. Where two or more NEOs traveled for personal reasons on the same flight, the incremental operating costs are proportionately split among the NEOs. Where a NEO experienced personal travel during a trip that was classified as primarily business in nature, the incremental mileage and operating costs incurred as a result of the personal travel were allocated to the NEO. The Carrier Board of Directors authorized Mr. Gitlin to use up to 50 hours of personal time on the corporate aircraft of which 14.3 were utilized.
1 | Bonus. Fiscal 2020 cash bonuses provided under Carrier’s Executive Annual Bonus Plan, 2019 and 2018 were provided under UTC’s Executive Annual Incentive Plan. Payments are primarily based on the achievement of pre-established goals. However, the Carrier Compensation Committee retains, and the UTC compensation committee retained, discretion to adjust annual bonus amounts based on its assessment of overall performance. Consequently, annual bonuses are reported in the Bonus column rather than in the Non-Equity Incentive Plan Compensation column. For Mr. Goris, the amount shown includes a cash sign-on bonus of $1,000,000 paid in the fourth quarter of 2020 to offset compensation forfeited from his former employer. | | | | |
2 | Stock Awards. Grant date fair value of the PSUs portion of the Founder’s Grant and RSUs granted during 2020, calculated in accordance with FASB ASC Topic 718, but excluding the effect of estimated forfeitures. The grant date fair values shown for PSU awards (“Founder’s Grant) granted in 2020 to our named executive officers assume target-level performance. If the PSU awards (“Founder’s Grant) are valued at two times the target number of shares (the maximum potential payout), then for fiscal 2020 the stock award amount would increase by $1,685,910, $562,031, $842,955, $842,955 and $842,955 for Messrs. Gitlin, O’Connor, Appel, Nelson and McLevish, respectively. For additional information on awards made in fiscal 2020, see the Grants of Plan-Based Awards Table and Outstanding Equity Awards Table. The assumptions made in calculating the fair value of the RSUs granted on February 4, 2020 are set forth in Note 21: Stock-Based Compensation, to the Consolidated Statement to Raytheon Technologies Corporation’s 2020 Form 10-K and the assumptions for the PSUs granted on May 14, 2020 are set forth in Note 14: Stock-Based Compensation, to the Consolidated Financial Statements to Carrier’s 2020 Annual Report on Form 10-K. Additionally, amounts shown include the incremental fair value resulting from the conversion of UTC PSUs into Carrier RSUs for the NEOs who held UTC PSUs. Pursuant to accounting guidance under FASB ASC Topic 718, the conversion resulted in a grant modification that caused incremental fair value determined by comparing the aggregate fair value of the outstanding awards immediately before and after the modification. The following table separates the grant date fair value of RSUs granted during 2020 and the incremental fair value attributable to the conversion of stock awards at Separation, both calculated in accordance with FASB ASC Topic 718, but excluding the effect of estimated forfeitures. |
| | NAME | Grant Date Fair Value of Stock Awards
(RSUs) Granted in February 2020
($) | Incremental Fair Value of Pre-2020
PSU Awards at Separation
($) |
| | | | |
| | D. Gitlin | 2,509,200 | 77,514 |
| | P. Goris | — | — |
| | K. O’Connor | 856,800 | — |
| | D. Appel | 350,370 | 8,984 |
| | C. Nelson | 856,800 | 30,378 |
| | T. McLevish | 1,751,085 | — |
3 | Option Awards. Grant date fair value of SARs granted during 2020, calculated in accordance with FASB ASC Topic 718, but excluding the effect of estimated forfeitures. The assumptions made in calculating the fair value of the SARs granted by UTC prior to the Separation on February 4, 2020 are set forth in Note 21: Stock-Based Compensation to the Consolidated Financial Statements set forth in the 2020 Annual Report on Form 10-K of Raytheon Technologies Corporation. The assumptions made in the valuation of the SARs granted by Carrier are set forth in Note 14: Stock-Based Compensation to the Consolidated Financial Statements set forth in Carrier’s 2020 Annual Report on Form 10-K. |
5044 | Carrier Global Corporation |
Table of Contents
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - Compensation Tables
4 | Change in Pension Value and Nonqualified Deferred Compensation Earnings. The amounts in this column reflect the change, if any, in the year-over-year actuarial present value of each NEO’s accrued benefit under Carrier’s Pension Preservation Plan. Actuarial value computations are based on the assumptions disclosed in the Pension Benefits table. For Messrs. Gitlin, Appel, and Nelson, the increase in the Carrier PPP benefit is attributable to the decrease in the discount rate used to value Carrier’s PPP benefits, which decreased from 3.27% to 2.25% in 2020. Carrier’s DCP does not provide above-market rates of return. |
5 | All Other Compensation. The 2020 amounts in this column consist of the following items: |
| | NAME | PERSONAL
USE OF
CORPORATE
AIRCRAFT
($)a | LEASED
VEHICLE
($)b | INSURANCE
PREMIUMS
($)c | COMPANY
CONTRIBUTIONS
TO 401(K)
PLANS
($)d | COMPANY
CONTRIBUTIONS
TO
NON-QUALIFIED
RETIREMENT
PLANS
($)e | RELOCATION
BENEFITS
($)f | FINANCIAL
PLANNING
($)g | TAX
PREPARATION/
REIMBURSEMENT
PAYMENTS
($)h | HEALTH
BENEFITS
($)i | MISCELLA-
NEOUS
($)j | TOTAL
($) |
| | | | | | | | | | | | | |
| | D. Gitlinj | 73,011 | 37,085 | 63,604 | 27,000 | 221,567 | 650,548 | 16,000 | — | 18,100 | 5,175 | 1,112,090 |
| | P. Goris | — | — | — | — | — | 37,669 | 1,885 | — | 1,499 | — | 41,053 |
| | K. O’Connor | 32,060 | 21,711 | — | 25,935 | 17,258 | 414,398 | 15,606 | — | 17,864 | — | 544,832 |
| | D. Appel | — | 29,652 | — | 33,060 | 50,930 | — | 15,589 | 12,529 | 14,818 | — | 156,578 |
| | C. Nelson | — | 22,375 | — | 32,250 | 73,697 | — | 16,000 | — | 17,913 | — | 162,235 |
| | T. McLevish | — | 23,382 | — | 15,675 | 76,770 | 9,300 | 16,000 | — | 18,226 | — | 159,353 |
| a | Incremental variable operating costs incurred for personal air travel which includes fuel (calculated on the basis of aircraft-specific average consumption rates and fleet average fuel costs), fleet average landing and handling fees, additional crew lodging and meal allowances, and catering and hourly maintenance contract charges, when applicable. Because fleet-wide aircraft utilization is primarily for business purposes (approximately 80% in 2020), capital and other fixed expenditures are not treated as an incremental cost. Where two or more NEOs traveled for personal reasons on the same flight, the incremental operating costs are proportionately split among the NEOs. The Carrier Board of Directors authorized Mr. Gitlin to use up to 50 hours of personal time on the corporate aircraft of which 23.4 were utilized. |
| b | Annual costs incurred by Carrier in connection with a leased vehicle provided to the NEO. |
| c | Premiums paid on behalf of Mr. Gitlin under the CEO Life Insurance Policy inherited from UTC. Under this plan, Carrier pays the premiums on a cash value life insurance contract owned by the CEO. Life insurance benefits equal up to three times the CEO’s actual or projected base salary at age 62. Once vested, at age 55, Carrier funds the policy to maintain coverage following retirement. |
| d | Dollar value of company matching and age-based Company automatic contributions made into the pre-Separation UTC Employee Savings Plan and post-Separation Carrier Retirement Savings Plan. |
| e | Dollar value of company contributions to the Carrier Savings Restoration Plan (“SRP”) and the Carrier Automatic Contribution Excess Plan (“CACEP”) inherited from UTC. Under the SRP, participants are credited with a benefit equal to the company matching contribution that the NEO did not receive under the Carrier Employee Savings Plan due to Internal Revenue Code limits. The CACEP provides an additional age-based company automatic contribution for compensation earned over Internal Revenue Code limits. For Mr. McLevish, amount includes a benefit restoration company contribution to the Carrier Deferred Compensation Plan (“DCP”) to recognize the reduction in the value of employer matching or other contributions under the Carrier Retirement Savings Plan or the SRP, as a result of the reduction of his compensation pursuant to the DCP. |
| f | Represents relocation assistance to Palm Beach Gardens, Florida. Costs shown above include closing costs, movement of household goods, temporary living accommodations (if needed while searching for a home), and other standard move costs and incentives commensurate with their levels; and reimbursement for taxes on imputed income associated with the relocation-related benefits provided to Messrs. Gitlin ($75,764), O’Connor ($57,494) and McLevish ($5,661). |
| g | Costs associated with a financial planning benefit available to NEOs provided by a third party. |
| h | Costs associated with tax preparation services provided by a third party. |
| i | Costs incurred by the Company associated with annual executive physicals and broad-based company-covered healthcare benefits. In addition, certain NEOs are eligible for grandfathered long-term disability benefits as part of the Legacy UTC Compensation Arrangements described on page 46; however, because no cost is incurred unless the NEO actually becomes disabled, no amount is reflected in this column. |
| j | For Mr. Gitlin, this amount includes a credit of opt-out of the Company’s basic life insurance and costs to the Company related to Board gifts and spouse travel. |
6 | Mr. Goris joined Carrier in November 2020. He received a cash sign-on bonus of $1 million paid in the fourth quarter of 2020 and a sign-on equity award with a target grant date value of $4 million on December 1, 2020 to offset compensation forfeited from his former employer. |
7 | Mr. O’Connor joined Carrier in January 2020. He received a sign-on equity award with a target grant date value of $2 million on January 2, 2020 to offset compensation forfeited from his former employer. He also received a one-time RSU retention grant with a value of $1 million. |
8 | Mr. McLevish served as Carrier’s Senior Vice President & Chief Financial Officer through November 2020. He then transitioned to the role of Special Advisor to the President and Chief Executive Officer. Mr. McLevish maintained his base salary through his retirement date, and his annual bonus target and eligibility through the end of 2020. |
TablebAnnual costs incurred by Carrier in connection with a leased vehicle provided to the NEO. As mentioned previously in the "Compensation Discussion and Analysis" section of Contents
the Proxy Statement, for consistency with market practice, this benefit has been eliminated.
Compensation Tables
cPremiums paid on behalf of Mr. Gitlin under the CEO Life Insurance Policy. Under this plan, Carrier pays the premiums on a cash value life insurance contract owned by the CEO. Life insurance benefits equal up to three times the CEO’s actual or projected base salary at age 62. Once vested, at age 55, Carrier funds the policy to maintain coverage following retirement.
dDollar value of company matching and age-based company automatic contributions made into the Carrier Retirement Savings Plan.
eDollar value of company contributions to the Carrier Savings Restoration Plan (“SRP”) and the Carrier Automatic Contribution Excess Plan (“CACEP”). Under the SRP, participants are credited with a benefit equal to the company matching contribution that the NEO did not receive under the Carrier Retirement Savings Plan due to Internal Revenue Code limits. The CACEP provides an additional age-based company automatic contribution for compensation earned over Internal Revenue Code limits.
fRepresents cost of annual executive physical covered by the company.
gRepresents relocation assistance to Palm Beach Gardens, Florida, including the final amount due on Mr. Gitlin's 2020 move. Costs shown above include closing costs, movement of household goods, temporary living accommodations (if needed while searching for a home), and other standard move costs and incentives commensurate with their levels; and reimbursement for taxes on imputed income associated with the relocation-related benefits provided to Messrs. Goris ($56,097) and White ($28,354).
hCosts associated with a financial planning benefit available to NEOs provided by a third party.
iFor Mr. White costs associated with a one-time tax gross-up of a cash payment pursuant to his offer letter described above with respect to the payment described in note (k) below, provided that this amount is subject to repayment by Mr. White in full if he voluntarily resigns within two years following the payment date or in part in the event his prior employer refunds a portion of the amount to him for tax reasons; for Mr. Timperman, costs associated with tax preparation by a third party.
jCosts incurred by the company associated with broad-based company-covered healthcare benefits. In addition, certain NEOs are eligible for grandfathered long-term disability benefits described on page 40; however, because no cost is incurred unless the NEO actually becomes disabled, no amount is reflected in this column.
kIn the conversion of UTC LTI awards at the Separation, any fractional shares were rounded down. In accordance with the Employee Matters Agreement, dated as of April 2, 2020, among the company, UTC and Otis Worldwide Corporation (“Otis”), which is filed as Exhibit 10.3 to the company’s current report on Form 8-K filed with the SEC on April 3, 2020 (the “Employee Matters Agreement”), an equivalent cash payment was made to Messrs. Gitlin ($6,750), Nelson ($3,719) and Timperman ($2,899). For Mr. Gitlin, this amount also includes a credit ($2,184) of opt-out of the company’s basic life insurance and costs to the company ($1,342) related to Board gifts and spouse travel. For Messrs. Goris, Nelson and Timperman, the costs to the company related to Board gifts and spouse travel in the amount of $1,038, $1,169 and $1,038, respectively. For Mr. White, this amount includes a one-time cash payment ($394,053) pursuant to his offer letter to cover reimbursement of a prior sign-on bonus paid to him by his former employer (which amount is subject to repayment by Mr. White in full if he voluntarily resigns within two years of the payment date or in part to the extent his prior employer refunds a portion of the amount to him for tax reasons) and cost to the company ($1,328) related to Board gifts and spouse travel.
7Mr. White joined Carrier in August 2021.
Grants of Plan-Based Awards
| | ESTIMATED FUTURE PAYOUTS
UNDER
EQUITY INCENTIVE PLAN AWARDS2 | ALL OTHER
STOCK AWARDS:
NUMBER OF
SHARES OF
STOCK | ALL OTHER
OPTION AWARDS:
NUMBER OF
SECURITIES
UNDERLYING | EXERCISE OR BASE
PRICE OF OPTION | GRANT DATE
FAIR
VALUE OF STOCK
AND OPTION |
| GRANT DATE1 | THRESHOLD
(#) | TARGET
(#) | MAXIMUM
(#) | OR UNITS
(#)3 | OPTIONS
(#)4 | AWARDS
($/SH)5 | AWARDS
($)6 |
| D. Gitlin | | | | | | | |
| 2/4/2020 | — | — | — | — | 544,370 | $25.58 | 2,132,130 |
| 2/4/2020 | — | — | — | 98,106 | — | — | 2,509,200 |
| 4/3/20207 | — | — | — | — | — | — | 77,514 |
| 5/14/2020 | 23,120 | 92,480 | 184,960 | — | — | — | 1,685,910 |
| 5/14/20208 | — | — | — | — | 661,400 | $16.55 | 3,062,282 |
| 5/14/20209 | — | — | — | 92,500 | — | — | 1,530,875 |
| P. Goris | | | | | | | |
| 12/1/202010 | — | — | — | — | 182,900 | $37.60 | 2,000,926 |
| 12/1/202010 | — | — | — | 53,195 | — | — | 2,000,132 |
| K. O’Connor | | | | | | | |
| 1/2/202011 | — | — | — | — | 217,150 | $25.60 | 1,000,791 |
| 1/2/202012 | — | — | — | 39,063 | — | — | 1,000,004 |
| 1/2/202013 | — | — | — | 39,063 | — | — | 1,000,004 |
| 2/4/2020 | — | — | — | — | 185,445 | $25.58 | 726,330 |
| 2/4/2020 | — | — | — | 33,500 | — | — | 856,800 |
| 5/14/2020 | 7,708 | 30,830 | 61,660 | — | — | — | 562,031 |
| 5/14/2020 | — | — | — | — | 110,200 | $16.55 | 510,226 |
| D. Appel | | | | | | | |
| 2/4/2020 | — | — | — | — | 76,570 | $25.58 | 299,904 |
| 2/4/2020 | — | — | — | 13,699 | — | — | 350,370 |
| 4/3/20207 | — | — | — | — | — | — | 8,984 |
| 5/14/2020 | 11,560 | 46,240 | 92,480 | — | — | — | 842,955 |
| 5/14/2020 | — | — | — | — | 165,200 | $16.55 | 764,876 |
| 6/1/202014 | — | — | — | 45,830 | — | — | 1,000,011 |
| C. Nelson | | | | | | | |
| 2/4/2020 | — | — | — | — | 185,445 | $25.58 | 726,330 |
| 2/4/2020 | — | — | — | 33,500 | — | — | 856,800 |
| 4/3/20207 | — | — | — | — | — | — | 30,378 |
| 5/14/2020 | 11,560 | 46,240 | 92,480 | — | — | — | 842,955 |
| 5/14/2020 | — | — | — | — | 165,200 | $16.55 | 764,876 |
| T. McLevish | | | | | | | |
| 2/4/2020 | — | — | — | — | 380,461 | $25.58 | 1,490,148 |
| 2/4/2020 | — | — | — | 68,465 | — | — | 1,751,085 |
| 5/14/2020 | 11,560 | 46,240 | 92,480 | — | — | — | 842,955 |
| 5/14/2020 | — | — | — | — | 165,200 | $16.55 | 764,876 |
1 | Equity awards granted by UTC before the Separation (April 3, 2020) were converted as follows: the number of unvested Carrier shares subject to the SAR award was determined by multiplying the original UTC SAR award, by the conversation ratio, calculated in accordance with the conversion methodology detailed in the Employee Matters Agreement. The per share exercise price of the Carrier SAR award was determined by multiplying the exercise price of the original UTC SAR award by the conversion ratio, calculated in accordance with the conversion methodology detailed in the Employee Matters Agreement. The number of Carrier shares underlying the unvested RSU award was determined by multiplying the original UTC RSU award, by the conversation ratio, calculated in accordance with the conversion methodology detailed in the Employee Matters Agreement. The UTC Compensation Committee approved the |
52 | Carrier Global Corporation |
Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS2 | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS3 | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS (#)4 | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#)5 | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SH)6 | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS ($)7 |
GRANT DATE1 | THRESHOLD ($) | TARGET ($) | MAXIMUM ($) | THRESHOLD (#) | TARGET (#) | MAXIMUM (#) |
| | | | | | | | | | |
| D. Gitlin | | | | | | | | | | |
| — | 208,000 | 2,080,000 | 4,160,000 | — | — | — | — | — | — | — |
| 2/4/2021 | — | — | — | 14,209 | 113,670 | 227,340 | — | — | — | 4,708,211 |
| 2/4/2021 | — | — | — | — | — | — | — | 440,315 | 38.33 | 4,359,119 |
| | | | | | | | | | |
| | | | | | | | | | |
| P. Goris | | | | | | | | | | |
| — | 71,500 | 715,000 | 1,430,000 | — | — | — | — | — | — | — |
| 2/4/2021 | — | — | — | 4,516 | 36,125 | 72,250 | — | — | — | 1,496,298 |
| 2/4/2021 | — | — | — | — | — | — | — | 139,925 | 38.33 | 1,385,258 |
| | | | | | | | | | |
| | | | | | | | | | |
| T. White | | | | | | | | | | |
| — | 54,000 | 540,000 | 1,080,000 | — | — | — | — | — | — | — |
| 9/1/2021 | — | — | — | — | — | — | 30,955 | — | — | 1,791,985 |
9/1/20218 | — | — | — | — | — | — | — | 127,645 | $57.89 | 1,790,859 |
| | | | | | | | | | |
| | | | | | | | | | |
| C. Nelson | | | | | | | | | | |
| — | 60,300 | 603,000 | 1,206,000 | — | — | — | — | — | — | — |
| 2/4/2021 | — | — | — | 3,647 | 29,175 | 58,350 | — | — | — | 1,208,429 |
| 2/4/2021 | — | — | — | — | — | — | — | 113,015 | 38.33 | 1,118,849 |
| | | | | | | | | | |
| | | | | | | | | | |
| J. Timperman | | | | | | | | | | |
| — | 54,000 | 540,000 | 1,080,000 | — | — | — | — | — | — | — |
| 2/4/2021 | �� | — | — | 3,300 | 26,400 | 52,800 | — | — | — | 1,093,488 |
| 2/4/2021 | — | — | — | — | — | — | — | 102,255 | 38.33 | 1,012,325 |
Table of Contents
Compensation Tables
| 2020 annual LTI awards at its January 31, 2020 meeting, specifying February 4, 2020 as the award grant date. All awards granted before Separation are shown after taking into account the Separation-related adjustment and without inclusion of dividend equivalents for RSUs credited after the grant date and prior to the Separation. | | | | |
2 | Consists of Founder’s Grant PSUs that are earned based on three-year TSR relative to a subset of industrial companies in the S&P 500 index measured from May 2020 to May 2023. Vesting ranges from a payout of 25% of target if threshold performance is achieved (relative TSR performs at the 35th percentile) to a maximum payout of 200% if maximum performance (relative TSR performs at or above the 85th percentile) is achieved. If Carrier’s three-year TSR is negative, the payout for the TSR portion of the award is capped at 100% regardless of Carrier’s relative TSR performance versus the companies within a subset of industrial companies in the S&P 500 Index. Each PSU corresponds to one share of Carrier common stock. Unvested PSUs do not accrue dividend equivalents. Vested PSUs are settled in unrestricted shares of Carrier common stock at the end of the performance period following the Committee’s review and approval of performance achievement levels. |
3 | RSUs (except for the one-time RSU award granted to Mr. O’Connor on January 2, 2020 described in footnote 12 below and the sign-on award granted to Mr. Goris on December 1, 2020 described in footnote 10 below) vest three years from the grant date, subject to the NEO’s continued service with the company, except in certain limited circumstances described in the footnotes to the Potential Payments on Termination or Change in Control table. Each RSU corresponds to one share of Carrier common stock. When Carrier pays a dividend to shareowners, RSUs earn dividend equivalents during the vesting period that are reinvested as additional RSUs. The reinvested RSUs vest on the same date as the underlying RSUs. |
4 | SARs vest and become exercisable three years from the grant date, subject to the NEO’s continued service with the company, except in certain limited circumstances described in the footnotes to the Potential Payments on Termination or Change in Control table. |
5 | The SAR exercise price equals the closing price of Carrier common stock on the grant date (or, in the case of awards granted by UTC prior to the Separation, the closing price of UTC’s common stock on the grant date, adjusted in accordance with the conversion methodology detailed in the Employee Matters Agreement, to reflect the Separation). |
6 | Grant date fair value of awards granted in 2020, with vesting assumed at 100% of target for performance-based awards. Values are calculated in accordance with FASB ASC Topic 718 but excluding the effect of estimated forfeitures. |
7 | Reflects the incremental fair value associated with the conversion of outstanding UTC PSUs into Carrier RSUs upon the Separation. |
8 | The number of SARs includes additional annual awards of 331,000 SARs approved by Carrier’s Compensation Committee after Separation. |
9 | The number of RSUs reflects additional annual awards of 92,500 RSUs approved by Carrier’s Compensation Committee after Separation. |
10 | In connection with his hire, Mr. Goris received RSU and SAR awards on December 1, 2020. These awards vest one third per year for three years from the grant date, subject to the NEO’s continued service with the company, except in certain limited circumstances described in the footnotes to the Potential Payments on Termination or Change in Control table. RSUs earn dividend equivalents during the vesting period that are reinvested as additional RSUs each time Carrier pays a dividend to shareowners. The reinvested RSUs vest on the same date as the underlying RSUs. |
11 | In connection with his hire, Mr. O’Connor received a SAR award on January 2, 2020. This award vests three years from the grant date, subject to continued service with the company, except in certain limited circumstances described in the footnotes to the Potential Payments on Termination or Change in Control table. |
12 | In connection with his hire, Mr. O’Connor received an RSU award on January 2, 2020. This award vests three years from the grant date, subject to continued service with the company, except in certain limited circumstances described in the footnotes to the Potential Payments on Termination or Change in Control table. RSUs earn dividend equivalents during the vesting period that are reinvested as additional RSUs each time Carrier pays a dividend to shareowners. The reinvested RSUs vest on the same date as the underlying RSUs. |
13 | As part of the Legacy UTC Compensation Arrangement, a one-time RSU award was granted to Mr. O’Connor. This award will vest in the event of a mutually agreeable separation following three years of grant date, upon death or a change in control. One-time RSUs accumulate dividend equivalents that are reinvested as additional RSUs during the vesting period. Vested one-time RSUs are settled in shares of Carrier common stock. RSUs earn dividend equivalents during the vesting period that are reinvested as additional RSUs that vest on the same date as the underlying RSUs. |
14 | As part of the Legacy UTC Compensation Arrangement, Mr. Appel received a retention RSU award on June 1, 2020 which vest three years from the grant date subject to the NEO’s continued service with the company, except in certain limited circumstances described in the footnotes to the Potential Payments on Termination or Change in Control table. RSUs earn dividend equivalents during the vesting period that are reinvested as additional RSUs each time Carrier pays a dividend to shareowners. The reinvested RSUs vest on the same date as the underlying RSUs. |
20212022 Proxy Statement | 53 |
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - Compensation Tables
Table1The Committee approved the 2021 annual long-term incentive awards at its regularly scheduled meeting on February 4, 2021, effective immediately. Mr. White’s awards were granted in connection with his hiring and were approved by the Committee to be effective on September 1, 2021 (following his commencement of Contentsemployment).2Represents the 2021 annual bonus established for each NEO under the Annual Bonus Plan, which is an incentive program designed to reward achievement of annual performance goals. The performance measures and methodology for calculating payouts are described in the “Compensation Discussion and Analysis – Section III: 2021 CEO and NEO Compensation Tables– 2021 Annual Bonus”.
3Number of PSUs granted under the Long-Term Incentive Plan, which vest based on performance relative to three-year EPS growth (weighted at 50%) and a three-year relative TSR goal (weighted at 50%). The number of shares that were possible to earn at the time of grant ranged from 0% to a maximum of 200% of the target number of PSUs. If the company’s three-year TSR is negative, the payout for the TSR portion of the award is capped at 100% regardless of the company’s relative TSR performance versus the companies within a subset of the S&P 500 Industrials Index. Each PSU corresponds to one share of the Carrier common stock. Unvested PSUs do not accrue dividend equivalents. Vested PSUs are settled in unrestricted shares of Carrier common stock at the end of the performance period following the Committee’s review and approval of performance achievement levels. See the “Compensation Discussion and Analysis - Section III: 2021 CEO and NEO Compensation – 2021 Long-Term Incentives” for more information.
4In connection with his hire, Mr. White received an RSU award on September 1, 2021. This award vests one third per year for three years from the grant date, subject to continued service with the company, except in certain limited circumstances described in the footnotes to the Potential Payments on Termination or Change in Control table. RSUs earn dividend equivalents during the vesting period that are reinvested as additional RSUs each time Carrier pays a dividend to shareowners. The reinvested RSUs vest on the same date as the underlying RSUs.
5SARs vest and become exercisable three years from the grant date, subject to the NEO’s continued service with the company, except in certain limited circumstances described in the footnotes to the Potential Payments on Termination or Change in Control table.
6The SAR exercise price equals the closing price of Carrier common stock on the grant date.
7Grant date fair value of awards granted in 2021, with vesting assumed at 100% of target for performance-based awards. Values are calculated in accordance with FASB ASC Topic 718, but excluding the effect of estimated forfeitures.
8In connection with his hire, Mr. White received a SAR award on September 1, 2021. This award vests one third per year for three years from the grant date, subject to continued service with the company, except in certain limited circumstances described in the footnotes to the Potential Payments on Termination or Change in Control Table.
Outstanding Equity Awards at Fiscal Year-End Table
| OPTION AWARDS | | | STOCK AWARDS | |
NAME / GRANT
DATE | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE | | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE | | | OPTION
EXERCISE
PRICE
($)1 | | | OPTION
EXPIRATION
DATE | | | NUMBER OF
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED
(#)2 | | | MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED
($)3 | | | EQUITY INCENTIVE
PLAN AWARDS:
NUMBER OF
UNEARNED
SHARES, UNITS
OR OTHER RIGHTS
THAT HAVE NOT
VESTED
(#)4 | | | EQUITY INCENTIVE
PLAN AWARDS:
MARKET OR
PAYOUT VALUE
OF UNEARNED
SHARES, UNITS
OR OTHER RIGHTS
THAT HAVE NOT
VESTED
($)5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| D. Gitlin | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 05/14/2020 | | | – | | | | 331,000 | 6 | | | $16.55 | | | | 5/13/2030 | | | | 92,971 | 6 | | | $3,506,866 | | | | | | | | | |
| 05/14/2020 | | | – | | | | 330,400 | 7 | | | $16.55 | | | | 5/13/2030 | | | | – | | | | – | | | | 184,960 | | | | $6,976,691 | |
| 02/04/2020 | | | – | | | | 544,370 | 8 | | | $25.58 | | | | 2/3/2030 | | | | 99,206 | 8 | | | $3,742,050 | | | | – | | | | – | |
| 02/05/2019 | | | – | | | | 607,182 | 9 | | | $20.19 | | | | 2/4/2029 | | | | 133,556 | 9 | | | $5,037,732 | | | | – | | | | – | |
| 01/02/2018 | | | – | | | | 320,042 | 10 | | | $21.43 | | | | 1/1/2028 | | | | 155,706 | 10 | | | $5,873,230 | | | | – | | | | – | |
| 01/03/2017 | | | 46,819 | | | | – | | | | $18.53 | | | | 1/2/2027 | | | | – | | | | – | | | | – | | | | – | |
| 01/04/2016 | | | 67,250 | | | | – | | | | $15.98 | | | | 1/3/2026 | | | | – | | | | – | | | | – | | | | – | |
| 01/02/2015 | | | 39,158 | | | | – | | | | $19.24 | | | | 1/1/2025 | | | | – | | | | – | | | | – | | | | – | |
| 11/12/2013 | | | – | | | | – | | | | – | | | | – | | | | 97,421 | 11 | | | $3,674,720 | | | | – | | | | – | |
| P. Goris | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 12/01/2020 | | | – | | | | 182,900 | 12 | | | $37.60 | | | | 11/30/2030 | | | | 53,195 | 12 | | | $2,006,515 | | | | – | | | | – | |
| K. O’Connor | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 05/14/2020 | | | – | | | | 110,200 | 7 | | | $16.55 | | | | 5/13/2030 | | | | – | | | | – | | | | 61,660 | | | | $2,325,815 | |
| 02/04/2020 | | | – | | | | 185,445 | 8 | | | $25.58 | | | | 2/3/2030 | | | | 33,874 | 8 | | | $1,277,727 | | | | – | | | | – | |
| 01/02/2020 | | | – | | | | 217,150 | 13 | | | $25.60 | | | | 1/1/2030 | | | | 39,502 | 13 | | | $1,490,015 | | | | – | | | | – | |
| 01/02/2020 | | | – | | | | – | | | | – | | | | – | | | | 39,502 | 11 | | | $1,490,015 | | | | – | | | | – | |
| D. Appel | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 06/01/2020 | | | – | | | | – | | | | – | | | | – | | | | 46,063 | 14 | | | $1,737,496 | | | | – | | | | – | |
| 05/14/2020 | | | – | | | | 165,200 | 7 | | | $16.55 | | | | 5/13/2030 | | | | – | | | | – | | | | 92,480 | | | | $3,488,346 | |
| 02/04/2020 | | | – | | | | 76,570 | 8 | | | $25.58 | | | | 2/3/2030 | | | | 13,852 | 8 | | | $522,497 | | | | – | | | | – | |
| 02/05/2019 | | | – | | | | 114,856 | 9 | | | $20.19 | | | | 2/4/2029 | | | | 22,856 | 9 | | | $862,128 | | | | – | | | | – | |
| 01/02/2018 | | | – | | | | 51,745 | 10 | | | $21.43 | | | | 1/1/2028 | | | | 30,605 | 10 | | | $1,154,421 | | | | – | | | | – | |
| 01/03/2017 | | | 8,512 | | | | – | | | | $18.53 | | | | 1/2/2027 | | | | – | | | | – | | | | – | | | | – | |
| 01/04/2016 | | | 20,175 | | | | – | | | | $15.98 | | | | 1/3/2026 | | | | – | | | | – | | | | – | | | | – | |
| 01/02/2015 | | | 11,747 | | | | – | | | | $19.24 | | | | 1/1/2025 | | | | – | | | | – | | | | – | | | | – | |
| 01/02/2014 | | | 38,867 | | | | – | | | | $18.81 | | | | 1/1/2024 | | | | – | | | | – | | | | – | | | | – | |
| 01/02/2013 | | | 10,725 | | | | – | | | | $14.05 | | | | 1/1/2023 | | | | – | | | | – | | | | – | | | | – | |
| C. Nelson | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 05/14/2020 | | | – | | | | 165,200 | 7 | | | $16.55 | | | | 5/13/2030 | | | | – | | | | – | | | | 92,480 | | | | $3,488,346 | |
| 02/04/2020 | | | – | | | | 185,445 | 8 | | | $25.58 | | | | 2/3/2030 | | | | 33,874 | 8 | | | $1,277,727 | | | | – | | | | – | |
| 06/14/2019 | | | – | | | | 396,014 | 15 | | | $20.95 | | | | 6/13/2029 | | | | 73,209 | 15 | | | $2,761,443 | | | | – | | | | – | |
| 02/05/2019 | | | – | | | | 236,292 | 9 | | | $20.19 | | | | 2/4/2029 | | | | 50,403 | 9 | | | $1,901,201 | | | | – | | | | | |
| 01/02/2018 | | | – | | | | 125,624 | 10 | | | $21.43 | | | | 1/1/2028 | | | | 58,178 | 10 | | | $2,194,474 | | | | – | | | | – | |
| 06/15/2017 | | | – | | | | – | | | | – | | | | – | | | | 106,001 | 16 | | | $3,998,358 | | | | – | | | | – | |
| 01/03/2017 | | | 17,876 | | | | – | | | | $18.53 | | | | 1/2/2027 | | | | – | | | | – | | | | – | | | | – | |
| 06/01/2015 | | | – | | | | – | | | | – | | | | – | | | | 57,527 | 11 | | | $2,169,918 | | | | | | | | | |
54 | Carrier Global Corporation |
Table of Contents
Compensation Tables
| OPTION AWARDS | | | STOCK AWARDS | |
NAME / GRANT
DATE | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE | | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE | | | OPTION
EXERCISE
PRICE
($)1 | | | OPTION
EXPIRATION
DATE | | | NUMBER OF
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED
(#)2 | | | MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED
($)3 | | | EQUITY INCENTIVE
PLAN AWARDS:
NUMBER OF
UNEARNED
SHARES, UNITS
OR OTHER RIGHTS
THAT HAVE NOT
VESTED
(#)4 | | | EQUITY INCENTIVE
PLAN AWARDS:
MARKET OR
PAYOUT VALUE
OF UNEARNED
SHARES, UNITS
OR OTHER RIGHTS
THAT HAVE NOT
VESTED
($)5 | |
| T. McLevish | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 05/14/2020 | | | – | | | | 165,200 | 7 | | | $16.55 | | | | 5/13/2030 | | | | – | | | | – | | | | 92,480 | | | | $3,488,346 | |
| 02/04/2020 | | | – | | | | 380,461 | 8 | | | $25.58 | | | | 2/3/2030 | | | | 69,234 | 8 | | | $2,611,506 | | | | – | | | | – | |
| 10/01/2019 | | | – | | | | 741,181 | 17 | | | $22.37 | | | | 9/30/2029 | | | | 45,220 | 17 | | | $1,705,698 | | | | – | | | | – | |
1 | The exercise price of each SAR is equal to the closing price on the NYSE of Carrier common stock on the grant date. For SARs granted prior to April 3, 2020, exercise prices shown were adjusted upon the Separation by using the conversion methodology detailed in the Employee Matters Agreement. |
2 | Reflects RSUs, including dividend equivalents reinvested as additional RSUs each time Carrier pays a dividend to shareowners during the vesting period for eligible awards. The reinvested RSUs vest on the same date as the underlying RSUs. For RSUs granted prior to April 3, 2020, the number of RSUs was adjusted upon the Separation by using the conversion methodology detailed in the Employee Matters Agreement. The 2018 and 2019 PSUs that were converted to RSUs upon the Separation are not eligible for dividend equivalents. |
3 | Calculated by multiplying the number of unvested RSUs by $37.72, the NYSE closing price of Carrier common stock on the last trading day of 2020. |
4 | PSUs granted as part of the Founder’s Grant, scheduled to vest on May 14, 2023, that are subject to vesting contingent on company performance relative to pre-established performance goals measured over a three-year period (May 2020 through May 2023) and the NEO’s continued service, except in certain limited circumstances as detailed in footnotes to the Potential Payments on Termination or Change-in-Control Table. The number of shares shown assumes maximum-level performance. |
5 | Calculated by multiplying the number of unvested PSUs by $37.72, the NYSE closing price of Carrier common stock on the last trading day of 2020. |
6 | Additional annual SAR and RSU awards granted to Mr. Gitlin which will vest May 14, 2023, subject to continued service, except in certain limited circumstances as described in the footnotes to the Potential Payments on Termination or Change-in-Control table. |
7 | SARs granted as part of the Founder’s Grant scheduled to vest on May 14, 2023, subject to the NEO’s continued service, except in certain limited circumstances as described in the footnotes to the Potential Payments on Termination or Change-in-Control table. |
8 | SARs and RSUs scheduled to vest on February 4, 2023, subject to the NEO’s continued service, except in certain limited circumstances as described in the footnotes to the Potential Payments on Termination or Change-in-Control table. |
9 | SARs and RSUs scheduled to vest on February 5, 2022, subject to the NEO’s continued service, except in certain limited circumstances as described in the footnotes to the Potential Payments on Termination or Change-in-Control table. Includes the 2019 UTC PSUs that converted to Carrier RSUs upon the Separation. The former UTC PSU awards remain eligible to vest on the original vesting date, subject only to continued employment. |
10 | SARs and RSUs, including the 2018 UTC PSUs that converted to Carrier RSUs upon Separation that vested on January 2, 2021. |
11 | One-time Legacy UTC Compensation Arrangement RSU grant which will vest in the event of a mutually agreeable separation (as described in the ELG Program Sunset section on page 46) following three years of grant date, upon death, disability or qualified termination following a change-in-control. |
12 | SAR and RSU awards granted to Mr. Goris in connection with his hire, which will vest one third per year on the anniversary of the grant date, subject to continued service or earlier in the case of death, disability, involuntary termination (other than for cause), or upon a qualifying termination following a change-in-control. |
13 | SAR and RSU awards granted to Mr. O’Connor in connection with his hire, which will vest on January 2, 2023, subject to continued service or earlier in the case of death, disability, or upon a qualifying termination following a change-in-control. |
14 | Retention RSU award granted to Mr. Appel which will vest on June 1, 2023, subject to continued service or earlier in the case of death, disability, retirement (on or after June 1, 2022), involuntary termination (other than for cause), or upon a qualifying termination following a change-in-control. |
15 | Special Retention SAR and RSU awards granted to Mr. Nelson which will vest June 14, 2022, subject to continued service or earlier in the case of death, disability or upon a qualifying termination following a change-in-control. |
16 | Retention RSU award granted to Mr. Nelson which will vest on June 15, 2021, subject to continued service or earlier in the case of death, disability or upon a qualifying termination following a change-in-control. |
17 | SAR and RSU awards granted to Mr. McLevish in connection with his hire, which will vest on October 1, 2022, subject to continued service or earlier in the case of death, disability, retirement (on or after October 31, 2021), involuntary termination (other than for cause), or upon a qualifying termination following a change-in-control. |
Table of Contents
Compensation Tables
This table reflects awards that relate to Carrier shares. Upon the Separation that occurred on April 3, 2020, vested UTC SARs were adjusted and converted into vested SARs of Carrier, (as shownRaytheon (“RTX”) and Otis that remain exercisable until the expiration of their term, regardless of continued employment with Carrier. The number of RTX and Otis SARs held by NEOs as a result of the Separation was reported in the previous table), RTX and Otis. Bothproxy for the number of outstanding UTC SARs and2021 Annual Meeting (reporting 2020 compensation) for informational purposes because the Separation occurred during 2020, but are not included here because they do not relate to Carrier service or Carrier stock.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OPTION AWARDS | STOCK AWARDS |
| NAME / GRANT DATE | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE | | OPTION EXERCISE PRICE ($)1 | OPTION EXPIRATION DATE | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)2 | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($)3 | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)4 | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($)5 |
| | | | | | | | | | |
| D. Gitlin | | | | | | | | | | |
| 02/04/2021 | — | 440,315 | 6 | 38.33 | 02/03/2031 | — | | — | 227,340 | 12,330,922 | |
| 05/14/2020 | — | 331,000 | 7 | 16.55 | 05/13/2030 | 90,417 | 7 | 4,904,218 | | — | — |
| 05/14/2020 | — | 330,400 | 8 | 16.55 | 05/13/2030 | — | | — | 184,960 | 10,032,230 | |
| 02/04/2020 | — | 544,370 | 9 | 25.58 | 02/03/2030 | 96,481 | 9 | 5,233,129 | | — | — |
| 02/05/2019 | — | 607,182 | 10 | 20.19 | 02/04/2029 | 133,556 | 10 | 7,244,077 | | — | — |
| 01/02/2018 | 320,042 | — | | 21.43 | 01/01/2028 | — | | — | — | — |
| 01/03/2017 | 46,819 | — | | 18.53 | 01/02/2027 | — | | — | — | — |
| 01/04/2016 | 67,250 | — | | 15.98 | 01/03/2026 | — | | — | — | — |
| 01/02/2015 | 39,158 | — | | 19.24 | 01/01/2025 | — | | — | — | — |
| 11/12/2013 | — | — | | — | — | 98,416 | 11 | 5,338,084 | | — | — |
| | | | | | | | | | |
| | | | | | | | | | |
| P. Goris | | | | | | | | | | |
| 02/04/2021 | — | 139,925 | 6 | 38.33 | 02/03/2031 | — | | — | 72,250 | 3,918,840 | |
| 12/01/2020 | 60,966 | 121,934 | 12 | 37.60 | 11/30/2030 | 35,830 | 12 | 1,943,419 | | — | — |
| | | | | | | | | | |
| | | | | | | | | | |
| T. White | | | | | | | | | | |
| 09/01/2021 | — | 127,645 | 13 | 57.89 | 08/31/2031 | 31,020 | 13 | 1,682,525 | | — | — |
| | | | | | | | | | |
| | | | | | | | | | |
| C. Nelson | | | | | | | | | | |
| 02/04/2021 | — | 113,015 | 6 | 38.33 | 02/03/2031 | — | | — | 58,350 | 3,164,904 | |
| 05/14/2020 | — | 165,200 | 8 | 16.55 | 05/13/2030 | — | | — | 92,480 | 5,016,115 | |
| 02/04/2020 | — | 185,445 | 9 | 25.58 | 02/03/2030 | 32,824 | 9 | 1,780,374 | | — | — |
| 06/14/2019 | — | 396,014 | 14 | 20.95 | 06/13/2029 | 73,956 | 14 | 4,011,373 | | — | — |
| 02/05/2019 | — | 236,292 | 10 | 20.19 | 02/04/2029 | 50,403 | 10 | 2,733,859 | | — | — |
| 01/02/2018 | 125,624 | — | | 21.43 | 01/01/2028 | — | | — | — | — |
| 01/03/2017 | 17,876 | — | | 18.53 | 01/02/2027 | — | | — | — | — |
| 06/01/2015 | — | — | | — | — | 58,115 | 11 | 3,152,158 | | | |
| | | | | | | | | | |
| | | | | |
| 46 | Carrier Global Corporation |
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - Compensation Tables
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OPTION AWARDS | STOCK AWARDS |
| NAME / GRANT DATE | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE | | OPTION EXERCISE PRICE ($)1 | OPTION EXPIRATION DATE | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)2 | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($)3 | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)4 | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($)5 |
| | | | | | | | | | |
| J. Timperman | | | | | | | | | | |
| 02/04/2021 | — | 102,255 | 6 | 38.33 | 02/03/2031 | — | | — | 52,800 | 2,863,872 | |
| 05/14/2020 | — | 165,200 | 8 | 16.55 | 05/13/2030 | — | | — | 92,480 | 5,016,115 | |
| 02/04/2020 | — | 134,597 | 9 | 25.58 | 02/03/2030 | 25,054 | 9 | 1,358,929 | | — | — |
| 06/14/2019 | — | 396,014 | 14 | 20.95 | 06/13/2029 | 73,956 | 14 | 4,011,373 | | — | — |
| 02/05/2019 | — | 155,534 | 10 | 20.19 | 02/04/2029 | 34,301 | 10 | 1,860,486 | | — | — |
| 01/02/2018 | 34,397 | — | | 21.43 | 01/01/2028 | — | | — | — | — |
| 10/16/2017 | — | — | | — | — | 54,659 | 11 | 2,964,704 | | — | — |
| 01/03/2017 | 2,724 | — | | 18.53 | 01/02/2027 | — | | — | — | — |
| | | | | | | | | | |
1The exercise price of each awardSAR is equal to the closing price on the NYSE of Carrier common stock on the grant date. For SARs granted prior to April 3, 2020, exercise prices shown were adjusted upon the Separation by using the conversion methodology detailed in the Employee Matters Agreement.
2Reflects RSUs, including dividend equivalents reinvested as additional RSUs each time Carrier pays a dividend to shareowners during the vesting period for eligible awards. The reinvested RSUs vest on the same date as the underlying RSUs. For RSUs granted prior to April 3, 2020, the number of RSUs was adjusted atupon the time of the Separation to reflect the post-Separation stock prices of the three companies by using the conversion methodology detailed in the Employee Matters Agreement. The table below reflects2019 PSUs that were converted to RSUs upon the outstanding RTXSeparation are not eligible for dividend equivalents.
3Calculated by multiplying the number of unvested RSUs by $54.24, the NYSE closing price of Carrier common stock on the last trading day of 2021.
4PSUs that are subject to vesting contingent on company performance relative to pre-established performance goals measured over a three-year period and Otis SARs held by our NEOsthe NEO’s continued service, except in certain limited circumstances as detailed in footnotes to the Potential Payments on Termination or Change in Control Table. The three-year performance period for Founder's Grant awards granted on May 14, 2020 scheduled to vest on May 14, 2023 is May 2020 through May 2023. The three-year performance period for awards granted on February 4, 2021 scheduled to vest on February 4, 2024 is January 1, 2021 through December 31, 2023. The number of shares shown assumes maximum-level performance, based on vesting estimates as of December 31, 2020.| | | | | RTX SARs | | OTIS SARs |
| NAME | | GRANT DATE | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE | | | OPTION
EXERCISE
PRICE
($) | | | OPTION
EXPIRATION
DATE | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE | | | OPTION
EXERCISE
PRICE
($) | | | OPTION
EXPIRATION DATE |
| | | | | | | | | | | | | | | | | | | | | | | |
| D. Gitlin | | 01/03/2017 | | | 46,819 | | | | $82.35 | | | 1/2/2027 | | | 23,409 | | | | $58.66 | | | 1/2/2027 |
| | | 01/04/2016 | | | 67,250 | | | | $71.01 | | | 1/3/2026 | | | 33,625 | | | | $50.58 | | | 1/3/2026 |
| | | 01/02/2015 | | | 39,158 | | | | $85.47 | | | 1/1/2025 | | | 19,579 | | | | $60.88 | | | 1/1/2025 |
| D. Appel | | 01/03/2017 | | | 8,512 | | | | $82.35 | | | 1/2/2027 | | | 4,256 | | | | $58.66 | | | 1/2/2027 |
| | | 01/04/2016 | | | 20,175 | | | | $71.01 | | | 1/3/2026 | | | 10,087 | | | | $50.58 | | | 1/3/2026 |
| | | 01/02/2015 | | | 11,747 | | | | $85.47 | | | 1/1/2025 | | | 5,873 | | | | $60.88 | | | 1/1/2025 |
| | | 01/02/2014 | | | 38,867 | | | | $83.58 | | | 1/1/2024 | | | 19,432 | | | | $59.53 | | | 1/1/2024 |
| | | 01/02/2013 | | | 10,725 | | | | $62.41 | | | 1/1/2023 | | | 5,362 | | | | $44.46 | | | 1/1/2023 |
| C. Nelson | | 01/03/2017 | | | 17,876 | | | | $82.35 | | | 1/2/2027 | | | 8,938 | | | | $58.66 | | | 1/2/2027 |
2021.
5Calculated by multiplying the number of unvested PSUs by $54.24, the NYSE closing price of Carrier common stock on the last trading day of 2021.
6SARs scheduled to vest on February 4, 2024, subject to the NEO’s continued service, except in certain limited circumstances as described in the footnotes to the Potential Payments on Termination or Change in Control Table.
7Additional annual SAR and RSU awards granted to Mr. Gitlin which will vest May 14, 2023, subject to continued service, except in certain limited circumstances as described in the footnotes to the Potential Payments on Termination or Change in Control Table.
8SARs granted as part of the Founder’s Grant scheduled to vest on May 14, 2023, subject to the NEO’s continued service, except in certain limited circumstances as described in the footnotes to the Potential Payments on Termination or Change in Control Table.
9SARs and RSUs scheduled to vest on February 4, 2023, subject to the NEO’s continued service, except in certain limited circumstances as described in the footnotes to the Potential Payments on Termination or Change in Control Table.
10SARs and RSUs, including the 2019 UTC PSUs that converted to Carrier RSUs upon Separation that vested on February 5, 2022.
11One time legacy RSU grant, which will vest in the event of a mutually agreeable separation following three years of grant date, upon death, disability or qualified termination following a change in control.
12SAR and RSU awards granted to Mr. Goris in connection with his hire, which will vest one-third per year on the anniversary of the grant date, subject to continued service or earlier as described in the footnotes to the Potential Payments on Termination or Change in Control Table.
13SAR and RSU awards granted to Mr. White in connection with his hire, which will vest one-third per year on the anniversary of the grant date, subject to continued service or earlier as described in the footnotes to the Potential Payments on Termination or Change in Control Table.
14Special Retention SAR and RSU awards granted to Mr. Nelson and Mr. Timperman, which will vest June 14, 2022, subject to continued service or earlier as described in the footnotes to the Potential Payments on Termination or Change in Control Table.
Option Exercises and Stock Vested
| | | OPTION AWARDS | | | STOCK AWARDS | |
| NAME | | NUMBER OF SHARES
ACQUIRED ON EXERCISE
(#)1 | | | VALUE REALIZED
ON EXERCISE
($)2 | | | NUMBER OF SHARES
ACQUIRED ON VESTING
(#)3 | | | VALUE REALIZED
ON VESTING
($)4 | |
| | | | | | | | | | | | | | | | | |
| D. Gitlin | | | 88,436 | | | | $6,038,182 | | | | 244,528 | | | | $11,599,735 | |
| P. Goris | | | – | | | | – | | | | – | | | | – | |
| K. O’Connor | | | – | | | | – | | | | – | | | | – | |
| D. Appel | | | – | | | | – | | | | 7,974 | | | | $1,072,299 | |
| C. Nelson | | | – | | | | – | | | | 15,478 | | | | $1,868,551 | |
| T. McLevish | | | – | | | | – | | | | – | | | | – | |
1 | SARs exercised during calendar year 2020, which includes pre-Separation and post-Separation exercise activity. |
2 | Calculated by multiplying the number of shares acquired on exercise by the difference between the market price of UTC common stock on the exercise date and the exercise price of the SAR. SARs included in this table were exercised before Separation. |
3 | PSUs and RSUs that vested in 2020, including shares settled to cover FICA taxes due during the year as a result of the NEOs meeting retirement eligible status under the Plan. UTC PSUs granted on January 3, 2017 vested at 114% of target on February 10, 2020, based on UTC’s performance through December 31, 2019. |
4 | Calculated by multiplying the number of vested PSUs and RSUs by the market price of UTC or Carrier common stock on the vesting date. |
56 | Carrier Global Corporation |
TableThis table reflects transactions that relate to Carrier equity only. | | | | | | | | | | | | | | |
| OPTION AWARDS | STOCK AWARDS |
| NAME | NUMBER OF SHARES ACQUIRED ON EXERCISE (#)1 | VALUE REALIZED ON EXERCISE ($)2 | NUMBER OF SHARES ACQUIRED ON VESTING (#)3 | VALUE REALIZED ON VESTING ($)4 |
| | | | |
| D. Gitlin | — | — | 163,081 | 6,158,926 | |
| P. Goris | — | — | 17,908 | 959,869 | |
| T. White | — | — | — | — |
| C. Nelson | — | — | 166,254 | 7,192,520 | |
| J. Timperman | 37,121 | 1,288,970 | | 66,752 | 2,976,847 | |
1SARs exercised during fiscal 2021.
2Calculated by multiplying the number of shares acquired on exercise by the difference between the market price of Carrier common stock on the exercise date and the exercise price of the SAR.
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - Compensation Tables
Table3RSUs that vested in 2021, including shares settled to cover FICA taxes due during the year as a result of Contentsthe NEOs meeting retirement eligible status under the LTI Plan.Compensation Tables
4Calculated by multiplying the number of vested RSUs by the market price of Carrier common stock on the vesting date.
Carrier inherited a frozen executive non-qualified pension plan upon Separation from
UTCUTC/RTX on April 3, 2020. Participants earn interest credits only.
For more information regarding Carrier’s non-qualified pension plans, please refer to the
Retirementsection "Retirement and Deferred Compensation
Benefits TableBenefits" beginning on page
45.39.
Plan participants may elect the following distribution options:
| | | | | | | | |
| PLAN | FAE BENEFIT FORMULA | CASH BALANCE BENEFIT FORMULA |
| | |
| | |
| Pension Preservation Plan | •▪Lump-sum1 payment
| Lump-sum1 payment | •▪
| Lump-sum payment |
| •▪
| Annuity payments | •▪
| Annuity payments |
| •▪
| Two- to 10-year annual installments | •▪
| Two- to 10-year annual installments |
| NEO Election | •▪
| Mr. Gitlin: Lump-sum payment | •▪
| Mr. Gitlin: Lump-sum payment |
| • | Mr. Appel: Annuity (monthly) payment | •▪
| Mr. Nelson2: Lump-sum payment |
| | | • | Mr. Appel: Lump-sum payment |
1 | Uses a discount rate equal to the Barclay’s Capital Municipal Bond Index averaged over five years (currently 2.010%). Note that this rate uses the November 30, 2020 yield in the average, which is consistent with ASC 715-30 year-end 2020 disclosure reporting. Actual lump sums paid in 2021 will be based on a PPP lump sum rate of 1.992% which uses the Barclay’s Capital Municipal Bond Index as of December 31, 2020. This non-taxable investment index is intended to yield an after-tax income stream on the net after-tax proceeds reinvested in tax-free bonds that are comparable to a more tax efficient annuity distribution. |
2 | Mr. Nelson was hired after 2001 and therefore his benefit under the PPP is only determined under the cash balance formula. |
1Uses a discount rate equal to the Barclay’s Capital Municipal Bond Index averaged over five years (currently 1.670%). Note that this rate uses the November 30, 2021 yield in the average, which is consistent with ASC 715-30 year-end 2021 disclosure reporting. Actual lump sums paid in 2022 will be based on a PPP lump sum rate of 1.668% which uses the Barclay’s Capital Municipal Bond Index as of December 31, 2021. This non-taxable investment index is intended to yield an after-tax income stream on the net after-tax proceeds reinvested in tax-free bonds that are comparable to a more tax efficient annuity distribution.
2Mr. Nelson was hired after 2001 and therefore his benefit under the PPP is only determined under the cash balance formula.
Under Carrier’s PPP, vesting requires three years of service. The normal retirement age under both the FAE and the Cash Balance benefit formulas is 65, but the FAE formula also provides full retirement benefits at age 62 for a participant who retires with at least 10 years of service. Early retirement benefits also are available under the FAE formula beginning at age 55 with at least 10 years of service, reduced by 0.2% for each month by which retirement precedes age 62. The value of the Cash Balance account is not impacted by an employee’s age at retirement. As of December 31,
2020, Mr. Appel was eligible for normal retirement and2021, none of the
other NEOs were eligible for early retirement under the FAE formula.
| NAME | | PLAN NAME | | NUMBER OF YEARS
OF CREDITED
SERVICE
(#) | | | PRESENT VALUE
OF ACCUMULATED
BENEFIT
($)1 | | | PAYMENTS DURING
LAST FISCAL YEAR
($) | |
| D. Gitlin4 | | Pension Preservation Plan | | | 22 | | | | 2,260,065 | | | | — | |
| P. Goris2 | | Pension Preservation Plan | | | — | | | | — | | | | — | |
| K. O’Connor2 | | Pension Preservation Plan | | | — | | | | — | | | | — | |
| D. Appel4 | | Pension Preservation Plan | | | 37 | | | | 2,698,779 | | | | — | |
| C. Nelson3,4 | | Pension Preservation Plan | | | 16 | | | | 527,968 | | | | — | |
| T. McLevish2 | | Pension Preservation Plan | | | — | | | | — | | | | — | |
1 | The following assumptions were used to determine the present value of the accumulated pension benefit: (i) the NEOs are assumed to retire at age 62 for the final average earnings benefit and age 65 for the cash balance benefit, which are the earliest dates at which the NEOs can retire without a reduction of benefits due to age; (ii) projected lump-sum payments under the PPP final average earnings benefit are calculated using 2.01% for 2021 retirements and grading up to an ultimate long-term interest rate of 4.0% (for retirements in 2025 and later years). Under the Employee Matters Agreement, for a 2-year period following the Separation, Messrs. Gitlin, Appel, and Nelson, who are participants in the UTC Retirement Plan, will have their years of service at Carrier recognized for purposes of eligibility for early retirement (the “Rule of 65” benefits and the “Rule of 100” benefits) under the UTC Employee Retirement Plan. These individuals will not be entitled to a distribution during such two-year period unless they are no longer employed by Otis, Carrier or RTX or any of their affiliates. However, none of these individuals are eligible to receive additional service credits (and/or years of service) for accrual purposes under the UTC Retirement Plan and the PPP. |
2 | Messrs. Goris, O’Connor and McLevish were hired by Carrier after January 1, 2010, and therefore do not participate in the PPP. |
3 | Mr. Nelson was hired after July 1, 2002 and therefore, his entire pension benefit is determined based on the cash balance formula. |
4 | The estimated lump-sum value of the nonqualified portion of the retirement benefits accrued under the PPP is $2,853,154, $426,124 and $2,726,991 for Messrs. Gitlin, Nelson and Appel, respectively, assuming retirement or termination on December 31, 2020, payable as of such date or attainment of age 55 (if later) assuming payment following December 31, 2020, on a lump-sum basis. |
| | | | | | | | | | | | | | |
| NAME | PLAN NAME | NUMBER OF YEARS OF CREDITED SERVICE (#) | PRESENT VALUE OF ACCUMULATED BENEFIT ($)1 | PAYMENTS DURING LAST FISCAL YEAR ($) |
D. Gitlin4 | Pension Preservation Plan | 22 | 2,259,433 | — |
P. Goris2 | Pension Preservation Plan | — | — | — |
T. White2 | Pension Preservation Plan | — | — | — |
C. Nelson3,4 | Pension Preservation Plan | 16 | 522,819 | — |
J. Timperman2 | Pension Preservation Plan | — | — | — |
1The following assumptions were used to determine the present value of the accumulated pension benefit: (i) the NEOs are assumed to retire at age 62 for the final average earnings benefit and age 65 for the cash balance benefit, which are the earliest dates at which the NEOs can retire without a reduction of benefits due to age; (ii) projected lump-sum payments under the PPP final average earnings benefit are calculated using 1.670% for 2022 retirements and grading up to an ultimate long-term interest rate of 4.0% (for retirements in 2026 and later years). There are no additional service credits for accrual purposes under the PPP. This table does not include our former parent company Employee Retirement Plan, which remained with UTC/RTX and has no relation to Carrier service following the Separation, except that under the Employee Matters Agreement, for a 2-year period following the Separation, participants in such plan (including Messrs. Gitlin and Nelson) will have their years of service at Carrier recognized for purposes of eligibility for early retirement (the “Rule of 65” benefits and the “Rule of 100” benefits) thereunder, but are not eligible to receive additional service credits (and/or years of service) for accrual purposes thereunder.
2Messrs. Goris and White were hired by Carrier after January 1, 2010, and therefore do not participate in the PPP. Mr. Timperman transitioned to a U.S.-based employee after January 1, 2010 and therefore does not participate in the PPP.
3Mr. Nelson was hired after July 1, 2002 and therefore, his entire pension benefit is determined based on the cash balance formula.
4The estimated lump-sum value of the nonqualified portion of the retirement benefits accrued under the PPP is $3,041,590 and $442,317 for Messrs. Gitlin and Nelson, respectively, assuming retirement or termination on December 31, 2021, payable as of such date or attainment of age 55 (if later) assuming payment following December 31, 2021, on a lump-sum basis.
| | | | | |
| 48 | Carrier Global Corporation |
Table of Contents
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - Compensation Tables
Nonqualified Deferred Compensation
Table
Carrier offers NEOs the opportunity to participate in the nonqualified deferred compensation programs described on page
45.| NAME | | PLAN1 | | EXECUTIVE
CONTRIBUTIONS
IN LAST FY
($)2 | | | REGISTRANT
CONTRIBUTIONS
IN LAST FY
($)3 | | | AGGREGATE
EARNINGS
IN LAST FY
($)4 | | | AGGREGATE
WITHDRAWALS/
DISTRIBUTIONS
($) | | | AGGREGATE
BALANCE
AS OF
DECEMBER 31,
2020
($)5 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| D. Gitlin | | Savings Restoration Plan | | | 112,400 | | | | 67,440 | | | | 443,781 | | | | — | | | | 1,842,015 | |
| | | Automatic Contribution Excess Plan | | | — | | | | 154,127 | | | | 37,657 | | | | — | | | | 191,784 | |
| P. Goris | | Deferred Compensation Plan | | | — | | | | — | | | | — | | | | — | | | | 0 | |
| | | Savings Restoration Plan | | | — | | | | — | | | | — | | | | — | | | | 0 | |
| | | Automatic Contribution Excess Plan | | | — | | | | — | | | | — | | | | — | | | | 0 | |
| K. O’Connor | | Automatic Contribution Excess Plan | | | — | | | | 17,258 | | | | 36 | | | | — | | | | 17,294 | |
| D. Appel | | Savings Restoration Plan | | | 26,343 | | | | 15,806 | | | | 59,067 | | | | — | | | | 290,452 | |
| | | Automatic Contribution Excess Plan | | | — | | | | 35,124 | | | | 3,307 | | | | — | | | | 38,431 | |
| C. Nelson | | Savings Restoration Plan | | | 37,700 | | | | 22,620 | | | | 286,724 | | | | — | | | | 1,147,894 | |
| | | Automatic Contribution Excess Plan | | | — | | | | 51,077 | | | | 10,030 | | | | — | | | | 61,107 | |
| T. McLevish | | Deferred Compensation Plan | | | 370,000 | | | | 38,740 | | | | 86,748 | | | | — | | | | 567,693 | |
| | | Savings Restoration Plan | | | 15,000 | | | | 3,930 | | | | 2,625 | | | | — | | | | 21,555 | |
| | | Automatic Contribution Excess Plan | | | — | | | | 34,100 | | | | 43 | | | | — | | | | 34,143 | |
1 | NEOs are eligible to participate in various deferred compensation plans as detailed above. |
2 | Amounts shown in this column are included in the Salary and Bonus columns of the Summary Compensation Table on page 50. |
3 | Amounts shown in this column are included in the All Other Compensation column of the Summary Compensation Table on page 50. |
4 | Amounts shown reflect hypothetical investment returns to accounts based on fixed income, bond and equity indices selected by the participant. |
5 | The sum of contributions (both by the NEO and Carrier) and credited earnings on those deferrals, less withdrawals. Of these totals, the following amounts have been included in the Summary Compensation Table in prior years: S494,800 (Mr. Gitlin); $80,040 (Mr. Nelson); and $70,334 (Mr. McLevish). |
58 | Carrier Global Corporation |
| | | | | | | | | | | | | | | | | | | | |
| NAME | PLAN1 | EXECUTIVE CONTRIBUTIONS IN LAST FY ($)2 | REGISTRANT CONTRIBUTIONS IN LAST FY ($)3 | AGGREGATE EARNINGS IN LAST FY ($)4 | AGGREGATE WITHDRAWALS/ DISTRIBUTIONS ($) | AGGREGATE BALANCE AS OF DECEMBER 31, 2021 ($)5 |
| | | | | | |
| D. Gitlin | Savings Restoration Plan | 64,500 | 38,700 | 591,759 | — | 2,536,974 |
| Automatic Contribution Excess Plan | — | 247,640 | 60,938 | — | 500,362 |
| P. Goris | Automatic Contribution Excess Plan | — | 24,578 | 1,743 | — | 26,322 | |
| T. White | Savings Restoration Plan | — | — | — | — | — |
| Automatic Contribution Excess Plan | — | — | — | — | — |
| C. Nelson | Savings Restoration Plan | 33,400 | 20,040 | 436,116 | — | 1,637,450 |
| Automatic Contribution Excess Plan | — | 90,014 | 17,992 | — | 169,112 |
| J. Timperman | Savings Restoration Plan | 29,900 | 17,940 | 51,613 | — | 296,752 |
| Automatic Contribution Excess Plan | — | 48,136 | 1,016 | — | 135,816 |
1NEOs are eligible to participate in various deferred compensation plans as detailed above. 2Amounts shown in this column are included in the Salary and Bonus columns of the Summary Compensation Table on page 44.
3Amounts shown in this column are included in the All Other Compensation column of Contentsthe Summary Compensation Tables
Table on page 44.
4Amounts shown reflect hypothetical investment returns to accounts based on fixed income, bond and equity indices selected by the participant.
5The sum of contributions (both by the NEO and Carrier) and credited earnings on those deferrals, less withdrawals. Of these totals, the following amounts have been included in the Summary Compensation Table in prior years: $828,767 (Mr. Gitlin); $191,437 (Mr. Nelson); and $89,425 (Mr. Timperman).
Potential Payments on Termination or Change in Control
Table
The table below estimates the value of payments and benefits that each NEO would have been entitled to receive had employment terminated on December 31,
2020,2021, under various hypothetical circumstances. Under Carrier’s programs, benefit eligibility and the value of benefits a NEO may receive vary depending on the reason for termination and whether the NEO is eligible for retirement at that time.
The equity amounts reflect the applicable unvested portion that would become vested as a result of the identified termination event.
Carrier does not provide automatic “single-trigger” accelerated vesting of equity compensation or excise tax gross-up payments to any NEOs in the event of a change in control of the
Company.company. Please see the Pension Benefits
tableand Nonqualified Deferred Compensation Table sections above for information regarding the amount and form of benefits that will be paid out in the event of a termination under the
PPP.| TERMINATION REASON | | D. GITLIN | | | P. GORIS | | | K. O’CONNOR | | | D. APPEL | | | C. NELSON | | | T. MCLEVISH | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Voluntary Termination | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash Payment | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Equity1,2 | | | $29,852,459 | | | | — | | | | — | | | | $6,680,771 | | | | $10,627,329 | | | | — | |
| Total due to Termination | | | $29,852,459 | | | | — | | | | — | | | | $6,680,771 | | | | $10,627,329 | | | | — | |
| Involuntary Termination (not for cause) | | | | | | | | | | | | | | | | | | | | | |
| Cash Payment | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Equity1,3 | | | $33,527,179 | | | | — | | | | — | | | | $6,680,771 | | | | $12,797,248 | | | | $13,082,826 | |
| Total due to Termination | | | $33,527,179 | | | | — | | | | — | | | | $6,680,771 | | | | $12,797,248 | | | | $13,082,826 | |
| Death or Disability4 | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash Payment5 | | | $1,800,000 | | | | — | | | | $518,579 | | | | $540,000 | | | | $585,000 | | | | $800,000 | |
| CEO Life Insurance6 | | | $4,855,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Equity1,7,8 | | | $64,874,931 | | | | $2,028,463 | | | | $12,636,760 | | | | $15,111,782 | | | | $34,968,690 | | | | $25,554,587 | |
| Total due to Termination | | | $71,529,931 | | | | $2,028,463 | | | | $13,155,339 | | | | $15,651,782 | | | | $35,553,690 | | | | $26,354,587 | |
| Termination Following a Change in control9 | | | | | | | | | | | | | | | | | | | | | |
| Cash Payment10 | | | $10,800,000 | | | | $2,800,000 | | | | $2,858,579 | | | | $3,055,000 | | | | $2,820,000 | | | | $4,000,000 | |
| Benefit Continuation and Other Programs11 | | | $51,809 | | | | $46,257 | | | | $46,014 | | | | $45,681 | | | | $45,923 | | | | $46,116 | |
| Equity1,12 | | | $64,874,931 | | | | $2,028,463 | | | | $12,636,760 | | | | $34,968,690 | | | | $15,111,782 | | | | $25,554,587 | |
| Total due to Termination | | | $75,726,740 | | | | $4,874,720 | | | | $15,541,353 | | | | $38,069,371 | | | | $17,977,705 | | | | $29,600,703 | |
Carrier offers NEOs the opportunity to participate in the nonqualified deferred compensation programs described on page 39.
| | | | | | | | | | | | | | | | | |
| TERMINATION REASON | D. GITLIN | P. GORIS | T. WHITE | C. NELSON | J. TIMPERMAN |
| | | | | |
| Voluntary Termination | | | | | |
| Cash Payment | $0 | $0 | $0 | $0 | $0 |
Equity1,2 | $66,133,005 | $0 | $0 | $17,874,829 | $0 |
| Total due to Termination | $66,133,005 | $0 | $0 | $17,874,829 | $0 |
| Involuntary Termination (not for cause) | | | | | |
Cash Payment3 | $0 | $1,787,500 | $1,440,000 | $0 | $0 |
Benefit Continuation and Other Programs4 | $53,709 | $46,711 | $47,968 | $47,254 | $43,102 |
Equity1,5 | $71,471,089 | $0 | $0 | $21,026,987 | $13,255,170 |
| Total due to Termination | $71,524,798 | $1,834,211 | $1,487,968 | $21,074,241 | $13,298,272 |
Death or Disability6 | | | | | |
Cash Payment7 | $2,080,000 | $715,000 | $540,000 | $603,000 | $540,000 |
CEO Life Insurance8 | $7,000,000 | $0 | $0 | $0 | $0 |
Equity1,9,10 | $102,110,853 | $8,158,028 | $1,682,525 | $50,336,632 | $44,325,539 |
| Total due to Termination | $111,190,853 | $8,873,028 | $2,222,525 | $50,939,632 | $44,865,539 |
Termination Following a Change in control11 | | | | | |
Cash Payment12 | $12,220,000 | $3,575,000 | $2,820,000 | $3,149,000 | $2,820,000 |
Benefit Continuation and Other Programs13 | $53,709 | $46,711 | $47,968 | $47,254 | $43,102 |
Equity1,14 | $107,126,968 | $8,158,028 | $1,682,525 | $52,844,690 | $46,833,597 |
| Total due to Termination | $119,400,677 | $11,779,739 | $4,550,493 | $56,040,944 | $49,696,699 |
1Equity awards are valued based on the closing price of Carrier common stock on the NYSE on the last trading day of 2021 ($54.24). For SARs, that value is based on the difference between the closing price and the exercise price (as long as that value is positive) multiplied by the number of SARs. For the 2021 PSU portion of the
1 | Equity awards are valued based on the closing price of Carrier common stock on the NYSE on the last trading day of 2020 ($37.72). For the 2020 PSU portion of the Founder’s Grant, values shown reflect target performance as of December 31, 2020. | | | | |
2 | In the event of voluntary termination, SAR and RSU awards granted under Carrier’s annual LTI Plan that are outstanding for more than one year will vest only after attaining qualifying retirement under the LTI Plan (defined as either: (i) age 65; (ii) age 55 plus 10 years of service; or (iii) “Rule of 65” — age 50 to 54 plus years of service add up to 65 or more). For NEOs who have attained qualifying retirement status, PSUs granted under Carrier’s annual LTI Plan that are outstanding for more than one year will remain eligible to vest at the completion of the performance period to the extent performance targets are achieved and PSUs that were converted to RSUs upon the Separation will remain eligible to vest on the third anniversary of the grant date. Messrs. Gitlin, Nelson, and Appel have satisfied a qualifying retirement condition. For non-retirement eligible NEOs, all unvested awards are cancelled. With the exception of Mr. Appel’s 2020 RSU retention award and Mr. McLevish’s new hire 2019 SAR and RSU awards, special out-of-cycle awards (SARs, RSUs and PSUs) and one-time RSU awards do not have retirement eligibility treatment and, therefore, forfeit upon voluntary termination. Mr. Appel’s 2020 RSU award provides for vesting in the event of his Retirement on or after June 1, 2022. Mr. McLevish’s 2019 SAR and RSU awards provide for vesting in the event of his Retirement on or after October 31, 2021. |
3 | In the event of involuntary termination (not for cause), for NEOs who have attained qualifying retirement status, SAR and RSU awards granted under Carrier’s annual LTI Plan that are outstanding for more than one year will vest. PSUs granted under Carrier’s annual LTI Plan that are outstanding for more than one year will remain eligible to vest at the completion of the performance period to the extent performance targets are achieved and PSUs that were converted to RSUs upon the Separation will remain eligible to vest on the third anniversary of the grant date. For NEOs who have not yet qualified for retirement, but have awards granted under Carrier’s annual LTI Plan that are outstanding for more than one year, a pro-rata portion of SARs and RSUs will vest. A pro-rata portion of annual PSU awards will remain eligible to vest at the completion of the performance period to the extent performance goals are achieved and PSUs that converted to RSUs upon the Separation will remain eligible to vest on the third anniversary of the grant date. Special out-of-cycle awards (SAR, RSU, and PSU) and one-time RSU awards do not have retirement eligibility treatment and, therefore, forfeit upon involuntary termination (not for cause), except for Mr. McLevish’s new hire 2019 SAR and RSU awards. In the event of involuntary termination (not for cause), Mr. McLevish’s 2019 RSU and SAR awards vest immediately. One-time RSUs will vest in the case of mutually agreeable separation following three years of service from the date of grant. As of December 31, 2020, Messrs. Gitlin and Nelson have met the service condition. |
4 | Messrs. Gitlin, O’Connor, Appel and Nelson are also eligible for a grandfathered long-term disability benefit equal to 80% of their base salary plus target bonus compensation as part of the Legacy UTC Compensation Arrangement. |
20212022 Proxy Statement | 5949 |
Proposal 2: Advisory Vote to Approve Named Executive Officer Compensation - CEO Pay Ratio
annual grant, values shown reflect target performance as of December 31, 2021. For the 2020 PSU portion of the Founder's Grant, values shown reflect maximum performance as of December 31, 2021.
2In the event of voluntary termination, SAR and RSU awards granted under Carrier’s annual LTI Plan that are outstanding for more than one year will vest only after attaining qualifying retirement under the LTI Plan (defined as either: (i) age 65; (ii) age 55 plus 10 years of service; or (iii) “Rule of 65” — age 50 to 54 plus years of service add up to 65 or more). For NEOs who have attained qualifying retirement status, PSUs granted under Carrier’s annual LTI Plan that are outstanding for more than one year will remain eligible to vest at the completion of the performance period to the extent performance targets are achieved and PSUs that were converted to RSUs upon the Separation will remain eligible to vest on the third anniversary of the grant date. Messrs. Gitlin and Nelson have satisfied a qualifying retirement condition. For non-retirement eligible NEOs, all unvested awards are cancelled, and vested SARs may be exercised up to 90 days following separation. Special out-of-cycle awards (SARs, RSUs and PSUs) and one-time RSU awards do not have retirement eligibility treatment and, therefore, forfeit upon voluntary termination.
3In the event of a qualifying involuntary termination (not for cause), the Senior Executive Severance Plan provides cash severance based on the NEO’s annual base salary in effect at the time of termination in the amount of (i) two times annual base salary for the CEO, and (ii) one and one-half times annual base salary for all other NEOs. The Senior Executive Severance Plan also provides for a pro-rated payout of the NEO’s target annual bonus based on the number of days worked in the fiscal year up until the date of termination. Messrs. Gitlin, Nelson, and Timperman would receive a cash severance payment if the value of their one-time RSU awards is less than what the cash severance payment would be under the Senior Executive Severance Plan, reduced by the value of the one-time RSU award at termination.
4In the event of an involuntary termination not for cause, the Senior Executive Severance Plan provides for the continuation of medical benefits and financial planning services for 12 months following the termination. The Senior Executive Severance Plan also provides for 12 months of outplacement services for each NEO.
5In the event of involuntary termination (not for cause), for NEOs who have attained qualifying retirement status, SAR and RSU awards granted under Carrier’s annual LTI Plan that are outstanding for more than one year will vest. PSUs granted under Carrier’s annual LTI Plan that are outstanding for more than one year will remain eligible to vest at the completion of the performance period to the extent performance targets are achieved and PSUs that were converted to RSUs upon the Separation will remain eligible to vest on the third anniversary of the grant date. For NEOs who have not yet qualified for retirement, but have awards granted under Carrier’s annual LTI Plan that are outstanding for more than one year, a pro-rata portion of SARs and RSUs will vest. A pro-rata portion of annual PSU awards will remain eligible to vest at the completion of the performance period to the extent performance goals are achieved and PSUs that converted to RSUs upon the Separation will remain eligible to vest on the third anniversary of the grant date. Special out-of-cycle awards (SAR, RSU, and PSU) and one-time RSU awards do not have retirement eligibility treatment and, therefore, forfeit upon involuntary termination (not for cause). One-time RSUs will vest in the case of mutually agreeable separation following three years of service from the date of grant. As of December 31, 2021, Messrs. Gitlin, Nelson, and Timperman have met the service condition.
6Messrs. Gitlin, Nelson and Timperman are also eligible for a grandfathered long-term disability benefit equal to 80% of their base salary plus target bonus compensation as part of the Legacy UTC Compensation Arrangement.
7The NEO in the event of disability, or in the event of the NEO’s death, the estate of the NEO, would be eligible to receive a pro-rated payout of the annual bonus at target.
8In the event of the death of our CEO, Mr. Gitlin, the CEO Life Insurance Policy provides a death benefit the beneficiary would be paid assuming the insured’s death occurs at the end of the policy year.
9In the event of a termination due to death, the LTI Plan provides for the accelerated vesting of all outstanding equity awards as of the date of death (including awards outstanding for less than one-year, special out-of-cycle and one-time RSU awards). For the PSU portion of awards, values shown reflect target performance as of December 31, 2021.
10In the event of a termination due to disability, the LTI Plan provides that no outstanding awards will be forfeited (including awards outstanding for less than one year and one-time awards). Awards granted by UTC prior to January 1, 2019 will continue to vest in accordance with their terms that applied prior to the Separation. Awards granted by after January 1, 2019 will continue to vest on the earlier of (i) the vesting date specified in the schedule of terms; or (ii) 29 months following the date the NEO incurs the disability. For the PSU portion of awards, values shown reflect target performance as of December 31, 2021.
11In the event the payments would be subject to the golden parachute excise tax under IRC Section 280G, the Change in Control Severance Plan provides that the NEO will either receive all such payments and benefits and pay the excise tax, or such payments and benefits will be reduced to the extent necessary so that the excise tax does not apply, whichever approach results in a higher after-tax amount of the payments and benefits being retained by the NEO. Given the uncertainty of these calculations, this table does not reflect the impact of the better net after-tax calculation.
12In the event of a qualifying termination following a change in control, the Change in Control Severance Plan provides cash severance based on the NEO’s annual base salary and target annual bonus in effect at the time of termination in the amount of (i) three times annual base salary plus target annual bonus for the CEO, and (ii) two times annual base salary plus target annual bonus for all other NEOs. The Change in Control Severance Plan also provides for a pro-rated payout of the NEO’s target annual bonus based on the number of days worked in the fiscal year up until the date of termination.
13In the event of a qualifying termination following a change in control, the Change in Control Severance Plan provides for the continuation of medical benefits and financial planning services for 12 months following the termination. The Change in Control Severance Plan also provides for 12 months of outplacement services for each NEO.
14In the event of a qualifying termination following a change in control, the LTI Plan provides for the accelerated vesting of all outstanding equity awards (including awards outstanding for less than one year and one-time awards). PSUs granted under the LTI Plan vest at the greater of target or actual performance. For the 2021 PSU portion of the annual grant, values shown reflect target performance as of December 31, 2021. For the 2020 PSU portion of the Founder's Grant, values shown reflect maximum performance as of December 31, 2021.
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Compensation Tables
5 | The NEO in the event of disability, or in the event of the NEO’s death, the estate of the NEO would be eligible to receive a pro-rated payout of the annual bonus at target. Mr. Goris was ineligible for the 2020 annual bonus based on the timing of his start date in 2020. | | | | |
6 | In the event of the death of our CEO, Mr. Gitlin, the CEO Life Insurance Policy provides a death benefit amount made up of premiums paid and credited interest, minus policy charges and partial surrenders to be paid to the beneficiary assuming the insured’s death occurs at the end of the policy year. |
7 | In the event of a termination due to death, the LTI Plan provides for the accelerated vesting of all outstanding equity awards as of the date of death (including awards outstanding for less than one-year, special out-of-cycle and one-time RSU awards), and the PSU portion of the Founder’s Grant will vest at target. |
8 | In the event of a termination due to disability, the LTI Plan provides that no outstanding awards will be forfeited (including awards outstanding for less than one year and one-time awards). Awards granted by UTC prior to January 1, 2019 will continue to vest in accordance with their terms that applied prior to the Separation. Awards granted by UTC after January 1, 2019 and prior to the Separation will continue to vest on the earlier of (i) the vesting date specified in the schedule of terms; or (ii) 29 months following the date the NEO incurs the disability. For the PSU portion of the Founder’s Grant values included reflect target performance as of December 31, 2020. |
9 | In the event the payments would be subject to the golden parachute excise tax under IRC Section 280G, the Change in Control Severance Plan provides that the NEO will either receive all such payments and benefits and pay the excise tax, or such payments and benefits will be reduced to the extent necessary so that the excise tax does not apply, whichever approach results in a higher after-tax amount of the payments and benefits being retained by the NEO. |
10 | In the event of a qualifying termination following a change in control, the Change in Control Severance Plan provides cash severance based on the NEO’s annual base salary and target annual bonus in effect at the time of termination in the amount of (i) three times annual base salary plus target annual bonus for the CEO, and (ii) two times annual base salary plus target annual bonus for all other NEOs. The Change in Control Severance Plan also provides for a pro-rated payout of the NEO’s target annual bonus based on the number of days worked in the fiscal year up until the date of termination. |
11 | In the event of a qualifying termination following a change in control, the Change in Control Severance Plan provides for the continuation of medical benefits and financial planning services for 12 months following the termination. The Change in Control Severance Plan also provides for 12 months of outplacement services for each NEO. |
12 | In the event of qualifying termination following a change in control, the LTI program provides for the accelerated vesting of all outstanding equity awards (including awards outstanding for less than one year and one-time awards). PSUs granted under the LTI Plan vest at the greater of target or actual performance. Amounts shown for the PSU portion of the Founder’s Grant assumes target performance as of December 31, 2020. |
6050 | Carrier Global Corporation |
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Proposal 2: Advisory Vote to Approve NEO Compensation - CEO Pay Ratio
CEO Pay Ratio
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted a rule requiring companies to disclose the ratio of the median employee’s total annual compensation relative to total annual compensation of the CEO. The following section explains the methodology that we used, in accordance with the SEC rules, to identify the median employee and to calculate the
20202021 ratio.
How We Identified the Median Employee
As permitted under SEC rules, Carrier used the same median employee that it used in its disclosure for fiscal year 2020 since during the company’s last completed fiscal year (2021) there has been no material change to its employee population or employee compensation arrangements that it reasonably believes would result in a significant change to its pay ratio disclosure.
Carrier used the following parameters
for fiscal year 2020 to identify the employee whose pay was at the median of all Carrier employees globally.
Consistently Applied Compensation Measure
The compensation measure we used to identify the median employee was gross cash compensation paid to employees from October 1, 2019 to September 30, 2020. Gross cash compensation varies by country and is based on local pay practices, but generally includes:
• | Base salary (including any local allowances) |
• | Incentive pay (including cash bonuses, sales incentives and other variable pay programs) |
• | Any other cash awards or payments1 |
▪Base salary (including any local allowances)
▪Incentive pay (including cash bonuses, sales incentives and other variable pay programs)
▪Any other cash awards or payments1
For the purposes of identifying the median employee, we included all active Carrier employees (excluding the CEO) on October 1, 2020, located in 40 countries in which Carrier has operations. Carrier’s employee population in these 40 countries represents approximately 95% of active employees on that date. As of October 1, 2020, Carrier’s global population consisted of approximately 56,000 regular workers at Carrier of which 11,583 were U.S. based.
We excluded 2,912 employees from 9nine countries under the SEC’s de minimis exemption22. Methodology and Material Assumptions
Annualized pay. Pay was annualized for employees who worked a partial year between October 1, 2019 and September 30, 2020. Partial-year employees include mid-year hires, employees on paid or unpaid leave, and employees on active military duty. Foreign exchange rates. Foreign currencies were converted into U.S. dollars as of October 1, 2020, based on the average daily spot rates during September 2020.1 | In some countries, due to differences in payroll systems and local laws and regulations, gains realized on the vesting and/or exercise of equity awards, as well as Company contributions to government-sponsored benefit plans, may be included. |
2 | The countries and approximate number of Carrier employees excluded from the calculation are as follows: Argentina (8), Brazil (301), Hungary (411), Kuwait (97), Malaysia (403), Poland (1,175), Russia (19), Thailand (415), and Vietnam (83). |
1In some countries, due to differences in payroll systems and local laws and regulations, gains realized on the vesting and/or exercise of equity awards, as well as company contributions to government-sponsored benefit plans, may be included
2The countries and approximate number of Carrier employees excluded from the calculation are as follows: Argentina (8), Brazil (301), Hungary (411), Kuwait (97), Malaysia (403), Poland (1,175), Russia (19), Thailand (415), and Vietnam (83).
Summary Compensation Table Values
Once we identified the median employee using gross cash compensation as the compensation measure, 2020
2021 total compensation was calculated for the CEO and the median employee for the full year using the same methodology required by the SEC for reporting in the Summary Compensation Table (see page
50)44). For the CEO and the median employee, the Summary Compensation Table values include employee fringe benefits, such as
Companycompany contributions to healthcare and retirement plans.
The
20202021 total annual compensation value for Mr. Gitlin was
$15,440,951$14,892,815 and for Carrier’s global median employee was
$63,371,$66,377, resulting in a ratio of
244:224:1.
Comparing Carrier’s Ratio to Other Companies
This ratio is a reasonable estimate calculated using a methodology consistent with the SEC rules, as described above. Because applicable SEC rules permit various methodologies, assumptions and exclusions, our CEO pay ratio may not be comparable to ratios calculated and disclosed by other companies.
2021 | | | | | |
| 2022 Proxy Statement | 61 |
Report of the Audit Committee
The Audit Committee assists the Board in its oversight responsibilities relating to: the integrity of Carrier’s financial statements; the independence, qualifications and performance of Carrier’s internal and external auditors; the
Company’scompany’s compliance with its policies and procedures, internal controls, code of business conduct and ethics for directors, officers and employees (“Our Code of Ethics”)
, and applicable laws and regulations; policies and procedures with respect to risk assessment and management; and such other responsibilities as delegated by the Board from time to time. The Audit Committee’s specific responsibilities and duties are set forth in the Audit Committee Charter, which is available on the
Company’scompany’s website (see page
20)7).
Management has the primary responsibility for the financial statements and the financial reporting processes, including the system of internal accounting controls. PricewaterhouseCoopers LLP (“PwC”), an independent registered public accounting firm and the
Company’scompany’s independent auditor, is responsible for expressing an opinion on the conformity of the
Company’scompany’s audited financial statements with generally accepted accounting principles in the
U.S.United States (“GAAP”)
. and on the effectiveness of the company's internal control over financial reporting.
In performing its oversight responsibilities, the Committee has reviewed and discussed with management and the independent auditor the
Company’scompany’s audited financial statements for the year ended December 31,
2020.2021, as well as the representations of management and the independent auditor's opinion thereon regarding the company's internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act. The Committee discussed with PwC and Carrier’s internal auditors the overall scope and plans for their respective audits. The Committee met with PwC and the internal auditors, with and without management present, to discuss the results of their examinations,
the evaluation of Carrier's internal controls, management's representations regarding internal control over financial reporting and the overall quality of Carrier’s financial reporting.
The Committee has discussed with PwC the matters required by the Public Company Accounting and Oversight Board’s (“PCAOB”) Auditing Standard No. 1301, Communications with Audit Committees. It also has discussed with PwC its independence from Carrier and its management, including the written disclosures and letter from PwC required by the PCAOB’s Rule 3526, Communication with Audit Committees Concerning Independence,, as approved by the SEC. The Committee has concluded that PwC’s provision of non-audit services as described in the table on page 6353 is compatible with PwC’s independence. PwC represented to the Committee that Carrier’s audited financial statements were fairly presented in accordance with GAAP. Based on the reviews and discussions referred to above, the Committee has recommended to the Board that the audited financial statements be included in Carrier’s Annual Report on Form 10-K for the year ended December 31,
20202021, filed with the SEC. The Committee
nominatesrecommended to the Board, and the Board approved, the appointment of the firm of PwC
for appointment by the shareowners as Carrier’s independent auditor for
2021.2022.
Charles M. Holley, Jr. Chair
Michael M. McNamara
Michael A. Todman
Virginia M. Wilson
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| 52 | Carrier Global Corporation |
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Proposal 3: Appoint an Independent Auditor for 2021
|
Ratify Appointment of Independent Auditor for 20212022 As required by our Bylaws, we are asking shareowners to vote on a proposal to appointratify the appointment of a firm of independent registered public accountants to serve as Carrier’s independent auditor until the next annual meeting. PwC, an independent registered public accounting firm, served as Carrier’s independent auditor in 2020,2021, and the Audit Committee has nominated,appointed, and the Board has approved, the firm for appointment by the shareowners to serve again as Carrier’s independent auditor for 20212022 until the next Annual Meeting in 2022.2023, subject to shareowner ratification. |
|
Frequently Asked Questions About the Auditor
How Is the Auditor Reviewed by the Company?
The Audit Committee is directly responsible for the
nomination,appointment, compensation, retention and oversight of the
Company’scompany’s independent auditor. To fulfill this responsibility, the Committee engages in a comprehensive annual evaluation of the independent auditor’s qualifications, performance and independence, and
will periodically
considerconsiders the advisability and potential impact of selecting a different independent registered public accounting firm to serve in that capacity.
Is the Audit Partner Rotated?
In accordance with SEC rules and PwC policies, audit partners are subject to rotation requirements that limit the number of consecutive years a partner may provide service to our
Company.company. For lead and concurring audit partners, the maximum number of consecutive years of service in that role is
five years.five. The selection process for the lead audit partner pursuant to this rotation policy would include a meeting between the Chair of the Audit Committee and the candidate as well as consideration of the candidate by the full Committee and with management.
Will the Auditor Participate in the Annual Meeting?
Representatives of PwC will
participate inattend the
20212022 Annual Meeting. They will be available to respond to appropriate shareowner questions and will have the opportunity to make a statement if they
wantdesire to do so.
What Happens if Shareowners
do notDo Not Ratify the Appointment of PwC?
The vote is an advisory vote, and, therefore, it is not binding. The Board, however, would reconsider the appointment if the proposal is rejected by shareowners.
What Were the Auditor’s Fees in
2021 and 2020?
| (IN THOUSANDS) | AUDIT | | AUDIT-RELATED | | TAX | | ALL OTHER FEES | | TOTAL |
| 2020 | $16,724 | | $1,834 | | $2,011 | | $5 | | $20,574 |
Due to the Separation, no fees are reflected for Carrier for the year ended December 31, 2019.
| | | | | | | | | | | | | | | | | |
| (IN THOUSANDS) | AUDIT($) | AUDIT-RELATED($) | TAX($) | ALL OTHER FEES($) | TOTAL($) |
| 2020 | 16,724 | | 1,834 | | 2,011 | | 5 | | 20,574 | |
| 2021 | 19,338 | | 377 | | 5,500 | | 60 | | 25,275 | |
Audit Fees.Fees in 2021 and 2020 include fees for the audit of Carrier’s consolidated annual financial statements, the review of interim financial statements in Carrier’s quarterly reports on Form 10-Q and the performance of audits in accordance with statutory requirements. Fees in 2021 also include fees for the audit of the effectiveness of Carrier's internal control over financial reporting. Audit fees for statutory audits were $6.4 million in 2021 and $6.9 million.million in 2020, respectively.
Audit-Related Fees.Fees in 2021 and 2020 include audit-related fees for employee benefit plan audits, advice regarding the application of generally accepted accounting principles for proposed transactions, special reports pursuant to agreed-upon procedures, contractually required audits and compliance assessments, and pre-implementation reviews of processes or systems. 2021 | | | | | |
| 2022 Proxy Statement | 63 |
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Proposal 3:
Appoint anRatify Appointment of Independent Auditor for
20212022
Tax Fees. In 2020,2021, tax fees included approximately $466,000$1.0 million for U.S. and non-U.S. tax compliance, related planning and assistance with tax refund claims and expatriate tax services, and approximately $1.545$4.5 million for tax consulting and advisory services. In 2020, tax fees included approximately $0.5 million for U.S. and non-U.S. tax compliance, related planning and assistance with tax refund claims and expatriate tax services, and approximately $1.5 million for tax consulting and advisory services.
All Other Fees. In both 2021 and 2020, all other fees primarily consisted of accounting research software. How Does the Committee Monitor and Control Non-Audit Services?
The Audit Committee has adopted procedures requiring its review and approval in advance of all non-audit services provided by the
Company’scompany’s independent auditor. All of the engagements and fees for
2021 and 2020 were approved by the Committee. The Committee reviews with PwC whether the non-audit services to be provided are compatible with maintaining the firm’s independence. The Board also has adopted the policy that in any year fees paid to the independent auditor for non-audit services shall not exceed the fees paid for audit and audit-related services. Non-audit services consist of those described above, as included in the tax fees and all other
feesfee categories.
Why Should I Vote For This Proposal?
The Audit Committee and the Board believe that the continued retention of PwC as our independent auditor is in the best interest of the
Companycompany and our shareowners.
| | |
The Board of Directors recommends a vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP to serve as the Company’scompany’s independent auditor for 20212022. |
64 | | | | | |
| 54 | Carrier Global Corporation |
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Proposal 4: Advisory Vote on the Frequency of Future Advisory Votes to Approve Named Executive Officer Compensation
PROPOSAL 4
Advisory Vote on the Frequency of Future Advisory Votes to Approve Named Executive Officer Compensation
WHAT AM I VOTING ON?
As required by federal securities law, the Board requests your advisory vote on the intervals at which shareowners should vote to approve the compensation of Carrier’s NEOs – whether every year, every two years or every three years. We are required to seek an advisory vote every six years. Although your vote on this frequency proposal is advisory and, thus, not binding on the Board, the Board will consider the outcome of the shareowner vote in making its decision.
The Board believes that an advisory vote on NEO compensation that occurs every year is the most appropriate option. An annual “Say-on-Pay” vote allows shareowners to provide frequent, direct input to the Company regarding its compensation philosophy, policies and practices. Holding the vote at one-year intervals also enhances shareowner communication by providing a clear, simple means for Carrier to ascertain general investor sentiment regarding its executive compensation program.
|
| The Board of Directors Recommends an Annual Shareowner Advisory Vote on the Compensation of Carrier’s Named Executive Officers. |
Table of Contents
FREQUENTLY ASKED QUESTIONS ABOUT THE ANNUAL MEETING
| | | | | |
YOUR VOTE
is
important | Why amAm I Being Provided with theseThese Proxy Materials? We are providing these proxy materials to you in connection with the solicitation by the Board of proxies to be voted at our 20212022 Annual Meeting of Shareowners and at any postponed or reconvened meeting. |
When and Where
isIs the Annual Meeting?
We will hold our Annual Meeting on April
19, 2021,14, 2022, at 8 a.m. Eastern time. In light of the COVID-19 pandemic, the Annual Meeting will be held in a virtual format to protect the health of our shareowners, directors and employees.
The virtual meeting website is www.virtualshareholdermeeting.com/
CARR2021.CanCARR2022.
How May I Attend the Meeting?
You will be able to attend the meeting virtually, but not in person. Because of the ongoing COVID-19 pandemic, we have adopted the virtual format to provide a safe experience for all attendees. If you owned shares of Carrier common stock at the close of business on February 22,
2021,2022, which is referred to as the “record date,” you
canmay participate from any geographic location with internet connectivity through a live audio webcast at www.virtualshareholdermeeting.com/
CARR2021.CARR2022. Once on that website you will need to log in using the control number on your proxy card, voting instruction form or notice regarding the availability of proxy materials. You may log into the meeting’s website beginning at 7:45 a.m. Eastern time on April
19.14, 2022.
How Can I Participate During the Meeting?
The virtual Annual Meeting will allow our shareowners of record to participate from any geographic location with internet connectivity, and, inconnectivity. In structuring the format of the meeting, our goal has been to enhance rather than constrain shareowner participation. To this end, shareowners will have an opportunity to vote and submit questions in writing online before and during the Annual Meeting through the www.virtualshareholdermeeting.com/CARR2021CARR2022 website, which can be accessed by following the instructions above (see Can"How May I Attend the Meeting?"). During the meeting, we will answer questions relevant to meeting matters that comply with the meeting’s procedures, which also will be available on the website. We believe that shareowner participation opportunities will be reasonably comparable to those that would be available at an in-person meeting. If you have an individual concern that is not of general concern to all shareowners, or if a question posed was not otherwise answered, please contact Carrier Investor Relations at investorrelations@carrier.com or
561-365-2020.1-561-365-2020.
Who Can Vote During the Meeting?
All shareowners are entitled to vote before or during the Annual Meeting if youthey owned shares of Carrier common stock on the record date. Please see below (How"How Do I Vote?) " on page 56for more information about voting before or during the meeting. Does the Company Have a Policy Requiring
thatThat Directors Attend Annual Meetings?
The
Companycompany does not have a written policy requiring that directors attend the Annual Meeting, but directors are encouraged to do so unless there is an unavoidable scheduling conflict. This year, while the
Companycompany is not hosting an in-person meeting, directors are similarly encouraged to participate unless they have a
such a conflict.
Seven of our eight directors at the time attended the 2021 Annual Meeting, which was held virtually; the eighth director was unable to attend due to technical difficulties.
What is the Quorum Requirement for the Annual Meeting?
Under the
Company’scompany’s Bylaws, a quorum is required to transact business at the Annual Meeting. The
holdersowners of a majority of the outstanding shares of Carrier common stock as of the record date, present either in person or by proxy and entitled to vote, will constitute a quorum. As of the record date,
869,283,513853,006,593 shares of Carrier common stock were issued and outstanding.
66 | Carrier Global Corporation |
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Frequently Asked Questions About the Annual Meeting
| | | | | |
| | |
|
 | |  |
BY THE INTERNET
Before the meeting you can vote online at: www.proxyvote.com. 
VOTE BY TELEPHONE
In the United States or Canada, you can vote by using any touch-tone telephone and calling the phone number shown on your voting materials. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. Internet and telephone voting facilities will be available 24 hours a day until 11:59 p.m. Eastern time on April 18, 2021.13, 2022. To authenticate your internet or telephone vote, you will need to enter your voter control number as shown on the voting materials you received. If you vote online or by telephone, you do not need to return a proxy card or voting instruction card.
| | VOTE BY MAIL
You can mail the proxy card or voting instruction form enclosed with your printed proxy materials. Mark, sign and date your proxy card or voting instruction form, and return it in the prepaid envelope we have provided or in an envelope addressed to: Vote Processing c/o Broadridge Financial Solutions 51 Mercedes Way Edgewood, NY 11717 Please allow sufficient time for the delivery of your proxy card if you vote by mail. 
VOTE DURING THE ANNUAL MEETING
During the meeting go to www.virtualshareholdermeeting.com/ CARR2021CARR2022 and log in using your voter control number. See page 6655 for more information about the virtual meeting. If you have already voted online, by telephone or by mail, then your vote during the Annual Meeting will supersede your earlier vote.
|
| | |
If you own shares in street name through an account with a bank, brokerage firm or other intermediary, then your intermediary will send you printed copies of the proxy materials or provide instructions on how to access proxy materials electronically. You are entitled to direct the intermediary how to vote your shares by following the voting instructions that the intermediary provides to you.
| | | | | |
| 56 | Carrier Global Corporation |
Frequently Asked Questions About the Annual Meeting
If you are a registered shareowner:
| | | | | |
| | •
|
▪If you voted by telephone or the internet, access the method you used and follow the instructions given for revoking a proxy. | proxy •▪
| Write to the Carrier Corporate Secretary (see page 70 for contact information) providing your name and account information, but allow sufficient time for delivery. | |
| | | | | |
| • | If you mailed a signed proxy card, mail a new proxy card with a later date, (whichwhich will override your earlier proxy card).card | •▪
| Write to the Carrier Corporate Secretary (see page 59 for contact information) providing your name and account information, but allow sufficient time for delivery ▪Vote during the virtual Annual Meeting. | Meeting |
| | | | | |
|
If you are a beneficial shareowner, ask your bank, brokerage firm or other intermediary about how to revoke or change your voting instructions.
Table of Contents
Frequently Asked Questions About the Annual Meeting
How Will My Shares beBe Voted?
Each share of Carrier common stock is entitled to one vote. Your shares will be voted in accordance with your instructions. In addition, if you have returned a signed proxy card or submitted voting instructions by telephone or the internet, the proxy holders – who are the individuals identified on your proxy card – will have the discretion to vote your shares on any matters not identified in this Proxy Statement that are brought to a vote at the Annual Meeting.
Shareowners are not permitted to vote for a greater number of persons for election as directors than the number of nominees named in this Proxy Statement.
If your shares are registered in your name and you sign and return a proxy card or vote by telephone or the internet but do not give voting instructions on a particular matter, the proxy holders will be authorized to vote your shares on that matter in accordance with the Board’s recommendation. If you hold your shares through an account with a broker and do not give voting instructions on a matter, your broker is permitted under NYSE rules to vote your shares in its discretion only on Proposal 3
(Appointment(Ratify Appointment of
thePricewaterhouseCoopers LLP to Serve as Independent
Auditor)Auditor for 2022) and is required to withhold a vote on each of the other Proposals, resulting in a so-called “broker non-vote.” The impact of abstentions and broker non-votes on the overall voting results is shown in the table below.
How Do Voting Abstentions and Broker Non-Votes Affect the Voting Results?
MATTER | | | | | | | | | | | |
| | | | |
| MATTER | VOTE REQUIRED FOR
APPROVAL | | | IMPACT OF
ABSTENTIONS | | | IMPACT OF BROKER
NON-VOTES |
| Election of Directors | | | Votes FOR a nominee must exceed 50% of the votes cast for that nominee. | | cast. | Not counted as votes cast. No impact on outcome. | | | Not counted as votes cast. No impact on outcome. |
| Advisory Vote to Approve Named Executive Officer Compensation | | | Approval by a majority ofVotes FOR the proposal must exceed votes making up the quorum. | | AGAINST it. | Counted toward quorum. Impact is same as a vote AGAINST. | | | Not counted as votes cast. No impact on outcome. |
AppointRatify Appointment of PricewaterhouseCoopers LLP to Serve as Independent Auditor for 20212022 | | | Approval byVotes FOR the proposal must be a majority of the votes making up the quorum. | | present. | Counted toward quorum. Impact is the same as a vote AGAINST. | | | Not applicable for reason explained above. |
Advisory Vote on the Frequency of Future Shareowner Votes to Approve Named Executive Officer Compensation | | | The option for which the greatest number of votes is cast. | | |
| 2022 Proxy Statement | Not counted as votes cast. No impact on outcome. | | | Not counted as votes cast. No impact on outcome.57 |
Frequently Asked Questions About the Annual Meeting
What Happens if a Director in an Uncontested Election Receives More Votes “Against”
thanThan “For” His or Her
Election?In an uncontested election of directors, any nominee for director who is an incumbent director and who receives a greater number of votes cast “Against” than votes “For” his or her election must, under Carrier’s
Corporate Governance Principles, promptly tender his or her resignation to the Chair of the Governance Committee following certification of the shareowner vote. The Governance Committee must promptly make a recommendation to the Board about whether to accept or reject the tendered resignation. The director who tendered a resignation may not participate in the Committee’s recommendation or the Board’s consideration.
Under our
Corporate Governance Principles, the Board must act on the Governance Committee’s recommendation no later than 90 days after the date of the shareowners’ meeting. Regardless of whether the Board accepts or rejects the resignation, Carrier must promptly file a Report on
Form 8-K with the SEC that explains the process by which the decision was reached and, if applicable, the reasons for rejecting the tendered resignation.
If a director’s resignation is accepted, the Governance Committee
also will
also recommend to the Board whether to fill the vacancy or to reduce the size of the Board. Under Carrier’s Bylaws, a vacancy arising in these circumstances may be filled, at the discretion of the Board, by a majority vote of the directors or at a special meeting of shareowners called by the Board.
Broadridge Financial Solutions (“Broadridge”), an independent entity, will tabulate the votes. A representative of Broadridge will act as the independent Inspector of Election for the Annual Meeting and in this capacity will supervise the voting and certify the results.
Broadridge has been instructed to keep the vote of each shareowner confidential, and the vote may not be disclosed, except in
68 | Carrier Global Corporation |
Table of Contents
Frequently Asked Questions About the Annual Meeting
legal proceedings or for the purpose of soliciting shareowner votes in a contested proxy solicitation.
How May the Company Solicit My Proxy?
Employees of Carrier may solicit proxies on behalf of the Board by mail, email, in person and by telephone. These employees will not receive any additional compensation for these activities. Carrier will bear the cost of soliciting proxies and will reimburse banks, brokerage firms and other intermediaries for their reasonable out-of-pocket expenses for forwarding proxy materials to shareowners. Carrier has retained Innisfree M&A Incorporated to assist in soliciting proxies for a fee of $25,000 plus expenses.
Why Did I Receive a Notice of Internet Availability?
To conserve natural resources and reduce costs, we are sending most shareowners a Notice of Internet Availability of Proxy Materials (“Notice”), as permitted by SEC rules. The Notice explains how you can access Carrier’s proxy materials on the internet and, if you prefer, how to obtain printed copies. The Notice also explains how you can choose print delivery of proxy materials for future annual meetings.
How Can I Receive My Proxy Materials Electronically?
To conserve
natural resources and reduce costs, we encourage shareowners to access their proxy materials electronically. If you are a registered shareowner, you can sign up at www.computershare-na.com/green to get electronic access to proxy materials for future meetings, rather than receiving them in the mail. Once you sign up, you will receive an email each year explaining how to access Carrier’s Annual Report and Proxy Statement and how to vote online. Your enrollment for electronic access will remain in effect unless you cancel it, which you can do up to two weeks before the record date for any future annual meeting.
If you are a beneficial shareowner, you may obtain electronic access to proxy materials by contacting your bank, brokerage firm or other intermediary, or by contacting Broadridge at http://enroll.icsdelivery.com/carrier.
What Materials Are Mailed to Me When I Share the Same Address as Another Carrier Shareowner?
If you share an address with one or more other Carrier shareowners, you may have received only a single copy of the Annual Report, Proxy Statement or Notice of Internet Availability of Proxy Materials for your entire household. This practice, known as “householding,” is intended to reduce printing and mailing costs.
If you are a registered shareowner and you prefer to receive a separate Annual Report, Proxy Statement or Notice of Internet Availability of Proxy Materials this year or in the future, or if you are receiving multiple copies at your address and would like to enroll in “householding” and receive a single copy, please contact Computershare at 1-866-507-8028.
Written requests may be sent to Computershare Trust Company, N.A., 462 South 4th Street, Suite 1600, Louisville KY 40202. If you are a beneficial shareowner, please contact your bank, brokerage firm or other intermediary to make your request. There is no charge for separate copies.
| | | | | |
| 58 | Carrier Global Corporation |
Frequently Asked Questions About the Annual Meeting
Will Any Other Business be Presented at the Annual Meeting?
As of the date of this Proxy Statement, the Board knows of no other matter that will be properly presented for shareowner action at the Annual Meeting
– other than those matters discussed in this Proxy Statement. However, if any other matter requiring a vote of the shareowners properly comes before the Annual Meeting, then the individuals acting under the proxies solicited by the Board will have the discretion to vote on those matters for you.
How Do I Submit Proposals and Nominations for the
20222023 Annual Meeting?
Shareowner Proposals Included in the Proxy Statement
To submit a shareowner proposal to be considered for inclusion in Carrier’s Proxy Statement for the 20222023 Annual Meeting under SEC Rule 14a-8, you must send the proposal to our Corporate Secretary. The Corporate Secretary must receive the proposal inTable of Contents
Frequently Asked Questions About the Annual Meeting
writing by
November 8, 2021.1, 2022
. Shareowner Proposals Introduced at the
20222023 Annual Meeting
To introduce a proposal for vote at the 20222023 Annual Meeting (other than a shareowner proposal included in the Proxy Statement in accordance with SEC Rule 14a-8), Carrier’s Bylaws require that the shareowner send advance written notice to the Carrier Corporate Secretary for receipt no earlier than December 20, 2021,15, 2022, and no later than January 19, 2022.14, 2023. This notice must include the information specified by Section 1.9 of the Bylaws, a copy of which is available on our website listed below.(see page 7).
Director Nominations at the
20222023 Annual Meeting
Carrier’s Bylaws require that a shareowner who wishes to nominate a candidate for election as a director at the 20222023 Annual Meeting (other than pursuant to the “proxy access” provisions of Section 1.16 of the Bylaws) must send advance written notice to the Carrier Corporate Secretary for receipt no earlier than December 20, 2021,15, 2022, and no later than January 19, 2022.14, 2023. This notice must include the information, documents and agreements specified by Section 1.9 of the Bylaws, a copy of which is available on our website listed below.(see page 7).
Director Nominations by Proxy Access
Carrier’s Bylaws require that an eligible shareowner who wishes to have a nominee of that shareowner included in Carrier’s proxy materials for the 20222023 Annual Meeting pursuant to the “proxy access” provisions of Section 1.16 of our Bylaws must send advance written notice to the Carrier Corporate Secretary for receipt no earlier than October 9, 2021,2, 2022, and no later than November 8, 2021.1, 2022. This notice must include the information, documents and agreements specified by Section 1.16 of the Bylaws, a copy of which is available on our website listed below.(see page 7).
How Do I Contact the Corporate Secretary’s Office?
Shareowners may contact Carrier’s Corporate Secretary’s Office in one of the three methods shown below:
 |  |  | | | | | | |
| | |
Write a letter | Send an email | Call |
| | |
| WRITE A LETTER | SEND AN EMAIL | CALL |
| | |
Carrier Corporate Secretary
Carrier Global Corporation
13995 Pasteur Boulevard
Palm Beach Gardens, FL 33418 | corpsec@carrier.com | 1-561-365-2335 |
| | |
Our Bylaws and other governance documents are available under the Corporate Responsibility section of the
Company’scompany’s website
at www.corporate.carrier.com.70 | Carrier Global Corporation |
(see page 7).
OTHER IMPORTANT INFORMATION
Cautionary Note Concerning Factors That May Affect Future Results
This Proxy Statement contains
statements which, to the extent they are not statements of historical or present fact, constitute “forward-looking statements” under the securities laws.
From time to time, oral or written forward-looking statements may also be included in other information released to the public. These forward-looking statements are intended to provide management’s current expectations or plans for our future operating and financial performance, based on assumptions currently believed to be valid. Forward-looking statements can be identified by the use of words such as “believe,” “expect,” “expectations,” “plans,” “strategy,” “prospects,” “estimate,” “project,” “target,” “anticipate,” “will,” “should,” “see,” “guidance,” “outlook,” “confident,” “scenario” and other words of similar meaning in connection with a discussion of future operating or financial performance or the Separation. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash
flows,flow, results of operations, uses of cash, share repurchases, tax rates and other measures of financial performance or potential future plans, strategies or transactions of Carrier, the estimated costs associated with the Separation, Carrier’s plans with respect to our indebtedness, statements with respect to current and future implications of corporate responsibility and sustainability topics and other statements that are not historical facts. All forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements.
For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the U.S. Private Securities Litigation Reform Act of 1995. Such risks, uncertainties and other factors include, without limitation:• | the effect of economic conditions in the industries and markets in which Carrier and our businesses operate in the U.S. and globally and any changes therein, including financial market conditions, fluctuations in commodity prices, interest rates and foreign currency exchange rates, levels of end market demand in construction, the impact of weather conditions, pandemic health issues (including COVID-19 pandemic and its effects, among other things, on production and on global supply, demand, and distribution as the outbreak continues and results in a prolonged period of travel, commercial and other restrictions and limitations), natural disasters and the financial condition of our customers and suppliers; |
• | challenges in the development, production, delivery, support, performance and realization of the anticipated benefits of advanced technologies and new products and services; |
• | future levels of indebtedness, capital spending and research and development spending; |
• | future availability of credit and factors that may affect such availability, including credit market conditions and Carrier’s capital structure and credit ratings; |
• | the timing and scope of future repurchases of Carrier’s common stock, including market conditions and the level of other investing activities and uses of cash; |
• | delays and disruption in the delivery of materials and services from suppliers; |
• | cost reduction efforts and restructuring costs and savings and other consequences thereof; |
• | new business and investment opportunities; |
• | risks resulting from being a smaller less diversified company than prior to the Separation; |
• | the outcome of legal proceedings, investigations and other contingencies; |
• | the impact of pension plan assumptions on future cash contributions and earnings; |
• | the impact of the negotiation of collective bargaining agreements and labor disputes; |
• | the effect of changes in political conditions in the U.S. (including in connection with the new administration in Washington, D.C.) and other countries in which Carrier and our businesses operate, including the effect of changes in U.S. trade policies or the United Kingdom’s withdrawal from the European Union, on general market conditions, global trade policies and currency exchange rates in the near term and beyond; |
• | the effect of changes (including potentially as a result of the new administration in Washington, D.C.) in tax, environmental, regulatory (including among other things import/export) and other laws and regulations in the U.S. and other countries in which we and our businesses operate; |
• | the ability of Carrier to retain and hire key personnel; |
• | the scope, nature, impact or timing of acquisition and divestiture activity, including among other things integration of acquired businesses into existing businesses and realization of synergies and opportunities for growth and innovation and incurrence of related costs; |
• | the expected benefits of the Separation; |
• | a determination by the U.S. Internal Revenue Service and other tax authorities that the Distribution or certain related transactions should be treated as taxable transactions; |
• | risks associated with indebtedness, including that incurred as a result of financing transactions undertaken in connection with the Separation, as well as our ability to reduce indebtedness and the timing thereof; |
• | the risk that dis-synergy costs, costs of restructuring transactions and other costs incurred in connection with the Separation will exceed Carrier’s estimates; and |
• | the impact of the Separation on Carrier’s business and Carrier’s resources, systems, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties. |
Table of Contents
Other Important Information
In addition, our 20202021 Annual Report on Form 10-K includes important information as to risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. See the Notes to the Consolidated Financial Statements in thisour 2021 Annual Report on Form 10-K under the heading “Note 2523 – Commitments and Contingent Liabilities,” the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Business Overview,” “Results of Operations,” “Liquidity and Financial Condition,” and “Critical Accounting Estimates,” and the section entitled “Risk Factors.” ThisOur 2021 Annual Report on Form 10-K also includes important information as to these factors in the “Business” section under the headings “General,” “Other Matters Relating to Our Business as a Whole,” and in the “Legal Proceedings” section. TheAny forward-looking statements speakstatement speaks only as of the date of this report or, in the case of any document incorporated by reference, the date of that document. We undertakeon which it is made, and Carrier assumes no obligation to publicly update or revise any forward-looking statements,such statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information as to factors that may cause actual results to differ materially from those expressed or implied in the forward-looking statements is disclosed from time to time in our other filings with the SEC.
law..
Corporate Governance Information, Our Code of Ethics and How to Contact the Board
Carrier’s Corporate Governance Principles (and related documents), the charters for each
Committee and Ourcommittee, our Code of Ethics,
and excerpts from our Corporate Policy Manual are available on Carrier’s website provided on page
20.7. Printed copies will be provided, without charge, to any shareowner upon a request addressed to the Corporate Secretary through the contact information provided on page
70.59.
Our Code of Ethics applies to all directors and employees, including the principal executive,
and financial and accounting officers.
Shareowners and other interested persons may send communications to the Board, the Lead Independent Director or one or more independent directors by: (i) using the contact information provided on the Corporate Responsibility section of Carrier’s website (see page
20)7); (ii) letter addressed to the Carrier Corporate Secretary (see page
7059 for contact information); or (iii) using Carrier’s Anonymous Reporting program
(see(contact information is available on Carrier's website provided on page
20 for contact information)7). Communications relating to Carrier’s accounting, internal controls, auditing matters or business practices will be reviewed by the
chief compliance officerChief Compliance Officer and reported to the Audit Committee pursuant to Carrier’s Corporate Governance Principles. All other communications will be reviewed by the Corporate Secretary and reported to the Board, as appropriate, pursuant to
theour Corporate Governance Principles.
Transactions
withWith Related Persons
Carrier has a written policy, which is available on our website (see page
20)7), for the review of transactions with related persons. The Related Person Transactions Policy requires review, approval or ratification of transactions
exceeding $120,000 in which Carrier is a participant and in which a Carrier director, executive officer,
or a beneficial owner of
more than 5%
or more of Carrier’s outstanding shares
– or an immediate family member of any of the foregoing persons
– has a direct or indirect material interest.
Any proposedsuch transaction must be reported for review by the Corporate Secretary who will, in consultation with the Company’s chief compliance officer,company’s Chief Compliance Officer, assess whether the transaction is a transaction with a related person, as that term is defined under Carrier’s policy. Following this review, the Board’s Governance Committee will then determine whether the transaction can be approved or not, based on whether the transaction is determined to be in, or not inconsistent with, the best interests of Carrier and its shareowners. In making this determination, the Governance Committee takes into consideration, among other factors it deems appropriate, whether the transaction is on terms no less favorable than terms generally available in transactions with unaffiliated third parties under the same or similar circumstances and the extent of the related person’s interest in the transaction.
| | | | | |
| 60 | Carrier Global Corporation |
Other Important Information
Each director and executive officer completes and signs a questionnaire at the end of each fiscal year to confirm that there are no material relationships or related person transactions between such individuals and Carrier other than those previously disclosed to the
Company.company. This ensures that all material relationships and related person transactions are identified, reviewed and disclosed in accordance with applicable policies, procedures and regulations.
Carrier’s policy generally permits the employment of relatives of related persons possessing the requisite skills and qualifications consistent with Carrier’s policies and practices for employing a non-related person in similar circumstances, provided the employment is approved by the Senior Vice President & Chief Human Resources Officer and the
chief compliance officer.Chief Compliance Officer.
William M. Sullivan, an employee of the company, is the son-in-law of John V. Faraci, a Carrier Director. In 2021, Mr. Sullivan received approximately $250,207 in total compensation, consisting of his salary and participation in employee benefit plans and programs generally made available to employees of similar responsibility levels. Mr. Sullivan's offer of employment was reviewed and approved by the Governance Committee in December 2020 in accordance with Carrier's Related Person Transactions Policy, which is available on our website listed on page 7.
From time to time, Carrier purchases services in the ordinary course of business from financial institutions that beneficially own
more than 5%
or more of our common stock. In
2020,2021, Carrier paid the following to such institutions for services related to certain employee benefit plans: (1) BlackRock, Inc. (approximately
$491,000)$540,900);
and (2) State Street Corporation (approximately
$268,000); and (3) The Vanguard Group (approximately $2,800)$276,000).
72 | Carrier Global Corporation |
Table of Contents
Other Important Information
Delinquent Section 16(a) Reports
Section 16(a) of the
Securities Exchange Act
of 1934, as amended, requires our directors,
and executive officers
among others,and persons who own more than 10% of our common stock to file reports with the SEC indicating their holdings of, and transactions in, Carrier
equity securities.common stock. Based upon a review of these reports, and upon written representations from our directors and executive officers, we believe that in
20202021 all reports
except one, were timely filed with the SEC.
An inadvertently late Form 4 was filed on behalf of Kevin J. O’Connor that related to the sale in 2020 of less than ten shares of Carrier common stock that was held in the UTC savings plan. Carrier is not aware of any beneficial owners of more than 10% of UTC Common Stock for purposes of Section 16(a).Incorporation by Reference
In connection with our discussion of director and executive compensation, we have incorporated by reference in this Proxy Statement certain information from Note
14-14 — Stock-Based Compensation, to the Consolidated Financial Statements in Carrier’s
20202021 Annual Report on Form 10-K filed on February
9, 2021;8, 2022; these are the only portions of such filings that are incorporated by reference in this Proxy Statement.
Company Names, Trademarks and Trade Names
Carrier Global Corporation and its subsidiaries’ names, abbreviations thereof, logos, and product and service designators are all either the registered or unregistered trademarks or trade names of Carrier Global Corporation and its subsidiaries. Names, abbreviations of names, logos and products and service designators of other companies and organizations are either the registered or unregistered trademarks or trade names of their respective owners. As used herein, the terms “we,” “us,” “our,” “the
Company”company” or “Carrier,” unless the context otherwise requires, mean Carrier Global Corporation and its subsidiaries.
2021 | | | | | |
| 2022 Proxy Statement | 73 |
APPENDIX A: RECONCILIATION OF GAAP MEASURES TO CORRESPONDING NON-GAAP MEASURES
Reconciliation of Reported GAAP to Adjusted Operating Profit & Operating
Profit Margin
| (UNAUDITED) | | | | | | | | | |
| (DOLLARS IN MILLIONS - INCOME (EXPENSE)) | | FOR THE THREE
MONTHS ENDED
MARCH 31, 2020 | | | FOR THE PERIOD
APRIL 1, 2020 TO
DECEMBER 31, 2020 | | | FOR THE
YEAR ENDED
DECEMBER 31, 2020 | |
| HVAC | | | | | | | | | | | | |
| Net sales | | | $1,959 | | | | $7,519 | | | | $9,478 | |
| | | | | | | | | | | | | |
| Operating profit | | | $167 | | | | $2,295 | | | | $2,462 | |
| Restructuring | | | (2 | ) | | | (5 | ) | | | (7 | ) |
| Impairment charge on equity method investment | | | (71 | ) | | | – | | | | (71 | ) |
| Gain on sale of investment | | | – | | | | 1,123 | | | | 1,123 | |
| Charge resulting from litigation matter | | | – | | | | (11 | ) | | | (11 | ) |
| Separation costs | | | (2 | ) | | | – | | | | (2 | ) |
| Adjusted operating profit | | | $242 | | | | $1,188 | | | | $1,430 | |
| Adjusted operating margin | | | 12.4 | % | | | 15.8 | % | | | 15.1 | % |
| | | | | | | | | | | | | |
| Refrigeration | | | | | | | | | | | | |
| Net sales | | | $808 | | | | $2,525 | | | | $3,333 | |
| | | | | | | | | | | | | |
| Operating profit | | | $99 | | | | $258 | | | | $357 | |
| Restructuring | | | – | | | | (12 | ) | | | (12 | ) |
| Net gain on expropriated plant | | | – | | | | – | | | | – | |
| Separation costs | | | – | | | | (6 | ) | | | (6 | ) |
| Adjusted operating profit | | | $99 | | | | $276 | | | | $375 | |
| Adjusted operating margin | | | 12.3 | % | | | 10.9 | % | | | 11.3 | % |
| | | | | | | | | | | | | |
| Fire & Security | | | | | | | | | | | | |
| Net sales | | | $1,206 | | | | $3,779 | | | | $4,985 | |
| | | | | | | | | | | | | |
| Operating profit | | | $120 | | | | $464 | | | | $584 | |
| Restructuring | | | (3 | ) | | | (25 | ) | | | (28 | ) |
| Separation costs | | | (3 | ) | | | (13 | ) | | | (16 | ) |
| Pension plan amendment | | | – | | | | – | | | | – | |
| Adjusted operating profit | | | $126 | | | | $502 | | | | $628 | |
| Adjusted operating margin | | | 10.4 | % | | | 13.3 | % | | | 12.6 | % |
| | | | | | | | | | | | | |
| General Corporate Expenses and Eliminations and Other | | | | | | | | | | | | |
| Net sales | | | $(85 | ) | | | $(255 | ) | | | $(340 | ) |
| | | | | | | | | | | | | |
| Operating profit | | | $(71 | ) | | | $(249 | ) | | | $(320 | ) |
| Restructuring | | | | | | | (2 | ) | | | (2 | ) |
| Consultant contract termination | | | – | | | | – | | | | – | |
| Separation costs | | | (40 | ) | | | (77 | ) | | | (117 | ) |
| Adjusted operating profit | | | $(31 | ) | | | $(170 | ) | | | $(201 | ) |
| | | | | | | | | | | | | | |
| (UNAUDITED) | | | | |
| (DOLLARS IN MILLIONS - INCOME (EXPENSE) | | FOR THE
YEAR ENDED
DECEMBER 31, 2021 | | FOR THE
YEAR ENDED
DECEMBER 31, 2020 |
| HVAC | | | | |
| Net sales | | $11,390 | | | $9,478 | |
| | | | |
| Operating profit | | $1,738 | | | $2,462 | |
| Restructuring | | (33) | | | (7) | |
| Impairment charge on minority owned joint venture investment | | — | | | (71) | |
| Gain on sale of interest in joint venture | | — | | | 1,123 | |
| Charge resulting from litigation matter | | — | | | (11) | |
| Separation costs | | — | | | (2) | |
| | | | |
| Acquisition and other related costs | | (5) | | | — | |
| Adjusted operating profit | | $1,776 | | | $1,430 | |
| Adjusted operating margin | | 15.6 | % | | 15.1 | % |
| | | | |
| Refrigeration | | | | |
| Net sales | | $4,127 | | | $3,333 | |
| | | | |
| Operating profit | | $476 | | | $357 | |
| Restructuring | | (25) | | | (12) | |
| | | | |
| | | | |
| | | | |
| Separation costs | | — | | | (6) | |
| | | | |
| | | | |
| Adjusted operating profit | | $501 | | | $375 | |
| Adjusted operating margin | | 12.1 | % | | 11.3 | % |
| | | | |
| Fire & Security | | | | |
| Net sales | | $5,515 | | | $4,985 | |
| | | | |
| Operating profit | | $662 | | | $584 | |
| Restructuring | | (26) | | | (28) | |
| | | | |
| | | | |
| Separation costs | | — | | | (16) | |
| | | | |
| Chubb transaction costs | | (42) | | | — | |
| Adjusted operating profit | | $730 | | | $628 | |
| Adjusted operating margin | | 13.2 | % | | 12.6 | % |
| | | | |
| General Corporate Expenses and Eliminations and Other | | | | |
| Net sales | | ($419) | | | ($340) | |
| | | | |
| Operating profit | | ($231) | | | ($320) | |
| Restructuring | | (5) | | | (2) | |
| | | | |
| | | | |
| Separation costs | | (20) | | | (117) | |
| Chubb transaction costs | | (1) | | | — | |
| Acquisition and other related costs | | (2) | | | — | |
| Adjusted operating profit | | ($203) | | | ($201) | |
74 | | | | | |
| 62 | Carrier Global Corporation |
Table of Contents
Appendix A: Reconciliation of GAAP Measures to Corresponding Non-GAAP Measures
| (UNAUDITED) | | | | | | | | | |
| (DOLLARS IN MILLIONS - INCOME (EXPENSE)) | | FOR THE THREE
MONTHS ENDED
MARCH 31, 2020 | | | FOR THE PERIOD
APRIL 1, 2020 TO
DECEMBER 31, 2020 | | | FOR THE
YEAR ENDED
DECEMBER 31, 2020 | |
| | | | | | | | | | | | | |
| Carrier | | | | | | | | | | | | |
| Net sales | | | $3,888 | | | | $13,568 | | | | $17,456 | |
| | | | | | | | | | | | | |
| Operating profit | | | $315 | | | | $2,768 | | | | $3,083 | |
| Total restructuring costs | | | (5 | ) | | | (44 | ) | | | (49 | ) |
| Total non-recurring and non-operational items | | | (116 | ) | | | 1,016 | | | | 900 | |
| Adjusted operating profit | | | $436 | | | | $1,796 | | | | $2,232 | |
| Constant currency Adjustment | | | 1 | | | | 5 | | | | 6 | |
| ADJUSTED OPERATING PROFIT AT CONSTANT CURRENCY | | | 435 | | | | 1,791 | | | | 2,226 | |
| Adjusted operating margin | | | 11.2 | % | | | 13.0 | % | | | 12.8 | % |
| | | | | | | | | | | | | | |
| (UNAUDITED) | | | | |
| (DOLLARS IN MILLIONS - INCOME (EXPENSE) | | FOR THE
YEAR ENDED
DECEMBER 31, 2021 | | FOR THE
YEAR ENDED
DECEMBER 31, 2020 |
| Carrier | | | | |
| Net sales | | $20,613 | | | $17,456 | |
| | | | |
| Operating profit | | $2,645 | | | $3,083 | |
| Total restructuring costs | | (89) | | | (49) | |
| Total non-recurring and non-operational items | | (70) | | | 900 | |
| Adjusted operating profit | | $2,804 | | | $2,232 | |
| | | | |
| | | | |
| Adjusted operating margin | | 13.6 | % | | 12.8 | % |
Reconciliation of GAAP to Adjusted Net Income, Earnings Per Share and Effective Tax Rate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (UNAUDITED) | | | | | | | | | | | |
| FOR THE YEAR ENDED DECEMBER 31, 2021 | | FOR THE YEAR ENDED DECEMBER 31, 2020 |
| (DOLLARS IN MILLIONS - INCOME (EXPENSE), EXCEPT PER SHARE AMOUNTS | Reported | | Adjustments | | Adjusted | | Reported | | Adjustments | | Adjusted |
| Net sales | $20,613 | | | $— | | | $20,613 | | | $17,456 | | | $— | | | $17,456 | |
| | | | | | | | | | | |
| Operating profit | 2,645 | | | 159 | | a | 2,804 | | | 3,083 | | | (851) | | a | 2,232 | |
| Operating margin | 12.8 | % | | | | 13.6 | % | | 17.7 | % | | | | 12.8 | % |
| | | | | | | | | | | |
| Income from operations before income taxes | 2,400 | | | 178 | | a,b | 2,578 | | | 2,855 | | | (846) | | a,b | 2,009 | |
| Income tax expense | (699) | | | 171 | | c | (528) | | | (849) | | | 326 | | c | (523) | |
| Income tax rate | 29.1 | % | | | | 20.5 | % | | 29.7 | % | | | | 26.0 | % |
| | | | | | | | | | | |
| Net income attributable to common shareowners | $1,664 | | | $349 | | | $2,013 | | | $1,982 | | | ($520) | | | $1,462 | |
| | | | | | | | | | | |
| Summary of Adjustments: | | | | | | | | | | | |
| Restructuring costs | | | $89 | | a | | | | | $49 | | a | |
| Separation costs | | | 20 | | a | | | | | 141 | | a | |
| Acquisition and other related costs | | | 7 | | a | | | | | — | | | |
| Chubb transaction costs | | | 43 | | a | | | | | — | | | |
| Gain on Sale of Joint Venture | | | — | | | | | | | (1,123) | | a | |
| Impairment of equity method investment | | | — | | | | | | | 71 | | a | |
| Charge resulting from litigation matter | | | — | | | | | | | 11 | | a | |
| Debt prepayment costs | | | 19 | | b | | | | | — | | | |
| Debt issuance costs | | | — | | | | | | | 5 | | b | |
| | | | | | | | | | | |
| Total adjustments | | | $178 | | | | | | | ($846) | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Tax effect on adjustments above | | | ($29) | | | | | | | $217 | | | |
| Tax specific adjustments | | | 200 | | | | | | | 109 | | | |
| Total tax adjustments | | | $171 | | c | | | | | $326 | | c | |
| | | | | | | | | | | |
| Shares outstanding - Diluted | 890.3 | | | | | 890.3 | | | 880.2 | | | | | 880.2 | |
| | | | | | | | | | | |
| Earnings per share - Diluted | $1.87 | | | | | $2.26 | | | $2.25 | | | | | $1.66 | |
(UNAUDITED) | | FOR THE YEAR ENDED
DECEMBER 31, 2020 | | | |
(DOLLARS IN MILLIONS - INCOME (EXPENSE)) | | | |
Net income attributable to common shareowners | | | $1,982 | |
| | | | |
Total restructuring costs | | | (49 | ) |
| | | | |
Total non-recurring and non-operational items included in operating profit | | | 900 | |
| | | | |
Non-recurring and non-operational items included in Interest expense, net: | | | | |
Interest income associated with participation in amnesty settlement | | | – | |
Interest income associated with IRS settlement | | | – | |
Debt issuance costs relating to Carrier’s separation from UTC | | | (5 | ) |
Non-recurring and non-operational items included in Interest expense, net | | | (5 | ) |
| | | | |
Tax effect of restructuring and non-recurring and non-operational items | | | (217 | ) |
| | | | |
Significant non-recurring and non-operational items included in Income tax expense: | | | | |
Favorable income tax adjustments related to tax amnesty | | | – | |
Adjustments related to tax settlements | | | – | |
Adjustment related to a valuation allowance recorded against a United Kingdom tax loss and credit carryforward as a result of separation related activities | | | (51 | ) |
Adjustment resulting from Carrier’s decision to no longer permanently reinvest certain pre-2018 unremitted non-U.S. earnings | | (46 | ) |
Deferred tax adjustment resulting from the UTC Separation | | | – | |
Deferred tax adjustment resulting from United Kingdom legislative change | | | (12 | ) |
Significant non-recurring and non-operational items included in Income tax expense | | | (109 | ) |
| | | | |
Total significant non-recurring and non-operational items | | | 520 | |
| | | | |
Adjusted net income attributable to common shareowners | | | $1,462 | |
| | | | |
Diluted earnings per share | | | $2.25 | |
Impact on diluted earnings per share | | | 0.59 | |
Adjusted diluted earnings per share | | | $1.66 | |
| | | | |
Effective tax rate | | | 29.7 | % |
Impact on effective tax rate | | | (3.7 | )% |
Adjusted effective tax rate | | | 26.0 | % |
20212022 Proxy Statement | 75 |
Table of Contents
Appendix A: Reconciliation of GAAP Measures to Corresponding Non-GAAP Measures
Free Cash Flow Reconciliation
| | | FOR THE THREE
MONTHS ENDED
MARCH 31, 2020 | | | FOR THE PERIOD
APRIL 1, 2020 TO
DECEMBER 31, 2020 | | | FOR THE YEAR ENDED
DECEMBER 31, 2020 | |
| (DOLLARS IN MILLIONS) | | | | | | | | | |
| Net income attributable to common shareowners | | | $96 | | | | $1,886 | | | | $1,982 | |
| Net cash flows provided by operating activities | | | 47 | | | | 1,645 | | | | 1,692 | |
| Less: Capital expenditures | | | 48 | | | | 264 | | | | 312 | |
| Free cash flow | | | ($1 | ) | | | $1,381 | | | | $1,380 | |
| | | | | | | | | | | | | | |
| (UNAUDITED) | | | | |
| | FOR THE
YEAR ENDED
DECEMBER 31, 2021 | | FOR THE
YEAR ENDED
DECEMBER 31, 2020 |
| (DOLLARS IN MILLIONS) | | | | |
| Net cash flows provided by operating activities | | $2,237 | | | $1,692 | |
| Less: Capital expenditures | | 344 | | | 312 | |
| Free cash flow | | $1,893 | | | $1,380 | |
Reconciliation of 2021 Incentive Compensation Results
| | | | | | | | | | | | | | | | | | | | |
| (UNAUDITED) | | | | | | |
| | FOR THE YEAR ENDED DECEMBER 31, 2021 |
| (DOLLARS IN MILLIONS) | | Net Sales | | Operating Profit | | Free Cash Flow |
| Adjusted financial results | | $20,613 | | | $2,804 | | | $1,893 | |
| | | | | | |
| Performance adjustments: | | | | | | |
| Constant currency | | 71 | | | 6 | | | — | |
| Acquisitions | | (199) | | | 11 | | | 33 | |
| Chubb divestiture/transaction costs | | — | | | (35) | | | 40 | |
| Performance adjusted results | | $20,485 | | | $2,786 | | | $1,966 | |
Factors Contributing to Total % Change in Net
Debt to EBITDA| | | (UNAUDITED)
FOR THE YEAR ENDED
DECEMBER 31, 2020 | | | FOR THE THREE
MONTHS ENDED
MARCH 31, 2020(1) | |
| (DOLLARS IN MILLIONS) | | | | | | |
| Long-term debt | | | $10,036 | | | | $11,029 | |
| Current portion of long-term debt | | | 191 | | | | 218 | |
| Less: Cash and cash equivalents | | | 3,115 | | | | 768 | |
| Net debt | | | $7,112 | | | | $10,479 | |
| | | | | | | | | |
| Net income attributable to common shareowners | | | $1,982 | | | | | |
| Plus: | | | | | | | | |
| Interest expense | | | 298 | | | | | |
| Income tax expense | | | 849 | | | | | |
| Depreciation and amortization | | | 336 | | | | | |
| EBITDA | | | 3,465 | | | | | |
| Less: | | | | | | | | |
| Total non-recurring and non-operational adjustments, excluding interest and tax adjustments | | | 851 | | | | | |
| Non-service pension benefit | | | 60 | | | | | |
| Non-controlling interest in subsidiaries’ earnings from operations | | | 24 | | | | | |
| Adjusted EBITDA | | | $2,578 | | | | | |
| Net debt to adjusted EBITDA | | | 2.8 | | | | | |
| | | | | | | | | | | | | | | | | |
| (UNAUDITED) | | | | | |
| | | FOR THE YEAR ENDED DECEMBER 31, 2021 vs. 2020 |
| HVAC | Refrigeration | Fire & Security | General Corporate Expenses and Eliminations and Other | Consolidated |
| Organic | 17 | % | 21 | % | 7 | % | — | % | 15 | % |
| FX Translation | 1 | % | 3 | % | 4 | % | — | % | 2 | % |
| Acquisitions / Divestitures, net | 2 | % | — | % | — | % | — | % | 1 | % |
| Other | — | % | — | % | — | % | — | % | — | % |
| Total | 20 | % | 24 | % | 11 | % | — | % | 18 | % |
(1) | On April 3, 2020, Carrier received cash contributions totaling $590 million from UTC related to the Separation, resulting in net debt of approximately $9.9 billion as of April 3, 2020. | | | | |
7664 | Carrier Global Corporation |
Table of Contents
Appendix A: Reconciliation of GAAP Measures to Corresponding Non-GAAP Measures
Use an independent executive compensation consultant to advise the Committee
Provide excise tax gross-up on severance/change in control payments
Use an independent executive compensation consultant to advise the Committee
Provide excise tax gross-up on severance or change in control payments
