UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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Hill-Rom Holdings, Inc.
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HILL-ROM HOLDINGS, INC.
PROXY
STATEMENT
Annual Meeting of Shareholders
March 15, 2016
10:00 am (Central Time)
Chicago, Illinois
HILL-ROM HOLDINGS, INC.
NOTICE
OF ANNUALTo Be Held March 15, 2016
The annual shareholders meetingAnnual Meeting of Shareholders of Hill-Rom Holdings, Inc., an Indiana corporation (“Hill-Rom”), will be held at the following time and location, and for the following purposes:
Wednesday, March |
(1) (2) | To elect nine (9) members to the Board of Directors to serve one-year terms expiring at the |
To consider and vote on a non-binding proposal to approve, on an advisory basis, the compensation of Hill-Rom’s named executive officers; |
(3) |
To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of Hill-Rom |
To transact any other items of business that may properly be brought before the meeting and any postponement or adjournment thereof. |
Only |
By Order of the Board of Directors | ||
Deborah M. Rasin | ||
Secretary |
January 18, 2019
TABLE OF CONTENTS
EXECUTIVE SUMMARY | 1 |
GENERAL INFORMATION ABOUT THE | 5 |
PROPOSALS REQUIRING YOUR VOTE | 9 |
Proposal No. 1 – Election of Directors | 9 |
Proposal No. 2 – Non-Binding Vote on Executive Compensation | 13 |
Proposal No. 3 – | |
CORPORATE GOVERNANCE | |
AUDIT COMMITTEE REPORT | |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | |
COMPENSATION DISCUSSION AND ANALYSIS | |
Compensation and Management Development Committee Report | |
Detailed Table of Contents for CD&A | |
SUMMARY COMPENSATION | |
PAY RATIO DISCLOSURE | 52 |
DIRECTOR COMPENSATION | |
EQUITY COMPENSATION PLAN INFORMATION | |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | |
APPENDIX A – RECONCILIATION OF NON-GAAP AND GAAP FINANCIAL MEASURES | 57 |
Proxy Statement |
This proxy statement relates to the solicitation by the Board of Directors (the “Board”) of Hill-Rom Holdings, Inc. (“Hill-Rom”, the “Company”, “we”, “us” or “our”), of proxies for use at the annual meeting of Hill-Rom’s shareholders (the “meeting”) to be held at our offices located at 180 North Stetson Avenue, Two Prudential Plaza, Suite 1630, Chicago, Illinois 60601, on Wednesday, March 15, 2016,6, 2019, at 10:00 a.m., Central time, and at any adjournments of the meeting. This proxy statement and the enclosed form of proxy were mailed initially to shareholders on or about January 27, 2016.
Executive Summary |
This summary highlights selected information in this proxy statement. Please review thethis entire proxy statement and the Hill-Rom 2015 Annual Report2018 Letter to Shareholders before voting.
www.proxyvote.com.
In 2015,fiscal year 2018, Hill-Rom:
· | Increased reported revenue |
· | Increased reported operating margin by 20 basis points to 10.2% and adjusted operating margin by 100 basis points to 17.3%. |
· | Grew reported earnings per diluted share (“EPS”) by 87% to $3.73 and adjusted EPS by |
· | Generated operating cash flow for the year of $395 million, an increase of 27 percent, and reduced debt by $337 million. |
· | Achieved a total |
· | Delivered significant value to shareholders through increased dividends and share repurchases. Hill-Rom raised its dividend for the seventh consecutive year and returned $66 million to shareholders through dividends and share repurchases during fiscal year 2018. |
· | Successfully completed our Chief Executive Officer transition marked by continued advancement in innovation, transformation of the |
· | Achieved over $300 million in new product revenue during fiscal 2018. Contributing to this performance are several innovative products, such as: |
- | Centrella™ Smart+ bed, which transforms care by providing optimized patient safety, enhanced patient satisfaction and advanced caregiver efficiency. Now available in the U.S. and Canada, the new scalable platform integrates with the NaviCare® Patient Safety application, including integrated technology, services, clinical programs and clinical expertise to prevent and reduce the risk of falls. The company expects to launch Centrella in various international markets in the coming months. |
Integrated Table Motion for the |
- | Welch Allyn Connex® Spot Monitor, an easy-to-use, full-color, touchscreen monitor that provides comprehensive and accurate patient vital signs (blood pressure measurement, pulse oximetry for |
- | Monarch™ Airway Clearance System, which builds high frequency chest wall oscillation therapy into a mobile vest, allowing a patient to be active and productive while receiving therapy. |
· |
· |
· | Introduced the TruSystem™ 7500 MR Neuro Surgical Table, which integrates with the IMRIS MR Neuro tabletop to support better patient treatment and optimize the surgical workflow. |
· | Optimized our product portfolio with the divestiture of assets related to the third-party rental business, and wind-down of the third-party surfaces business. |
· | Finalized the Company’s business optimization plans focused on driving operating efficiencies, improving the cost structure, and generating approximately $50 million in pre-tax savings over the next several years. These initiatives provide the opportunity to reinvest savings, and align resources with key priority growth areas in new products |
Voting Matters and Board Recommendations
Proposal | Recommendation of the Board | Page References |
To elect nine (9) members to the Board of Directors, each for | FOR all nominees | 9 |
To an advisory basis, the compensation of Hill-Rom’s named executive officers | FOR the proposal | 13 |
To ratify the appointment of PricewaterhouseCoopers LLP as Hill-Rom’s independent registered public accounting firm for fiscal year 2019 | FOR ratification of the appointment |
Additional important information about our annualthe meeting and voting can be found in the section entitled “General Information About the Annual Meeting and Voting” beginning on page 5.
Governance Highlights
Our Board believes that good corporate governance enhances shareholder value. Our governance practices include:
Governance Practice | Description | For More Information |
Director Independence | All of our directors, except our CEO, are independent | |
Non-Executive Chair | We have a non-executive, independent Board chair | |
During the fiscal year ended September 30, 2018, our incumbent members of the Board attended on average committee meetings, and each attended the Board and their respective committee meetings | ||
Annual Director Election/ Resignation Policy | Our directors are elected annually, and we have a resignation policy if a director fails to garner a majority of votes cast | 7, 9 |
Executive Session | Our independent directors meet regularly in executive session without management and non-independent directors present | |
Independent Compensation Consultant | We have a fully independent compensation consultant |
Executive Compensation Highlights
Hill-Rom’s compensation program is designed to align the compensation of each executive’s compensationnamed executive officer (“NEOs” or “Named Executive Officers”) with Hill-Rom’s performance and the interests of our shareholders, and to provide the proper incentives to attract, retain and motivate key personnel in a clear, transparent manner. In order to do this, we:
· |
· |
· |
Last year’s Non-Binding Vote on Executive Compensation received support of approximately 94% of our shareholders (excluding abstentions and broker non-votes). Based on the results of the shareholder vote, no significant changes to our compensation program took place in fiscal year 2018.
In summary, we compensate our named executive officersNEOs as follows:
Component of Compensation | Form of Compensation | For More Information |
Base Salary | Annual Cash Salary | 31 |
Annual Cash | 32-34 | |
Long-Term Incentive Compensation | Stock Options (25% of annual grant value) Restricted Stock Units (25% of annual grant value) Performance Stock Units (50% of annual grant value) | 35-39 |
We also adhere to several additional principles regarding executive compensation for our NEOs, which we believe highlight the strength of both our governance practices and our overall executive compensation program:
Executive Compensation Principle | Description | For More Information |
Stock Ownership | We require significant stock ownership by all of our senior executive officers, including 6X base salary for our CEO | |
Clawback, Anti-Hedging and Anti- Pledging Policies | We have clawback, anti-hedging and anti-pledging policies | |
No Single-Trigger Change in Control Agreements | We | |
At-Will Employment Agreements | Our executives all have at-will employment agreements | |
No Re-Pricing of Stock Options; No Buy-Back of Equity Grants | We | |
No Gross-Ups for 280G Excise | We |
General Information About the Meeting and Voting |
1. | Who may vote? |
Shareholders holding shares of Hill-Rom common stock as of the close of business on January 8, 20162, 2019 (the “record date”) are entitled to vote at the annual meeting. At the close of business on suchthe record date, there were 65,301,51766,657,887 shares of common stock outstanding and entitled to vote at the annual meeting. Common stock is the only class of stock outstanding and entitled to vote. You have one vote for each share of common stock held as of the record date, which may be voted on each proposal presented at the annual meeting.
2. | How can I elect to receive my proxy materials electronically? |
If you would like to reduce the costs incurred by us in mailing proxy materials, you can consentelect to receivingreceive all future proxy statements, proxy cards and annual reports electronically. To sign up for electronic delivery, follow the instructions provided with your proxy materials and on your proxy card or voting instruction card, to vote using the Internet, or go to https://enroll1.icsdelivery.com/hrc.enroll.icsdelivery.com/hrc. When prompted, indicate that you agree to receive or access shareholder communications electronically in the future.
3. | Can I vote my shares by filling out and returning the Notice Regarding the Availability of Proxy Materials? |
No. See Question 6 “How do I vote?” for more information on how to vote.
4. | How can I access the proxy materials over the |
You can view the proxy materials for the annual meeting on the Internetinternet at www.proxyvote.com.
5. | How does the Board recommend that I vote? |
The Board recommends that you vote:
· | FOR each of the nominees for |
· | FOR the non-binding approval of the compensation of Hill-Rom’s |
· |
FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Hill-Rom’s independent registered public accounting firm. |
6. | How do I vote? |
You may vote by any of the following methods:
· | By Telephone or Internet — You may submit your proxy vote by following the instructions provided in the Notice Regarding the Availability of Proxy Materials, or by following the instructions provided with your proxy materials and on your proxy card or voting instruction form. |
· | By Mail — You may submit your proxy vote by mail by signing a proxy card and mailing it in the enclosed envelope if your shares are registered directly in your name or, for shares held beneficially in street name, by following the voting instructions provided by your broker, trustee or nominee. |
· | In Person at the |
7. | If I voted by telephone or |
No.
5 |
8. | Can I change my vote? |
If you are a shareholder of record, you may revoke your proxy at any time before the voting polls are closed at the annual meeting by the following methods:
· | voting at a later time by telephone or |
· | writing our Corporate Secretary at: Hill-Rom Holdings, Inc., |
· | giving notice of revocation to the Inspector of Election at the |
If you are a street name shareholder and you voted by proxy, you may later revoke your proxy by informing the holder of record in accordance with that entity’s procedures.
9. | What happens if I do not specify a choice for a proposal when returning a proxy? |
If you are a shareholder of record and your proxy card is signed and returned without voting instructions, it will be voted according to the recommendation of the Board of Directors.
If you are a beneficial/street name shareholder and fail to provide voting instructions, your broker, bank or other holder of record is permitted to vote your shares on the proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm. However, they may not vote on the election of directors or the other proposals listed herein absent instructions from you. Without your voting instructions, on the proposals, a “broker non-vote” will occur with respect to those other proposals.
10. | How are votes, including broker non-votes and abstentions, counted? |
Votes are counted in accordance with both our Amended and Restated Code of By-laws (our “By-laws”) and Indiana law. A broker non-vote or abstention will be counted towards a quorum, but will not be counted in the election of directors or the votes on any of the other proposals.
11. | What constitutes a quorum? |
A majority of the outstanding shares of common stock entitled to vote, represented at the meeting in person or by proxy, constitutes a quorum. Broker non-votes and abstentions will be counted as represented at the meeting for purposes of determining whether a quorum is present.
12. | What happens if other matters come up at the |
The matters described in the noticeNotice of annual meetingAnnual Meeting of the Shareholders are the only matters we know of that will be voted on at the annual meeting. If other matters are properly presented at the annual meeting, the persons named on the proxy card or voting instruction form will vote your shares according to their best judgment.
13. | Who will count the votes? |
A representative of Broadridge Financial Solutions, Inc., an independent tabulator appointed by the Board, of Directors, will count the votes and act as the Inspector of Election. The Inspector of Election will have the authority to receive, inspect, electronically tally and determine the validity of the proxies received.
14. | Who can attend the |
Admission to the annual meeting is limited to shareholders of Hill-Rom as of the record date, persons holding validly executed proxies from shareholders who held Hill-Rom common stock on January 8, 2016,as of the record date, and invited guests of Hill-Rom.
In order to be admitted to the annual meeting in person, you should pre-register by contacting Hill-Rom’s Investor Relations Departmentdepartment at investors@hill-rom.com, or in writing atto Investor Relations, Hill-Rom Holdings, Inc., 180 N. Stetson Avenue, Two Prudential Plaza,130 East Randolph, Suite 4100,1000, Chicago, Illinois 60601, no later than March 7, 2016.February 26, 2019. Additionally, proof of ownership of Hill-Rom stock must be shown at the door. Failure to pre-register or to provide adequate proof that you were a shareholder onas of the record date may prevent you from being admitted to the annual meeting. Please read the following rules carefully because they specify the documents that you must bring with you to the annual meeting in order to be admitted.
If you were a record holder of Hill-Rom common stock on January 8, 2016,
If a broker, bank, trustee or other nominee was the record holder of your shares of Hill-Rom common stock on January 8, 2016,
· | Valid government-issued personal identification (such as a driver’s license or passport), and |
· | Proof that you owned shares of Hill-Rom common stock |
If you are a proxy holder for a shareholder of Hill-Rom,
then you must bring:· | The validly executed proxy naming you as the proxy holder, signed by a shareholder of Hill-Rom who owned shares of Hill-Rom common stock |
· | Valid government-issued personal identification (such as a driver’s license or passport), and |
· | Proof of the shareholder’s ownership of shares of Hill-Rom common stock |
15. | How many votes must each proposal receive to be adopted? |
Directors are elected by a plurality of the votes cast by shareholders entitled to vote, which means that nominees who receive the greatest number of votes will be elected even if such amount is less than a majority of the votes cast. However, our Corporate Governance Standards provide that, prior to nomination,the meeting, director nominees shall submit a letter of resignation that is effective in the event such director receives a greater number of votes “withheld” from his or her election than votes “for” such election. The Board is required to accept the resignation unless the Board determines that accepting such resignation would not be in the best interests of Hill-Rom and its shareholders.
The non-binding proposal to approve the compensation of our Named Executive OfficersNEOs and the proposals to approve our Stock Incentive Plan, our Short Term Incentive Plan, andproposal to ratify the appointment of the independent registered public accounting firm will be approved if the votes cast favoring the action exceed the votes cast opposing the action. The non-binding vote on the frequency of the shareholder vote on executive compensation will be determined by plurality vote, with the frequency receiving the greatest number of votes being the frequency approved by the shareholders.
16. | Who pays for the proxy solicitation related to the |
We do. In addition to sending you or making available to you these materials, some of our directors and officers, as well as management and non-management employees, may contact you by telephone, mail, e-mail or in person. You may also be solicited by means of press releases issued by Hill-Rom, postings on our website, and advertisements in periodicals. None of our officers or employees will receive any extra compensation for soliciting you. We have retained Innisfree M&A Incorporated to assist us in soliciting your proxy for an estimated fee of $8,000$10,000 plus reasonable out-of-pocket expenses. We will also reimburse banks, nominees, fiduciaries, brokers and other custodians for their costs of sending the Notice Regarding the Availability of Proxy Materials or proxy materials to the beneficial owners of Hill-Rom common stock.
17. | If I want to submit a shareholder proposal for the |
In order for shareholder proposals submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 to be presented at our 20172020 annual meeting of shareholders and included in our proxy statement and form of proxy relating to that meeting, such proposals must be submitted to the Corporate Secretary of Hill-Rom at our registered offices in Batesville, IndianaChicago, Illinois no later than September 29, 2016,21, 2019, which is 120 days prior to the calendar anniversary of the mailing date of this proxy statement.
In addition, our Amended and Restated Code of By-laws providesprovide that for business to be brought before a shareholders’ meeting by a shareholder or for nominations to the Board of Directors to be made by a shareholder for consideration at a shareholders’ meeting, notice thereof must be received by the Corporate Secretary of Hill-Rom at our registered offices not later than 100 days prior to the anniversary of the immediately preceding annual meeting, or not later than December 5, 2016November 26, 2019 for the 20172020 annual meeting of shareholders. The notice must also provide certain information set forth in the Amended and Restated Code ofour By-laws.
18. | How can I obtain a copy of the Annual Report on Form 10-K? |
You may receive a hard copy of proxy materials, including the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018, by following the directions set forth on the Notice Regarding the Availability of Proxy Materials. The Annual Report on Form 10-K for the fiscal year ended September 30, 2018 is also available on our website at http://ir.hill-rom.com.
19. | Where can I find the voting results of the |
We will announce preliminary voting results at the conclusion of the annual meeting and publish the final voting results in a Form 8-K to be filed with the U.S. Securities and Exchange Commission (“SEC”) within four business days after the conclusion of the annual meeting.
Proposals Requiring Your Vote |
Proposal No. 1 – Election of Directors
The Board currently consists of nineten members, and the terms of all the directors expire at the upcoming annual meeting. Charles Golden informed the Board of his decision to retire from the Board effective as of the date of the meeting, and thus he is not nominated for re-election. The shareholders will therefore elect nine members of the Board to serve one-year terms expiring at the 20172020 annual meeting of shareholders. Unless authority is withheld, all shares represented by proxies submitted pursuant to this solicitation (other than broker non-votes) will be voted in favor of electing as directors the nominees listed below for the terms indicated. If any of these nominees should be unable to serve, shares represented by proxies may be voted for a substitute nominee selected by the Board, or the position may become vacant.
The Board of Directors recommends that shareholders vote “FOR” the election to the Board of Directors of each of the nominees named below.
NOMINEES
Name | Age | Principal Occupation | Director Since |
Rolf A. Classon | 70 | Chairman of the Board of Hill-Rom | 2002 |
John J. Greisch | 60 | President and Chief Executive Officer of Hill-Rom | 2010 |
William G. Dempsey | 64 | Retired Executive Vice President, Global Pharmaceuticals, Abbott Laboratories | 2014 |
James R. Giertz | 58 | Executive Vice President and Chief Financial Officer of H.B. Fuller Company | 2009 |
Charles E. Golden | 69 | Retired Executive Vice President and Chief Financial Officer of Eli Lilly and Company | 2002 |
William H. Kucheman | 66 | Former Interim Chief Executive Officer of Boston Scientific Corp. | 2013 |
Ronald A. Malone | 61 | Retired Chief Executive Officer of Gentiva Health Services, Inc. | 2007 |
Eduardo R. Menascé | 70 | Retired President, Enterprise Solutions Group, Verizon Communications | 2004 |
Stacy Enxing Seng | 51 | Former President, Vascular Therapies, Covidien | 2015 |
Name | Age | Principal Occupation/Professional Background | Director Since
|
William G. Dempsey* | 67 | Chair of the Board Hill-Rom | 2014
|
John P. Groetelaars | 53 | President and Chief Executive Officer Hill-Rom | 2018
|
Gary L. Ellis | 62 | Retired Chief Financial Officer Medtronic plc | 2017
|
Stacy Enxing Seng | 54 | Venture Partner, Lightstone Venture Capital
| 2015 |
Mary Garrett | 60 | Retired Vice President of Global Marketing IBM
| 2017 |
James R. Giertz | 61 | Retired Senior Vice President and Chief Financial Officer H.B. Fuller Company
| 2009 |
William H. Kucheman
| 69 | Retired Interim Chief Executive Officer Boston Scientific Corp.
| 2013
|
Ronald A. Malone | 64 | Retired Chairman Gentiva Health Services, Inc.
| 2007 |
Nancy M. Schlichting | 64 | Retired Chief Executive Officer Henry Ford Health System
| 2017 |
* Mr. Classon became Chairman of the Board of Hill-Rom in 2006. HeDempsey served as Interim President and Chief Executive Officer of Hill-Rom from May 2005 until March 2006 and as Vice ChairmanChair of the Board from December 2003 untilMarch 6, 2018 through July 16, 2018, at which time he returned to his electionposition as Interim President and Chief Executive Officer. From 2002 to 2004, Mr. Classon served as Chairmannon-executive, independent Chair of the Executive Committee of Bayer Healthcare AG, the healthcare division of Bayer AG, a global healthcare and chemicals company, and, from 1995 to 2002, Board.
WILLIAM G. DEMPSEY |
Mr. Classon served as President of Bayer Diagnostics. From 1991 to 1995, Mr. Classon was an Executive Vice President in charge of Bayer Diagnostics’ Worldwide Marketing, Sales and Service operations. From 1990 to 1991, Mr. Classon was President and Chief Operating Officer of Pharmacia Biosystems A.B. Prior to 1990, Mr. Classon served as President of Pharmacia Development Company Inc. and Pharmacia A.B.’s Hospital Products Division. Mr. Classon serves as a director of Fresenius Medical Care, Tecan Group and Catalent, Inc., and served as a director of Auxilium Pharmaceuticals, Inc. through 2015.
Mr. Dempsey has extensive experience in the health care industry, including positions in management and on the boards of several companies. In addition, his international operations experience and his service as a senior officer at a large company makes him highly qualified to serve on the board.Board.
JOHN P. GROETELAARS |
Mr. Groetelaars, was elected President & Chief Executive Officer of Hill-Rom and appointed to serve as a director effective May 14, 2018. Mr. Groetelaars most recently served as executive vice president and president of the Interventional Segment at Becton, Dickinson and Company, which he joined in December 2017 following its acquisition of C.R. Bard Inc. He previously served in a variety of progressive roles at C.R. Bard during his 10-year career there, including as a group president from 2015 to 2017. Mr. Groetelaars joined C.R. Bard in 2008 as vice president and general manager, Davol Inc., and was appointed president of Davol in 2009. In 2013, Mr. Groetelaars was promoted to group vice president and in 2015 he was promoted to group president, a position he held until C.R. Bard was acquired by Becton, Dickinson and Company in December 2017. Prior to joining C.R. Bard, Mr. Groetelaars held various international leadership positions at Boston Scientific Corporation from 2001 until 2008. Prior to joining Boston Scientific, Mr. Groetelaars held positions in general management, marketing, business development and sales with Guidant Corporation and with Eli Lilly.
Mr. Groetelaars’ extensive experience in the medical device industry, including his multinational experience with substantial public medical device companies and leadership roles in global strategy, operations, sales and business development make him highly qualified to serve as the president and chief executive officer (“CEO”) of Hill-Romas well as a member of the Board.
GARY L. ELLIS |
Mr. Ellis has served as director of Hill-Rom since 2017. He was previously Chief Financial Officer and Senior Vice President of Medtronic plc. Mr. Ellis also serves as an independent director of The Toro Company. He is a Certified Public Accountant.
Mr. Ellis brings significant financial leadership experience and expertise to the Board and provides oversight regarding capital structure, financial condition and policies, long-range financial objectives, financing requirements and arrangements, capital budgets and expenditures, risk-management, and strategic planning matters. Additionally, Mr. Ellis contributes his international experience managing worldwide financial operations and analyzing financial implications of merger and acquisition transactions, as well as aligning business strategies and financial decisions.
10 |
STACY ENXING SENG |
Ms. Enxing Seng has served as director of Hill-Rom since 2015. She is the former President, Vascular Therapies of Covidien from 2011 to 2014 and prior to that was President of Peripheral Vascular of Covidien from 2010 to 2011. Ms. Enxing Seng joined Covidien in 2010 through the $2.6B acquisition of ev3 Incorporated, where she was a founding member and executive officer responsible for leading their Peripheral Vascular division from 2001 to 2010. Prior to that, she held positions of increasing responsibility with SCIMED, Boston Scientific, American Hospital Supply and Baxter. Ms. Enxing Seng currently is a Venture Partner with Lightstone Venture Capital and serves on the boards of Sonova Holding AG, Solace Therapeutics and Fogarty Institute for Innovation, and was formerly on the boards of Claret Medical, Inc., Spirox, Inc., FIRE 1 Medical Incubator and CV Ingenuity.
Ms. Enxing Seng has broad experience as a former senior executive responsible for a world-wide business unit of a major medical device company. In addition, she has significant experience as a co-founder of a successful medical device start-up. Her operational experience at a large medical device company, combined with her broad scope experience gained from her role as a co-founder of a medical device company, provide the Board with valuable insights across marketing, sales, innovation and a variety of other medical device related areas.
MARY GARRETT |
Ms. Garrett has served as director of Hill-Rom since 2017.Ms. Garrettmost recently served as CMO of Global Markets for IBM Corporation, a leading global provider of technology products and services, from 2008 until her retirement in December 2015. She joined IBM in 1981 as an electrical engineer and went on to serve in a number of senior roles including: Partnership Executive for Memorial Sloan Kettering, Vice President, Small and Medium Business for Global Technology Services, Vice President of Marketing for Global Technology Services, and Vice President of Marketing for eBusiness Hosting. Ms. Garrett currently serves as a board member and on the audit committee for Ethan Allen Interiors, Inc. She is an active mentor in W.O.M.E.N. in America, a professional development group aimed at advancing promising women, and is also on the board of the American Marketing Association, serving as past Chair.She also serves as Advisor for the World 50 Organization. Ms. Garrett serves on the strategic planning committee of the Western Connecticut Health Network and is on the board of Danbury Hospital.
Ms. Garrett has extensive experience in the technology industry, including digital transformation, big data and cognitive analytics, cybersecurity, and cloud computing. In addition, her broad international background, marketing expertise, and business leadership experience, as well as experience as a public company director make her highly qualified to serve on the Board.
JAMES R. GIERTZ |
Mr. Giertz has served as a director of Hill-Rom since 2009. He has been Executiveserved as the Senior Vice President and Chief Financial Officer of H.B. Fuller Company, St. Paul, Minnesota sincefrom March 2008. 2008 until his retirement in February 2017. Prior to joining H.B. Fuller, he served as Senior Managing Director, Chief Financial Officer and, for several months in 2007 a director, of Residential Capital, LLC, one of the largest originators, servicers and securitizers of home loans in the United States. Prior to that, he was Senior Vice President of the Industrial Products division, and Chief Financial Officer of Donaldson Company, Inc., a worldwide provider of filtration systems and replacement parts. In addition, Mr. Giertz served as assistant treasurer of the parent company at General Motors, and also held several international treasury positions in Canada and Europe. Mr. Giertz alsocurrently serves on the Boardas a director of the Junior AchievementSchneider National, Inc. and is a member of the Upper Midwest and the Board of Regents of Concordia University of St. Paul.
Mr. Giertz has extensive experience in financial statement preparation and accounting, and operations, and his service as a senior officer in large corporations brings knowledge and valuable insight to the Board. In addition, his international experience is a valuable asset to the Board.
11 |
WILLIAM H. KUCHEMAN |
Mr. Kucheman has served as a director of Hill-Rom since 2013
Mr. Kucheman’s board of directors experience includes committee membership in audit, mergers and acquisitions, compensation and management development, and sales effectiveness. His executive experience with invasive medical devices, including FDA regulation, commercialization process, government reimbursement, and clinical marketing, makes him highly qualified to serve on the Board.
RONALD A. MALONE |
Mr. Malone has served as a director of Hill-Rom since 2007. He served as Chairman of the Board of Gentiva Health Services from 2002 to 2011, as Chief Executive Officer from 2002 through 2008, and as a director through 2012. He joined Gentiva in 2000 as Executive Vice President and President of Gentiva’s Home Health Division. Prior to joining Gentiva, he served in various positions with Olsten Corporation including Executive Vice President of Olsten Corporation and President, Olsten Staffing Services, United States and Canada. He is a director of Capital Senior Living, Inc., a former director of the National Association for Home Care & Hospice and a former director and chairman of the Alliance for Home Health Quality and Innovation.
Mr. Malone has an intimate knowledge of the home health industry and expertise in the legislative and regulatory landscape affecting healthcare companies. In addition, his experience as an officer of other health care companies provides the Board with valuable operational experience.
NANCY M. SCHLICHTING |
Ms. Enxing SengSchlichting has served as director of Hill-Rom since 2015. She2017. Ms. Schlichting is the formerretired President Peripheral Vascularand Chief Executive officer of CovidienHenry Ford Health System (“HFHS”) in Detroit, Michigan, serving in this role from 2012June, 2003 to 2014,January, 2017. She joined HFHS in 1998 as Senior Vice President and Chief Administrative Officer, and was promoted to Executive in Residence for Covidien in 2014. PriorVice President and Chief Operating Officer from 1999 to that, she was2003, and President Vascular Therapies,and Chief Executive Officer of Covidien from 2010 to 2012. Ms. Enxing Seng joined Covidien in 2010 through the $2.6B acquisition of ev3 Incorporated, where she was a founding member and executive officer responsible for leading their Peripheral Vascular divisionHenry Ford Hospital from 2001 to 2010. Prior to that, she held positions of increasing responsibility with SCIMED, Boston Scientific, American Hospital Supply and Baxter. Ms. Enxing Seng2003. She currently serves as a director of Walgreens Boots Alliance (13 years of Board service, chair of Compensation Committee and member of Audit Committee), a director on the boardsboard of Sonova Holding AG, Solace Therapeutics,directors of Encompass Health (member of Compliance and Spirox, Inc.Quality of Care Committee and member of Audit Committee), and was formerlya trustee of Kresge Foundation (chair of Compensation Committee and member of Audit Committee), Michigan State University, the Detroit Symphony Orchestra, Duke University and vice-chair of the Duke University Health System Board.
Ms. Schlichting's career in healthcare administration spans more than 35 years in senior-level executive roles. She is credited with leading HFHS through a dramatic financial turnaround, and for award-winning customer service, quality and diversity initiatives, including HFHS being the recipient of the 2011 Malcolm Baldrige National Quality Award. Her significant healthcare leadership background, and her comprehensive knowledge of finance and accounting gained by education, experience and service on the boards of FIRE 1 Medical Incubator and CV Ingenuity.
Proposal No. 2 – Non-Binding Vote on Executive Compensation
We hold an annual non-binding vote on Executive Compensation each year. Accordingly, wewe are presenting to our shareholders the following resolution for their annual vote (on a non-binding basis):
“RESOLVED, that the shareholders of Hill-Rom Holdings, Inc. approve, on an advisory basis, the compensation of the Company’s named executive officersNEOs and the overall compensation policies and procedures employed by Hill-Rom, disclosed pursuant to Item 402 of the SEC’s Regulation S-K, and described in the Compensation Discussion and Analysis and the tabular disclosure regarding named executive officerNEO compensation (together with the accompanying narrative disclosure) in this proxy statement.”
As described under “Compensation Discussion and Analysis” beginning on page 31,24, our philosophy in setting executive compensation is to provide a total compensation package that allows us to continue to attract, retain and motivate talented executives who drive our Company’s success, while aligning compensation with the interests of our shareholders and ensuring accountability and transparency. Consistent with the philosophy, a significant majority of the total compensation opportunity for each of our named executive officersNEOs is based on measurable corporate, business area and individual performance, both financial and non-financial, and on the performance of our shares on a long-term basis.
Because your vote is advisory, it will not be binding on the Board of Directors.Board. However, the Compensation and Management Development Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
The Board of Directors recommends that you vote “FOR” the approval of this resolution.
13 |
Proposal No. 5 – Reauthorization of the Hill-Rom Holdings, Inc. Stock Incentive Plan
Subject to shareholder ratification, the Audit Committee of our Board has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the fiscal year ending September 30, 2016.2019. Representatives from PwC will be present at the annual meeting with an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.
The Audit Committee has adopted a policy requiring that all services from the outside independent registered public accounting firm must be pre-approved by the Audit Committee or its delegate and has adopted guidelines that non-audit related services should not exceed the total of audit and audit related fees. During fiscal 2015,year 2018, PwC’s fees for non-audit related services fell within these guidelines.
The following table presents fees for professional services rendered by PwC for the audit of our annual consolidated financial statements for the fiscal years ended September 30, 20142017 and 2015,2018, and fees billed for other services rendered by PwC during those periods.
2014 | 2015 | |||
Audit Fees (1) | $2,783,900 | $3,618,840 | ||
Audit-Related Fees (2) | -- | $6,100 | ||
Tax Fees (3) | $355,732 | $688,268 | ||
All Other Fees (4) | $146,800 | $122,000 | ||
Total | $3,286,432 | $4,435,208 |
2017 | 2018 | |||||||
Audit Fees (1) | $ | 3,814,000 | $ | 3,867,700 | ||||
Audit-Related Fees | $ | 0 | $ | 0 | ||||
Tax Fees (2) | $ | 111,700 | $ | 62,000 | ||||
All Other Fees (3) | $ | 2,000 | $ | 273,000 | ||||
Total | $ | 3,927,700 | $ | 4,202,700 |
Audit Fees were billed by PwC for professional services rendered for the integrated audit of our consolidated financial statements and our internal control over financial reporting, along with the review and audit of the application of new accounting pronouncements, SEC releases, acquisition accounting, statutory audits of |
Tax Fees were billed by PwC for professional services rendered for tax compliance, tax advice and tax planning. |
All Other Fees were fees billed by PwC for all other products and services provided to us. |
The Board recommends that you vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as Hill-Rom’s independent registered public accounting firm.
Corporate Governance |
Board Leadership
The Board is currently led by our non-executive, independent Chair, Mr. Classon.Dempsey. The Board has determined that the leadership of the Board is best conducted by an independent Chair. ThisChair which allows (i) the Chair to provide overall leadership to the Board in its oversight function whileand (ii) the Chief Executive Officer,president and CEO, Mr. Greisch, providesGroetelaars, to provide leadership with respect to the day-to-day management and operation of our business. We believe theThe separation of thethese offices allowsenables Mr. ClassonDempsey to focus on managing Board matters and allowswhile letting Mr. Greisch toGroetelaars focus on managing our business. In addition, weWe believe that the separation of thethese offices enhances the objectivity of the Board in its management oversight role.
During fiscal year 2018, and in anticipation of the departure of Mr. John J. Greisch (Hill-Rom’s previous president and CEO), effective March 6, 2018, the Board appointed Mr. Dempsey to serve as the Executive Chair of the Board. In that role, Mr. Dempsey provided executive leadership and guidance during the period of management transition and continued to provide leadership to the Board. At the time Mr. Dempsey was named the Executive Chair, the Board no longer deemed him independent and thereby named Mr. Malone to serve as the Board's independent Lead Director effective as of March 6, 2018 to maintain the Board’s independent oversight function. At the time Mr. Dempsey was appointed to serve as the Executive Chair of the Board, he ended his service as a member of the Audit Committee.
Mr. Dempsey continued to serve as Executive Chair of the Board from his appointment on March 6, 2018 through July 16, 2018, at which time the Board ended his service as Executive Chair of the Board. Mr. Dempsey earned $789,231 in base salary and $650,000 in Restricted Stock Units in his role as Executive Chair, as previously disclosed and in accordance with the terms set forth in the Form 8-K the Company filed with the SEC on March 7, 2018. At such time, and after the Board had determined Mr. Dempsey’s independence based on discussions with Mr. Dempsey and a review of his responses to questions about employment history, affiliation and family and other relationships with the Company, Mr. Dempsey resumed his prior role as independent Chair of the Board. In addition, effective July 16, 2018, the Board ended Mr. Malone’s service as independent Lead Director and Mr. Malone resumed his prior role as Board Member and Chair of the Nominating/ Corporate Governance Committee.
Assuming Mr. Dempsey is re-elected to the Board at the meeting, the Board plans to re-elect Mr. Dempsey as the Chair of the Board at the recommendation of the Nominating/Corporate Governance Committee.
Executive sessions (meetings of independent directors without management present) are held regularly at the beginning and end of Board meetings, and, depending on directors’ desire, from time to time during Board and committee meetings. The Chair generally presides at executive sessions of non-management directors.
Board’s Role in Strategic Planning and Oversight of Risk Management
The Board is responsible for directing and overseeing the management of Hill-Rom’s business in the best interests of the shareholders and consistent with good corporate citizenship. The Board sets strategic direction and priorities for the Company, approves the selection of the senior management team and oversees and monitors risks and performance. At Board meetings during the year, members of senior management review their organizations and present their long-range strategic plans to the Board, and at the start of each fiscal year, the Board reviews and approves the Company’s operating plan and budget for the next fiscal year.
A fundamental part of setting Hill-Rom’s business strategy is the assessment of the risks Hill-Rom faces and how they are managed. SeniorThe Board oversees risk management meets regularly to reviewwith a focus on the most significant risks facing the Company, including strategic, operational, financial, legal and discuss the Company’s top enterprisecompliance risks. The output of these meetings is provided and discussed at each Board meeting. In addition, each of the Board, the Nominating/Corporate Governance Committee, and the Audit CommitteesCommittee, as necessary, meet regularly throughout the year with our financial and treasury management teams and with our Chief Compliance Officer, Vice President, Internal Audit, Chief Legal Officer and Chief LegalInformation Officer to assess the strategic, operational, financial, legal compliance, and operational/strategiccompliance risks throughout our businesses and to review our insurance and other risk management programs and policies. These regular meetings enable the Board to exercise its ultimate oversight responsibility for Hill-Rom’s risk management processes.
Communications with Directors
Shareholders of Hill-Rom and other interested persons may communicate with the Chair of the Board, the chairs of Hill-Rom’sthe committees of the Board, or the non-management directors of Hill-Rom as a group by sending an email to investors@hill-rom.com.investors@hill-rom.com. The email should specify the intended recipient.
Director Attendance at Annual Meeting
Hill-Rom does not have a formal policy regarding director attendance at its annual meetings of shareholders, but Hill-Rom’s directors generally do attend the annual meetings. The Chair of the Board presides at the annual meeting of shareholders, and the Board holds one of its regular meetings in conjunction with the annual meeting of shareholders. All continuing members of the Board at the time of our 20152018 annual meeting of shareholders attended that meeting in person.
Corporate Governance Standards and Code of Ethics
The Board has adopted Corporate Governance Standards for the Board of Directors that provide the framework for the effective functioning of the Board of Directors.Board. In addition, the Board has adopted a Global Code of Conduct that applies to everyone who conducts business for and with Hill-Rom including all directors, officers otherand employees of Hill-Rom, agents, vendors, suppliers and other business partners,consultants worldwide, and which constitutes a “code of ethics” within the meaning of Item 406 of the SEC’s Regulation S-K. The Board reviews, from time to time, and makes changes toreviewed the Global Code of Conduct based on recommendations made byduring fiscal year 2018 and did not recommend any changes. Both the Audit CommitteeCorporate Governance Standards and the Global Code of the Board. TheyConduct are both available via the Investor Relations section of the Hill-RomCompany’s website at http://ir.hill-rom.com.
Determinations with Respect to Independence of Directors
The Board determines the independence for each member of the Board based on an annual evaluation performed and recommendations made by the Nominating/Corporate Governance Committee, consistent with the applicable rules of the New York Stock Exchange.
Based on these standards and all relevant facts and circumstances, the Board has determined that each current member of Rolf A. Classon, William G. Dempsey, James R. Giertz, Charles E. Golden, William H. Kucheman, Ronald A. Malone, Eduardo R. Menascéthe Board and Stacy Enxing Sengeach nominee for the Board is independent, and thatwith the exception of John J. GreischP. Groetelaars, who is not independent.
Transactions with Related Persons
The Corporate Governance Standards forCompany has written procedures regarding the Board require that all new proposedreview and preapproval of related party transactions involving executive officers or directors must be reviewed and approved by the Nominating/Corporate Governance Committee. The Corporate Governance Standards do not specify the standards to be applied by thedirectors. Under these procedures, our Nominating/Corporate Governance Committee inis responsible for reviewing transactions withand preapproving all related persons. However, we expect that in generalperson transactions. When reviewing and/or approving proposed related party transactions, the Nominating/Corporate Governance Committee will consider all of the relevant facts and circumstances, including: the benefits to us,us; the impact on a director’s independence in the event the related person is a director, an immediate family member of a director or an entity in which a director is a partner, shareholder or executive officer,officer; the availability of other sources for comparable products or services,services; the terms of the transaction,transaction; and the terms available for similar transactions with unrelated third parties.
Meetings, Committees and Position SpecificationsBoard Skills Assessment of the Board of Directors
During the fiscal year ended September 30, 2015,2018, the Board held seven meetings. During this period, no incumbent member of the Board attended fewer than 90%75% of the aggregate number of meetings of the full Board and the meetings of the committees on which he or she served, and our incumbent directors attended an average of 99%97% of the meetings of the Board and committees on which they served. The
Per our Corporate Governance Standards, the Nominating/Corporate Governance Committee assessed the Board's effectiveness as a whole as well as the effectiveness of the individual directors and the Board's various Committees, including a review of the mix of skills, core competencies and qualifications (including independence under applicable standards) of members of the Board has adopted position specifications applicableand its various committees, which reflect expertise in one or more of the following areas: chief executive officer experience, strong healthcare experience, financial acumen, international experience, regulatory experience, sales and marketing experience, product development/ design experience, payor and reimbursement experience, science/technology expertise with clinical applications, acute care provider experience, mergers and acquisitions and integration experience, and cybersecurity experience.
In order to membersmake these assessments, the Nominating/Corporate Governance Committee solicited the opinions of each director regarding the foregoing matters and nominees. The specifications provide, in general, that a candidate must be of sound character, be an expert in his or her chosen field, be knowledgeable of Hill-Rom’s business (or be willingthen presented its findings and recommendations to become so) and have experience as an overseer of, and advisorthe Board. In addition to senior management. In addition,the above, the particular skills and talents of any director nominee should positively contribute to the diversity of the various skills and talents of the Board as a whole.
The following table shows the current composition of the committees of the Board, all of which operate pursuant to written charters:
Director | Audit Committee | Nominating/ Corporate Governance Committee | Compensation and Management Development Committee | Mergers and Acquisitions Committee |
Rolf A. Classon (Board Chair) (I) | C | C | ||
John J. Greisch | ü | |||
William G. Dempsey (I) | ü | |||
James R. Giertz (I) | ü | |||
Charles E. Golden (I) | C | ü | ü | |
William H. Kucheman (I) | ü | ü | ||
Ronald A. Malone (I) | ü | C | ü | |
Eduardo R. Menascé (I) | ü | |||
Stacy Enxing Seng (I) | ü | |||
Number of Meetings in FY 2015 | 9 | 6 | 6 | 7 |
Director Audit Committee Nominating/ Corporate Governance Committee Compensation Committee Mergers and C John P. Groetelaars Gary L. Ellis (I)* ü Stacy Enxing Seng (I) ü Mary Garrett (I) ü James R. Giertz (I) ü C ü ü William H. Kucheman (I) ü ü Ronald A. Malone (I) C ü Nancy M. Schlichting (I) ü C
and
Management
Development
Acquisitions
CommitteeWilliam G. Dempsey (Board Chair) (I) Charles E. Golden (I)** Number of Meetings in fiscal year 2018 9 5 7 0
I = Independent Director
C = Committee Chair
* Assuming Mr. Ellis is re-elected to the Board at the meeting, the Board plans to elect Mr. Ellis as Chair of the Audit Committee
at the recommendation of the Nominating/Corporate Governance Committee.** Mr. Golden informed the Board of his decision to retire from the Board effective as of the date of the meeting.
The Audit Committee has general oversight responsibilities with respect to Hill-Rom’s financial reporting and controls, and legal, regulatory and ethical compliance. It regularly reviews Hill-Rom’s financial reporting process, its system of internal control over financial reporting, legal and regulatory compliance and ethics, and internal and external audit processes. Each member of the Audit Committee is independent under Rule 10A-3 of the SEC and NYSE listing standards and meets the financial literacy guidelines established by the Board in the Audit Committee Charter. The Board of Directors has determined that each of Messrs. Golden, Kucheman,Ellis and MenascéGiertz is an “audit committee financial expert” as that term is defined in Item 407(d) of the SEC’s Regulation S-K.
The Compensation and Management Development Committee assists the Board in ensuring that the officers and key management of Hill-Rom are effectively compensated in a way that is internally equitable and externally competitive.competitive and is responsible for approving our CEO compensation. The Compensation and Management Development Committee is also responsible for reviewing and assessing the talent development and succession management actions concerning the officers and key employees of Hill-Rom.
The Nominating/Corporate Governance Committee assists the Board in ensuring that Hill-Rom is operated in accordance with prudent and practical corporate governance standards, ensuring that the Board achieves its objective of having a majority of its members be independent in accordance with NYSE listing standards, and identifying and evaluating candidates for the Board. In identifying and evaluating candidates for the Board, the Nominating/Corporate Governance Committee considers each candidate’s experience, integrity, background and skills as well as other qualities that the candidate may possess and factors that the candidate may be able to bring to the Board. Although we do not have a formal policy with regard to the consideration of Directors. Itdiversity in identifying director candidates, the Board believes that it is essential that its members represent diverse viewpoints, with a broad array of experiences, professions, skills, geographic representation and backgrounds that, when considered as a group, provide a sufficient mix of perspectives to allow the Board to best fulfill its responsibilities to the long-term interests of our shareholders. The Nominating/Corporate Governance Committee also assists the Audit Committee with Hill-Rom’s non-financial compliance oversight.
The Mergers and Acquisitions Committee assists the Board in reviewing and assessing potential acquisition opportunities that Hill-Rom may have.
Nomination of Directors for Election
The Nominating/Corporate Governance Committee considers director candidates recommended by shareholders, and any such recommendations should be communicated to the Chair of the Nominating/Corporate Governance Committee in the manner described above in “Communications with Directors” and should be accompanied by substantially the same types of information as are required under Hill-Rom’s Code ofour By-laws for shareholder nominees.
Our By-Laws providesprovide that nominations of persons for election to the Board of Directors of Hill-Rom may be made at any meeting of shareholders by or at the direction of the Board of Directors or by any shareholder entitled to vote for the election of members of the Board of Directors at the meeting. For nominations to be made by a shareholder, the shareholder must have given timely notice thereof in writing to the Corporate Secretary of Hill-Rom and any nominee must satisfy the qualifications established by the Board of Directors of Hill-Rom.Board. To be timely, a shareholder’s nomination must be delivered to or mailed and received by the Corporate Secretary not later than (i) in the case of the annual meeting, 100 days prior to the anniversary of the date of the immediately preceding annual meeting which was specified in the initial formal notice of such meeting (but if the date of the forthcoming annual meeting is more than 30 days after such anniversary date, such written notice will also be timely if received by the Corporate Secretary by the later of 100 days prior to the forthcoming meeting date and the close of business 10 days following the date on which Hill-Rom first makes public disclosure of the meeting date) and (ii) in the case of a special meeting, the close of business on the tenth day following the date on which Hill-Rom first makes public disclosure of the meeting date. The notice given by a shareholder must set forth: (i) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (ii) a representation that the shareholder is a holder of record, setting forth the shares so held, and intends to appear in person or by proxy as a holder of record at the meeting to nominate the person or persons specified in the notice; (iii) a description of all arrangements or understandings between such shareholder and each nominee proposed by the shareholder and any other person or persons (identifying such person or persons) pursuant to which the nomination or nominations are to be made by the shareholders; (iv) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC; (v) the consent in writing of each nominee to serve as a director of Hill-Rom if so elected; and (vi) a description of the qualifications of such nominee to serve as a director of Hill-Rom.
Compensation and Management Development Committee Interlocks and Insider Participation
As of the fiscal year ended September 30, 2015,2018, the following directors served on the Compensation and Management Development Committee: Ronald A. Malone, Rolf A. Classon (through March 2015), James R. Giertz,Nancy M. Schlichting, William H. Kucheman and Stacy Enxing Seng and William G. Dempsey.Seng. The Compensation and Management Development Committee had no interlocks or insider participation.
Availability of Governance Documents
Copies of Hill-Rom’s Corporate Governance Standards, Global Code of Ethical Business Conduct and Board committee charters are available at http://ir.hill-rom.com or in print to any shareholder who requests copies through Hill-Rom’s Investor Relations office.department. Also available on Hill-Rom’s website are position specifications adopted by the Board for the positions of Chief Executive Officer and Chair of the Board of Directors and its committees, and other members of the Board of Directors.
Audit Committee Report |
Hill-Rom maintains an independent Audit Committee is comprised entirely of independent directors (as defined for members of an audit committee under NYSE listing standards and SEC audit committee structure and membership requirements) andthat operates in accordance withpursuant to a written charter adopted by the Board. The charter is available on Hill-Rom’s website at www.hill-rom.com under “Our Company–Company Overview–Board of Directors. TheDirectors–Corporate Governance–Documents & Charters.” Each member of the Audit Committee is independent as defined in the NYSE listing standards and SEC rules, and the Board of Directors has determined that each of Messrs. Golden, KuchemanEllis and MenascéGiertz is an "audit committee financial expert" as that term is defined in Item 407(d) of the SEC’s Regulation S-K of SEC.
Management is responsible for Hill-Rom’s internal controls, financial reporting process and(including quarterly earnings press releases), risk assessment policies, compliance with laws and regulations and ethical business standards. The independent registered public accounting firm is responsible for performing an integrated audit of Hill-Rom’s consolidated financial statements and its internal control over financial reporting in accordance with standards of the Public Company Accounting Oversight Board (“PCAOB”) and the issuance of a report thereon. The Audit Committee of the Board of Directors (the “Audit Committee”) has the responsibility to monitor and oversee these processes.
As part of its oversight responsibilities, the Audit Committee meets separately at most regular committeeleast twice each quarter (once to review the quarterly external financial reporting, and at least once in connection with regularly scheduled Board meetings). At these meetings, the Audit Committee meets with management, the Vice President of Internal Audit (solely with respect to regularly scheduled Board meetings) and Hill-Rom’s outside independent registered public accounting firm, as necessary (in each case, with and without management present, at the Audit Committee’s discretion) to discuss the adequacy and effectiveness of Hill-Rom’s internal controls and the quality of the financial reporting process. The Audit Committee also pre-approves all audit and non-audit services to be performed by the outside independent registered public accounting firm. The Audit Committee evaluates the performance of the independent registered public accounting firm, including senior audit engagement team members, on an annual basis and determines whether to reengage the current firm or consider other audit firms. In doing so, the Audit Committee considers the quality and efficiency of the services provided, global capabilities and technical expertise, knowledge of the Company’s global operations and industry and the effectiveness of their communications in providing value-added advice, insights and candid feedback on risks, controls and compliance matters. The Audit Committee also considers how effectively the outside independent registered public accounting firm maintains its independence and employs its independent judgment, objectivity and professional skepticism. Based on our evaluation, the Audit Committee believes that it is in the best interests of the shareholders to approve subject to shareholder ratification, the appointment of PricewaterhouseCoopers LLP (“PwC”) as Hill-Rom’s outside independent registered public accounting firm PricewaterhouseCoopers LLP (“PwC”). The Audit Committee also pre-approves all audit and non-audit services to be performed by the firm. The independent firm,for fiscal year 2019. PwC has been the independent registered public accounting firm used by Hill-Rom since 1985.
In accordance with SEC rules, audit partners are subject to rotation requirements that limit the number of years an individual partner may provide service to any company. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of Hill-Rom’s lead audit partner pursuant to this policy involves meetings between members of the Audit Committee and the candidates, as well as discussion and evaluation by the full Audit Committee and with Hill-Rom management.
The Audit Committee has reviewed and discussed the audited consolidated financial statements with management and PwC. Management represented to the Audit Committee that Hill-Rom’s audited consolidated financial statements were prepared in accordance with generally accepted accounting principles. PwC discussed with the Audit Committee matters required to be discussed by Statement on Auditing Standards No. 114 (The Auditor’s Communication With Those Charged With Governance).16. Management and the independent registered public accounting firmPwC also made presentations to the Audit Committee throughout the year on specific topics of interest, current developments and best practices for audit committees.
PwC also provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee regarding independence. PwC informed the Audit Committee that it was independent with respect to Hill-Rom within the meaning of the securities acts administered by the SEC and the requirements of the PCAOB. The Audit Committee discussed this finding, and also considered whether non-audit consulting services provided by PwC could impair the auditors’ independence and concluded that such services have not done so.
Based upon the foregoing, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in Hill-Rom’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015.
Submitted by the Audit Committee has discussed with the Chief Executive Officer and the Chief Financial Officer of Hill-Rom the certifications required to be given by such officers in connection with Hill-Rom’s Annual Report on Form 10-K pursuant to the Sarbanes-Oxley Act of 2002 and SEC rules adopted thereunder, including the subject matter of such certifications and the procedures followed by such officers and other management in connection with the giving of such certifications.
Charles E. Golden (Chair)
Gary L. Ellis
Mary Garrett
James R. Giertz
Security Ownership of Certain Beneficial Owners and Management |
The following table sets forth information with respect to the beneficial ownership of our outstanding common stock as of January 8, 2016the record date by:
· | each of our directors and our |
· | all of our directors and executive officers as a group; and |
· | each person or entity that is known by us to be the beneficial owner of more than five percent of our common stock. |
Our common stock is our only class of equity securities outstanding. Except as otherwise noted in the footnotes below, the individual director or executive officer or their family members had sole voting and investment power with respect to such securities. None of the shares beneficially owned by our directors and executive officers are pledged as security. The number of shares beneficially owned includes, as applicable, directly and/or indirectly owned shares of common stock, common stock shares underlying stock options that are currently exercisable or will become exercisable within 60 days from January 8, 2016,the record date, and deferred stock share awards (otherwise known as restricted stock units or RSUs) that are vested or will vest within 60 days from January 8, 2016.the record date. Except as specified below, the business address of the persons listed is our headquarters, 180 N. Stetson Avenue, Two Prudential Plaza130 East Randolph, Suite 4100,1000, Chicago, ILIllinois 60601.
Name of Beneficial Owner | Shares Owned Directly | Shares Owned Indirectly | Shares Under Options/RSUs Exercisable/ Vesting Within 60 Days | Total Number of Shares Beneficially Owned | Percent of Class |
Directors and Named Executive Officers: | |||||
Rolf A. Classon | 15,806 | - | 69,927 | 85,733 | * |
John J. Greisch | 136,242 | - | 697,923 | 834,165 | 1.3% |
William G. Dempsey | - | - | 7,204 | 7,204 | * |
James R. Giertz | 2,000 | - | 22,254 | 24,254 | * |
Charles E. Golden | 6,464 | - | 49,000 | 55,464 | * |
William Kucheman | - | - | 8,263 | 8,263 | * |
Ronald A. Malone | - | - | 11,532 | 11,532 | * |
Eduardo R. Menascé | - | - | 34,404 | 34,404 | * |
Stacy Enxing Seng | - | - | 3,165 | 3,165 | * |
Susan R. Lichtenstein | 27,217 | - | 124,490 | 151,707 | * |
Michael S. Macek | 3,648 | - | 7,081 | 10,729 | * |
Alton E. Shader | 21,116 | - | 38,912 | 60,028 | * |
Carlyn D. Solomon | - | - | 8,964 | 8,964 | * |
Steven J. Strobel | - | - | 5,322 | 5,322 | * |
All directors and executive officers as a group (19) | 232,158 | - | 1,134,055 | 1,375,177 | 2.1% |
Name of Beneficial Owner | Shares Owned Directly | Shares Owned Indirectly | Shares Under Options/RSUs Exercisable/ Vesting Within 60 Days | Total Number of Shares Beneficially Owned |
Percent of Class | |
Directors and NEOs: | ||||||
William G. Dempsey | - | - | 16,221 | 16,221 | * | |
John P. Groetelaars (1) | - | - | - | - | * | |
Gary L. Ellis | - | - | 3,136 | 3,136 | * | |
Stacy Enxing Seng | - | - | 11,580 | 11,580 | * | |
Mary Garrett | 300 | - | 4,835 | 5,135 | * | |
James R. Giertz | 2,000 | - | 31,270 | 33,270 | * | |
Charles E. Golden (2) | 6,464 | - | 59,792 | 66,256 | * | |
William Kucheman | - | - | 20,210 | 20,210 | * | |
Ronald A. Malone | - | - | 39,988 | 39,988 | * | |
Nancy M. Schlichting | - | - | 4,835 | 4,835 | * | |
Carlos Alonso Marum | 12,571 | 1,191 | 23,834 | 37,596 | * | |
Alton E. Shader (3) | 24,340 | - | - | 24,340 | * | |
Steven J. Strobel (4) | 25,020 | - | 47,810 | 70,117 | * | |
Paul S. Johnson | 3,042 | - | 8,878 | 11,920 | * | |
John J. Greisch (5) | - | - | - | - | * | |
Rolf A. Classon (6) | - | - | - | - | * | |
All directors and executive officers | 139,289 | 2,600 | 342,927 | 484,816 | * |
(1) Mr. Groetelaars joined the Company on May 14, 2018.
(2) Mr. Golden informed the Board of his decision to retire from the Board effective as of the date of the meeting.
(3) Mr. Shader left the Company on December 1, 2018.
(4) On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date.
(5) Mr. Greisch retired from the Company on May 14, 2018.
(6) Mr. Classon retired as Chair of the Board on March 6, 2018.
Name of Beneficial Owner | Total Number of Shares Beneficially Owned | Percent of Class | |||
Other 5% Beneficial Owners: | |||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 5,680,224 (1) | 8.4% | |||
The Vanguard Group 100 Vanguard Blvd. Malvern, PA | |||||
8.3% |
———————
* Less than 1% of the total shares outstanding.
(1) | This information is based solely on the Schedule |
(2) | This information is based solely on the Schedule |
Compensation Discussion and Analysis |
Compensation and Management Development Committee Report
The Compensation and Management Development Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and, based upon this review and discussion, recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018.
The Compensation and Management Development Committee
William H. Kucheman | |
Stacy Enxing Seng |
Contents of the Compensation Discussion and Analysis
Named Executive Officers | |
Goals of Our Compensation Program | |
Role of the Compensation and Management Development Committee | |
Compensation Consultant | 26 |
Peer Group and Survey Data | |
2018 Advisory Vote | 27 |
CEO Compensation | 27 |
Components of CEO Compensation | 27-28 |
Performance-Based Pay | 28 |
Target CEO Compensation Summary | 28 |
Key Governance Features Relating to Executive Compensation | 29 |
Elements of Executive Compensation | 30 |
Base Salary | 31-32 |
Annual Cash Incentives | 32-34 |
Long-Term Equity Based Incentive (LTI) Awards; 3 Year TSR Graph | 35-39 |
Retirement and Change in Control Agreements | 39-40 |
Other | |
Risk Assessment of Compensation Policies and Practices |
24 |
Named Executive Officers
This Compensation Discussion and Analysis (“CD&A”) describes our compensation programsprogram and how they applyit applies to our Named Executive Officers (“NEOs”),NEOs, comprising:
John | President and Chief Executive Officer |
Senior Vice President | |
Alton E. Shader (3) | Senior Vice President and President Front Line Care |
Senior Vice President and President International | |
Paul Johnson | Senior Vice President and President Patient Support Systems |
John J. Greisch (4) | Retired President and Chief |
(1) | Mr. Groetelaars joined the Company on May 14, 2018. |
(2) | On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date. |
(3) | Mr. Shader left the Company on December 1, 2018. |
(4) | Mr. Greisch retired from the |
Goals of Our Compensation Program
Hill-Rom’s compensation program is designed to:
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In aggregate, the compensation of Hill-Rom’s compensation program has generally targetedexecutive officers is assessed against the 50
Role of the Compensation and tiedManagement Development Committee
The Board’s Compensation and Management Development Committee (for purposes of this CD&A, the “Committee”) is charged with ensuring that Hill-Rom’s compensation program meets the objectives outlined above. In that role, the Committee assists the Board in fulfilling its responsibility for assuring that the officers and key management personnel of the Company are effectively compensated in terms of salaries, supplemental compensation and other benefits which are internally equitable, externally competitive, and advance the long-term interests of the Company’s shareholders. The Committee also reviews and assesses the talent development and succession management actions concerning the officers and key employees of the Company, administers Hill-Rom’s compensation plans and keeps the Board informed regarding executive compensation matters.
The Committee, in consultation with Hill-Rom’s independent compensation consultant and the full Board, determines the compensation of the Chief Executive Officer. Additionally, the Chief Executive Officer makes recommendations to the achievementCommittee regarding the compensation of pre-established corporate financial objectives.
Compensation Consultant
The Committee engages nationally recognized outside compensation and benefits consulting firms to evaluate independently and objectively the effectiveness of and assist with implementation of Hill-Rom’s compensation and benefit programs and to provide the Committee with additional expertise in the evaluation of Hill-Rom’s compensation practices. During fiscal year 2018, the Committee engaged Exequity LLP (“Exequity”) as its executive compensation consultant. Exequity has been asked by the Committee to provide guidance on compensation proposals, including changes to compensation levels, the design of incentive plans, as well as relevant information about market practices and trends.
Exequity is an independent compensation consultant that provided no other services to Hill-Rom other than those services provided to the Committee. After considering the six independence factors discussed in Section 303A.05(c)(iv)(A)-(F) of the NYSE Listed Company Manual, the Committee determined that Exequity had no conflict of interest pursuant to Item 407(e)(3)(iv) of the SEC’s Regulation S-K.
Peer Group and Survey Data
As one of several factors in considering approval of elements of Hill-Rom’s compensation program, the Committee compares Hill-Rom’s compensation program and performance against an approved peer group of companies. The compensation peer group (the “Compensation Peer Group”), which is annually reviewed and updated by the Committee, consists of companies that are similar in revenue (typically 0.5x to 2.5x Hill-Rom’s revenue) and in similar industries as Hill-Rom and with whom Hill-Rom may compete for executive talent. For fiscal year 2018, the Committee reviewed the Compensation Peer Group for appropriateness and made no changes. The companies that made up the Compensation Peer Group are as follows:
Compensation Peer Group | |
Agilent Technologies, Inc. | Intuitive Surgical, Inc. |
Bio-Rad Laboratories, Inc. | MEDNAX, Inc. |
Bruker Corporation | Patterson Companies, Inc. |
C.R. Bard, Inc. (1) | PerkinElmer, Inc. |
The Cooper Companies, Inc. | Quest Diagnostics Incorporated |
DENTSPLY SIRONA Inc. | STERIS plc |
Edwards Life Sciences Corporation | Teleflex Incorporated |
Halyard Health, Inc. | Varian Medical Systems, Inc. |
Hologic, Inc. | Waters Corporation |
(1) | C.R. Bard, Inc. was removed from the Compensation Peer Group mid-year upon acquisition by Becton, Dickinson and Company. |
Links Between Executive Compensation and Company Performance
Overall, the Committee believes the Company’s compensation policies and programs are effective, market-appropriate, and in line with shareholder expectations. However, the Committee and management will continue to engage with shareholders and evaluate Hill-Rom’s pay programs.
The key components of our compensation program that link compensation and performance:
· | Executive compensation is comprised of (1) base salary, (2) variable cash incentive awards |
· |
· | Our variable |
· | As shown below, the significant majority of our CEO’s compensation is |
2018 Advisory Vote
Last year’s Non-Binding Vote on Executive Compensation received support of John Greisch, Our approximately 94% of our shareholders (excluding abstentions and broker non-votes). Based on the results of the shareholder vote, no significant changes to our compensation program took place in fiscal year 2018.
CEO
While our Compensation and Management Developmentthe Committee works to align the pay of all of our executives towith the interests of our shareholders, the Committee believes that itsuch alignment is especially important in the case of our Chief Executive Officer, John Greisch.Groetelaars. Accordingly, the Compensation and Management Development Committee has selected a mix of paycompensation opportunities for Mr. GreischGroetelaars which is weighted towards annual bonusesbonus[es] and long-term equity based compensation. Approximately 85% of Mr. Greisch’s annual target total pay opportunity is at-risk, including almost 70% derived from long term equity awards. The Compensation and Management Development Committee believes that it is critical that Mr. Greisch’s compensation is substantially related to shareholder return, thereby aligning his interests to those of the shareholders to enhance stockholder value.
The components of Mr. Greisch’sGroetelaars’s pay are as follows:
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· | Fiscal modify his annual cash incentive award. |
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· | Based on strong individual and Company performance in the second half of fiscal year 2018 and an assessment of his total compensation against the market median, Mr. Groetelaars’ fiscal year 2019 long-term equity incentive was increased to $4,250,000. Mr. Groetelaars’ annual cash incentive remained unchanged. |
· | As shown in the section below, the significant majority of our CEO’s compensation is performance-based and therefore at-risk. |
Performance-Based Pay
The Compensation and Management Development Committee believes it is important to ensure that a meaningful portion of Mr. Greisch’sGroetelaars’s compensation is in the form of an annual bonus, based on the Company’s performance.performance-based. In FY 2015,fiscal year 2018, the majority of Mr. Greisch’s cashGroetelaars’s target total compensation was in the form of an annual bonus paid under the company’s 162(m) bonus plan. The amount of the bonus was $1.1M, which is the product of his annual salary, multiplied by hiscash incentive and long-term, equity-based incentives. In fiscal year 2018, Mr. Groetelaars’s target annualized cash bonus percentage of 110%, multiplied by the company’s performance of 102% under its annual cash bonus plan. Notably, the Compensation and Management Development Committee did not apply any sort of positive “performance modifier” to Mr. Greisch’s annual bonus, so as to ensure the best possible alignment between his cash bonus and the Company’s performance.
Total Percentage of Fiscal Year 2018 Target Annualized Compensation at Risk: 85%that is Performance-Based: 84%
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Key Governance Features Relating to Executive Compensation
The Hill-Rom Board has instituted a number of corporate governance features related to executive compensation, which are highlighted below and described more fully later.
What We Do | What We Don’t Do | |||
We require significant stock ownership, including 6X base salary for our CEO, ensuring that executives are invested in Hill-Rom’s long-term success | ||||
We engage a fully independent compensation consultant | We don’t provide for single-trigger change in control in executive employment agreements | |||
We have a | We don’t provide gross-ups for 280G excise taxes related to change in control agreements | |||
Our executives have at-will employment agreements | ||||
We don’t allow executives to hedge or pledge their Hill-Rom stock under any circumstances | ||||
Our incentive plans include a cap on payout opportunities. This mitigates against the possibility of excessively high earning potential that could motivate inappropriate behavior. | ||||
We annually make awards of long-term incentives that are tied to stock price performance. The overlay of these awards helps mitigate the possibility of behaviors that would enhance incentive earnings in one year at the expense of future performance results. | ||||
We grant half of our LTI awards in the form of PSUs which have specific performance goals over a 3-year performance period and which cliff vest after three years |
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Elements of Executive Compensation
The major components of Hill-Rom’s executive officer compensation program are summarized below:
Element | Purpose | Key Characteristics |
Base Salary | Reflects each executive’s base level of responsibility, qualifications and contributions to the | Fixed compensation that is reviewed and, if appropriate, adjusted annually |
Variable Annual Cash Incentive | Motivates our executives to achieve annual company objectives that the Board believes will drive long-term growth in shareholder value | This annual cash |
Long-term, Incentive | Motivates our executives by directly linking their compensation to the value of our stock relative to our |
Long-term, Incentive | Motivates our executives by tying compensation to long-term stock appreciation; additionally, the time-vesting nature of the awards helps enable executive retention | Long-term restricted stock units vest on a |
Long-term, Incentive - Stock Options | Motivates our executives by linking their compensation to appreciation in our stock price | Stock options vest 25% per year over a |
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Base Salary
Hill-Rom provides senior management a base salary that is competitive andat a level consistent with their positions, skill levels, experience, knowledge and length of service with Hill-Rom.knowledge. Base salary is intended to aid in the attraction and retention of talent in a competitive market and is generally targeted at the market median, although actual salaries may be higher or lower as a result of various factors, including those given above as well as individual performance, internal pay equity within Hill-Rom, length of service with Hill-Rom and the degree of difficulty in replacing the individual.
Name | 2014 Base Salary | 2015 Base Salary | 2015 Base Salary Increase | 2016 Base Salary | 2016 Base Salary Increase |
John J. Greisch | $965,000 | $1,000,000 | 3.6% | $1,030,000 | 3.0% |
Susan R. Lichtenstein* | $453,614 | $464,000 | 2.3% | N/A | N/A |
Michael S. Macek** | $221,000 | $252,000 | 13.9% | N/A | N/A |
Alton E. Shader | $420,240 | $450,000 | 7.1% | $464,000 | 3.0% |
Carlyn D. Solomon*** | N/A | $600,000 | N/A | $630,000 | 5.0% |
Steven J. Strobel*** | N/A | $475,000 | N/A | $489,000 | 3.0% |
Name | 2017 Base Salary | 2018 Base Salary | 2018 Base Salary Increase |
John P. Groetelaars (1) President and Chief Executive Officer, Member | N/A | $1,000,000 | N/A |
Steven J. Strobel (2) Chief Financial Officer | $504,0000 | $519,000 | 2.98% |
Alton E. Shader (3) Senior Vice President and President, Front Line | $478,000 | $492,000 | 2.93% |
Carlos Alonso Marum Senior Vice President and President, International | $467,000 | $481,000 | 3.00% |
Paul Johnson Senior Vice President and President, Patient | 400,000 | 440,000 | 10.00% |
John J. Greisch (4) Retired President and Chief Executive Officer | 1,050,000 | 1,085,000 | 3.33% |
(1) | Mr. Groetelaars joined the Company on May 14, 2018. |
(2) | On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date. |
(3) | Mr. Shader left the Company on December 1, 2018. |
(4) | Mr. Greisch retired from the Company on May 14, 2018. |
Fiscal Year 2019 Changes to Base Salary. Based on a review of the Corporation in January 2016.
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In line with the goals of our compensation program, as well as his performance during fiscal year 2018, Mr. Johnson received a base salary increase of 10% in Fiscal Year 2014.
Annual Cash Incentives
Overview
. AllEach named executive officerNEO receives a target award that (1) iscan be adjusted upwards or downwards based on achieving Company-wide targets, which set the STIC Funding Percentage, and (2) may be adjusted upwards or downwards based on individualfinancial performance targets and measures.
STIC Plan Payment Calculation
. TheSTIC Performance by (c) the STIC Target Opportunity by (d) base salary.
Individual Performance Modifier. Under the terms of the STIC Plan, the Committee may apply a modifier to an executive’s award based on the achievement of individual performance objectives. To evaluate individual performance, individual goals are set each year for each NEO. These include shared financial and strategic objectives as well as objectives that are directly related to each NEO’s specific business function. Except with respect to his own performance, this assessment is based on our CEO’s recommendation to the Committee on how well the NEO performed his or her job, based on both qualitative and quantitative results. There is no specific weight given to any one individual goal or objective. This evaluation of the impact of the individual contributions on actual compensation is not a formula-based process resulting in a quantifiable amount of impact, but rather involves the exercise of discretion and judgment. This enables the Committee to differentiate among NEOs and emphasize the link between personal performance and compensation. The Individual Performance Modifier is assigned between 0% and 150% of the NEO’s funded STIC award.
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For fiscal year 2015,2018, the targets and achievements (in millions, except per share data) were as follows:
STIC Targets and Achievement Calculation | ||||||
Threshold | Target | Maximum | Weight | Achieved | Achievement | |
Revenue* | $1,726 | $1,918 | $2,110 | 40% | $2,004 | 104% |
Adjusted EPS* | $2.10 | $2.48 | $2.85 | 60% | $2.49/ $2.64** | 101% |
Total Weighted Average Achievement* | 102% | |||||
*Adjusted for the impact of acquisitions and various one-time events (such as litigation settlements, changes in policies, and certain other unusual charges or benefits) from our as-reported financial results. These amounts may differ from our reported adjusted numbers. **Adjusted EPS as reported to investors was $2.64. The difference between the reported number of $2.64 and the $2.49 used to calculate STIC relates to a number of items that were excluded from adjusted EPS as reported, but included in the STIC calculation, such as the financial impact of the additional shares of stock granted by the Compensation and Management Development Committee as a result of overachievement in our 2013 PSU grant, and the Welch Allyn acquisition. |
Fiscal Year 2018 STIC Plan Targets and Achievement Calculation ($ in Millions except EPS) | ||||||
Threshold |
Target |
Maximum |
Weight |
Achieved |
Achievement | |
STIC Revenue (1) | $2,581 | $2,867 | $3,154 | 50% | $2,851 | 50% |
STIC Adjusted EPS (2) | $3.61 | $4.25 | $4.89 | 25% | $4.25 | 25% |
STIC Free Cash Flow (3) | $190 | $224 | $258 | 25% | $274 | 37% |
Percentage Payout | 50% | 100% | 150% | |||
STIC Plan Funding Percentage | 112% | |||||
STIC Plan Funding Percentage After Adjustment (4) | 110% |
(1) Revenue as reported to investors was $2,848 million versus a STIC revenue of $2,851. The difference between the reported numbers and the numbers used to calculate STIC relates to divestiture activities and the impact of fluctuations in foreign exchange rates.
(2) Adjusted EPS as reported to investors was $4.75 versus a STIC Adjusted EPS of $4.25. Adjusted EPS as reported to investors excludes the impact of strategic developments, acquisition and integration costs, special charges, the one-time impact of U.S. tax reform legislation, significant litigation expenses and other unusual events. The difference between the Adjusted EPS and STIC Adjusted EPS relates to the exclusion for STIC Adjusted EPS of the ongoing benefit realized from U.S. tax reform legislation and the tax benefit from excess stock compensation deductions above amounts included in our plan.
(3) Free Cash Flow as reported to investors was $306 million versus STIC Free Cash Flow of $274 million. The differences between the reported numbers and the numbers used to calculate STIC relates to the cash flow impact of special items, U.S. tax reform legislation and excess stock compensation deductions above amounts included in our Plan.
(4) Following the completion of fiscal year 2018, the Committee reviewed the adjusted financial performance of Hill-Rom against the predetermined financial targets and determined that the Committee would exercise its negative discretion and set the aggregate corporate STIC Plan Funding Percentage at 110% and reallocate the difference to other business units in an effort to align business incentives.
The objectives are set with the intention that the relative level of difficulty in achieving the targets is consistent from year to year. In addition, in order to encourage management to take actions in the best interests of Hill-Rom, the Compensation and Management Development Committee has the discretion to exclude nonrecurring special charges and amounts from the calculation of these targets. At its November 2015 meeting,Further, the Compensation and Management DevelopmentCommittee considers the broader performance of the business to determine whether negative discretion should be applied to the financial performance of the STIC Plan Funding Percentage outlined above. Following the completion of fiscal year 2018, the Committee reviewed the adjusted financial performance of Hill-Rom against the predetermined financial targets and determined that based on ourthe Company’s performance in fiscal year 2015,2018, the Committee would exercise its negative discretion and set the aggregate STIC Plan Funding Percentage was 102%at 110%.
STIC Target Opportunity and Fiscal Year 2018 Payouts. The following chart shows the fiscal year 2018 STIC Plan Target Opportunity and fiscal year 2018 STIC Plan Payout for each NEO. The payouts reflect the Company’s adjusted performance of 110% of target plus the application of any Individual Performance Modifiers.
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Name | Fiscal Year 2018 Base Salary | Fiscal Year 2018 STIC Plan Target Opportunity as a % of Base Salary | Fiscal Year 2018 STIC Plan Target Opportunity | Fiscal Year 2018 STIC Plan Payout |
John P. Groetelaars (1) President and Chief Executive | $ 384,615 | 100% | $ 384,615 | $ 424,231 |
Steven J. Strobel (2) Chief Financial Officer | $ 519,000 | 75% | $ 389,250 | $ 429,343 |
Alton E. Shader (3) Senior Vice President and | $ 492,000 | 70% | $ 344,400 | $ 379,873 |
Carlos Alonso Marum Senior Vice President and President, | $ 481,000 | 70% | $ 336,700 | $ 352,811 |
Paul Johnson Senior Vice President and | $ 440,000 | 70% | $ 308,000 | $ 424,655 |
John J. Greisch (4) Retired President and Chief | $ 668,500 | 110% | $ 773,350 | $ 811,091 |
(1) | Mr. Groetelaars joined the Company on May 14, 2018; his base salary was prorated for award payout. |
(2) | On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date. |
(3) | Mr. Shader left the Company on December 1, 2018. |
(4) | Mr. Greisch retired from the Company on May 14, 2018; his base salary was prorated for award payout. |
Fiscal Year 2019 Changes to Plan Design and Target Opportunity.In order to drive growth within the business, the Committee has rebranded the annual incentive program as Business Incentive for Growth (“BIG”), demonstrating significant payeffective for performance alignmentfiscal year 2019. The structure of BIG will be similar to the STIC Plan. Employees eligible to participate in BIG will be placed into differentiated funding pools according to the business unit(s) and geographic region(s) in which such employees work (collectively, the “business unit pools”). Employees who work as part of our compensation programcorporate function rather than a specific business unit will participate in a separate BIG funding pool (the “corporate pool”). The design of the corporate pool (in terms of the pooling percentage of 0% to 150%) will not change relative to our STIC Plan effective for fiscal year in which we achieved2018. However, BIG differentiates the business unit pools by providing a 27% TSR. This STICpool funding percentage was based on an Adjusted EPS of $2.49, as compared0% to $2.64 reported200% of aggregate target opportunities (versus 0% to our stockholders at150% for the endcorporate pool). NEOs who are Presidents of ourbusiness units will participate equally in the corporate pool and their respective business unit pool; with each pool weighted 50%. Business unit pool target opportunity measures will be (i) revenue, weighted 60% and (ii) operating income, weighted 40%. The Committee confirmed that the fiscal year. The difference between the reported number of $2.64 and the $2.49year 2018 target opportunity measures used to calculate STIC relates to a number of items that were excluded from adjusted EPS as reported, but included in the STIC calculation, such asPlan remain appropriate for the financial impact of the additional shares of stock granted by the Compensation and Management Development Committee as a result of overachievement in our 2013 PSU grant.
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STIC Target Metrics | ||
FY 2015 | FY 2016 | |
Revenue | 40% | 25% |
Adjusted EPS | 60% | 50% |
Operating Cash Flow | N/A | 25% |
STIC Target Opportunities | ||
Name | FY 2015 | FY 2016 |
John J. Greisch | 110% | 110% |
Susan R. Lichtenstein* | 60% | N/A |
Michael S. Macek** | 30% | N/A |
Alton E. Shader | 70% | 70% |
Carlyn D. Solomon | 80% | 80% |
Steven J. Strobel | 75% | 75% |
*Ms. Lichtenstein retired from the Corporation in January 2016. **Mr. Macek stepped down as the interim CFO in November 2014, and will not be a named executive officer going forward. |
Long-Term Equity Based Incentive (LTI) Awards
Overview:
Hill-Rom’s Stock Incentive Plan provides for the opportunity to grant stock options, restricted stock units (“RSUs”), PSUs and other equity-based incentive awards to officers, other key employees and non-employee directors to help align those individuals’ interests with those of shareholders, to help motivate executives to make sound strategic long-term decisions, and to better enable Hill-Rom to attract and retain capable directors andHill-Rom’s long-term incentive compensationLTI program provides a portfolio approach to long-term incentives by providing:
· | Awards targeted to align with competitive market |
· | Payouts that correlate high performance with increased payouts and low performance with reduced |
· | A mix of awards representative of typical market |
· | Awards that support internal equity among Hill-Rom’s executives. |
In addition, the Compensation and Management Development Committee consideredconsiders the Stock Incentive Plan share usage rate, compensation expense, number of plan participants and potential aggregate target awards for participants when determining target award levels and the mix of long-term incentive awards.
Target LTI Opportunity for Fiscal Year 2018 Awards. The following chart shows the fiscal year 2018 LTI Plan Target Opportunity
Name | Fiscal Year 2018 Base Salary | Fiscal Year 2018 Target LTI Opportunity (as a % of Base Salary) | Fiscal Year 2018 Target LTI Award | 2018 Actual LTI Award* | Stock (25%) | RSUs Granted (25%) | PSUs (50%) | |
John P. Groetelaars (1) President and Chief Executive | $ 1,000,000 | 400% | $ 4,000,000 | $ 4,000,000 | 39,962 | 11,505 | 23,010 | |
Steven J. Strobel (2) Chief Financial Officer | $ 519,000 | 250% | $ 1,297,500 | $ 1,297,500 | 14,758 | 4,083 | 8,166 | |
Alton E. Shader (3) Senior Vice President and President, | $ 492,000 | 200% | $ 984,000 | $ 984,000 | 11,192 | 3,097 | 6,193 | |
Carlos Alonso Marum Senior Vice President and | $ 481,000 | 175% | $ 841,750 | $ 968,013 | 11,011 | 3,046 | 6,092 | |
Paul Johnson Senior Vice President and | $ 440,000 | 175% | $ 770,000 | $ 847,000 | 9,634 | 2,666 | 5,331 | |
John J. Greisch (4) Retired President and Chief | $ 1,085,000 | 500% | $ 5,425,000 | $ 5,425,000 | 61,704 | 17,071 | 34,141 |
(1) | Mr. Groetelaars joined the Company on May 14, 2018. |
(2) | On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date. |
(3) | Mr. Shader left the Company on December 1, 2018. |
(4) | Mr. Greisch retired from the Company on May 14, 2018. |
* | Dollar values shown under this column differ from the expense-based values shown in the Summary Compensation Table and Grants of Plan Based Awards Table. See “Calculation of shares” within the narrative below. |
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Stock Options. In fiscal year 2018, a percentagestock option grant was made to each of base salary, were and are:
LTI Target Opportunities | ||
Name | FY 2015 | FY 2016 |
John J. Greisch | 450% | 475% |
Susan R. Lichtenstein* | 175% | N/A |
Michael S. Macek** | 60% | N/A |
Alton E. Shader | 175% | 175% |
Carlyn D. Solomon | 300% | 300% |
Steven J. Strobel | 225% | 225% |
*Ms. Lichtenstein retired from the Corporation in January 2016. **Mr. Macek stepped down as the interim CFO in November 2014, and will not be a named executive officer going forward. |
RSUs.
PSUs. In fiscal year 2018, a PSU grant was made to each of the NEOs equal annual installments.
Calculation of shares. The dollar value of an LTI award at grant is converted to RSUs and PSUs based on the average closing price of Hill-Rom stock over a period of the 20 business days prior to the grant date. A binomial stock option valuation model is used to calculate the number of stock options awarded.
Prior performance unit plan payouts. For the PSU awards granted in fiscal year 2013, 2016,vesting was based on a one-year Adjusted Free Cash Flow measure modified by relative TSR over a three yearthree-year period, a stock performance metric based upon share price appreciation and dividends paid to our shareholders. From October 1, 2012 to September 30, 2015, holders of Hill-Rom’s common stock achieved a TSR in the 69th percentile of the Corporation’s peer group, comparedeach case, subject to a minimum percentage payout of 0% of target for below threshold performance, and a maximum percentage payout of 150% of target for maximum performance (or a total of 225% of target for maximum performance of the 60th percentile. Accordingly, Fiscal Year 2013both Adjusted Free Cash Flow and relative TSR).
· | From October 1, 2015 to September 30, 2016, Adjusted Free Cash Flow achieved $200 million compared to a target performance of $170 million. Accordingly, the fiscal year 2016 Free Cash Flow measure resulted in a 150% achievement of target units against the plan. |
· | From October 1, 2015 to September 30, 2018, holders of Hill-Rom’s common stock achieved a TSR of 78.7%, which was at the 43rd percentile of our peer group used by the Committee to assess and compare the Company’s TSR with the TSR or certain of our peers (the “TSR Peer Group”), compared to a target performance of the 50th percentile. Accordingly, the TSR modifier resulted in achievement of 86.6% of the performance target. |
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· | The Adjusted Free Cash Flow performance of 150% was modified by the TSR performance of 86.6% resulting in an overall payout of 129.9% of the target award amount. Accordingly, fiscal year 2016 PSU grants vested on September 30, 2018 at a level of 129.9% of the target award amount. Accordingly, fiscal year 2016 PSU grants awarded to the NEOs (other than Mr. Groetelaars) vested on September 30, 2018 at a level of 129.9% of the target award amount, again demonstrating pay for performance alignment in our compensation program. |
Fiscal Year 2016 – 2018 Performance Share Unit Program
Measure | Threshold
| Target
| Maximum
| Achieved | % of Measure Target | % of Target Payout |
Free Cash Flow* | $145M | $170M | $196M | $200M | 150% | 129.9% |
Relative TSR | 0 - 25% | 50% | 75% | 43.3% | 86.6% | |
Percentage Payout | 50% | 100% | 150% |
* The fiscal year 2016 – 2018 Free Cash Flow measure’s performance was determined on September 30, 2015 at a level2016 and relative TSR was determined on September 30, 2018. Free Cash Flow as reported to investors was $197.6 million versus PSU Free Cash Flow of 160% of$200 million. The differences between the target award amount, again demonstrating pay for performance alignment in our compensation program.
Under the fiscal year 2016 – fiscal year 2018 PSU program, Mr. Greisch earned 52,853 shares of stock, Mr. Strobel earned 12,254 shares of stock, Mr. Shader earned 11,054 shares of stock, Mr. Alonso earned 9,811 shares of stock, and Mr. Johnson earned 2,001 shares of stock. At the time the fiscal year 2016 PSU award agreement languagewas granted, Mr. Groetelaars was not employed by the Company.
37 |
Beginning with the fiscal year 2017 PSU award, the one-year Free Cash Flow measure was replaced by a three-year Free Cash Flow measure. This change means that payouts are subject to reduction to zero for the FY 2013 PSU grants,full three-year performance period.
The TSR Peer Group used for the Compensation Committee was required to approve awards of sharesPSUs granted in excess of target, which would result if performance in excess of the 60th percentile was exceeded. As described in the 2013 proxy, the intent at the time of grant was to observe the payout schedule set forth in the table below for determining share payouts (as a percentage of target) at each performance level. Given Hill-Rom’s strong TSR performance, in the 69th percentile of the peer group, the Compensation and Management Development Committee chose to follow the intent of this original design as disclosed in 2013, which required that they grant an additional award equivalent to the additional value above target as shown in the original payout schedule. Accordingly, the shares earned in excess of 100% are required to be disclosed as new awards for FY 2015 compensation in the summary compensation table below. Therefore, these “new” awards pertain to the actual performance from the FY 2013 PSUs, calculated as set forth in the 2013 grant agreements. The PSU award agreements were changed beginning in FY 2014 to eliminate the need for additional action on the part of the Compensation and Management Development Committee in the event of above-target achievement.
TSR Peer Group | |
Companies in Compensation Peer Group | Additional Companies |
Agilent Technologies, Inc. | Abbott Laboratories |
Bio-Rad Laboratories, Inc. | Baxter International Inc. |
Bruker Corporation | Becton, Dickinson and Company |
The Cooper Companies, Inc. | Boston Scientific Corporation |
DENTSPLY SIRONA Inc. | Danaher Corp. |
Edwards Life Sciences Corporation | DexCom Inc. * |
Halyard Health, Inc. | Globus Medical, Inc. * |
Hologic, Inc. | Haemonetics Corporation |
Intuitive Surgical, Inc. | Integra LifeSciences Holdings Corporation |
MEDNAX, Inc. | Johnson & Johnson |
Patterson Companies, Inc. | Massimo Corporation |
PerkinElmer, Inc. | Medtronic plc |
Quest Diagnostics Incorporated | Merit Medical Systems, Inc. * |
STERIS plc | NuVasive, Inc. * |
Teleflex Incorporated | ResMed Inc. |
Varian Medical Systems, Inc. | Stryker Corporation |
Waters Corporation | Thermo Fisher Scientific Inc. |
West Pharmaceutical Services, Inc. | |
Zimmer Biomet Holdings, Inc. | |
* New addition to the TSR Peer Group in fiscal year 2018. |
Fiscal Year 2019 Changes to LTI Target Opportunity: The Committee believed was a better overall industry fit, since it included moreconfirmed that the fiscal year 2018 LTI Target Opportunities remain appropriate for all NEOs in fiscal year 2019 except for Mr. Groetelaars whose target increased from 400% to 417% of Hill-Rom’s custom peer group, direct competitors,his fiscal year 2019 base salary and companiesMr. Johnson whose target increased from 175% to 200% of his fiscal year 2019 base salary, based on the results of compensation benchmarking performed by the Committee’s independent compensation consultant and in Hill-Rom’s industry.
Fiscal Year 2014, 2015 and 2016 PSU Grants | |||
Performance Level | Free Cash Flow Achievement Modifier* | Three-Year Relative TSR Achievement Modifier** | Total Performance Modifier |
Below Threshold | 0% | 50% | 0% |
Threshold | 50% | 50% | 25% |
Target | 100% | 100% | 100% |
Maximum | 150% | 150% | 225% |
Share Ownership Guidelines
. In order to align the interests of executives to the long-term performance of the Company, executive officers are required to own a certain amount of Hill-Rom stock within five years of joining the Company. The ownership requirements are as follows:38 |
Stock Ownership Guidelines | |
Executive Officer | Multiple of Annual Salary |
CEO | 6x |
CFO | 3x |
Senior Vice President | 2x |
Vice President who (1) reports to the CEO, or (2) is a Section 16 reporting officer | 1x |
Shares owned outright and unvested RSUs count toward the required ownership level. This requirement, like the Executive Compensation Recoupment Policy discussed below, helps ensure long-term focus and appropriate levels of risk-taking by executive officers. Other than Mr. Greisch, who hasMessrs. Strobel, Shader, Alonso and Johnson have achieved histheir required ownership level,levels, and Mr. Macek, whoGroetelaars (who is no longeron track to meet the interim CFO, and Ms. Lichtenstein, who is no longer with the company, none of our named executive officers haverequired ownership level) has not been with the Company for more than five years, and therefore areis not required to meet these guidelines. However, all are on track to meetguidelines until his five-year anniversary with the target by their five year anniversaries.
Hill-Rom’s Executive Compensation Recoupment Policy.
Under our Executive Compensation Recoupment Policy, theTiming of Equity Grants
. We generally make all equity grants to our executives on an annual basis (except in the case of a new hire or promotion), and these grants have historically been made at our November Board meeting.Anti-Hedging/Anti-Pledging Policy
. Hill-Rom has adopted an insider trading policy which incorporates anti-hedging and anti-pledging provisions. Consequently, no officer or director may enter into a hedge or pledge of Hill-Rom stock.Re-pricing and Buybacks.
With respect to each of our NEOs, Hill-Rom does not re-price options, nor does itRetirement and Change in Control Agreements
Overview
. Hill-Rom believes that it is in the best interests ofRetirement Guidelines for Executives. With respect to our Company-wide retirement programs (including our 401(k) and our pension plan, which has stopped taking new entrants), we have several other programs in place.
· | accelerated vesting of outstanding time-based RSUs and stock options which have been held for at least one |
· |
· | vesting of outstanding PSUs |
· | pro-rata vesting of outstanding PSUs which have been |
39 |
· | an extension of |
Supplemental Executive Retirement Plan
. TheChange in Control Agreements
. Hill-Rom has aOther Personal Benefits
In addition to the elements of compensation discussed above, we also provide senior level management with various other benefits in order to remain competitive with the market, in attracting and retaining qualified executives. Hill-Rom believes that these benefits are in-line with the market, are reasonable in nature, are not excessive and are in the best interest of Hill-Rom and its shareholders. None of our NEOs receive any excise tax or prerequisiteperquisite tax gross-ups, other than potentially for reasonable relocation costs and housing allowance, as applicable.
Employment Agreements
We have entered into an employment agreement with each of our Named Executive Officers.NEOs. We believe that it is appropriate for our senior executivesexecutive officers to have employment agreements because they provide certain contractual protections to us that we might not otherwise have, including provisions relating to non-competition with us, non-solicitation of our employees and confidentiality of our proprietary information. Additionally, we believe that employment agreements are a useful tool in recruiting and retention of senior level employees. The current employment agreements set forth the basic duties of the senior executive officers and provide that each senior executive officer is entitled to receive, in addition to base salary, incentive compensation payable inat our discretion and such additional compensation, benefits and perquisites as we may deem appropriate. The employment agreements are terminable by either us or the executive officer “without cause” on sixty (60) days’ written notice, or if terminated by us, pay in lieu of notice, and are terminable at any time by us for cause, as defined in each employment agreement. See “Potential Payments Upon Termination or Change in Control” belowon pages 48 and 49 for further information regarding payments due upon termination. The employment agreements also contain non-competition and non-solicitation agreements of the senior executive officers, which continue generally for a period of eighteen to twenty-four months after the termination of the senior executive officer’s employment.
Fiscal Year 2018 Changes to Employment Agreements. The Committee approved certain changes to employment agreements effective in fiscal year 2019. The employment agreements are terminable by either us or the executive officer “without cause” on 180 days written notice. Further, the non-competition and non-solicitation agreements of the Compensation and Management Development Committee
Risk Assessment of Compensation Policies
and PracticesAssisted by its independent compensation consultant, the Compensation and Management Development Committee reviewed our material compensation policies and practices applicable to our employees and executive officers. ItFollowing the independent consultant’s review and recommendation, the Committee concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Key features of the compensation program supporting this conclusion include:
· | appropriate pay philosophy, peer group and market positioning, |
· | effective balance in cash and equity mix, short and |
· | elements of the compensation |
· | meaningful risk mitigants, such as the stock ownership guidelines and executive compensation recoupment policies. |
41 |
Summary Compensation Table |
The following tables and notes set forth compensation information for the fiscal years ended September 30, 2015, 2014,2018, 2017, and 20132016 for our Named Executive Officers.
Non-Equity | ||||||||||||||||||||||||||||
Name and | Stock | Option | Incentive Plan | All Other | ||||||||||||||||||||||||
Principal Position | Year | Salary | Bonus (1) | Awards (2) | Awards (3) | Comp. (4) | Comp. (5) | Total | ||||||||||||||||||||
JOHN J. GREISCH | 2015 | $ | 994,615 | None | $ | 5,778,430 | $ | 1,148,314 | $ | 1,123,100 | $ | 207,236 | $ | 9,251,695 | ||||||||||||||
President and Chief Executive Officer, | 2014 | $ | 961,923 | None | $ | 5,187,933 | $ | 963,908 | $ | 774,895 | $ | 197,226 | $ | 8,085,885 | ||||||||||||||
Member of the Board of Directors | 2013 | $ | 942,644 | None | $ | 2,331,985 | $ | 952,230 | $ | 832,355 | $ | 193,597 | $ | 5,252,811 | ||||||||||||||
STEVEN J. STROBEL (6) | 2015 | $ | 420,192 | None | $ | 853,493 | $ | 272,725 | $ | 263,880 | $ | 75,912 | $ | 1,886,202 | ||||||||||||||
Senior Vice President and | ||||||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||
MICHAEL S. MACEK (7) | 2015 | $ | 250,923 | None | $ | 225,645 | $ | 48,230 | $ | 102,549 | $ | 109,446 | $ | 736,793 | ||||||||||||||
Vice President, Treasurer and | 2014 | $ | 234,096 | None | $ | 236,894 | $ | 41,373 | $ | 102,940 | $ | 16,898 | $ | 632,201 | ||||||||||||||
Interim Chief Financial Officer | 2013 | $ | 208,875 | None | $ | 79,690 | $ | 32,542 | $ | 84,841 | $ | 10,627 | $ | 416,575 | ||||||||||||||
SUSAN R. LICHTENSTEIN | 2015 | $ | 462,402 | None | $ | 1,130,777 | $ | 217,578 | $ | 284,246 | $ | 66,454 | $ | 2,161,457 | ||||||||||||||
Senior Vice President, Corporate Affairs, | 2014 | $ | 452,246 | None | $ | 789,227 | $ | 208,381 | $ | 208,617 | $ | 56,738 | $ | 1,715,209 | ||||||||||||||
Chief Legal Officer and Secretary | 2013 | $ | 443,693 | None | $ | 480,165 | $ | 196,057 | $ | 235,068 | $ | 53,649 | $ | 1,408,632 | ||||||||||||||
ALTON E. SHADER (8) | 2015 | $ | 431,191 | None | $ | 1,203,848 | $ | 220,832 | $ | 402,019 | $ | 84,276 | $ | 2,342,166 | ||||||||||||||
Senior Vice President and | 2014 | $ | 418,357 | None | $ | 1,068,911 | $ | 202,249 | $ | 204,006 | $ | 51,247 | $ | 1,944,770 | ||||||||||||||
President, Front Line Care | ||||||||||||||||||||||||||||
CARLYN D. SOLOMON (9) | 2015 | $ | 507,692 | $ | 806,250 | $ | 3,937,368 | $ | 459,328 | $ | 532,039 | $ | 152,353 | $ | 6,395,030 | |||||||||||||
Chief Operating Officer |
Name and Principal Position | Year | Salary (1) | Bonus | Stock Awards (2) | Option Awards (3) | Non-Equity Incentive Plan Compensation (4) | All Other Comp. (5) | Total | ||||||||||||||||||||
JOHN P. GROETELAARS (6)(7) President and Chief Executive Officer, Member of the Board of Directors | 2018 | $ | 384,615 | None | $ | 2,981,176 | $ | 2,200,039 | $ | 424,231 | $ | 110,261 | $ | 6,100,322 | ||||||||||||||
STEVEN J. STROBEL (8)
| 2018 | $ | 517,558 | None | $ | 1,013,646 | $ | 319,216 | $ | 429,343 | $ | 81,830 | $ | 2,361,592 | ||||||||||||||
2017 | $ | 502,269 | None | $ | 915,933 | $ | 300,400 | $ | 321,300 | $ | 80,185 | $ | 2,120,087 | |||||||||||||||
2016 | $ | 505,654 | None | $ | 718,584 | $ | 242,435 | $ | 449,342 | $ | 80,337 | $ | 1,996,352 | |||||||||||||||
ALTON E. SHADER (9)
| 2018 | $ | 490,654 | None | $ | 1,768,857 | $ | 242,083 | $ | 379,873 | $ | 244,625 | $ | 3,126,092 | ||||||||||||||
2017 | $ | 476,385 | None | $ | 729,678 | $ | 239,329 | $ | 284,410 | $ | 222,463 | $ | 1,952,264 | |||||||||||||||
2016 | $ | 479,692 | None | $ | 648,199 | $ | 218,671 | $ | 464,269 | $ | 229,088 | $ | 2,039,920 | |||||||||||||||
CARLOS ALONSO MARUM
| 2018 | $ | 479,654 | None | $ | 756,200 | $ | 238,168 | $ | 352,811 | $ | 88,933 | $ | 1,915,766 | ||||||||||||||
2017 | $ | 465,385 | None | $ | 653,497 | $ | 214,335 | $ | 333,438 | $ | 86,005 | $ | 1,752,660 | |||||||||||||||
2016 | $ | 468,423 | None | $ | 575,274 | $ | 194,086 | $ | 323,759 | $ | 119,158 | $ | 1,680,700 | |||||||||||||||
PAUL S. JOHNSON
| 2018 | $ | 436,154 | None | $ | 661,776 | $ | 208,383 | $ | 424,655 | $ | 73,057 | $ | 1,804,025 | ||||||||||||||
2017 | $ | 391,801 | None | $ | 334,367 | $ | 109,676 | $ | 238,000 | $ | 67,861 | $ | 1,141,704 | |||||||||||||||
2016 | $ | 360,121 | None | $ | 256,232 | $ | 39,591 | $ | 300,411 | $ | 44,768 | $ | 1,001,123 | |||||||||||||||
JOHN J. GREISCH (10)
| 2018 | $ | 668,500 | None | $ | 4,237,961 | $ | 1,334,658 | $ | 811,091 | $ | 203,833 | $ | 7,256,043 | ||||||||||||||
2017 | $ | 1,047,692 | None | $ | 3,816,095 | $ | 1,251,677 | $ | 981,750 | $ | 238,363 | $ | 7,335,577 | |||||||||||||||
2016 | $ | 1,065,000 | None | $ | 3,550,162 | $ | 1,197,776 | $ | 1,156,793 | $ | 228,353 | $ | 7,198,084 |
The amounts in this column represent the grant date fair value of time-based RSUs granted during the applicable fiscal year, excluding a reduction for risk of forfeiture. Also included is the grant date fair value of PSUs granted during each of fiscal |
Components of Stock Awards for Fiscal Year 2015 | ||||
Name | Annual LTI Award | Supplemental Grant for FY13 PSUs (a) | Other Awards (b) | Total Stock Awards |
Mr. Greisch | $3,593,343 | $2,185,087 | $0 | $5,778,430 |
Mr. Strobel | $853,493 | $0 | $0 | $853,493 |
Mr. Macek | $150,972 | $74,673 | $0 | $225,645 |
Ms. Lichtenstein | $680,873 | $449,904 | $0 | $1,130,777 |
Mr. Shader | $691,042 | $412,762 | $100,044 | $1,203,848 |
Mr. Solomon | $1,437,328 | $0 | $2,500,040 | $3,937,368 |
The amounts in this column represent the grant date fair value of time-based stock options granted during the applicable fiscal years, excluding the reduction for risk of forfeiture. These grant date fair values were based on the methodology set forth in Notes 1 and 7 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, |
The amounts in this column represent cash awards earned for the applicable fiscal year and paid in the subsequent fiscal year, under our 162(m) Incentive Plan. |
Please refer to the “All Other Compensation” table below for further |
(6) | In 2018, Mr. Groetelaars received a one-time sign-on award comprised of $1,200,000 of stock options upon commencement of his employment to compensate him for the bonus and unvested equity opportunities foregone at his previous employer upon joining Hill-Rom. |
(7) | Mr. Groetelaars was elected President and Chief Executive Officer effective May 14, 2018 and his salary and non-equity incentive plan compensation are pro-rated as of such date. |
(8) | On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date. |
(9) | Mr. Shader left the Company on December 1, 2018. |
(10) | Mr. Greisch retired from the Company on May 14, 2018. |
42 |
All Other Compensation for Fiscal Year 2015 | |||||
Company Contributions | |||||
Name | 401(k) (a) | Supp 401(k) (a) | Relocation Costs | Health & Welfare Benefits | Total All Other Compensation |
Mr. Greisch | $18,550 | $179,789 | $0 | $8,897 | $207,236 |
Mr. Strobel | $22,387 | $34,611 | $0 | $18,914 | $75,912 |
Mr. Macek | $14,244 | $0 | $89,204 | $5,998 | $109,446 |
Ms. Lichtenstein | $18,550 | $33,216 | $0 | $14,688 | $66,454 |
Mr. Shader | $18,550 | $30,947 | $11,899 | $22,880 | $84,276 |
Mr. Solomon | $20,396 | $47,483 | $67,088 | $17,386 | $152,353 |
All Other Compensation for Fiscal Year 2018
Name | Company Contributions to the 401(k) (1) | Company Contributions to the Supplemental 401(k) (1) | Relocation and Housing Costs (2) | Gross-up on Relocation and Housing Costs | Health and Welfare Benefits | Total All Other Compensation | ||||||||
John P. Groetelaars President and Chief Executive Officer, Member of the Board of Directors | 9,462 | 43,837 | 50,000 | - | 6,962 | $ | 110,261 | |||||||
Steven J. Strobel (3) Chief Financial Officer | 19,524 | 43,956 | - | - | 18,350 | $ | 81,830 | |||||||
Alton E. Shader (4) Senior Vice President and President, Front Line Care | 19,250 | 38,971 | 102,407 | 55,895 | 28,102 | $ | 244,625 | |||||||
Carlos Alonso Marum Senior Vice President and President, International | 19,250 | 37,659 | 750 | 695 | 30,579 | $ | 88,933 | |||||||
Paul S. Johnson Senior Vice President and President, Patient Support Systems | 19,250 | 32,009 | - | - | 21,797 | $ | 73,057 | |||||||
John J. Greisch (5) Retired President and Chief Executive Officer | 19,250 | 124,981 | - | - | 59,602 | $ | 203,833 |
(1) | Amounts represent Company |
(2) | Represents (i) amounts Mr. Groetelaars was reimbursed by the Company for his housing during fiscal year 2018 related to his relocation to Chicago, IL to serve as President and Chief Executive Officer of Hill-Rom and (ii) amounts Mr. Shader was reimbursed by the Company for his housing during fiscal year 2018 related to his relocation to Skaneateles, NY to serve as SVP, President Front Line Care after the Welch Allyn acquisition and (iii) amounts incurred for tax return filing assistance related to Mr. Alonso’s relocation from Barcelona, Spain to Chicago, IL to serve as SVP, President International. |
(3) | On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date. |
(4) | Mr. Shader left the Company on December 1, 2018. |
(5) | Mr. Greisch retired from the Company on May 14, 2018. |
43 | ||
Grants of Plan-Based Awards for Fiscal Year Ended September 30, 2015
The following table summarizes the grants of plan-based awards to each of the Named Executive OfficersNEOs for the fiscal year ended September 30, 2015.2018. All equity awards granted during fiscal year 20152018 were granted under our Stock Incentive Plan.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of | Exercise or Base Price of | Grant Date Fair Value of | |||||||||||||||||||||||||||||||||||||
Name | Grant Date | Actual Amount 2015 | Min. | Target | Max. | Min. | Target | Max. | Shares or Stock Units (3) | Option Awards (4) | Stock and Option Awards (5) | ||||||||||||||||||||||||||||||
John J. Greisch | $ | 1,123,100 | - | $ | 1,100,000 | $ | 2,475,000 | ||||||||||||||||||||||||||||||||||
11/17/2014 | 89,642 | $ | 44.93 | $ | 1,148,314 | ||||||||||||||||||||||||||||||||||||
11/17/2014 | 25,563 | $ | 1,148,546 | ||||||||||||||||||||||||||||||||||||||
11/17/2014 | - | 51,125 | 115,031 | $ | 2,444,797 | ||||||||||||||||||||||||||||||||||||
9/30/2015 | 42,094 | $ | 2,185,087 | ||||||||||||||||||||||||||||||||||||||
Steven J. Strobel | $ | 263,880 | - | $ | 323,065 | $ | 726,896 | ||||||||||||||||||||||||||||||||||
11/17/2014 | 21,290 | $ | 44.93 | $ | 272,725 | ||||||||||||||||||||||||||||||||||||
11/17/2014 | 6,072 | $ | 272,815 | ||||||||||||||||||||||||||||||||||||||
11/17/2014 | - | 12,143 | 27,322 | $ | 580,678 | ||||||||||||||||||||||||||||||||||||
Michael S. Macek | $ | 102,549 | - | $ | 100,800 | $ | 226,800 | ||||||||||||||||||||||||||||||||||
11/17/2014 | 3,765 | $ | 44.93 | $ | 48,230 | ||||||||||||||||||||||||||||||||||||
11/17/2014 | 1,074 | $ | 48,255 | ||||||||||||||||||||||||||||||||||||||
11/17/2014 | - | 2,148 | 4,833 | $ | 102,717 | ||||||||||||||||||||||||||||||||||||
9/30/2015 | 1,439 | $ | 74,673 | ||||||||||||||||||||||||||||||||||||||
Susan R. Lichtenstein | $ | 284,246 | - | $ | 278,400 | $ | 626,400 | ||||||||||||||||||||||||||||||||||
11/17/2014 | 16,985 | $ | 44.93 | $ | 217,578 | ||||||||||||||||||||||||||||||||||||
11/17/2014 | 4,844 | $ | 217,641 | ||||||||||||||||||||||||||||||||||||||
11/17/2014 | - | 9,687 | 21,796 | $ | 463,232 | ||||||||||||||||||||||||||||||||||||
9/30/2015 | 8,667 | $ | 449,904 | ||||||||||||||||||||||||||||||||||||||
Alton E. Shader | $ | 402,019 | - | $ | 315,000 | $ | 708,750 | ||||||||||||||||||||||||||||||||||
11/17/2014 | 17,239 | $ | 44.93 | $ | 220,832 | ||||||||||||||||||||||||||||||||||||
11/17/2014 | 4,916 | $ | 220,876 | ||||||||||||||||||||||||||||||||||||||
11/17/2014 | - | 9,832 | 22,122 | $ | 470,166 | ||||||||||||||||||||||||||||||||||||
9/1/2015 | 1,946 | $ | 100,044 | ||||||||||||||||||||||||||||||||||||||
9/30/2015 | 7,952 | $ | 412,762 | ||||||||||||||||||||||||||||||||||||||
Carlyn D. Solomon | $ | 532,039 | - | $ | 416,877 | $ | 937,973 | ||||||||||||||||||||||||||||||||||
11/17/2014 | 35,857 | $ | 44.93 | $ | 459,328 | ||||||||||||||||||||||||||||||||||||
11/17/2014 | 65,868 | $ | 2,959,449 | (6) | |||||||||||||||||||||||||||||||||||||
11/17/2014 | - | 20,450 | 46,013 | $ | 977,919 |
Name | Grant Date | 2018 Award Amount | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock and Option Awards: Number of Shares of Stock or Units (3) | Exercise or Base Price of Option Awards (4) | Grant Date Fair Value of Stock and Option Awards (5) | |||||||||||||||||||||||||||||||||||
Min. | Target | Max. | Min. | Target | Max. | |||||||||||||||||||||||||||||||||||||
John P. Groetelaars | n.a. | $ | 424,231 | - | $ | 384,615 | $ | 865,385 | ||||||||||||||||||||||||||||||||||
President and Chief | 5/14/2018 | - | 23,010 | 51,773 | $ | 1,956,310 | ||||||||||||||||||||||||||||||||||||
Executive Officer, Member | 5/14/2018 | 11,505 | $ | 1,024,865 | ||||||||||||||||||||||||||||||||||||||
of the Board of Directors | 5/14/2018 | 39,962 | $ | 89.08 | $ | 999,849 | ||||||||||||||||||||||||||||||||||||
5/14/2018 | 51,400 | $ | 89.08 | $ | 1,200,190 | |||||||||||||||||||||||||||||||||||||
Steven J. Strobel (6) | n.a. | $ | 429,343 | - | $ | 389,250 | $ | 875,813 | ||||||||||||||||||||||||||||||||||
Chief Financial Officer | 11/8/2017 | - | 8,166 | 18,374 | $ | 694,518 | ||||||||||||||||||||||||||||||||||||
11/8/2017 | 4,083 | $ | 319,127 | |||||||||||||||||||||||||||||||||||||||
11/8/2017 | 14,758 | $ | 78.16 | $ | 319,216 | |||||||||||||||||||||||||||||||||||||
Alton E. Shader (7) | n.a. | $ | 379,873 | - | $ | 344,400 | $ | 774,900 | ||||||||||||||||||||||||||||||||||
Senior Vice President and | 11/8/2017 | - | 6,193 | 13,934 | $ | 526,715 | ||||||||||||||||||||||||||||||||||||
President, Front Line Care | 11/8/2017 | 3,097 | $ | 242,062 | ||||||||||||||||||||||||||||||||||||||
11/8/2017 | 11,192 | $ | 78.16 | $ | 242,083 | |||||||||||||||||||||||||||||||||||||
7/16/2018 | 10,967 | $ | 1,000,081 | |||||||||||||||||||||||||||||||||||||||
Carlos Alonso Marum | n.a. | $ | 352,811 | - | $ | 336,700 | $ | 757,575 | ||||||||||||||||||||||||||||||||||
Senior Vice President and | 11/8/2017 | - | 6,092 | 13,707 | $ | 518,125 | ||||||||||||||||||||||||||||||||||||
President, International | 11/8/2017 | 3,046 | $ | 238,075 | ||||||||||||||||||||||||||||||||||||||
11/8/2017 | 11,011 | $ | 78.16 | $ | 238,168 | |||||||||||||||||||||||||||||||||||||
Paul S. Johnson | n.a. | $ | 424,655 | - | $ | 308,000 | $ | 693,000 | ||||||||||||||||||||||||||||||||||
Senior Vice President and | 11/8/2017 | - | 5,331 | 11,995 | $ | 453,402 | ||||||||||||||||||||||||||||||||||||
President, Patient Support | 11/8/2017 | 2,666 | $ | 208,375 | ||||||||||||||||||||||||||||||||||||||
Systems | 11/8/2017 | 9,634 | $ | 78.16 | $ | 208,383 | ||||||||||||||||||||||||||||||||||||
John J. Greisch (8) | n.a. | $ | 811,091 | - | $ | 735,350 | $ | 1,654,538 | ||||||||||||||||||||||||||||||||||
Retired President and Chief | 11/8/2017 | - | 34,141 | 76,817 | $ | 2,903,692 | ||||||||||||||||||||||||||||||||||||
Executive Officer | 11/8/2017 | 17,071 | $ | 1,334,269 | ||||||||||||||||||||||||||||||||||||||
11/8/2017 | 61,704 | $ | 78.16 | $ | 1,334,658 |
Amounts represent |
The amounts under the “Target” column reflect the number of PSUs granted to the |
Amounts under this column represent stock options and RSU’s granted to our |
The average of the high and low selling prices of our common stock on the |
The grant date fair values of stock and option awards granted to our |
(6) | On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date. |
(7) | Mr. Shader left the Company on December 1, 2018. |
(8) | Mr. Greisch retired from the Company on May 14, 2018. |
Outstanding Equity Awards at September 30, 2015
The following table summarizes the number and terms of stock options, deferred stock shares and PSUs outstanding for each of the Named Executive OfficersNEOs as of September 30, 2015.
Option Awards | Stock Awards | ||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options | Number of Securities Underlying Unexercised Options Unexcercisable | Option Grant Date (1) | Option Exercise Price | Option Expiration Date | Grant 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 (3) | |||||||||||||||||||
John J. Greisch | 207,987 | 0 | 1/8/2010 | $ | 23.92 | 1/8/2020 | |||||||||||||||||||||||
147,679 | 0 | 11/16/2010 | $ | 38.81 | 11/16/2020 | ||||||||||||||||||||||||
141,871 | 47,291 | 11/29/2011 | $ | 30.63 | 11/29/2021 | ||||||||||||||||||||||||
60,191 | 60,192 | 11/13/2012 | $ | 26.94 | 11/13/2022 | 11/13/2012 | 36,621 | $ | 1,903,926 | ||||||||||||||||||||
20,199 | 60,598 | 11/18/2013 | $ | 41.53 | 11/18/2023 | 11/18/2013 | 23,849 | $ | 1,239,935 | 46,420 | $ | 2,413,376 | |||||||||||||||||
0 | 89,642 | 11/17/2014 | $ | 44.93 | 11/17/2024 | 12/12/2013 | 51,404 | $ | 2,672,512 | ||||||||||||||||||||
11/17/2014 | 25,886 | $ | 1,345,829 | 51,125 | $ | 2,657,989 | |||||||||||||||||||||||
Steven J. Strobel | 0 | 21,290 | 11/17/2014 | $ | 44.93 | 11/17/2024 | 11/17/2014 | 6,149 | $ | 319,676 | 12,143 | $ | 631,315 | ||||||||||||||||
Michael S. Macek | 2,872 | 0 | 11/16/2010 | $ | 38.81 | 11/16/2020 | |||||||||||||||||||||||
0 | 1,534 | 11/29/2011 | $ | 30.63 | 11/29/2021 | ||||||||||||||||||||||||
0 | 2,057 | 11/13/2012 | $ | 26.94 | 11/13/2022 | 11/13/2012 | 1,252 | $ | 65,091 | ||||||||||||||||||||
867 | 2,601 | 11/18/2013 | $ | 41.53 | 11/18/2023 | 11/18/2013 | 3,499 | $ | 181,903 | 1,993 | $ | 103,616 | |||||||||||||||||
0 | 3,765 | 11/17/2014 | $ | 44.93 | 11/17/2024 | 11/17/2014 | 1,088 | $ | 56,543 | 2,148 | $ | 111,675 | |||||||||||||||||
Susan R. Lichtenstein | 19,625 | 0 | 5/6/2010 | $ | 31.69 | 5/6/2020 | |||||||||||||||||||||||
30,388 | 0 | 11/16/2010 | $ | 38.81 | 11/16/2020 | ||||||||||||||||||||||||
32,181 | 10,728 | 11/29/2011 | $ | 30.63 | 11/29/2021 | ||||||||||||||||||||||||
12,393 | 12,393 | 11/13/2012 | $ | 26.94 | 11/13/2022 | 11/13/2012 | 7,541 | $ | 392,057 | ||||||||||||||||||||
4,366 | 13,101 | 11/18/2013 | $ | 41.53 | 11/18/2023 | 11/18/2013 | 7,631 | $ | 396,715 | 10,036 | $ | 521,772 | |||||||||||||||||
0 | 16,985 | 11/17/2014 | $ | 44.93 | 11/17/2024 | 11/17/2014 | 4,905 | $ | 255,025 | 9,687 | $ | 503,627 | |||||||||||||||||
Alton E. Shader | 3,988 | 0 | 7/11/2011 | $ | 45.91 | 7/11/2021 | |||||||||||||||||||||||
0 | 5,085 | 11/29/2011 | $ | 30.63 | 11/29/2021 | ||||||||||||||||||||||||
11,369 | 11,370 | 11/13/2012 | $ | 26.94 | 11/13/2022 | 11/13/2012 | 6,918 | $ | 359,667 | ||||||||||||||||||||
4,238 | 12,715 | 11/18/2013 | $ | 41.53 | 11/18/2023 | 11/18/2013 | 14,902 | $ | 774,732 | 9,740 | $ | 506,383 | |||||||||||||||||
0 | 17,239 | 11/17/2014 | $ | 44.93 | 11/17/2024 | 11/17/2014 | 4,978 | $ | 258,815 | 9,832 | $ | 511,166 | |||||||||||||||||
9/1/2015 | 1,952 | $ | 101,484 | ||||||||||||||||||||||||||
Carlyn D. Solomon | 0 | 35,857 | 11/17/2014 | $ | 44.93 | 11/17/2024 | 11/17/2014 | 66,701 | $ | 3,467,788 | 20,450 | $ | 1,063,196 |
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Grant Date (1) | Option Exercise Price | Option Expiration Date | Grant Date (2) | Number of Shares or Units of Stock That Have Not Vested | 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 (3) | |||||||||||||||||||||||||
John P. Groetelaars President and Chief Executive Officer, Member of the Board of Directors | 0 | 91,362 | 5/14/2018 | $ | 89.08 | 5/14/2028 | 5/14/2018 | 11,556 | $ | 1,090,865 | 51,773 | $ | 4,887,324 | ||||||||||||||||||||||
Steven J. Strobel (5) | 15,967 | 5,323 | 11/17/2014 | $ | 44.93 | 11/17/2024 | |||||||||||||||||||||||||||||
Chief Financial Officer | 8,554 | 8,555 | 11/16/2015 | $ | 51.33 | 11/16/2025 | 11/16/2015 | 4,871 | $ | 459,791 | |||||||||||||||||||||||||
5,000 | 15,000 | 11/14/2016 | $ | 53.70 | 11/14/2026 | 11/14/2016 | 5,638 | $ | 532,211 | 24,887 | $ | 2,349,356 | |||||||||||||||||||||||
0 | 14,758 | 11/8/2017 | $ | 78.16 | 11/8/2027 | 11/8/2017 | 4,119 | $ | 388,870 | 18,374 | $ | 1,734,458 | |||||||||||||||||||||||
Alton E. Shader (6) | 16,953 | 0 | 11/18/2013 | $ | 41.53 | 11/18/2023 | |||||||||||||||||||||||||||||
Senior Vice President | 12,929 | 4,310 | 11/17/2014 | $ | 44.93 | 11/17/2024 | |||||||||||||||||||||||||||||
and President, Front | 7,716 | 7,716 | 11/16/2015 | $ | 51.33 | 11/16/2025 | 11/16/2015 | 4,394 | $ | 414,757 | |||||||||||||||||||||||||
Line Care | 3,983 | 11,951 | 11/14/2016 | $ | 53.70 | 11/14/2026 | 11/14/2016 | 4,491 | $ | 423,960 | 19,827 | $ | 1,871,669 | ||||||||||||||||||||||
0 | 11,192 | 11/8/2017 | $ | 78.16 | 11/8/2027 | 11/8/2017 | 3,125 | $ | 294,962 | 13,934 | $ | 1,315,393 | |||||||||||||||||||||||
7/16/2018 | 10,990 | $ | 1,037,478 | ||||||||||||||||||||||||||||||||
Carlos Alonso Marum | 3,675 | 1,226 | 4/13/2015 | $ | 50.98 | 4/13/2025 | |||||||||||||||||||||||||||||
Senior Vice President | 6,848 | 6,849 | 11/16/2015 | $ | 51.33 | 11/16/2025 | 11/16/2015 | 3,899 | $ | 368,067 | |||||||||||||||||||||||||
and President, | 3,567 | 10,703 | 11/14/2016 | $ | 53.70 | 11/14/2026 | 11/14/2016 | 4,022 | $ | 379,697 | 17,757 | $ | 1,676,261 | ||||||||||||||||||||||
International | 0 | 11,011 | 11/8/2017 | $ | 78.16 | 11/8/2027 | 11/8/2017 | 3,073 | $ | 290,105 | 13,707 | $ | 1,293,941 | ||||||||||||||||||||||
Paul S. Johnson | 0 | 724 | 11/17/2014 | $ | 44.93 | 11/17/2024 | |||||||||||||||||||||||||||||
Senior Vice President | 5/2/2016 | 2,140 | $ | 202,050 | |||||||||||||||||||||||||||||||
and President, Patient | 1,397 | 1,397 | 11/16/2015 | $ | 51.33 | 11/16/2025 | 11/16/2015 | 795 | $ | 75,056 | |||||||||||||||||||||||||
Support Systems | 1,825 | 5,477 | 11/14/2016 | $ | 53.70 | 11/14/2026 | 11/14/2016 | 2,058 | $ | 194,275 | 9,086 | $ | 857,671 | ||||||||||||||||||||||
0 | 9,634 | 11/8/2017 | $ | 78.16 | 11/8/2027 | 11/8/2017 | 2,690 | $ | 253,913 | 11,995 | $ | 1,132,304 | |||||||||||||||||||||||
John J. Greisch (7) | 11/14/2016 | 103,691 | $ | 9,788,454 | |||||||||||||||||||||||||||||||
Retired President and Chief Executive Officer | 11/8/2017 | 13,138 | $ | 1,240,204 |
Unvested stock options based solely on continued employment |
Market value is determined by multiplying the number of unvested RSUs and/or PSUs by |
(4) | PSUs pursuant to the fiscal year 2017 – 2019 and fiscal year 2018 –2020 programs are shown based on maximum performance (225% of target). |
(5) | On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date. |
(6) | Mr. Shader left the Company on December 1, 2018. |
(7) | Mr. Greisch retired from the Company on May 14, 2018. |
Option Exercises and Stock Vested Forin Fiscal Year Ended September 30, 2015
The following table summarizes the number of stock option awards exercised and the value realized upon exercise during the fiscal year ended September 30, 20152018 for the Named Executive Officers,NEOs, as well as the number of stock awards vested and the value realized upon vesting.
Option Awards | Stock Awards | ||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting (1) | Value Realized on Vesting | |||
John J. Greisch | - | - | 146,678 | $7,304,892 | |||
Steven J. Strobel | - | - | - | - | |||
Michael S. Macek | 6,347 | $114,891 | 4,953 | $247,080 | |||
Susan R. Lichtenstein | - | - | 30,922 | $1,535,027 | |||
Alton E. Shader | 15,253 | $238,970 | 24,906 | $1,259,627 | |||
Carlyn D. Solomon | - | - | - | - |
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | ||||||||||||
John P. Groetelaars President and Chief Executive Officer, Member of the Board of Directors | - | $ | 0 | - | $ | 0 | ||||||||||
Steven J. Strobel (1) Chief Financial Officer | - | $ | 0 | 18,326 | $ | 1,671,170 | ||||||||||
Alton E. Shader (2) Senior Vice President and President, Front Line Care | 16,812 | $ | 1,027,875 | 17,916 | $ | 1,654,441 | ||||||||||
Carlos Alonso Marum Senior Vice President and President, International | - | $ | 0 | 11,209 | $ | 1,050,370 | ||||||||||
Paul S. Johnson Senior Vice President and President, Patient Support Systems | 5,168 | $ | 247,638 | 2,827 | $ | 258,888 | ||||||||||
John J. Greisch (7) Retired President and | 803,424 | $ | 43,421,494 | 152,647 | $ | 13,988,115 |
(1) | On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date. |
(2) | Mr. Shader left the Company on December 1, 2018. |
(3) | Mr. Greisch retired from the Company on May 14, 2018. |
Nonqualified Deferred Compensation for Fiscal Year Ended September 30, 2015
Name | Plan (1) | Executive Contributions in Last FY | Registrant Contributions in Last FY | Aggregate Earnings in Last FY (2) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE (3) | |||||
�� | |||||||||||
John J. Greisch | SERP | - | $179,789 | ($7,899) | None | $1,093,009 | |||||
Steven J. Strobel | SERP | - | $34,611 | ($1,074) | None | $33,537 | |||||
Michael S. Macek | SERP | - | $0 | - | None | - | |||||
Susan R. Lichtenstein | SERP | - | $33,216 | ($1,393) | None | $179,257 | |||||
Alton E. Shader | SERP | - | $30,947 | ($2,730) | None | $110,482 | |||||
Carlyn D. Solomon | SERP | - | $47,483 | ($1,794) | None | $45,689 |
Name | Plan (1) | Executive Contributions in Fiscal Year 2018 | Registrant Contributions in Fiscal Year 2018 | Aggregate Earnings in Fiscal Year 2018 (2) | Aggregate Withdrawals / Distributions in Fiscal Year 2018 | Aggregate Balance on Sept 30, 2018 (3) | ||||||||||||||||
John P. Groetelaars President and Chief | SERP | $ | 0 | $ | 43,837 | $ | 388 | $ | 0 | $ | 44,225 | |||||||||||
Steven J. Strobel (4) Chief Financial Officer | SERP | $ | 0 | $ | 43,956 | $ | 6,087 | $ | 0 | $ | 181,435 | |||||||||||
Alton E. Shader (5) Senior Vice President and | SERP | $ | 0 | $ | 38,971 | $ | 16,104 | $ | 0 | $ | 278,201 | |||||||||||
Carlos Alonso Marum Senior Vice President and | SERP | $ | 0 | $ | 37,659 | $ | 5,685 | $ | 0 | $ | 140,396 | |||||||||||
Paul S. Johnson Senior Vice President and | SERP | $ | 0 | $ | 32,009 | $ | 2,871 | $ | 0 | $ | 69,346 | |||||||||||
John J. Greisch (6) Retired President and | SERP | $ | 0 | $ | 124,981 | $ | 74,579 | $ | 0 | $ | 1,934,077 |
We maintain a 401(k) Savings Plan |
Amounts represent earnings on the Registrant’s SERP balances for the fiscal year. The SERP Plan’s investment approach provides for investments mirroring the employee’s investment allocation under the 401(k). |
Of the amounts shown in this column related to the SERP, all of the following amounts represent Company contributions reported in the Summary Compensation Table of this |
Name | Plan | Aggregate Contributions Reported in the Summary Compensation Table of Prior Proxy Statements | ||||
John P. Groetelaars | SERP | $ | 0 | |||
Steven J. Strobel | SERP | $ | 131,392 | |||
Alton E. Shader | SERP | $ | 223,126 | |||
Carlos Alonso Marum | SERP | $ | 97,052 | |||
Paul S. Johnson | SERP | $ | 34,466 | |||
John J. Greisch | SERP | $ | 1,734,517 |
(5) | Mr. Shader left the Company on December 1, 2018. |
(6) | Mr. Greisch retired from the Company on May 14, 2018. |
47 | ||
Potential Payments Upon Termination or Change in Control
Benefits Payable Upon Termination Under Employment Agreements
The following tables set forth estimates of the amounts payable to each of our NEOs upon specified termination events, based upon a hypothetical termination date of September 30, 2015,2018.
Event | Salary & Other Cash Payments | Accelerated Vesting of Retirement Savings Plan (2) | Accelerated Vesting of Equity Based Awards (3) | Continuance of Health & Welfare Benefits (4) | Limited Outplacement Assistance | Total | ||||||||||||||||||
John P. Groetelaars President and Chief Executive Officer, Member of the Board of Directors | ||||||||||||||||||||||||
Permanent Disability (1) | $ | 2,343,266 | $ | 18,954 | $ | 3,749,076 | $ | 0 | $ | 0 | $ | 6,111,297 | ||||||||||||
Death | $ | 1,985,769 | $ | 18,954 | $ | 3,749,076 | $ | 0 | $ | 0 | $ | 5, 753,800 | ||||||||||||
Termination Without Cause | $ | 2,485,769 | $ | 18,954 | $ | 0 | $ | 16,097 | $ | 10,000 | $ | 2,530,821 | ||||||||||||
Resignation With Good Reason | $ | 2,485,769 | $ | 18,954 | $ | 0 | $ | 16,097 | $ | 10,000 | $ | 2,530,821 | ||||||||||||
Termination for Cause | $ | 61,538 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 61,538 | ||||||||||||
Resignation Without Good Reason | $ | 485,769 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 485,769 | ||||||||||||
Retirement | $ | 485,769 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 485,769 | ||||||||||||
Steven J. Strobel (5) Chief Financial Officer | ||||||||||||||||||||||||
Permanent Disability (1) | $ | 1,336,944 | $ | 0 | $ | 4,677,969 | $ | 0 | $ | 0 | $ | 6,014,913 | ||||||||||||
Death | $ | 1,519,243 | $ | 0 | $ | 4,677,969 | $ | 0 | $ | 0 | $ | 6,197,212 | ||||||||||||
Termination Without Cause | $ | 1,000,243 | $ | 0 | $ | 3,780,143 | $ | 15,755 | $ | 10,000 | $ | 4,806,140 | ||||||||||||
Resignation With Good Reason | $ | 1,000,243 | $ | 0 | $ | 0 | $ | 15,755 | $ | 10,000 | $ | 1,025,997 | ||||||||||||
Termination for Cause | $ | 51,900 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 51,900 | ||||||||||||
Resignation Without Good Reason | $ | 481,243 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 481,243 | ||||||||||||
Retirement | $ | 481,243 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 481,243 | ||||||||||||
Alton E. Shader (6) Senior Vice President and President, Front Line Care | ||||||||||||||||||||||||
Resignation Without Good Reason | $ | 429,073 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 429,073 | ||||||||||||
Carlos Alonso Marum Senior Vice President and President, International | ||||||||||||||||||||||||
Permanent Disability (1) | $ | 1,495,230 | $ | 0 | $ | 3,320,856 | $ | 0 | $ | 0 | $ | 4,816,087 | ||||||||||||
Death | $ | 1,353,661 | $ | 0 | $ | 3,320,856 | $ | 0 | $ | 0 | $ | 4,674,518 | ||||||||||||
Termination Without Cause | $ | 872,661 | $ | 0 | $ | 2,638,433 | $ | 15,787 | $ | 10,000 | $ | 3,536,882 | ||||||||||||
Resignation With Good Reason | $ | 872,661 | $ | 0 | $ | 0 | $ | 15,787 | $ | 10,000 | $ | 898,448 | ||||||||||||
Termination for Cause | $ | 38,850 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 38,850 | ||||||||||||
Resignation Without Good Reason | $ | 391,661 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 391,661 | ||||||||||||
Retirement | $ | 391,661 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 391,661 | ||||||||||||
Paul S. Johnson Senior Vice President and President, Patient Support Systems | ||||||||||||||||||||||||
Permanent Disability (1) | $ | 2,178,574 | $ | 0 | $ | 2,085,253 | $ | 0 | $ | 0 | $ | 4,263,826 | ||||||||||||
Death | $ | 1,340,193 | $ | 0 | $ | 2,085,253 | $ | 0 | $ | 0 | $ | 3,425,446 | ||||||||||||
Termination Without Cause | $ | 900,193 | $ | 0 | $ | 1,389,071 | $ | 15,740 | $ | 10,000 | $ | 2,315,004 | ||||||||||||
Resignation With Good Reason | $ | 900,193 | $ | 0 | $ | 0 | $ | 15,740 | $ | 10,000 | $ | 925,934 | ||||||||||||
Termination for Cause | $ | 35,538 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 35,538 | ||||||||||||
Resignation Without Good Reason | $ | 460,193 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 460,193 | ||||||||||||
Retirement | $ | 460,193 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 460,193 | ||||||||||||
John J. Greisch (7) Retired President and Chief Executive | ||||||||||||||||||||||||
Retirement | $ | 835,608 | $ | 0 | $ | 21,254,050 | $ | 0 | $ | 0 | $ | 22,089,658 | ||||||||||||
(1) Benefits provided under our disability plans are based on various circumstances including the NEO meeting certain eligibility requirements. Our disability plans are fully insured; therefore, claim payments are reviewed and processed by our third-party insurance carrier. The following assumptions were used to determine the salary and other cash payment amount for permanent disability: normal retirement age is based on the Social Security Normal Retirement Age Table and long-term disability benefits are based on the lesser of 60% of the NEO's monthly earnings or $15,000 per month; and a 4.2% discount rate.
(2) For the CEO, this represents the cash payment of an amount equal to the unvested portion of company contributions in the SERP that would immediately become vested upon death, disability, termination without cause or termination with good reason and three times the amounts accrued for the twelve months immediately prior to the termination under the SERP. Messrs. Strobel, Alonso, and Johnson are vested in the SERP so no additional benefit would be received upon termination.
48 |
(3) The amounts indicated represent the intrinsic value of all unvested non-qualified stock options that would have become vested and exercisable upon retirement, permanent disability, death or in connection with agreements providing for the vesting of awards upon Termination without Cause and the market value of all unvested RSUs and PSUs that would have vested upon retirement, permanent disability, death or in connection with agreements providing for the vesting of awards upon Termination without Cause. The amounts were calculated based on the closing price of our common stock of $94.40 on September 30, 2018, except for in the case of Mr. Greisch, whose awards are valued on May 14, 2018, the date of his retirement.
(4) Amounts represent the dollar value of the incremental cost to Hill-Rom by providing continuing health and life insurance coverage based on the individual’s selected coverage in effect immediately before the hypothetical termination.
(5)On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date.
(6) Mr. Shader left the Company on December 1, 2018.
(7) Mr. Greisch retired from the Company on May 14, 2018.
49 |
Termination Due to Death or Permanent Disability
In the event an NEO dies or suffers a permanent disability during the term of employment, the NEO will be immediately vested in the SERP.
Termination Without Cause or Resignation with Good Reason
Upon a termination by the Company without cause or a resignation for good reason, each NEO other than the CEO is eligible to receive severance pay of then-current base salary for twelve months, and the CEO is eligible to receive severance pay of then-current base salary for twenty-four months. Each NEO will be immediately vested in the SERP. Health and similar welfare benefits will continue on substantially the same terms and conditions as at the time of the termination until the earlier of (i) the end of twelve months or (ii) such time as the NEO is eligible to be covered by comparable benefits of a subsequent employer.
In addition to the severance pay noted above, in the event any NEO’s (other than the CEO) employment is terminated by the Company without cause on or before November 16, 2019, such NEO will be entitled to receive cash payments for all outstanding unvested equity awards that are forfeited as a result of termination of employment that otherwise would have vested on or before November 16, 2019, calculated as follows:
(i) | For each unvested stock option, an amount equal to the difference between the closing price of the Company’s common stock on the date of termination of employment and the stock option’s exercise price, with such payment to be made as soon as practicable following the date of termination of employment. |
(ii) | For each unvested restricted stock unit, an amount equal to the closing price of the Company’s common stock on the date of termination of employment, with such cash payment to be made as soon as practicable following the effective date of termination of employment. |
(iii) | For each unvested performance share unit, an amount equal to the closing price of the Company’s common stock on the last day of the applicable three-year performance period for such performance share unit, with the number of performance share units earned to be determined as of the end of the performance period based on actual Company financial performance for the full performance period and with such cash payment to be made as soon as practicable following the completion of the performance period. |
During fiscal year 2018, the Committee approved certain changes to the benefits wouldreceived by each NEO upon termination by the company without cause or resignation with good reason effective in fiscal year 2019 including the following: 1) severance pay will be as follows:
John J. Greisch | ||||||||||||||||||||||||
Accelerated | Accelerated | Continuance of | Limited | |||||||||||||||||||||
Salary & Other | Vesting of | Vesting of | Health & | Outplacement | ||||||||||||||||||||
Event | Cash Payments | Stock Options (2) | Stock Awards (3) | Welfare Benefits (4) | Assistance | Total | ||||||||||||||||||
Permanent Disability (1) | $ | 1,432,980 | $ | 3,784,673 | $ | 12,233,567 | $ | 19,118 | $ | 17,470,338 | ||||||||||||||
Death | $ | 580,769 | $ | 3,784,673 | $ | 12,233,567 | $ | 15,158 | $ | 16,614,167 | ||||||||||||||
Termination Without Cause | $ | 2,080,769 | $ | 19,118 | $ | 10,000 | $ | 2,109,887 | ||||||||||||||||
Resignation With Good Reason | $ | 2,080,769 | $ | 19,118 | $ | 10,000 | $ | 2,109,887 | ||||||||||||||||
Termination for Cause | $ | 80,769 | $ | 80,769 | ||||||||||||||||||||
Resignation Without Good Reason | $ | 80,769 | $ | 80,769 | ||||||||||||||||||||
Retirement | $ | 80,769 | $ | 3,151,800 | $ | 7,425,371 | $ | 10,657,940 | ||||||||||||||||
Steven J. Strobel | ||||||||||||||||||||||||
Accelerated | Accelerated | Continuance of | Limited | |||||||||||||||||||||
Salary & Other | Vesting of | Vesting of | Health & | Outplacement | ||||||||||||||||||||
Event | Cash Payments | Stock Options (2) | Stock Awards (3) | Welfare Benefits (4) | Assistance | Total | ||||||||||||||||||
Permanent Disability (1) | $ | 1,497,378 | $ | 150,307 | $ | 950,991 | $ | 15,234 | $ | 2,613,910 | ||||||||||||||
Death | $ | 529,231 | $ | 150,307 | $ | 950,991 | $ | 12,654 | $ | 1,643,183 | ||||||||||||||
Termination Without Cause | $ | 504,231 | $ | 15,234 | $ | 10,000 | $ | 529,465 | ||||||||||||||||
Resignation With Good Reason | $ | 504,231 | $ | 15,234 | $ | 10,000 | $ | 529,465 | ||||||||||||||||
Termination for Cause | $ | 29,231 | $ | 29,231 | ||||||||||||||||||||
Resignation Without Good Reason | $ | 29,231 | $ | 29,231 | ||||||||||||||||||||
Retirement | $ | 29,231 | $ | 29,231 | ||||||||||||||||||||
Michael S. Macek | ||||||||||||||||||||||||
Accelerated | Accelerated | Continuance of | Limited | |||||||||||||||||||||
Salary & Other | Vesting of | Vesting of | Health & | Outplacement | ||||||||||||||||||||
Event | Cash Payments | Stock Options (2) | Stock Awards (3) | Welfare Benefits (4) | Assistance | Total | ||||||||||||||||||
Permanent Disability (1) | $ | 2,343,892 | $ | 138,081 | $ | 518,828 | $ | 3,800 | $ | 3,004,601 | ||||||||||||||
Death | $ | 525,200 | $ | 138,081 | $ | 518,828 | $ | 0 | $ | 1,182,109 | ||||||||||||||
Termination Without Cause | $ | 151,200 | $ | 1,900 | $ | 10,000 | $ | 163,100 | ||||||||||||||||
Resignation With Good Reason | $ | 25,200 | $ | 25,200 | ||||||||||||||||||||
Termination for Cause | $ | 25,200 | $ | 25,200 | ||||||||||||||||||||
Resignation Without Good Reason | $ | 25,200 | $ | 25,200 | ||||||||||||||||||||
Retirement | $ | 25,200 | $ | 25,200 |
Susan R. Lichtenstein | ||||||||||||||||||||||||
Accelerated | Accelerated | Continuance of | Limited | |||||||||||||||||||||
Salary & Other | Vesting of | Vesting of | Health & | Outplacement | ||||||||||||||||||||
Event | Cash Payments | Stock Options (2) | Stock Awards (3) | Welfare Benefits (4) | Assistance | Total | ||||||||||||||||||
Permanent Disability (1) | $ | 1,381,755 | $ | 796,545 | $ | 2,069,196 | $ | 15,154 | $ | 4,262,650 | ||||||||||||||
Death | $ | 537,477 | $ | 796,545 | $ | 2,069,196 | $ | 12,574 | $ | 3,415,792 | ||||||||||||||
Termination Without Cause | $ | 501,477 | $ | 15,154 | $ | 10,000 | $ | 526,631 | ||||||||||||||||
Resignation With Good Reason | $ | 501,477 | $ | 15,154 | $ | 10,000 | $ | 526,631 | ||||||||||||||||
Termination for Cause | $ | 37,477 | $ | 37,477 | ||||||||||||||||||||
Resignation Without Good Reason | $ | 37,477 | $ | 37,477 | ||||||||||||||||||||
Retirement | $ | 37,477 | $ | 676,631 | $ | 1,136,637 | $ | 1,850,746 | ||||||||||||||||
Alton E. Shader | ||||||||||||||||||||||||
Accelerated | Accelerated | Continuance of | Limited | |||||||||||||||||||||
Salary & Other | Vesting of | Vesting of | Health & | Outplacement | ||||||||||||||||||||
Event | Cash Payments | Stock Options (2) | Stock Awards (3) | Welfare Benefits (4) | Assistance | Total | ||||||||||||||||||
Permanent Disability (1) | $ | 2,943,101 | $ | 648,140 | $ | 2,512,247 | $ | 13,174 | $ | 6,116,662 | ||||||||||||||
Death | $ | 527,692 | $ | 648,140 | $ | 2,512,247 | $ | 12,574 | $ | 3,700,653 | ||||||||||||||
Termination Without Cause | $ | 477,692 | $ | 13,174 | $ | 10,000 | $ | 500,866 | ||||||||||||||||
Resignation With Good Reason | $ | 477,692 | $ | 13,174 | $ | 10,000 | $ | 500,866 | ||||||||||||||||
Termination for Cause | $ | 27,692 | $ | 27,692 | ||||||||||||||||||||
Resignation Without Good Reason | $ | 27,692 | $ | 27,692 | ||||||||||||||||||||
Retirement | $ | 27,692 | $ | 27,692 | ||||||||||||||||||||
Carlyn D. Solomon | ||||||||||||||||||||||||
Accelerated | Accelerated | Continuance of | Limited | |||||||||||||||||||||
Salary & Other | Vesting of | Vesting of | Health & | Outplacement | ||||||||||||||||||||
Event | Cash Payments | Stock Options (2) | Stock Awards (3) | Welfare Benefits (4) | Assistance | Total | ||||||||||||||||||
Permanent Disability (1) | $ | 2,092,764 | $ | 253,150 | $ | 4,530,984 | $ | 15,154 | $ | 6,892,052 | ||||||||||||||
Death | $ | 536,923 | $ | 253,150 | $ | 4,530,984 | $ | 12,574 | $ | 5,333,631 | ||||||||||||||
Termination Without Cause | $ | 636,923 | $ | 15,154 | $ | 10,000 | $ | 662,077 | ||||||||||||||||
Resignation With Good Reason | $ | 636,923 | $ | 15,154 | $ | 10,000 | $ | 662,077 | ||||||||||||||||
Termination for Cause | $ | 36,923 | $ | 36,923 | ||||||||||||||||||||
Resignation Without Good Reason | $ | 36,923 | $ | 36,923 | ||||||||||||||||||||
Retirement | $ | 36,923 | $ | 36,923 |
Termination For Cause or Resignation Without Good Reason
Upon a termination by the Company for cause or a resignation without good reason, an NEO will not receive a severance payment.
Retirement
Current NEOs who are at least 55 years old and who have at least five years of service (or ten years of service for those NEOs with effective hire dates on or after August 1, 2016) are eligible for certain retirement benefits, including the full vesting of outstanding RSUs, PSUs and stock options which have been held for at least one year and partial vesting of outstanding RSUs, PSUs and stock options which have been granted within one year of retirement. Vested stock options can be exercised until the earlier of either the original expiration date or the three-year anniversary of the retirement date. PSUs vest based on the Company’s achievement of the performance goals during the performance period. PSUs vest after the completion of the performance period and are based on the Company’s achievement of the performance goals during that period.
Benefits Payable Under Change in Control Agreements
Based upon a hypothetical Changechange in Controlcontrol date of September 30, 2015,2018, the Changechange in Control Benefitscontrol benefits with and without a termination of employment would be as follows:
Acceleration of Stock Based Awards | ||||||||||||||||||||||||||||||||||||||||||||
Name | Salary | Incentive Comp. | Continuation Of Health and Welfare Benefits | Vacation Benefits | Retirement Savings Plan Benefits | Limited Outplacement Assistance | Continuation of Term Life Insurance Coverage | Stock Options (1) | RSUs (2) | Performance Based Awards (3) | Total | |||||||||||||||||||||||||||||||||
John J. Greisch | ||||||||||||||||||||||||||||||||||||||||||||
With termination | $ | 2,338,101 | $ | 778,770 | $ | 17,817 | $ | 80,769 | $ | 1,513,374 | $ | 7,794 | $ | 9,309 | $ | 3,755,070 | $ | 7,083,645 | $ | 4,304,970 | $ | 19,889,619 | ||||||||||||||||||||||
Without termination | $ | 3,784,673 | $ | 7,162,202 | $ | 0 | $ | 10,946,875 | ||||||||||||||||||||||||||||||||||||
Steven J. Strobel | ||||||||||||||||||||||||||||||||||||||||||||
With termination | $ | 585,363 | $ | 219,511 | $ | 15,719 | $ | 29,231 | $ | 33,537 | $ | 6,162 | $ | 3,205 | $ | 138,075 | $ | 287,214 | $ | 388,211 | $ | 1,706,228 | ||||||||||||||||||||||
Without termination | $ | 150,307 | $ | 319,676 | $ | 0 | $ | 469,983 | ||||||||||||||||||||||||||||||||||||
Michael S. Macek (4) | ||||||||||||||||||||||||||||||||||||||||||||
With termination | $ | 126,000 | $ | 0 | $ | 1,600 | $ | 25,200 | $ | 0 | $ | 10,000 | $ | 600 | $ | 138,081 | $ | 303,537 | $ | 215,291 | $ | 820,309 | ||||||||||||||||||||||
Without termination | $ | 138,081 | $ | 303,537 | $ | 0 | $ | 441,618 | ||||||||||||||||||||||||||||||||||||
Susan R. Lichtenstein | ||||||||||||||||||||||||||||||||||||||||||||
With termination | $ | 928,000 | $ | 278,400 | $ | 25,147 | $ | 37,477 | $ | 179,257 | $ | 10,000 | $ | 5,160 | $ | 796,545 | $ | 1,043,797 | $ | 1,025,399 | $ | 4,329,182 | ||||||||||||||||||||||
Without termination | $ | 796,545 | $ | 1,043,797 | $ | 0 | $ | 1,840,342 | ||||||||||||||||||||||||||||||||||||
Alton Shader | ||||||||||||||||||||||||||||||||||||||||||||
With termination | $ | 669,365 | $ | 234,278 | $ | 18,784 | $ | 27,692 | $ | 110,482 | $ | 7,437 | $ | 896 | $ | 631,101 | $ | 1,439,188 | $ | 755,943 | $ | 3,895,166 | ||||||||||||||||||||||
Without termination | $ | 648,140 | $ | 1,494,698 | $ | 0 | $ | 2,142,838 | ||||||||||||||||||||||||||||||||||||
Carlyn D. Solomon | ||||||||||||||||||||||||||||||||||||||||||||
With termination | $ | 688,021 | $ | 275,208 | $ | 14,555 | $ | 36,923 | $ | 45,689 | $ | 5,734 | $ | 2,987 | $ | 230,250 | $ | 3,076,375 | $ | 608,110 | $ | 4,983,852 | ||||||||||||||||||||||
Without termination | $ | 253,150 | $ | 3,467,788 | $ | 0 | $ | 3,720,938 |
Salary & Other Cash Payments | Accelerated Vesting of Retirement Savings Plan (1) | Accelerated Vesting of Equity Based Awards (2) | Continuance of Health & Welfare Benefits (3) | Limited Outplacement Assistance | Effect of Modified Economic Cut-Back | Total | ||||||||||||||||||||||
John P. Groetelaars President and Chief Executive Officer, Member of the Board of Directors | $ | 3,485,769 | $ | 151,629 | $ | 3,627,489 | $ | 48,291 | $ | 10,000 | $ | 0 | $ | 7,323,178 | ||||||||||||||
Steven J. Strobel (4) Chief Financial Officer | $ | 1,519,243 | $ | 0 | $ | 4,797,763 | $ | 31,509 | $ | 10,000 | $ | (8,270 | ) | $ | 6,350,245 | |||||||||||||
Alton E. Shader (5) Senior Vice President and President, Front Line Care | - | - | - | - | - | - | - | |||||||||||||||||||||
Carlos Alonso Marum Senior Vice President and President, International | $ | 1,353,661 | $ | 0 | $ | 3,404,967 | $ | 31,575 | $ | 10,000 | $ | (137,914 | ) | $ | 4,662,289 | |||||||||||||
Paul S. Johnson Senior Vice President and President, Patient Support Systems | $ | 1,340,193 | $ | 0 | $ | 2,116,594 | $ | 31,480 | $ | 10,000 | $ | (131,814 | ) | $ | 3,366,453 | |||||||||||||
John J. Greisch (6) Retired President and Chief Executive Officer | - | - | - | - | - | - | - |
(1) For the CEO, this represents the cash payment of an amount equal to the unvested portion of company contributions in the SERP that would immediately become vested upon death, disability, termination without cause or termination with good reason and three times the amounts accrued for the twelve months immediately prior to the termination under the SERP. Messrs. Strobel Alonso, and Johnson are vested in the SERP so no additional benefit would be received upon termination.
(2) The amounts indicated represent the intrinsic value of all unvested non-qualified stock options that would have become vested and exercisable upon termination in connection with a change in control and the market value of all unvested RSUs and PSUs that would have vested upon termination in connection with a change in control. The amounts were calculated based on the closing price of our common stock of $94.40 on September 30, 2018, adjusted, as applicable, for Section 280G limitations.
(3) Amounts represent the dollar value of the incremental cost to Hill-Rom by providing continuing health and life insurance coverage based on the individual’s selected coverage in effect immediately before the hypothetical termination.
(4)On November 26, 2018, Mr. Strobel notified the Company of his intention to retire from the Company following a transition period. Effective December 3, 2018, Mr. Strobel took on a new role as senior advisor to the Company’s CEO and he is expected to remain in such new role through November 17, 2019, his anticipated retirement date.
(5) Mr. Shader left the Company on December 1, 2018.
(6) Mr. Greisch retired from the Company on May 14, 2018.
Change in Control
In the event that a NEO other than the CEO is terminated in connection with a change in control, the NEO will receive a cash payment of two times the then-current annual base salary plus a sum equal to the amount of all accrued and unpaid vacation and business expenses; the CEO will receive a cash payment of three times the then-current annual base salary. Health and similar welfare benefits for NEOs other than the CEO will continue on substantially the same terms and conditions for twenty-four months (thirty-six months for the CEO). Life insurance benefits for NEOs other than the CEO will continue for a period of two years following the termination (three years for the CEO).
The NEO will receive a cash payment equal to the amount of short term incentive compensation which would be payable if the Company had achieved performance targets (at 100%) in effect for the year in which the termination occurred, and the NEO will receive accelerated vesting of certain equity awards. If not already vested, the NEO would become immediately vested in the SERP. In addition to the benefits listed above, the CEO will also receive a cash payment for amounts accrued as of the date of the termination under the SERP and an additional amount equal to three times the amounts accrued for the twelve months immediately prior to the termination under the SERP.
During fiscal year 2018, the Committee approved certain changes to the benefits received by each NEO upon termination and change in control effective in fiscal year 2019 including the following: 1) severance pay will be calculated on the basis of base salary and target short-term incentive and 2) payment of a pro-rata actual short-term incentive for the year of termination will be paid instead of target incentive.
Pay Ratio Disclosure |
As required by Section 953(b) of the Dodd-Frank Wall Street Reform Act and Consumer Protection Act of 2010, and Item 402(u) of Regulation S-K, we are providing the following disclosure about the ratio of the annual total compensation of Mr. Groetelaars, our CEO, to the annual total compensation of our median employee.
Because Hill-Rom had two different CEOs during fiscal year 2018, SEC rules allow us the option of calculating the compensation provided to each CEO during fiscal year 2018 for the time each served as CEO and combine those amounts, or the CEO serving in that position on the date we selected to identify the median employee (July 15, 2018) and annualize that CEO's compensation. We decided to annualize the compensation Mr. Groetelaars received for his role as President and CEO of Hill-Rom beginning on May 14, 2018.
For 2018, the annual total compensation of our median employee (excluding our CEO) was $64,559. The 2018 annualized total compensation of our CEO was $7,582,263. Based on this information, for 2018 the ratio of our CEO's annual total compensation to the annual total compensation of our median employee was 117:1. We believe this ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
For purposes of reporting annual total compensation and the ratio of annual total compensation of the CEO to the median employee, both the CEO and median employee's annual total compensation were calculated consistent with the disclosure requirements of executive compensation under the Summary Compensation Table.
To identify the median employee, we examined the 2018 total cash compensation, including base salaries, overtime payments, allowances, incentives and commissions paid, to all individuals, excluding our CEO, who were employed by us as of July 15, 2018, as reflected in our payroll records. In accordance with Item 402(u) and instructions thereto, we included all full-time, part-time, temporary and seasonal employees. We selected total cash compensation for all employees as a consistently applied compensation measure because we do not widely distribute annual equity awards to employees and because we believe that this measure reasonably reflects the total annual compensation of our employees. For purposes of calculating the total cash compensation of our non-U.S. employees, we converted local currencies to U.S. dollars based on our fiscal year 2018 operating plan exchange rates.
Once we identified our median employee based on that analysis, we then determined that employee's annual total compensation in the same manner that we determine the total compensation of our NEOs for purposes of the Summary Compensation Table, as discussed above.
Director Compensation |
In setting non-employee director compensation, the Board of Directors considers the significant amount of time that directors expend in fulfilling their duties to Hill-Rom as well as the skill-level required for members of the Board. Our director pay package is designed to attract and retain highly-qualified, independent professionals to monitor the effectiveness of policy and decision-making both at the Board and management level, with a view to enhancing shareholder value over the long term. Our Nominating/Corporate Governance Committee generally reviews our non-employee director compensation program on an annual basis, with the assistance of the compensation consulting firm used by the Compensation and Management Development Committee. Directors who are also employees of Hill-Rom receive no additional remuneration for services as a director.
Non-Employee Director Compensation for Fiscal 2015
For fiscal year 2015,2018, our non-employee directors (other than the Chair of the Board) received a quarterly cash retainer of $13,750;$18,750; the Chair of the Board’s quarterly retainer was $27,500.$38,750. The Lead Director received a one-time retainer in the amount of $25,000. Committee members of the Audit Committee, Compensation and Management and Development Committee and Nominating/Corporate Governance CommitteesCommittee received a quarterly retainer in the amount of $3,125, $1,875 and $1,250, respectively. Chairs of the Audit Committee, Compensation and Management and Development Committee and Nominating/Corporate Governance CommitteesCommittee received a quarterly retainer in the amount of $6,250, $5,000 and $3,750, respectively. Committee members also received a fee in the amount of $1,500 for each otherspecial committee meeting attended, in person or by telephone. In addition, each non-employee director is, on the first trading day following the close of each annual meeting of the Company’s shareholders, awarded vested deferred RSUs valued at $150,000$180,000 ($190,000220,000 in the case of the Chair of the Board). Delivery of shares of common stock underlying these RSUs occurs on the later of one year and one day from the date of the grant or the six monthsix-month anniversary of the date that the applicable director ceases to be a member of the Board of Directors.Board. In fiscal year 20152018 the annual grant consisted of 3,9582,586 vested deferred RSUs for the Chair of the Board and 3,1252,116 for each other non-employee director. A new director may receive a pro-rata portion of the annual award representing time served during the fiscal year of joiningduring which the Board of Directors.
Non-Employee Director Compensation for Fiscal 2016
Upon consultation, analysis and recommendation of the Company’s independent compensation is unchanged, other thanconsultant, Exequity, the Nominating/Corporate Governance Committee has recommended, and the Board has agreed, that no changes are to be made to the annual cash retainer for each of our non-employee directors increased by $10,000 ($25,000 for the Chair), and Chair, and that no changes are to be made to the annual equity retainer increased by $10,000 for each of our non-employee directors and Chair. Exequity provides the Nominating/Corporate Governance Committee with benchmarking to the Company’s peer groups.
53 |
Director Compensation Table For Fiscal Year Ended September 30, 2015
Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) | Option Awards | All Other Compensation (3) | Total |
Rolf A. Classon | $132,750 | $190,024 | - | $216 | $322,990 |
William G. Dempsey | $62,500 | $150,031 | - | $216 | $212,747 |
Stacy Enxing Seng (4) | $46,875 | $150,031 | - | $126 | $197,032 |
James R. Giertz | $65,000 | $150,031 | - | $216 | $215,247 |
Charles E. Golden | $94,000 | $150,031 | - | $216 | $244,247 |
William H. Kucheman | $76,500 | $150,031 | - | $216 | $226,747 |
Ronald A. Malone | $89,000 | $150,031 | - | $216 | $239,247 |
Eduardo R. Menascé | $67,500 | $150,031 | - | $216 | $217,747 |
Joanne C. Smith, M.D. (4) | $38,750 | - | - | $90 | $38,840 |
Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) | Option Awards | All Other Comp (3) | Total | |||||||||||||||
William G. Dempsey | $ | 75,761 | $ | 220,017 | $ | 0 | $ | 112 | $ | 295,889 | ||||||||||
Gary L. Ellis | $ | 87,500 | $ | 180,029 | $ | 0 | $ | 112 | $ | 267,641 | ||||||||||
Stacy Enxing Seng | $ | 99,000 | $ | 180,029 | $ | 0 | $ | 112 | $ | 279,141 | ||||||||||
Mary Garrett | $ | 87,500 | $ | 180,029 | $ | 0 | $ | 112 | $ | 267,641 | ||||||||||
James R. Giertz | $ | 87,500 | $ | 180,029 | $ | 0 | $ | 112 | $ | 267,641 | ||||||||||
Charles E. Golden (4) | $ | 105,000 | $ | 180,029 | $ | 0 | $ | 112 | $ | 285,141 | ||||||||||
William H. Kucheman | $ | 100,500 | $ | 180,029 | $ | 0 | $ | 112 | $ | 280,641 | ||||||||||
Ronald A. Malone (5) | $ | 136,500 | $ | 180,029 | $ | 0 | $ | 112 | $ | 316,641 | ||||||||||
Nancy Schlichting | $ | 92,750 | $ | 180,029 | $ | 0 | $ | 112 | $ | 272,891 | ||||||||||
Rolf A. Classon (6) | $ | 85,000 | $ | 0 | $ | 0 | $ | 56 | $ | 85,056 |
(1) The amounts in this column include the annual retainer and the amounts earned by each non-employee director for attending special committee meetings in person and/or by teleconference. For the Chair of each of our Audit Committee, Compensation and Management Development Committee, and Nominating/Corporate Governance Committee, the additional annual retainer is also included.
(2) The amounts indicated represent the grant date fair value of RSUs granted to our non-employee directors during fiscal year 2018, and do not include any common stock equivalent dividends accrued on the RSUs since the grant date. The determination of this value was based on the methodology set forth in Notes 1 and 7 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2018. As of September 30, 2015,2018, our non-employee directors owned aggregate stock awards in the following amounts (in shares): Rolf A. Classon 69,694, William G. Dempsey 7,180,23,327; Gary L. Ellis 3,129; Stacy Enxing Seng 3,154,11,554; Mary Garrett 4,824; James R. Giertz 22,180,31,199; Charles E. Golden 48,693,59,657; William H. Kucheman 11,493,20,165; Ronald A. Malone 30,604,39,897 and Eduardo R. Menascé 34,289.
(3) Amounts in this column represent the dollar value of the voluntary director life and accidental death and dismemberment insurance premiums paid by us during fiscal year 2018 on behalf of each director.
(4) Mr. Golden informed the Board of his decision to retire from the Board effective as of the date of the meeting.
(5) Mr. Malone received a one-time cash retainer in the amount of $25,000 for his tenure as Lead Director from March 6, 2018 through July 16, 2018.
(6) Mr. Classon retired as Chair of the Board on March 6, 2018.
Equity Compensation Plan Information |
The following table sets forth information concerning Hill-Rom's equity compensation plans as of September 30, 2015:
Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights (1) | Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||
Plan Category | (a) | (b) | (c) | ||||||
Equity compensation plans approved by security holders | 3,119,089 | $34.37 | 4,739,332 | ||||||
Equity compensation plans not approved by security holders(2)(3) | 7,657 | $0.00 | - | ||||||
Total | 3,126,746 | $34.37 | 4,739,332 (4) |
Plan Category | Number of Securities to be issued upon exercise of | Weighted Average exercise price of outstanding options, warrants and rights (1) (b) | Number of Securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||
Equity compensation plans approved by security holders | 1,790,628 | $ | 57.40 | 2,701,204 | ||||||||
Equity compensation not approved by security holders (2)(3) | 6,763 | - | ||||||||||
Total | 1,797,391 | $ | 57.40 | 2,701,097 | (4) |
RSUs and PSUs are excluded when determining the weighted-average exercise price of outstanding stock options. |
Under the Hill-Rom Holdings Stock Award Program, which has not been approved by security holders, shares of common stock have been granted to certain key employees. All shares granted under this program are contingent upon continued employment over specified terms. Dividends, payable in stock equivalents, accrue on the grants and are subject to the same specified terms as the original grants. Under this program, a total of |
Members of the Board |
Amount consists of |
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Section 16(a) Beneficial Ownership Reporting Compliance |
Under Section 16(a) of the Securities Exchange Act of 1934, our directors, our executive officers and any person holding more than ten percent of our common stock are required to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. We are required to report in this proxy statement any failure to file or late filing occurring during the fiscal year ended September 30, 2015.2018. Based solely on a review of filings furnished to us and other information from reporting persons, we believe that all of these filing requirements were satisfied by our directors, executive officers and ten percent beneficial owners.
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Appendix A – Reconciliation of non-GAAP and GAAP Financial Measures |
The following table reconciles financial results reported in accordance with accounting principles generally accepted in the United States of America (“GAAP”) to non-GAAP financial results. We routinely provide gross margin, operating margin and earnings per share results on an adjusted basis because the Company’s management believes these measures contribute to an understanding of our financial performance, provide additional analytical tools to understand our results from core operations and reveal underlying trends. These measures exclude strategic developments, acquisition and integration costs, special charges or other unusual events. The Company also excludes expenses associated with the amortization of intangible assets associated with prior business acquisitions. These adjustments are made to allow investors to evaluate and understand operating trends excluding the non-cash
impact of acquired intangible amortization on operating income and earnings per share.
Management uses these measures internally for planning, forecasting and evaluating the performance of the business. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
In addition, we present certain results on a constant currency basis. Constant currency information compares results between periods as if foreign currency exchange rates had remained consistent period-over-period. We monitor sales performance on a constant currency basis that eliminates the positive or negative effects that result from translating international sales into U.S. dollars. We calculate constant currency by applying the foreign currency exchange rate for the prior period to the local currency results for the current period. We believe that evaluating growth in net revenue on a constant currency basis provides an additional and meaningful assessment to both management and investors.
(In millions) | Year Ended September 30, 2018 | Year Ended September 30, 2017 | ||||||||||||||||||||||||||||||
Operating Margin | Income Before Income Taxes | Income Tax Expense | Diluted EPS | Operating Margin1 | Income Before Income Taxes | Income Tax Expense | Diluted EPS | |||||||||||||||||||||||||
GAAP Basis | 10.2 | % | $ | 197.2 | $ | (55.2 | ) | $ | 3.73 | 10.0 | % | $ | 183.0 | $ | 50.7 | $ | 1.99 | |||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||
Acquisition and integration costs | 0.4 | % | 11.1 | 3.0 | 0.12 | 0.9 | % | 23.5 | 9.7 | 0.21 | ||||||||||||||||||||||
Acquisition-related intangible asset amortization | 3.8 | % | 106.9 | 28.2 | 1.16 | 4.0 | % | 108.4 | 34.2 | 1.10 | ||||||||||||||||||||||
Field corrective actions | — | % | — | — | — | — | % | — | (0.2 | ) | — | |||||||||||||||||||||
Litigation settlements and expenses | 0.2 | % | 5.8 | 1.5 | 0.06 | (0.3 | )% | 5.7 | 2.1 | 0.05 | ||||||||||||||||||||||
Special charges2 | 2.7 | % | 77.6 | 21.1 | 0.84 | 1.9 | % | 37.4 | 4.8 | 0.49 | ||||||||||||||||||||||
Tax law and method changes and related costs | — | % | 1.6 | 79.2 | (1.15 | ) | — | % | — | (2.2 | ) | 0.03 | ||||||||||||||||||||
Gain on disposition | — | % | (1.0 | ) | — | (0.01 | ) | — | % | (1.0 | ) | (0.4 | ) | (0.01 | ) | |||||||||||||||||
Adjusted Basis | 17.3 | % | $ | 399.2 | $ | 77.8 | $ | 4.75 | 16.3 | % | $ | 357.0 | $ | 98.7 | $ | 3.86 |
1 | Total may not add due to rounding |
2 | Fiscal 2017 includes favorable litigation settlement of $15.1 million which was recognized as Special charges in our Statements of Consolidated Income. Refer to Note 7 of our Consolidated Financial Statements in Item 8 of our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 for additional information. |
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