UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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BRUNSWICK CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
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TABLE OF CONTENTS
March 24, 201622, 2018
Dear fellow shareholders:
Thank you for your investment in Brunswick. In 2017, we enjoyed our eighth consecutive year of growth with year-over-year revenue growth of 9% and earnings per share, as adjusted, growth of 12%.(1) Since 2013, your investment delivered compounded annual growth in adjusted pretax earnings of 16.3% and five-year compounded annual growth in total shareholder return of 14.6%. We are proud of these results, and I want to personally thank my 15,000 fellow associates who together worked so hard to deliver them.
The Board remains committed to delivering long-term, sustainable shareholder value through continued operating excellence and strategic oversight. As a result of our continuous and rigorous review of corporate strategy and capital allocation, we recently announced plans to spin-off our fitness equipment and billiards business into a stand-alone public company. We believe that two stand-alone companies, with sharper strategic focus, appropriate capital structures, and undivided management attention, will be able to unlock greater value for our shareholders than our present structure. When complete, this spin-off will enable Brunswick Shareholder:investors to participate in either, or both, the recreational marine and fitness businesses.
As in the past, strong corporate governance is an important element of our commitment. Your Board continually evaluates and strengthens its governance practices. Last year, we unilaterally adopted bylaw amendments that include proxy access provisions. This year, we are asking shareholders to vote in favor of a plan to declassify the Board of Directors. This Proxy Statement includes details on proposed amendments to Brunswick’s Restated Certificate of Incorporation to declassify the Board (see Proposal 2 on page 25 for more details).
We have much work to accomplish in the coming year, but we have never been more excited about the future of your company. The spin-off of Fitness, among many other initiatives we are pleasedundertaking, should help enable both companies to invite the shareholders of Brunswick Corporation to attend the Company’s Annual Meeting of Shareholders, to be heldcapitalize on Wednesday, May 4, 2016, at 9:00 a.m. CDT at the Ritz-Carlton Hotel, 160 East Pearson Street, Chicago, Illinois 60611.
As a Brunswick shareholder, you have been able to share in our financialnew markets and operational successes. Our total shareholder return for the last three fiscal years was an outstanding 77.3%. Our Board of Directors, the management team and our over 13,000 global employees are dedicated totechnologies while continuing to add value forserve our shareholders.
In 2015, Brunswick concentrated on executing its growth plan, which included investing in innovative products, capacity expansioncustomers, remain market leaders, and focusing on both core businesses and strategic acquisitions in growing markets. In 2016, Brunswick will continuedeliver solid financial returns to drive profitable growth through product leadership, research and development programs, targeted acquisitions and expansion into new adjacent markets.our shareholders.
We will begin mailing a notice to our shareholders on March 24, 2016,22, 2018, containing instructions about online access to our 20162018 Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2015,2017, as well as instructions regarding how to receive paper copies of these documents if you prefer.
Your vote is very important. Whether or not you plan to attend the meeting, we urge you toplease vote via the Internet, by telephone, or by signing and returning a proxy card. Please vote as soon as possible so that your shares will be represented.
Your Board, the management team, and Brunswick’s more than 15,000 global employees remain committed to delivering long-term value to our investors. Thank you for your continued support of Brunswick.support.
Sincerely,
Mark D. Schwabero
Chairman and Chief Executive Officer
Brunswick Corporation 1 N. Field Court Lake Forest, IL 60045-4811Telephone 847.735.4700
Mark D. Schwabero Chairman and Chief Executive Officer |
NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS
Notice of Annual Meeting of ShareholdersMEETING INFORMATION
DATE AND TIME:
May 4, 2016
9:002, 2018
9 a.m. CDT
Ritz-Carlton Hotel, 160 E. Pearson Street, Chicago, Illinois
March 24, 2016
Dear Brunswick Shareholder:
The Annual Meeting of Shareholders of Brunswick Corporation will be held at the Ritz-Carlton Hotel, 160 E. Pearson Street, Chicago, Illinois, on Wednesday, May 4, 2016, at 9:00 a.m. CDT. At the Annual Meeting, we will consider and vote upon the following matters:
Sincerely,
Christopher F. Dekker
SecretaryLOCATION:
Brunswick Corporation 1
26125 N. Field Court Lake Forest,Riverwoods Blvd., Suite 500
Mettawa, IL 60045-4811Telephone 847.735.470060045
VOTING MATTERS 2018 PROPOSALS | Board Recommends: | Learn More on Page: |
PROPOSAL 1: Election of Directors | FOR each nominee | 12 |
PROPOSAL 2: Approval of Amendments to our Restated Certificate of Incorporation to Declassify the Board of Directors | FOR | 25 |
PROPOSAL 3: Advisory Vote to Approve the Compensation of our Named Executive Officers | FOR | 55 |
PROPOSAL 4: Ratification of the Appointment of Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2018 | FOR | 58 |
REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS*:
BY TELEPHONE | BY MAIL | IN PERSON** |
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. Page references are supplied to help you find further information in this Proxy Statement.
Eligibility to Vote
proxyvote.com
By 5:00 p.m. EDT
on May 1, 2018
1-800-690-6903
By 5:00 p.m. EDT
on May 1, 2018
Completing, signing, and
returning your proxy or
voting instruction card
To arrive by May 1, 2018
Annual Meeting
May 2, 2018
9 a.m. CDT
AM I ELIGIBLE TO VOTE? You can vote if you were a shareholder of record at the close of business on March 4, 2016.
How to Cast Your Vote
You can vote by any of the following methods:5, 2018.
Voting Matters
Proxy Summary | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices | |
This summary highlights information contained elsewhere in this Proxy Statement. The summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. Page references are supplied to help you find further information in this Proxy Statement.
9% increase in 2017 net sales compared with 2016. 4-year CAGR(2) of 7.5%. | |||
flow of 2017. | |||
Business Highlights
(forFor more detail, please see Brunswick’sour Annual Report on Form 10-K filed with the SECSecurities and Exchange Commission (SEC) on February 17, 2016)
Our results in 2015 represent the sixth consecutive year of strong improvements in operating performance. The Company sought to achieve the following financial objectives in 2015:20, 2018.
MARK D. SCHWABERO | “As a Brunswick shareholder, you have shared in our financial and operational success. Our 2017 results represent our eighth consecutive year of growth. Thank you for your continued support.” |
(1) | ||
BRUNSWICK CORPORATION - 2016 Proxy Statement4
We achieved excellent Total Shareholder Return (TSR) for the 3 years ended December 31, 2015
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
STOCK PRICE HISTORYDIRECTOR NOMINEES
*Closing stock price as reported on the New York Stock Exchange for each year.
Director Nominees (page 12)
Name | Age | Director since | Occupation | Independent (Yes/No) | Committee Memberships | Other Public Company Boards | ||||||
Nolan D. Archibald | 72 | 1995 | Retired; Executive Chairman of Stanley, Black & Decker, Inc. | Yes | •Finance •Executive | •Huntsman Corporation •Lockheed Martin Corporation | ||||||
David C. Everitt | 63 | 2012 | Retired; President, Agricultural and Turf Division -North America, Asia, Australia and Sub-Saharan and South Africa, and Global Tractor and Turf Products of Deere & Company | Yes | •Human Resources and Compensation •Nominating and Corporate Governance •Qualified Legal Compliance | •Agrium, Inc. •Allison Transmission Holdings, Inc. •Harsco Corporation | ||||||
Roger J. Wood | 53 | 2012 | Retired; President and Chief Executive Officer of Dana Holding Corporation | Yes | •Audit •Finance | •Tenneco Inc. |
Governance HighlightsFor more information, visit page 12
KEY SKILLS & EXPERTISE | MANUEL A. FERNANDEZ Chairman, CEO, & President of Director Since: 1997 Age: 71 Other Public Boards:2 Committees: Nominating and Executive | |||
Human Resources and Compensation LEAD INDEPENDENT DIRECTOR | KEY SKILLS & EXPERTISE | MARK D. SCHWABERO Chairman & CEO of Director Since: 2014 Age: 65 Other Public Boards: 1 Committees: Executive | ||
KEY SKILLS & EXPERTISE | DAVID V. SINGER CEO of Director Since: 2013 Age: 62 Other Public Boards: 3 Committees: Audit Finance INDEPENDENT DIRECTOR | KEY SKILLS & EXPERTISE | J. STEVEN WHISLER Chairman & CEO of Phelps Director Since: 2007 Age: 63 Other Public Boards: 2 Committees: Human Resources and Executive Nominating and Corporate | |
INDEPENDENT DIRECTOR |
The Board of Directors believes that having our Chief Executive OfficerCEO serve as Chairman of the Board is in the best interest of the shareholders at this time because this structure ensures a seamless flow of communication between management and the Board, in particular with respect to the Board’s oversight of the Company’sour strategic direction, as well as the Board’s ability to ensure management’s focused execution of thatour strategy. Our strong Lead Independent Director position ensures robust and independent Board oversight.
BRUNSWICK CORPORATION - 2016 Proxy Statement5The Board is committed to strong corporate governance and has approved amendments to our Restated Certificate of Incorporation to declassify the Board of Directors, subject to shareholder approval at the Annual Meeting.
Key skills & expertise legend | Audit/ Finance | Global | Operations/ Manufacturing | Technology | CEO | Public Company Board | Regulatory/ Legal/ Governance | Dealers/ Distribution | Diverse | Fitness/ Marine Industry | Marketing |
2018 PROXY STATEMENT | 6 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
Executive Compensation (page 24)
EXECUTIVE COMPENSATION
For more information, visit page 32
Compensation Element | Metric(s) | Role | How It’s Designed and Determined | |||
n/a | Foundation of total pay, as incentives and benefits are a function of base salary. | Reviewed annually, targeting median of | ||||
Divisional Earnings Before Interest and Taxes (EBIT) | Primary element used to reward accomplishments against established business and individual goals within a given year. | Target funding based on planned performance for the year, as approved by the Board of Directors, with actual funding tied to annual performance against target metrics and limited to no more than 200 percent of target funding. | ||||
Operating Margin
Relative Total Shareholder Return (TSR) | Focus management team on creating and sustaining value for shareholders. | Annual | ||||
Reinforce retention and reward | Annual RSU grants for NEOs represent 50 percent of targeted equity value. RSUs cliff vest at the end of a three-year period. |
WHAT WE |
Base a very high percentage of executive pay on performance
Require executives to achieve performance-based goals tied to shareholder return
Target median compensation levels and review market data of our peer group when making executive compensation decisions
Apply strict share ownership guidelines to NEOs and Directors
Require vested shares from our equity compensation programs to be held until share ownership guidelines are met
Disclose complete information on annual incentive plans
Evaluate, and manage, risk in our compensation programs
Use an independent compensation consultant
Have an established clawback policy
Maintain double-trigger equity award vesting acceleration upon involuntary termination following a Change in Control (CIC)
Engage in a rigorous and thoughtful executive succession planning process with the Board
WHAT WE DON’T | ||||
DO: |
No tax gross-ups (including perquisites, excise tax)
BRUNSWICK CORPORATION - 2016 Proxy Statement6No modified single-trigger or single-trigger CIC severance agreements (we only use double-trigger CIC severance provisions)
Expressly forbid option repricing not in accordance with plans already approved by shareholders
Expressly forbid exchanges of underwater options for cash in all of our active equity plans
No hedging of shares by our Directors or employees
No pledging of shares by our Directors or employees
No dividends or dividend equivalents on unearned Performance Shares
2018 PROXY STATEMENT | 7 |
2015 Executive Total Targeted Compensation Mix (page 26)
Component | CEO | Other NEOs | ||||||
Base Salary | 14 | % | 25 | % | ||||
Annual Incentives | 21 | % | 23 | % | ||||
Long-Term Incentives | 65 | % | 52 | % |
2015 Executive Compensation Summary (page 34)
Name and Principal Position | Year | Salary | Stock Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Non-qualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||
Dustan E. McCoy(1) | ||||||||||||||||||||
Former Chairman and | ||||||||||||||||||||
Chief Executive Officer | 2015 | $ | 1,125,000 | $ | 6,500,604 | $ | 1,777,000 | $ | 188,089 | $ | 452,777 | $ | 10,043,470 | |||||||
Mark D. Schwabero(2) | ||||||||||||||||||||
Chairman and Chief | ||||||||||||||||||||
Executive Officer | 2015 | $ | 744,231 | $ | 2,502,375 | $ | 784,000 | $ | - | $ | 181,097 | $ | 4,211,703 | |||||||
William L. Metzger | ||||||||||||||||||||
Senior Vice President | ||||||||||||||||||||
and Chief Financial | ||||||||||||||||||||
Officer | 2015 | $ | 517,500 | $ | 1,000,904 | $ | 545,000 | $ | 29,292 | $ | 121,285 | $ | 2,213,981 | |||||||
John C. Pfeifer | ||||||||||||||||||||
Vice President and | ||||||||||||||||||||
President – Mercury | ||||||||||||||||||||
Marine | 2015 | $ | 479,423 | $ | 1,000,904 | $ | 429,000 | $ | 191 | $ | 115,019 | $ | 2,024,537 | |||||||
B. Russell Lockridge(3) | ||||||||||||||||||||
Vice President | ||||||||||||||||||||
and Chief Human | ||||||||||||||||||||
Resources Officer | 2015 | $ | 430,615 | $ | 500,567 | $ | 453,000 | $ | - | $ | 130,217 | $ | 1,514,399 |
Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices | ||
Advisory Vote to Approve Executive Compensation (page 43) and Ratification of Appointment of Auditors (page 47)2017 EXECUTIVE TOTAL TARGETED COMPENSATION MIX
For more information, visit page 35
2017 EXECUTIVE COMPENSATION SUMMARY
For more information, visit page 44
Year | Salary | Bonus | Stock Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Non-Qualified Deferred Compensation Earnings | All Other Compensation | Total |
MARK D. SCHWABERO, Chairman and Chief Executive Officer | |||||||
2017 | $1,036,539 | — | $5,000,340 | $821,000 | — | $259,641 | $7,117,520 |
WILLIAM L. METZGER, Senior Vice President and Chief Financial Officer | |||||||
2017 | $523,269 | — | $999,930 | $360,000 | $59,931 | $130,101 | $2,073,231 |
JAIME A. IRICK, Vice President and President — Fitness Division | |||||||
2017 | $451,250 | $460,000 | $1,601,492 | $160,000 | — | $229,558 | $2,902,300 |
JOHN C. PFEIFER, Vice President and President — Mercury Marine | |||||||
2017 | $493,269 | — | $999,930 | $405,000 | $346 | $134,288 | $2,032,833 |
HUW S. BOWER, Vice President and President — Brunswick Boat Group | |||||||
2017 | $399,969 | — | $799,952 | $160,000 | — | $107,256 | $1,467,177 |
ADDITIONAL PROPOSALS
FOR MORE INFORMATION, VISIT PAGES 25, 55, AND 58
In addition to the election of directors,Directors (page 12), we are asking our shareholders to approve amendments to our Restated Certificate of Incorporation to declassify our Board of Directors (page 25). We are also asking shareholders to approve our compensation programs for Named Executive Officers on a non-binding advisory basis our compensation programs for named executive officers (commonly referred to as a “say-on-pay vote”) and(page 55). Finally, we are asking shareholders to ratify the Audit Committee’s appointment of Deloitte & Touche LLP (Deloitte) as our independent registered public accounting firm for fiscal year 2016.2018 (page 58).
BRUNSWICK CORPORATION-2016 Proxy Statement7
2018 PROXY STATEMENT | 8 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
PROXY STATEMENT
The Board of Directors of Brunswick Corporation is soliciting proxies from Brunswick’s shareholders on behalf of the Company for the annual meeting to be held at the Ritz-Carlton Hotel, 160 E. Pearson Street, Chicago,Brunswick Corporation headquarters, 26125 N. Riverwoods Boulevard, Suite 500, Mettawa, Illinois 60611,60045, on Wednesday, May 4, 2016,2, 2018, at 9:00 a.m. CDT (the Annual Meeting). As required by rules adopted by the Securities and Exchange Commission (the SEC),(SEC) rules, we are making this Proxy Statement and our Annual Report on Form 10-K available to our shareholders electronically via the Internet. In addition, we are using the SEC’s Notice and Access Rules to provide shareholders with more options for receipt of these materials. Accordingly, on March 24, 2016,22, 2018, we will begin mailing a Notice of Internet Availability of Proxy Materials (the Notice) to our shareholders containing instructions about how to access this Proxy Statement and Brunswick’s Annual Report via the Internet, how to vote online or by telephone, and how to receive paper copies of the documents and a proxy card.
FREQUENTLY ASKED QUESTIONS ABOUT THE MEETING
What is the purpose of the Annual Meeting?
What is the purpose of the Annual Meeting? |
At the Annual Meeting, shareholders will act upon matters described in the Notice, including the election to our Board of Directors of the three nominees named in this Proxy Statement, the approval of the compensation of our named executive officers on an advisory basis and the ratification of the Audit Committee’s appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.including:
• | The election to our Board of Directors of the four nominees named in this Proxy Statement |
• | Approval of amendments to our Restated Certificate of Incorporation to declassify the Board of Directors |
• | An advisory say-on-pay vote to approve the compensation of our Named Executive Officers |
• | Ratification of the Audit Committee’s appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2018 |
Who may vote at the Annual Meeting?
Who may vote at the Annual Meeting? |
Only holders of one or more of the 90,768,92687,359,679 shares of Brunswick common stock, par value $.75 per share (Common Stock), issued and outstanding as of the close of business on March 4, 20165, 2018 (the Record Date) will be entitled to vote at the Annual Meeting. Each holder as of the Record Date is entitled to one vote for each share of Brunswick Common Stock held.
Who can attend the Annual Meeting?
Who can attend the Annual Meeting? |
Only shareholders who owned Brunswick Common Stock as of the Record Date, or their duly appointed proxies, will be entitled to attend the Annual Meeting. If you hold your shares through a broker, bank, or other nominee, you will not be admitted to the Annual Meeting unless you bring a copy of a statement (such as a brokerage statement) from your nominee reflecting your stock ownership as of the Record Date.
Who will count the votes? |
How do I vote?
Brunswick’s tabulator, Broadridge Financial Solutions, Inc., will count the votes. Representatives of Brunswick’s Law Department will act as inspectors of election.
How do I vote? |
If you are a shareholder of record as of the Record Date, you can vote: (i) by attending the Annual Meeting; (ii) by following the instructions on your Notice for voting by telephone at 1-800-690-6903 or via the Internet atwww.proxyvote.com; or (iii) by signing, dating and mailing in a proxy card. The deadline for voting by telephone or via the Internet is 5:00 p.m. EDT on May 3, 2016.
BY INTERNET proxyvote.com By 5:00 p.m. EDT | BY TELEPHONE 1-800-690-6903 By 5:00 p.m. EDT |
BY MAIL Completing, signing, To arrive by May 1, 2018 | IN PERSON Annual Meeting May 2, 2018 |
If you hold your shares through a broker, bank, or other nominee, that institution will instruct you as to how your shares may be voted by proxy, including whether telephone or Internet voting options are available. If you hold your shares through a broker, bank, or other nominee and would like to vote in person at the Annual Meeting, you must first obtain a proxy issued in your name from the institution that holds your shares.
If you hold any shares in the Brunswick Retirement Savings Plan or the Brunswick Rewards Plan, you must direct the trustee of these plans how to vote these shares by following the instructions on your Notice for voting by telephone at 1-800-690-6903 or via the Internet at www.proxyvote.com, or by signing, dating, and mailing in a proxy card. The deadline for voting shares held in the Brunswick Retirement Savings Plan or the Brunswick Rewards Plan is 5:00 p.m. EDT on April 29, 2016.27, 2018. The trustee will vote these shares as you direct. The trustee will vote allocated shares of the Company’s common stockCommon Stock for which proxies are not received in direct proportion to voting by allocated shares for which proxies are received.
BRUNSWICK CORPORATION-2016 Proxy Statement8
2018 PROXY STATEMENT | 9 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
Can I change my vote after I have voted?
FREQUENTLY ASKED QUESTIONS ABOUT THE MEETING
Can I change my vote after I have voted? |
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting, including voting via the Internet or by telephone (only your latest Internet or telephone proxy that is timely submitted prior to the meeting will be counted), by signing and returning a new proxy card with a later date, or by attending the meeting and voting in person. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the meeting or specifically request in writing that your prior proxy be revoked.
Who will count the votes?
Brunswick’s tabulator, Broadridge Financial Solutions, Inc., will count the votes. Representatives of Brunswick’s Legal Department will act as inspectors of election.
How will my shares be voted if I sign, date and return a proxy card?
How will my shares be voted if I sign, date, and return a proxy card? |
If you sign, date, and return a proxy card and indicate how you would like your shares to be voted, your shares will be voted as you have instructed. If you sign, date, and return a proxy card but do not indicate how you would like your shares to be voted, your proxy will be voted as follows: forin accordance with the election of the three director nominees named in this Proxy Statement; for the approval of the compensation of our named executive officers; and for the ratification of the Audit Committee’s appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the Company’s fiscal year ending December 31, 2016.Board’s recommendations. With respect to any other matter that is properly brought before the meeting, the proxy holders will vote the proxies held by them in accordance with their best judgment.
What are the Board’s recommendations? |
What are the Board’s recommendations?
PROPOSAL 1: Election of Directors |
each nominee |
PROPOSAL 2: Approval of Amendments to our Restated Certificate of Incorporation to Declassify the Board of Directors | FOR |
PROPOSAL 3: Advisory Vote to Approve the Compensation of our Named Executive Officers | FOR |
PROPOSAL 4: Ratification of the Appointment of Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2018 | FOR |
What vote is required to approve each matter to be considered at the Annual Meeting? |
The Board of Directors recommends a vote for the election of the three director nominees named in this Proxy Statement. The Board recommends a vote for the approval of the compensation of our named executive officers. The Board and the Audit Committee recommend the ratification of the Audit Committee’s appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.
What vote is required to approve each matter to be considered at the Annual Meeting?
Election of Directors. Directors. Brunswick has adopted a majority voting standard for the uncontested election of directorsDirectors and, therefore, the three directorfour Director nominees shall be elected to the Board of Directors if they each receive a majority of the votes cast, in person or by proxy, at the Annual Meeting. Under Brunswick’s majority voting standard for uncontested elections, if the number of votes cast “For” a directorDirector nominee’s election does not exceed the number of votes cast “Against”
election, then the directorDirector nominee must tender his or her resignation from the Board promptly after certification of the shareholders’ vote. The Board will decide within 120 days of that certification, through a process managed by the Nominating and Corporate Governance Committee and excluding the directorDirector nominee in question, whether to accept the resignation. Because Brunswick has adopted a majority voting standard for the uncontested election of directors,Directors, abstentions will have no effect on the election of directorDirector nominees. If any one or more of the three directorDirector nominees is unable to serve, votes will be cast, pursuant to authority granted by the enclosed proxy, for the alternate individual or individuals designated by the Board.Board designates.
Advisory Approval of Amendments to our Restated Certificate of Incorporation to Declassify the Board of Directors. The affirmative vote of the holders of 80% of the outstanding shares entitled to vote in elections of Directors, represented in person or by proxy, will be required for the approval of the amendments. Because approval of this resolution requires a supermajority of the outstanding shares represented at the Annual Meeting, abstentions will have the same effect as votes against approval.
Advisory Vote to Approve the Compensation of our Named Executive Compensation. Officers. The affirmative vote of the holders of a majority of the shares having voting power, represented in person or by proxy, will be required for the approval of the non-binding resolution relating to the compensation of the Company’s named executive officers.our Named Executive Officers (NEOs). Because approval of this resolution requires a majority of the shares having voting power and represented at the Annual Meeting, abstentions will have the same effect as votes against approval.
Ratification of the Appointment of Independent Registered Public Accounting Firm. Firm. The affirmative vote of the holders of a majority of the shares having voting power, represented in person or by proxy, will be required for the ratification of the Audit Committee’s appointment of Deloitte & Touche LLP as Brunswick’s independent registered public accounting firm for the fiscal year ending December 31, 2016.2018. Because the vote to ratifyratification of the independent registered public accounting firm requires a majority of the shares having voting power and represented at the Annual Meeting, abstentions will have the same effect as votes against ratification.
BRUNSWICK CORPORATION-2016 Proxy Statement9
What constitutes a quorum? |
What constitutes a quorum?
The Annual Meeting will be held only if a quorum is present. A quorum will be present if a majority of the 90,768,926 shares of Brunswick Common Stock issued and outstanding on the Record Date are represented, in person or by proxy, at the Annual Meeting. Shares represented by properly completed proxy cards or ballots marked “Abstain” or returned without voting instructions are counted as present for the purpose of determining whether a quorum is present. In addition, broker non-votes will be counted as present for quorum purposes.
2018 PROXY STATEMENT | 10 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
FREQUENTLY ASKED QUESTIONS ABOUT THE MEETING
How will broker non-votes be treated?
How will broker non-votes be treated? |
Broker non-votes occur when a broker lacks discretionary authority to vote on a proposal and the beneficial owner has not provided an indication as toinstructions about how to vote. Brunswick will treat broker non-votes as present to determine whether or not there is a quorum at the Annual Meeting, but they will not be treated as having voting power on the proposals, if any, for which the broker indicates it does not have discretionary authority. This means that broker non-votes will not have any effect on whether a proposal passes.
We expect that brokers will have discretionary authority with respect to the proposal to ratify the appointment of our independent registered public accounting firm but will lack discretionary authority with respect to the election of directors andDirectors, the advisory vote to approve the compensation of our Named Executive Officers, and approval of amendments to our Restated Certificate of Incorporation to declassify the Company’s named executive officers, and accordinglyBoard of Directors. Accordingly, broker non-votes will have no impact on such proposals, but brokers will have discretionary authority with respectmay occur as to ratification of the appointment of the independent registered public accounting firm.these three proposals.
Will my vote be kept confidential?
Will my vote be kept confidential? |
Yes. As a matter of policy, shareholder proxies, ballots, and tabulations that identify individual shareholders are kept confidential and are available only to Brunswick’sour tabulator and inspectors of election, who are obligated to keep your vote confidential.
Who pays to prepare, mail and solicit the proxies?
Brunswick pays all of the costs of preparing, mailing and soliciting proxies. Brunswick asks brokers, banks, voting trustees and other nominees and fiduciaries to forward notices and, when requested, proxy materials to the beneficial owners and to obtain authority to execute proxies. Brunswick will reimburse the brokers, banks, voting trustees and other nominees and fiduciaries upon request. In addition to solicitation by mail, telephone, facsimile, Internet or personal contact by its designated officers and employees (who will not receive additional compensation for their solicitation efforts), Brunswick has retained the services of Georgeson Inc. to solicit proxies for a fee of $9,900 plus expenses.
What if other matters come up during the Annual Meeting?
What if other matters come up during the Annual Meeting? |
If any matters other than those referred to in the Notice properly come before the meeting, the individuals named in the accompanying form of proxy will vote the proxies held by them in accordance with their best judgment. Brunswick isWe are not aware of any business other than the items referred to in the Notice that may be considered at the meeting.
BRUNSWICK CORPORATION-2016 Proxy Statement10
Who pays to prepare, mail, and solicit the proxies? |
Brunswick pays all of the costs of preparing, mailing, and soliciting proxies. We ask brokers, banks, voting trustees, and other nominees and fiduciaries to forward notices and, when requested, proxy materials to the beneficial owners and to obtain authority to execute proxies. We reimburse the brokers, banks, voting trustees, and other nominees and fiduciaries upon request. In addition to solicitation by mail, telephone, facsimile, Internet, or personal contact by our designated officers and employees (who will not receive additional compensation for their solicitation efforts), we have retained the services of Innisfree M&A Incorporated to solicit proxies for a fee of $75,000.
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of printed proxy materials?
Pursuant to SEC rules, Brunswick iswe are required to provide access to itsour proxy materials via the Internet and hashave elected to use the SEC’s Notice and Access Rules for soliciting proxies. Accordingly, Brunswick iswe are sending a Notice to all of itsour shareholders as of the Record Date. All shareholders may access Brunswick’sour proxy materials on the website referred to in the Notice. ShareholdersYou may also request to receive a printed set of the proxy materials. InstructionsYou can find instructions regarding how to access Brunswick’sour proxy materials via the Internet and how to request a printed copy can be found in the Notice. Additionally, by following the instructions in the Notice, shareholdersyou may request to receive proxy materials in printed form by mail or electronically by e-mailemail on an ongoing basis. Choosing to receive your future proxy materials by e-mailemail will save Brunswickus the cost of printing and mailing documents to you and will reduce the impact of the Company’sour Annual Meetings on the environment. If you choose to receive future proxy materials by e-mail,email, you will receive an e-mailemail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mailemail will remain in effect until you terminate it.
Multiple individuals residing in my home are beneficial owners of shares of Brunswick Common Stock. Why did we receive only one mailing?
Multiple individuals residing in my home are beneficial owners of shares of Common Stock. Why did we receive only one mailing? |
Brunswick is sending only one envelope with multiple Notices to you if you share a single address with another shareholder, unless we have received instructions to the contrary from you. This practice, known as “householding,” is designed to eliminate duplicate mailings, conserve natural resources, and reduce Brunswick’sour printing and mailing costs. We will promptly deliver a separate Notice to you upon written or verbal request. If you wish to receive duplicateseparate mailings in the future, you may contact Brunswick Shareholder Services by telephone at 847.735.4294, by mail at 126125 N. Field Court, Lake Forest,Riverwoods Blvd., Ste 500, Mettawa, IL 60045, or by e-mailemail atservices@brunswick.com.
If you currently receive multiple Notices, you can request householding by contacting Brunswick Shareholder Services as described above. If you own your shares through a broker, bank, or other nominee, you can request householding by contacting the holder of record.
BRUNSWICK CORPORATION-2016 Proxy Statement11
2018 PROXY STATEMENT | 11 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
PROPOSAL NO. 1:ELECTION OF DIRECTORS
At the Annual Meeting, shareholders willWhat am I voting on? Shareholders are being asked to elect threefour individuals to serve on the Board of Directors.
Recommendation: | Your Board of Directors recommends a vote FOR the election of the nominees. |
The current Board of Directors has nominated Nolan D. Archibald, David C. Everitt and Roger J. Wood nominated:
MANUEL A. FERNANDEZ | MARK D. SCHWABERO | DAVID V. SINGER | J. STEVEN WHISLER |
for election as directorsDirectors to serve for terms expiring at the 20192021 Annual Meeting, or until their respective successors have been elected and qualified.
The Board of Directors currently has ten10 members divided among three classes, one of which consists of four directors and two of which consist of three directors. As explained in further detail in Proposal 2, the Board of Directors has approved, and is recommending our shareholders approve, amendments to our Restated Certificate of Incorporation to declassify the Board of Directors. If Proposal 2 is approved by our shareholders at the Annual Meeting, beginning with the annual meeting of shareholders to be held in 2019, Director nominees will, if elected, serve for one-year terms. However, the approval or disapproval of Proposal 2 by our shareholders will not affect the length of the term that Messrs. Fernandez, Schwabero, Singer, and Whisler will, if elected at the Annual Meeting, serve or the length of the existing terms of our other current Directors.
Biographical information follows for each nominee and each directorDirector whose term of office will continue after the Annual Meeting. Additional information is set forth below regarding the specific experience, qualifications, attributes, or skills of each member of the Board of Directors that led the Board to conclude that such individualindividuals should serve on the Board in light of the Company’sour business and leadership structure.
Nominees for Election for Terms Expiring at the 2019 Annual MeetingDIRECTOR NOMINEE SUMMARY
Nolan D. Archibald
2018 PROXY STATEMENT | 12 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
Director since 1995ELECTION OF DIRECTOR NOMINEES FOR TERMS EXPIRING AT THE 2021 ANNUAL MEETING
MANUEL A. FERNANDEZ
Retired; Executive
Chairman, CEO, & President of Stanley Black & Decker, Inc., a consumerGartner Group (Retired)
Director Since: 1997
Age: 71
Committees:
Nominating and commercial products company, 2010 to 2013; Chairman, PresidentCorporate Governance (Chair)
Executive
Human Resources and Chief Executive Officer of The Black & Decker Corporation, 1986 to 2010; recipient of the American Marketing Association’s Edison Achievement Award; director of Huntsman Corporation and Lockheed Martin Corporation; age 72; serves as the Chair of the Finance Committee.Compensation
LEAD INDEPENDENT DIRECTOR
As the former Executive Chairman and Chief Executive Officer of a global consumerleading technology company and commercial products company, with more than 25 yearsthe Managing Director of experience in those roles,a venture capital partnership, Mr. ArchibaldFernandez brings significant experience and knowledge to our Board regarding strategic planning, innovation, technology, acquisitions, corporate governance, distribution, operations, and human resources. Mr. Fernandez’s extensive experience in a variety of businesses with strong commercial product offerings, including three technology companies, allows him to provide invaluable advice and guidance to our Company’s management and Board.
Experience:
Retired; Chairman, Chief Executive Officer, and President of Gartner Group, a technology research and advisory firm, 1991 to 1999; Executive Chairman of Sysco Corporation, a marketer and distributor of foodservice products, 2012 to 2013; Non-Executive Chairman of Sysco Corporation, 2009 to 2012; Managing Director, SI Ventures, LLC, a venture capital partnership, from 1998 to present. Previously served as President and Chief Executive Officer at Dataquest, Inc., Gavilan Computer Corporation, and Zilog Incorporated. Director of SI Ventures, LLC, Leggett and Platt Incorporated, and Performance Food Group; previously served as Chairman of the University of Florida Board of Trustees, Chairman Emeritus of Gartner, Inc., Director of Flowers Foods, Inc., Stanley Black & Decker, Inc., Tibco Software, Inc., and Time Inc.
KEY SKILLS AND EXPERTISE | |
Audit/Finance | |
Global | |
Operations/Manufacturing | |
Technology | |
CEO | |
Public Company Board | |
Regulatory/Legal/Governance | |
Diverse | |
MARK D. SCHWABERO
Chairman & CEO of Brunswick Corporation
Director Since: 2014
Age: 65
Committees:
Executive
As the Chairman and Chief Executive Officer of the Company and as the former Vice President and President of Mercury Marine, Brunswick’s largest operating division, Mr. Schwabero’s roles have provided him with extensive knowledge of and experience with our businesses and industries, allowing him to communicate effectively about our operations and business strategy with the Board. Mr. Schwabero is uniquely qualified to assist the Board on strategic and operating issues facing the Company. Based on his various roles within Brunswick and his prior experience, Mr. Schwabero brings comprehensive management and manufacturing experience to our Board and, as former Chairman of the National Marine Manufacturers Association, understands the operations, financial, and marketing challenges facing companies in the marine market.
Experience:
Chairman and Chief Executive Officer of Brunswick Corporation, February 2016 to present; President and Chief Operating Officer of Brunswick Corporation, 2014 to February 2016; Vice President and President—Mercury Marine, 2008 to 2014; President—Mercury Outboards, 2004 to 2008. Previously served as President and Chief Executive Officer of Hendrickson International; President, Automotive Products and Regional President for Pilkington Libby-Owens Ford; President of Bosch Braking Systems, North America; and positions of increasing responsibility in over 17 years with Navistar International; Director of 1st Source Corporation.
KEY SKILLS AND EXPERTISE | |
Audit/Finance | |
Global | |
Operations/Manufacturing | |
Dealers/Distribution | |
CEO | |
Marine/Fitness Industry | |
Public Company Board | |
2018 PROXY STATEMENT | 13 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
ELECTION OF DIRECTOR NOMINEES FOR TERMS EXPIRING AT THE 2021 ANNUAL MEETING
DAVID V. SINGER
CEO of
Snyder’s-Lance, Inc. (Retired)
Director Since: 2013
Age: 62
Committees:
Audit
Finance
As the former Chief Executive Officer of a maker and global marketer of snack foods and through his director and public company audit committee roles, Mr. Singer brings extensive management and financial experience to our Board, as well as experience in supply chain, manufacturing, logistics, and distribution matters. Mr. Singer’s experience in corporate finance, governance, and acquisitions is beneficial to the Board in several areas including oversight of business management, strategic planningexternal auditors and internal controls.
Experience:
Retired; Chief Executive Officer of Snyder’s-Lance, Inc., a leading snack food company, 2010 to 2013; President and Chief Executive Officer of Lance, Inc., 2005 to 2010; Executive Vice President and Chief Financial Officer of Coca-Cola Bottling Company Consolidated, 2001 to 2005. Director of Flowers Foods, Inc., Hanesbrands, Inc., and SPX Flow, Inc.; previously served as Director of Lance, Inc. and Snyder’s-Lance, Inc.
KEY SKILLS AND EXPERTISE | |
Audit/Finance | |
Operations/Manufacturing | |
Marketing | |
Dealers/Distribution | |
CEO | |
Public Company Board | |
J. STEVEN WHISLER
Chairman & CEO of Phelps Dodge Corporation (Retired)
Director Since: 2007
Age: 63
Committees:
Human Resources and Compensation (Chair)
Executive
Nominating and Corporate Governance
As the former Chairman and Chief Executive Officer of a mining and manufacturing company with operations on several continents, Mr. Whisler has extensive experience with international business operations.operations and regulatory compliance matters. Additionally, Mr. Archibald is also well-suitedWhisler’s background enables him to provide strategic advice and guidance to our Company’s management and Board in regard to a wide variety ofregarding financial, issues.human resources, and risk oversight matters.
David C. Everitt
Director since 2012
Experience:
Retired; President, Agricultural and Turf Division - North America, Asia, Australia, and Sub-Saharan and South Africa, and Global Tractor and Turf Products of Deere & Company, the world’s largest manufacturer of agricultural equipment and a major U.S. producer of construction, forestry and lawn and grounds care equipment, 2009 to 2012; President, Agricultural Division — North America, Australia, Asia and Global Tractor and Implement Sourcing, 2006 to 2009; President, Agricultural Division — Europe, Africa, South America and Global Harvesting Equipment Sourcing, 2001 to 2006; director of Agrium Inc., Allison Transmission Holdings, Inc. and Harsco Corporation; age 63.
As the former President of Deere & Company’s largest division, Mr. Everitt brings his engineering experience, global expertise and extensive knowledge of dealer and distribution issues to our Board.
Roger J. Wood
Director since 2012
Retired; PresidentChairman and Chief Executive Officer of Dana HoldingPhelps Dodge Corporation, a world leadermining and manufacturing company, 2000 to 2007; employed by Phelps Dodge Corporation in the supplya number of axles, driveshafts, off-highway transmissions, sealing and thermal-management products and genuine service parts, 2011 to 2015; Group President, Engine of BorgWarner, Inc., a worldwide automotive industry components and parts supplier, 2010 to 2011; Executive Vice President of BorgWarner, Inc., 2009 to 2011; President of BorgWarner Turbo Systems Inc. and BorgWarner Emissions Systems Inc., 2005 to 2009; director of Tenneco Inc. and Fallbrook Technologies; previously served as director of Dana Holding Corporation; age 53.
As the formerpositions since 1976, including President and Chief Executive OfficerOperating Officer. Director of Dana,CSX Corporation and given his many yearsInternational Paper Company (Presiding Director 2009 to 2017). Previously served as Director of service at another Tier-1 automotive supplier, Mr. Wood has unique insightBurlington Northern Santa Fe Corporation and brings significant knowledge to the Board in the areas of manufacturing operations, business management and strategic planning.U.S. Airways Group, Inc.
KEY SKILLS AND EXPERTISE | |
Audit/Finance | |
Global | |
Operations/Manufacturing | |
Technology | |
Dealers/Distribution | |
CEO | |
Public Company Board | |
Regulatory/Legal/Governance | |
Your Board of Directors recommends a vote FOR the election of the nominees named above.
BRUNSWICK CORPORATION-2016 Proxy Statement12
2018 PROXY STATEMENT | 14 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
Directors Continuing in Office until the 2017 Annual Meeting
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2020 ANNUAL MEETING
NANCY E. COOPER
Nancy E. Cooper
Director since 2013
Retired; Executive Vice President and Chief Financial Officer& CFO of CA Technologies, Inc., one of the largest independent software corporations in the world, 2006 to 2011; Chief Financial Officer of IMS Health, Inc., a global information and technology services company, 2001 to 2006; director of Guardian Life Insurance Company of America, The Mosaic Company and Teradata Corporation; age 62; serves as the Chair of the (Retired)
Director Since: 2013
Age: 64
Committees:
Audit Committee.(Chair)
Executive
As the former Executive Vice President and Chief Financial Officer of CA Technologies, Ms. Cooper brings financial acumen and technology experience to our Board. Ms. Cooper’s extensive experience as a Chief Financial Officer and her other financial leadership roles for several companies, as well as her service on the audit committees of two other public companies, will assistassists the Board in several areas including finance, internal control, and audit.audit matters.
RalphExperience:
Retired; Executive Vice President and Chief Financial Officer of CA Technologies, Inc., one of the largest independent software corporations in the world, 2006 to 2011; Chief Financial Officer of IMS Health, Inc., a global information and technology services company, 2001 to 2006. Director of The Mosaic Company, Guardian Life Insurance Company of America, and Aptiv PLC; previously served as Director of Teradata Corporation.
KEY SKILLS AND EXPERTISE | |
Audit/Finance | |
Global | |
Technology | |
Public Company Board | |
Diverse | |
RALPH C. StayerSTAYER
Chairman of Johnsonville Sausage, LLC
Director since Since: 2002
Age: 74
Committees:
Audit
Finance
As the leader of a successful consumer-focused private enterprise, Mr. Stayer brings extensive management experience to the Board in the areas of effective competition, production, distribution, marketing, and financial matters. Additionally, Mr. Stayer’s writing, teaching, and consulting work relating to organizational development and leadership enable him to provide our management and Board with advice and guidance in relation to strategic, organizational, and individual development.
Experience:
Chairman, Johnsonville Sausage, LLC, a maker of sausage products, since 1980; President and Chief Executive Officer of Johnsonville Sausage, LLC, 1980 to 2015; Founder of Leadership Dynamics, a consulting firm; Member of the Board of Trustees of Boston College; age 72.Director of Hometown Bank; and Trustee of the Baylor Art Museum.
KEY SKILLS AND EXPERTISE | |
Audit/Finance | |
Global | |
Operations/Manufacturing | |
Marketing | |
Dealers/Distribution | |
CEO | |
2018 PROXY STATEMENT | 15 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2020 ANNUAL MEETING
JANE L. WARNER
As
Executive Vice President Decorative Surfaces and Finishing Systems of Illinois Tool Works Inc. (Retired)
Director Since: 2015
Age: 71
Committees:
Finance
Nominating and Corporate Governance
With almost 40 years of experience in global manufacturing and manufacturing information systems businesses, Ms. Warner has particular appreciation for the leader of a successful consumer-focused private enterprise, Mr. Stayer brings extensive management experience tochallenges facing our operations, distribution network, and customers. Her leadership roles in these diverse companies, along with the financial understanding she has gained through her business unit leadership, assists our Board in working through the areas of effective competition, production, distribution and financial matters. Additionally, Mr. Stayer’s writing, teaching and consulting work relating to organizational development and leadership enable him to provideissues that confront our Company’s management and Board with advice and guidance in relation to strategic, organizational and individual development.global businesses.
Jane L. Warner
Director since 2015
Experience:
Retired; Executive Vice President -DecorativePresident—Decorative Surfaces and Finishing Systems of Illinois Tool Works Inc., a diversified manufacturer of highly engineered components and industrial systems and consumables, 2007 to 2013; Group President of Global Finishing Systems of Illinois Tool Works Inc., 2005 to 2007; President of Plexus Systems, L.L.C. (now known as Plex), an online manufacturing software company, 2004 to 2005; Vice President of Electronic Data Systems, 2000 to 2004; Executive Vice President and President of Kautex North America and Randall divisions for Textron Automotive, 1994 to 1999. Formerly, Ms. Warner held executive positions in manufacturing, engineering, and human resources over a 20-year span at General Motors Corporation; directorCorporation. Director of Regal Beloit Corporation and Tenneco Inc.; previously served as directorDirector of MeadWestvaco Corporation; age 69.Corporation.
KEY SKILLS AND EXPERTISE | |
Global | |
Operations/Manufacturing | |
Technology | |
Dealers/Distribution | |
Public Company Board | |
Diverse | |
With almost 40 years of experience at global manufacturing and manufacturing information systems businesses, Ms. Warner has particular appreciation for the challenges facing our operations, distribution network and customers. Her leadership roles in these diverse companies, along with the financial understanding she has gained through her business unit leadership, will assist our Board in working through the issues that confront our global businesses.DIRECTORS CONTINUING IN OFFICE UNTIL THE 2019 ANNUAL MEETING
NOLAN D. ARCHIBALD
BRUNSWICK CORPORATION -2016 Proxy Statement13
Directors Continuing in Office until the 2018 Annual Meeting
Manuel A. Fernandez
Director since 1997
Retired; Executive Chairman of Sysco Corporation, a marketer and distributor of foodservice products, 2012 to 2013; Non-Executive Chairman of Sysco Corporation, 2009 to 2012; Managing Director, SI Ventures, LLC, a venture capital partnership, since 1998; Chairman, Chief Executive Officer and President of Gartner Group, a technology research and advisory firm, 1991 to 1999; previously served as President and Chief Executive Officer at Dataquest, Inc, Gavilan Computer Corporation and Zilog Incorporated; director of Leggett and Platt Incorporated and Time Inc.; previously served as Chairman of the University of Florida Board of Trustees, Chairman Emeritus of Gartner, Inc., director of Flowers Foods, Inc., Stanley Black & Decker, Inc. and Tibco Software, Inc.; age 69; serves as the Lead Independent (Retired)
Director and as Chair of the Nominating and Corporate Governance and Qualified Legal Compliance Committees.Since: 1995
Age: 74
Committees:
Finance (Chair)
Executive
As the former Executive Chairman and Chief Executive Officer of a foodserviceglobal consumer and commercial products company, and the Managing Directorwith more than 25 years of a venture capital partnership,experience in those roles, Mr. FernandezArchibald brings significant experience and knowledge to our Board regardingin the areas of business management, strategic planning, acquisitions, corporate governancemarketing, and human resources.international business operations. Mr. Fernandez’s extensive experience in information technology, including his role as Chairman and Chief Executive Officer of a leading information technology company, as well as with a variety of businesses with strong commercial product offerings, allows himArchibald is also well-suited to provide invaluable advice and guidance to our Company’s management and Board regarding innovation, technology strategy and distribution.on a wide variety of financial issues.
Mark D. SchwaberoExperience:
Director since 2014
Retired; Executive Chairman of Stanley Black & Decker, Inc., a consumer and Chief Executive Officer of Brunswick Corporation since February 2016; President and Chief Operating Officer of Brunswick Corporation, 2014commercial products company, 2010 to February 2016; Vice President and President — Mercury Marine, 2008 to 2014; President — Mercury Outboards, 2004 to 2008; previously served as2013; Chairman, President, and Chief Executive Officer of Hendrickson International, The Black & Decker Corporation, 1986 to 2010; recipient of the American Marketing Association’s Edison Achievement Award in 1996; Director of Huntsman Corporation and Lockheed Martin Corporation.
KEY SKILLS AND EXPERTISE | |
Audit/Finance | |
Global | |
Operations/Manufacturing | |
Marketing | |
Dealers/Distribution | |
CEO | |
Public Company Board | |
2018 PROXY STATEMENT | 16 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2019 ANNUAL MEETING
DAVID C. EVERITT
President, Automotive ProductsAgricultural and Regional President for Pilkington Libby-Owens Ford,Turf Division of Deere & Company (Retired)
Director Since: 2012
Age: 65
Committees:
Human Resources and Compensation
Nominating and Corporate Governance
As the former President of Bosch Braking Systems, Deere & Company’s largest division, Mr. Everitt brings his engineering experience, global expertise, and extensive knowledge of dealer and distribution issues to our Board. Mr. Everitt also provides crucial operations, manufacturing, and marketing experience.
Experience:
Retired; President, Agricultural and Turf Division—North America, Asia, Australia, and positionsSub-Saharan and South Africa, and Global Tractor and Turf Products of increasing responsibility in over 17 years with Navistar International; directorDeere & Company, the world’s largest manufacturer of 1st Sourceagricultural equipment and a major U.S. producer of construction, forestry, and lawn and grounds care equipment, 2009 to 2012; President, Agricultural Division—North America, Australia, Asia and Global Tractor and Implement Sourcing, 2006 to 2009; President, Agricultural Division—Europe, Africa, South America and Global Harvesting Equipment Sourcing, 2001 to 2006. Director of Nutrien Ltd., Allison Transmission Holdings, Inc., and Harsco Corporation; age 63.previously served as Director of Agrium Inc.
KEY SKILLS AND EXPERTISE | |
Global | |
Operations/Manufacturing | |
Marketing | |
Dealers/Distribution | |
Public Company Board | |
ROGER J. WOOD
Chairman & CEO of Fallbrook Technologies Inc.
Director Since: 2012
Age: 55
Committees:
Audit
Finance
As the Chairman and Chief Executive Officer of an advanced technology company focused on mechanical devices, Mr. Wood brings substantial expertise regarding technology and as the former President and Chief Operating Officer of Brunswick Corporation, Mr. Schwabero’s roles have provided him with extensive knowledge of our businesses and industries and allow himcustomer solutions to communicate effectively about our operations and business strategy with the Board. Mr. Schwabero has extensive knowledge of the Company and is uniquely qualified to assist the Board on strategic and operating issues facing the Company. Based on his various roles within Brunswick and prior experience, Mr. Schwabero brings comprehensive management and manufacturing experience to our Board and, as former Chairman of the National Marine Manufacturers Association, understands the operations, finances and marketing challenges facing companies in the marine market.
David V. Singer
Director since 2013
Retired; Chief Executive Officer of Snyder’s-Lance, Inc., a leading snack food company, 2010 to 2013;Formerly President and Chief Executive Officer of LanceDana Holding Corporation, Mr. Wood’s experience and work there and at another Tier-1 automotive supplier provide unique insight and significant knowledge to the Board in the areas of manufacturing operations, business management, global operations, and strategic planning.
Experience:
Chairman and Chief Executive Officer, Fallbrook Technologies Inc., a privately held technology developer and manufacturer, February 2018 to present; President and Chief Executive Officer of Dana Holding Corporation, a world leader in the supply of axles, driveshafts, off-highway transmissions, sealing and thermal-management products, and genuine service parts, 2011 to 2015; Group President, Engine of BorgWarner, Inc., a worldwide automotive industry components and parts supplier, 2010 to 2011; Executive Vice President of BorgWarner Inc., 2009 to 2011; President of BorgWarner Turbo Systems Inc. and BorgWarner Emissions Systems Inc., 2005 to 2010; Executive Vice President and Chief Financial Officer2009. Director of Coca-Cola Bottling Company Consolidated, 2001 to 2005; director of Flowers Foods, Inc., Hanesbrands, Inc. and SPX Flow,Tenneco Inc.; previously served as directorLead Director of LanceFallbrook Technologies Inc. and Snyder’s-Lance, Inc.; age 60.Director of Dana Holding Corporation.
KEY SKILLS AND EXPERTISE | |
Audit/Finance | |
Global | |
Operations/Manufacturing | |
CEO | |
Public Company Board | |
Technology | |
As the former Chief Executive Officer of a maker and marketer of snack foods throughout the world and through his director and public company audit committee roles, Mr. Singer brings extensive management and financial experience to our Board, as well as experience in supply chain, manufacturing, logistics and distribution matters. Mr. Singer also offers experience in corporate finance, governance and acquisitions.
J. Steven Whisler
Director since 2007
Retired; Chairman and Chief Executive Officer of Phelps Dodge Corporation, a mining and manufacturing company, 2000 to 2007; employed by Phelps Dodge Corporation in a number of positions since 1976, including President and Chief Operating Officer; director of CSX Corporation and lead director of International Paper Company; previously served as director of Burlington Northern Santa Fe Corporation and U.S. Airways Group; age 61; serves as the Chair of the Human Resources and Compensation Committee.
As the former Chairman and Chief Executive Officer of a mining and manufacturing company with operations on several continents, Mr. Whisler has extensive experience with international business operations and regulatory compliance matters. Additionally, Mr. Whisler’s background enables him to provide strategic advice and guidance to our Company’s management and Board regarding financial, human resources and risk oversight matters.
BRUNSWICK CORPORATION -2016 Proxy Statement14
2018 PROXY STATEMENT | 17 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
Board Committees
The Board of Directors has six committees: Audit, Finance, Human Resources and Compensation, Nominating and Corporate Governance, Qualified Legal Compliance and Executive. Each committee is comprised solely of independent directors, as that standard is determined by the Board’sadopted written Principles and Practices (the Principles) and the New York Stock Exchange (NYSE) Listed Company Manual, with the exception of the Executive Committee, of which Mr. Schwabero is a member. Each of the committees may, at its sole discretion and at Brunswick’s expense, obtain advice and assistance from outside legal, financial, accounting or other experts and advisors. The following table shows the current membership of these committees:
The principal responsibilities of each of these committees are described generally below and in detail in their respective committee charters, which are available aton the Brunswick website, www.brunswick.com/company/governance/committees.htmlprinciplespractices.php, or in print upon request by any Brunswick shareholder. The Principles set the framework for our governance structure. The Board believes that good corporate governance is a source of competitive advantage for Brunswick. Good governance allows the skills, experience, and judgment of the Board to support our executive management team, enabling management to improve our performance and maximize shareholder value.
Audit Committee
Members ofAs set forth in the Audit CommitteePrinciples, the Board’s responsibilities include overseeing and directing management in building long-term value for shareholders. The Chief Executive Officer (CEO) and the senior management team are Ms. Cooper (Chair), Mr. Singer, Mr. Stayerresponsible for managing day-to-day business operations and Mr. Wood.for presenting regular updates to the Board about our business. The Board has determined that each member ofoffers the Audit Committee is a “financial expert” as that term is defined by SEC rules.CEO and management constructive advice and counsel and may, in its sole discretion and at the Company’s expense, obtain advice and counsel from independent legal, financial, accounting, compensation, and other advisors.
The Audit Committee assistsBoard of Directors met six times during 2017. Our directors collectively attended 96 percent of the 2017 Board and committee meetings. The Principles provide that all members of the Board in overseeingare requested to attend Brunswick’s accounting, auditing and reporting practices, its independent registered public accounting firm, its systemAnnual Meeting of internal controls andShareholders. All members of the integrityBoard attended the 2017 Annual Meeting of its financial information and disclosures. The Committee reviews certain regulatory and compliance matters, policies regarding risk assessment and risk management, cybersecurity and corporate tax strategy. The Audit Committee maintains free and open communication, and meets separately at each regularly scheduled Board meeting with the Company’s independent registered public accounting firm, its internal auditors and management.Shareholders.
The Audit Committee met eleven times during 2015.independent directors regularly meet in executive session without members of management present. The Lead Independent Director, Manuel A. Fernandez, presides and acts as the Board’s leader when it meets in executive session or when the Chairman and CEO is unable to lead the Board’s deliberations. Additionally, the Lead Independent Director serves as a liaison between management and the Board and is responsible for consulting with the Chairman and CEO regarding Board and committee meeting agendas and Board governance matters.
Finance CommitteeBOARD COMPOSITION:
Members of the Finance Committee are Mr. Archibald (Chair), Mr. Singer, Mr. Stayer, Ms. Warner and Mr. Wood. The Finance Committee assists
2018 PROXY STATEMENT | 18 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
BOARD QUALIFICATIONS
Among other things, the Board expects each Director to understand our business and the markets in overseeing Brunswick’s financialwhich we operate, monitor economic and business trends, and use his or her perspective, background, experience, and knowledge to provide management with insights and guidance. To that end, the Board is comprised of business savvy Directors with strategic mindsets and meaningful operational skills. The Board continually monitors its members’ skills and experience and considers its members’ expertise for succession planning and committee assignments. As part of this evaluation process, the Board and its committees conduct annual self-evaluations and the Lead Independent Director may also engage individual Board members regarding Board or Committee performance. Every three years, the Board engages a third party to interview Directors. This third party also provides feedback on Board performance and financial structure, including debt structure, financial policies and procedures, capital expenditures and capital expenditure budgets. The Committee also reviews proposals for corporate financing, short-term and long-term borrowings, the declaration and distribution of dividends, material investments and divestitures, share repurchases, insurance coverage and related matters, as well as the funding and performance of Brunswick’s pension plans.relative to peers.
The Finance Committee met five times during 2015.
DIVERSITY OF EXPERIENCE
Human Resources and Compensation Committee
2018 PROXY STATEMENT | 19 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
BOARD SELECTION AND REFRESHMENT
Members of the Human Resources and Compensation Committee (the Compensation Committee) are Mr. Whisler (Chair), Mr. Everitt and Mr. Fernandez. The Compensation Committee’s responsibilities, among other duties, include the following:THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
CANDIDATE SELECTION PROCESS
DIRECTOR CANDIDATE CONSIDERATIONS
• | |
• | |
• | |
• | JUDGMENT |
• | INTELLIGENCE |
• | PERSONAL CHARACTER |
• | ABILITY TO MAKE INDEPENDENT ANALYTICAL INQUIRIES |
• | WILLINGNESS TO DEVOTE TIME TO BOARD DUTIES |
• | LIKELIHOOD OF BOARD TENURE |
The Board and the Nominating and Corporate Governance Committee (“Governance Committee”) believe that a diverse Board of Directors is important. Therefore, additional consideration is given to achieving an overall diversity of perspectives, backgrounds, and experiences in Board membership. The Governance Committee may retain a third-party search firm to assist it with identifying qualified candidates.
The Principles require a non-employee Director to retire from the Board at the first annual meeting of shareholders following his or her 75th birthday, and for an employee Director to retire when he or she ceases employment with Brunswick.
The Governance Committee will consider qualified Director candidates who shareholders suggest by written submissions to:
Brunswick Corporation
BRUNSWICK CORPORATION26125 N. Riverwoods Blvd., Suite 500
Mettawa, IL 60045
Attention: Corporate Secretary’s Office
fax: 847.735.4433 -2016or email: corporate.secretary@brunswick.com
Any recommendation a shareholder submits must include the name of the candidate, a description of the candidate’s educational and professional background, contact information for the candidate, and a brief explanation of why the shareholder believes the candidate is suitable for election. The Governance Committee will apply the same standards in considering Director candidates recommended by shareholders as it applies to other candidates.
In addition to recommending Director candidates to the Governance Committee, shareholders may also, pursuant to procedures established in our Amended By-Laws, directly nominate one or more Director candidates to stand for election through our advance notice or proxy access procedures. In order for a shareholder nominee to be included in our Proxy Statement15 for an annual meeting, the nomination notice must be provided between 120 and 150 days before the anniversary date that we first mailed our Proxy Statement for the annual meeting of the previous year, and must comply with all applicable requirements in the Amended By-Laws. To nominate Director candidates to stand for election at an annual meeting of shareholders without including them in our proxy materials, a shareholder must deliver written notice of the nomination to Brunswick’s Secretary not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. For a special meeting of shareholders, a shareholder wishing to make such a nomination must deliver written notice of the nomination to Brunswick’s Secretary no later than the close of business on the tenth day following the date on which notice of the meeting is first given to shareholders. In any case, a notice of nomination submitted by a shareholder must include information concerning the nominating shareholder and the shareholder’s nominee(s) as required by our Amended By-Laws.
2018 PROXY STATEMENT | 20 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
BOARD LEADERSHIP
The Compensation Committee meets in conjunction with regularly scheduled meetingsBoard of Directors believes that having the Company’s CEO serve as Chairman of the Board is in the best interest of Directorsshareholders at this time because this structure ensures a seamless flow of communication between management and as otherwise required. The Chairman and Chief Executive Officer,the Board, in particular with respect to the Board’s oversight of our strategic direction, as well as the Vice PresidentBoard’s ability to ensure management’s focused execution of that strategy. Our strong Lead Independent Director position ensures that there are processes in place for robust and Chief Human Resources Officer, regularly attend meetings. At each meeting,independent Board oversight. The Board believes that the Committee meets incombined role of Chairman and CEO, together with the appointment of a Lead Independent Director by the other independent Directors, a substantial majority of independent Directors, and the use of regular executive session.sessions of non-management Directors achieves an appropriate balance between the effective development of key strategic and operational objectives and independent oversight of management’s execution of those objectives.
The Chairman and Chief Executive Officer is responsible for establishing strategies to achieveAdditionally, the Company’s objectives. To ensureBoard believes that executive compensation is consistent with those objectives,because the Chairman and Chief Executive OfficerCEO is responsible for making recommendationsthe Director most familiar with our business, industry, and day-to-day operations, he is well-positioned to help the Board focus on those issues of greatest importance to the Compensation CommitteeCompany and its shareholders and to assist the Board with identifying our strategic priorities, as well as the short-term and long-term risks and challenges facing us. While independent Directors have invaluable experience and expertise from outside the Company and its businesses, giving them different perspectives regarding the following: compensationdevelopment of our strategic goals and principles;objectives, the peer group of companiesCEO is well-suited to be usedbring Company-specific experience and industry expertise to determine compensation ranges and prevailing compensation practices; selection of performance targets for incentive plans,his discussions with input from other senior executives; performance rating and compensation actions to be taken; and salary increases, incentive awards and equity grants for senior executives.non-management Directors.
The Compensation Committee collaborates with the Chairman and Chief Executive Officer to develop incentive funding formulas for Brunswick divisions, and for conducting performance evaluations, talent development and succession planning for senior executives. The Committee establishes criteria pursuant to which Brunswick’s senior executives allocate equity awards to non-executive employees, and oversees Brunswick’s Human Resources Department in its administration of compensation and benefit plans.RECENT FOCUS AREAS
The Compensation Committee continues to engage Frederic W. Cook & Co., Inc. (FWC) to provide advice on various aspects of Brunswick’s executive compensation programs. The Committee meetsOur Board is active and engaged, not only providing outstanding oversight and governance, but also refining procedures consistent with FWC in executive session on a regular basis and FWC reports directly to the Committee. The Compensation Committee has assessed the independence of FWC pursuant to applicable SEC rules and NYSE listing standards and has concluded that FWC’s work for the Compensation Committee does not raise any conflict of interest.current best practices.
The Compensation Committee met six times during 2015.
Acquisitions, portfolio composition, and strategic growth plans | ||
Technology and data security initiatives | ||
Director and management succession planning | ||
March 2018 announcement of spin-off transaction creating two focused companies |
Nominating and Corporate Governance Committee
Members of the Nominating and Corporate Governance Committee are Mr. Fernandez (Chair), Mr. Everitt, Ms. Warner and Mr. Whisler. The Nominating and Corporate Governance Committee assists the Board in overseeing policies and programs designed to ensure Brunswick’s adherence to high corporate governance and ethical standards and compliance with applicable legal and regulatory requirements. Together with the Compensation Committee, it oversees the annual review of the Chairman and Chief Executive Officer’s performance. The Committee identifies, screens, interviews and recommends to the Board potential director nominees, and oversees other matters related to Board composition, performance, standards, size and membership, including ensuring appropriate diversity of perspective, background and experience in Board membership.
The Nominating and Corporate Governance Committee has responsibility for making recommendations regarding director compensation design to theOn March 1, 2018, we announced that our Board of Directors had authorized proceeding with a spin-off of the Fitness business. Following the proposed transaction, the Fitness business, including billiards game tables and furnishings, will be an independent, standalone, publicly traded company. The Board designated members of the Executive Committee to oversee the transaction process. The proposed transaction is intended to be tax-free to Brunswick shareholders for reviewU.S. federal income tax purposes. Details of the distribution will be included in a Form 10 registration statement filed with the Securities and action. Brunswick’s Human Resources Department andExchange Commission at a later date. The proposed transaction is expected to be completed by the Company’s outside consultants provideend of the Nominating and Corporate Governance Committee with director compensation data as publicly reported, including data relatingfirst quarter 2019, subject to peer groupfinal approval from our Board and other similarly-sized companies, as well as data from published surveys.customary conditions.
DIRECTOR INDEPENDENCE
The Nominating and Corporate Governance Committee met six times during 2015.
Qualified Legal Compliance Committee
Members ofAs noted in the Qualified Legal Compliance Committee are Mr. Fernandez (Chair), Ms. Cooper, Mr. Everitt, Ms. Warner and Mr. Whisler. The Qualified Legal Compliance Committee receives and investigates reports made to it concerning possible material violations of law or breaches of fiduciary duty by the Company or any of its officers, directors, employees or agents. During 2015, no reports were made to the Qualified Legal Compliance Committee and, therefore, it did not meet.
Executive Committee
In addition to its standing committees,Principles, the Board of Directors has an Executive Committee, comprised of the Chairman of the Board, the Lead Independent Director and the Chairs of the Audit Committee, Finance Committee, Compensation Committee and Nominating and Corporate Governance Committee. The Executive Committee meets from time to time at the request of the Chairman of the Board. The Executive Committee did not meet during 2015.
BRUNSWICK CORPORATION -2016 Proxy Statement16
Director Independence
The Principles requirebelieves that independent directors mustDirectors should constitute a substantial majority of the Board and that no more than two members of management may serve on the Board at the same time. The Principles provide that a directorDirector shall be considered to be independent if he or she satisfies the general directorDirector independence standards established by the NYSE. The NYSE standards provide that a directorDirector will not be independent unless the Board affirmatively determines that the directorDirector has no material relationship with Brunswick (either directly or as a partner, shareholder, or officer of an organization that has a relationship with Brunswick). In addition, the NYSE standards provide that a directorDirector is not independent if:
• | The |
• | The |
• | Certain specified relationships exist between the |
• | The |
• | A member of the |
• | The |
• | The |
• | The |
Applying the NYSE standards described above, and considering all relevant facts and circumstances, the Board has made an affirmative determination that none of the non-management directorsDirectors has a material relationship with Brunswick and that all non-management directors,Directors, comprised of Mr. Archibald, Ms. Cooper, Mr. Everitt, Mr. Fernandez, Mr. Singer, Mr. Stayer, Ms. Warner, Mr. Whisler, and Mr. Wood are independent.
BRUNSWICK CORPORATION -2016 Proxy Statement17
2018 PROXY STATEMENT | 21 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
SHAREHOLDER ENGAGEMENT
Our active investor relations efforts include regular and ongoing engagement with current and potential investors, financial analysts, and the media through conference calls, face-to-face investor meetings, correspondence, conferences, and other events. This ensures that management and the Board understand, consider, and address the issues that matter most to our shareholders. Since 2012, Brunswick has held an Investor Day at least every two years, most recently in November 2017. These Investor Days allow access to our top managers to discuss and explain our marine and fitness businesses, update the live and webcast audience on our progress against our current three-year plan, and outline our plans, strategies, and commitments for the next three years.
SHAREHOLDER COMMUNICATION
The Principles provide that our shareholders or other interested parties may, at any time, communicate in writing with the Board, the Lead Independent Director, or the non-management Directors as a group, by writing to:
Brunswick Corporation
CORPORATE GOVERNANCE26125 N. Riverwoods Blvd., Suite 500
Mettawa, IL 60045
Attention: Corporate Secretary’s Office
fax: 847.735.4433 or email: corporate.secretary@brunswick.com
OverviewThe General Counsel will review and distribute to the Board, the Lead Independent Director, or the non-management Directors as a group, as appropriate, copies of written communications received by any of these means, depending on the subject matter and facts and circumstances described in the communication. Communications that are not related to the duties and responsibilities of the Board, or are otherwise considered to be improper for submission to the intended recipient(s), will not be forwarded to the Board, the Lead Independent Director, or the non-management Directors.
BOARD COMMITTEES
The Board of Directors has adopted writtenfive committees: Audit, Finance, Human Resources and Compensation, Nominating and Corporate Governance, and Executive. Each committee is comprised solely of independent Directors, as that standard is determined by the Principles and Practices (the Principles) to assist itthe NYSE Listed Company Manual, with the exception of the Executive Committee, of which Mr. Schwabero is a member. Each of the committees may, at its sole discretion and at Brunswick’s expense, obtain advice and assistance from outside legal, financial, accounting, or other experts and advisors.
The following table shows the current membership of these committees:
AUDIT | FINANCE | HUMAN RESOURCES & COMPENSATION | NOMINATING & CORPORATE GOVERNANCE | EXECUTIVE | |
N. ARCHIBALD | |||||
N. COOPER | |||||
D. EVERITT | |||||
M. FERNANDEZ | |||||
M. SCHWABERO | |||||
D. SINGER | |||||
R. STAYER | |||||
J. WARNER | |||||
S. WHISLER | |||||
R. WOOD |
2018 PROXY STATEMENT | 22 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
BOARD COMMITTEES
The principal responsibilities of each of these committees are described generally below and in the performance of its duties and the exercise of its responsibilities. The Principlesdetail in their respective committee charters, which are available on Brunswick’s website,at www.brunswick.com/company/governance/principlespractices.phpcommittees.html, or in print upon request by any Brunswick shareholder.
AUDIT COMMITTEE |
NUMBER OF TIMES THIS COMMITTEE MET IN 2017: | 11 | |||||||
NANCY E. COOPER (C) | DAVID V. SINGER | RALPH C. STAYER | ROGER J. WOOD |
The Principles setAudit Committee assists the frameworkBoard in overseeing Brunswick’s accounting, auditing, and reporting practices, its independent registered public accounting firm, its system of internal controls, and the quality and integrity of its financial information and disclosures. The Committee reviews certain regulatory and compliance matters, policies regarding risk assessment and risk management, corporate tax strategy, cybersecurity, and our Information Security programs. The Audit Committee also receives and investigates any reports made to it concerning possible material violations of law or breaches of fiduciary duty by the Company or any of its officers, directors, employees, or agents. The Audit Committee maintains free and open communication, and meets separately at each regularly scheduled Board meeting with the Company’s independent registered public accounting firm, its internal auditors, and management.
FINANCE COMMITTEE |
NUMBER OF TIMES THIS COMMITTEE MET IN 2017: | 5 | |||||||
NOLAN D. ARCHIBALD (C) | DAVID V. SINGER | RALPH C. STAYER | JANE L. WARNER | ROGER J. WOOD |
The Finance Committee assists the Board in overseeing Brunswick’s financial performance and financial structure, including debt structure, financial policies and procedures, capital expenditures, and capital expenditure budgets. The Committee also reviews proposals for corporate financing, short-term and long-term borrowings, the declaration and distribution of dividends, material investments and divestitures, share repurchases, insurance coverage, and related matters, as well as the funding and performance of Brunswick’s pension plans, hedging practices, and associated derivatives.
HUMAN RESOURCES AND COMPENSATION COMMITTEE |
NUMBER OF TIMES THIS COMMITTEE MET IN 2017: | 7 | |||||||
J. STEVEN WHISLER (C) | DAVID C. EVERITT | MANUEL A. FERNANDEZ |
The responsibilities of the Human Resources and Compensation Committee (the Compensation Committee) include:
• | Annually review and approve goals and objectives for Brunswick’s senior executives; together with the CEO, evaluate the performance of senior executives in light of these criteria; and oversee management development and succession planning; |
• | Annually review and make recommendations to the Board of Directors about the compensation (including salary, annual incentive, and other cash compensation) of the CEO and, together with the Governance Committee, oversee the annual review of CEO’s performance; |
• | Approve equity awards to the CEO and compensation (including salary, annual incentive, equity-based compensation, and other incentive compensation) to be paid to other senior executives, and authorize the CEO to approve awards to employees other than senior executives based on criteria established by the Compensation Committee; and |
2018 PROXY STATEMENT | 23 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
BOARD COMMITTEES
HUMAN RESOURCES AND COMPENSATION COMMITTEE (CONTINUED) |
The Chairman and CEO, as well as the Vice President and Chief Human Resources Officer, regularly attend meetings of the Compensation Committee although they are not present for any discussions involving their own compensation or performance evaluations. At each meeting, the Committee meets in executive session.
The Chairman and CEO is responsible for establishing strategies to achieve the Company’s objectives. To ensure that executive compensation is consistent with those objectives, the Chairman and CEO is responsible for making recommendations to the Compensation Committee regarding the following: compensation goals and principles; the peer group of companies to be used to determine compensation ranges and prevailing compensation practices; selection of performance targets for incentive plans, with input from other senior executives; performance rating and compensation actions to be taken; and salary increases, incentive awards, and equity grants for senior executives.
The Compensation Committee collaborates with the Chairman and CEO to develop incentive funding formulas for Brunswick divisions, and for conducting performance evaluations, talent development, and succession planning for senior executives. The Committee establishes criteria pursuant to which Brunswick’s senior executives allocate equity awards to non-executive employees, and oversees Brunswick’s Human Resources Department in its administration of compensation and benefit plans.
The Compensation Committee continues to engage Frederic W. Cook & Co., Inc. (FW Cook) to provide advice on various aspects of Brunswick’s executive compensation programs. The Committee meets with FW Cook in executive session on a regular basis and FW Cook reports directly to the Committee. The Compensation Committee has assessed the independence of FW Cook pursuant to applicable SEC rules and NYSE listing standards and has concluded that FW Cook’s work for the Compensation Committee does not raise any conflict of interest.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE |
NUMBER OF TIMES THIS COMMITTEE MET IN 2017: | 6 | |||||||
MANUEL A. FERNANDEZ (C) | DAVID C. EVERITT | JANE L. WARNER | J. STEVEN WHISLER |
The Governance Committee assists the Board in overseeing policies and programs designed to ensure Brunswick’s adherence to high corporate governance structure.and ethical standards and compliance with applicable legal and regulatory requirements. Together with the Compensation Committee, it oversees the annual review of the Chairman and CEO’s performance. The Committee identifies, screens, interviews, and recommends to the Board potential director nominees, and oversees other matters related to Board composition, performance, standards, size, and membership, including ensuring appropriate diversity of perspective, background, and experience in Board membership.
The Governance Committee has responsibility for making recommendations regarding director compensation design to the Board of Directors for review and action. Our Human Resources Department and outside consultants provide the Governance Committee with director compensation data as publicly reported, including data relating to peer group and other similarly-sized companies, as well as data from published surveys.
EXECUTIVE COMMITTEE |
NUMBER OF TIMES THIS COMMITTEE MET IN 2017: | 0 | |||||||
NOLAN D. ARCHIBALD | NANCY E. COOPER | MANUEL A. FERNANDEZ | MARK D. SCHWABERO | J. STEVEN WHISLER |
In addition to its standing committees, the Board of Directors has an Executive Committee, comprised of the Chairman of the Board, the Lead Independent Director, and the Chairs of the Audit, Finance, Compensation, and Governance Committees. The Executive Committee meets from time to time at the request of the Chairman of the Board.
2018 PROXY STATEMENT | 24 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
PROPOSAL 2: | APPROVAL OF AMENDMENTS TO OUR RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS |
What am I voting on? Shareholders are being asked to declassify the Board.
Voting Recommendation: Your Board of Directors recommends a vote FOR approval of amendments to our Restated Certificate of Incorporation to declassify the board.
Currently, our Restated Certificate of Incorporation, dated as of July 22, 1987 (our “Certificate of Incorporation”), divides the members of the Board into three classes. Each class is elected at an annual meeting of shareholders to hold office for a term beginning on the date of election and expiring at the annual meeting of shareholders held in the third year following the year of election. One class consists of four members whose terms expire upon the election and qualification of their successors at the Annual Meeting (“Class I”), one class consists of three members whose terms expire upon the election and qualification of their successors at the annual meeting of shareholders to be held in 2019 (“Class II”), and one class consists of three members whose terms expire upon the election and qualification of their successors at the annual meeting of shareholders to be held in 2020 (“Class III”).
After careful consideration, our Board has determined that it is advisable and in the best interests of the Company and its shareholders to declassify the Board to allow the Company’s shareholders to vote on the election of the entire Board on an annual basis, rather than on a staggered basis, and to provide that Directors may be removed with or without cause consistent with Delaware law.
This general description of the proposed amendments to our Certificate of Incorporation is qualified in its entirety by reference to the text of the proposed amendments attached as Appendix 1 to this Proxy Statement. Additions to our Certificate of Incorporation are marked with bolded text and deletions are indicated by strike-outs.
DECLASSIFICATION OF THE BOARD
If proposal 2 is approved by our shareholders at the Annual Meeting, the declassification of the Board will be effected as follows:
• | At the annual meeting of shareholders to be held in 2021 and at each annual meeting of shareholders to be held thereafter, all Directors will be elected annually; |
• | The Class I Directors elected at the Annual Meeting will be elected for a term expiring at the annual meeting of shareholders to be held in 2021; |
• | The Class II Directors will continue to serve the remainder of their elected terms, which expire at the annual meeting of shareholders to be held in 2019, and the Directors elected at the annual meeting of shareholders to be held in 2019 will be elected for a term expiring at the annual meeting of shareholders to be held in 2020; and |
If this proposal is approved by our shareholders, any Director appointed to fill a vacancy that did not arise from an increase in the size of the Board will hold office for the term that remains for the applicable vacating Director, and any Director elected to fill a vacancy that resulted from an increase in the size of the Board will be elected to serve until the next annual meeting of shareholders.
If this proposal is not approved by our shareholders, the Board will remain classified, with each class of directors serving a term expiring at the annual meeting of shareholders held in the third year following the year of their election.
REMOVAL OF DIRECTORS WITHOUT CAUSE
Delaware corporate law provides that, unless a company’s certificate of incorporation provides otherwise, members of a classified board of directors may be removed only for cause. At present, because the Board is classified, our Certificate of Incorporation provides that directors are removable only for cause. If this proposal is approved by our shareholders, our Certificate of Incorporation will be amended to remove this provision such that Directors may be removed with or without cause after the Board is no longer classified. If this proposal is not approved by our shareholders, the Board will remain classified and our shareholders will be able to remove directors only for cause.
If this proposal is approved by our shareholders, it will become effective when the Company files the amendments to the Certificate of Incorporation with the Secretary of State of the State of Delaware, which the Company intends to do promptly following the Annual Meeting, assuming shareholders approve the amendments.
CONSIDERATIONS OF THE BOARD
We have historically had a classified board structure in which Directors have been divided into three classes and one class is elected each year to serve a three-year term. The Board believes that goodthis classified board structure promotes continuity and stability of strategy, oversight, and policies, provides negotiating leverage to the Board in a potential takeover situation, and
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Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
facilitates the Board’s ability to focus on creating long-term shareholder value. The Board is aware, however, that the current trend in corporate governance is leading away from classified boards in favor of electing all Directors annually, and that some argue that a sourceclassified board structure may reduce Directors’ accountability to shareholders because it does not enable shareholders to express a view on each Director’s performance through an annual vote. Some institutional investors believe that the election of competitive advantageDirectors is a means for Brunswick. Goodshareholders to influence corporate governance allows the skills, experiencepolicies and judgmentto hold management accountable for implementing those policies.
In determining whether to support declassification of the Board, the Board carefully considered the advantages and disadvantages of the current classified board structure and determined that it is advisable and in the best interests of the Company and our shareholders to support Brunswick’s executive management team, enabling management to improve Brunswick’s performance and maximize shareholder value.declassify the Board.
2018 PROXY STATEMENT | 26 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
GOVERNANCE POLICIES & PRACTICES
As set forth in the Principles, the Board’s responsibilities include overseeing and directing the Company’s management in building long-term value for shareholders. The Chief Executive Officer and the Company’s senior management team are responsible for managing Brunswick’s day-to-day business operations and for presenting regular updates to the Board about the Company’s business. The Board offers the Chief Executive Officer and management constructive advice and counsel and may, in its sole discretion and at the Company’s expense, obtain advice and counsel from independent legal, financial, accounting and other advisors.
The Board of Directors met five times during 2015. Our directors collectively attended 98 percent of the 2015 Board and committee meetings, with each director attending more than 85 percent of the aggregate of the Board meetings and meetings of committees of which he or she was a member during 2015. The Principles provide that all members of the Board are requested to attend Brunswick’s Annual Meeting of Shareholders. All members of the Board then in office attended the 2015 Annual Meeting of Shareholders.
The non-management directors regularly meet in executive session without members of management present. The Lead Independent Director, Manuel A. Fernandez, presides and acts as the Board’s leader when it meets in executive session or when the Chairman and Chief Executive Officer is unable to lead the Board’s deliberations. Additionally, the Lead Independent Director serves as a liaison between management and the Board and is responsible for consulting with the Chairman and Chief Executive Officer regarding Board and committee meeting agendas and Board governance matters.BRUNSWICK ETHICS PROGRAM
Brunswick Ethics Program
In 2013, Brunswickhas adopted theBrunswick Code of Conduct (the Code), which updated and replaced the prior code of ethics adopted in 2000. The Code applies to all employees, officers, directors, vendors, suppliers, and directors of the Company,agents, and includes standards and procedures for reporting and addressing potential conflicts of interest, as well as a general code of conduct that provides guidelines regarding how to conduct business in an ethical manner. The Board has adopted an additional Code of Ethics for Senior Financial Officers and Managers (the Financial Officer Code of Ethics). The Financial Officer Code of Ethics applies to Brunswick’s Chief Executive Officer, Chief Financial Officer, Vice President — President—Treasurer, Vice President — President—Tax, Vice President — President—Internal Audit, Vice President and Controller, and other designated Brunswick employees, designated by the Board, and sets forth standards to which these officers and employees are to adhere in areas such as conflicts of interest, disclosure of information, and compliance with laws, rules, and regulations. The Financial Officer Code of Ethics supplements the Code. The Nominating and Corporate Governance Committee, Audit Committee, and the Company’sour Ethics Office oversee and administer these policies. The Code and the Financial Officer Code of Ethics are available atwww.brunswick.com/company/ethics/codeofethics.php, and any Brunswick shareholder may obtain them in print upon request. If Brunswick grants a waiver of the policies set forth in the Code or the Financial Officer Code of Ethics, or materially amends either, we will, to the extent required by applicable law, regulation, or NYSE listing standard, disclose that waiver or amendment by making an appropriate statement on our website atwww.brunswick.com.
Director Nomination Process
The Nominating and Corporate Governance Committee is responsible for, among other things, identifying, screening, personally interviewing and recommending director nominee candidates to the Board. The Nominating and Corporate Governance Committee considers nominees on the bases of their integrity, experience, achievements, judgment, intelligence, personal character, ability to make independent analytical inquiries, willingness to devote adequate time to Board duties and the likelihood that they will be willing to serve on the Board for a sustained period. The Company does not have a formal policy with respect to diversity as a consideration in the identification of nominees for the Board of Directors. However, the Board and the Nominating and Corporate Governance Committee believe that it is important that the Board reflect different viewpoints and, therefore, as set forth in the Principles, additional consideration is given to achieving an overall diversity of perspectives, backgrounds and experiences in Board membership. The Nominating and Corporate Governance Committee may retain a third-party search firm to assist it with identifying qualified candidates that meet the needs of the Board at that time.
BRUNSWICK CORPORATION -2016 Proxy Statement18
The Nominating and Corporate Governance Committee will consider qualified director candidates who shareholders suggest by written submissions to Brunswick’s Secretary at Brunswick Corporation, 1 N. Field Court, Lake Forest, Illinois 60045; Attention: Corporate Secretary’s Office (fax: 847.735.4433; e-mailcorporate.secretary@brunswick.com). Any recommendation a shareholder submits must include the name of the candidate, a description of the candidate’s educational and professional background, contact information for the candidate and a brief explanation of why the shareholder believes the candidate is suitable for election. The Nominating and Corporate Governance Committee will apply the same standards in considering director candidates recommended by shareholders that it applies to other candidates.
In addition to recommending director candidates to the Nominating and Corporate Governance Committee, shareholders may also, pursuant to procedures established in the Company’s By-laws, directly nominate one or more director candidates to stand for election at an annual or special meeting of shareholders. For an annual meeting of shareholders, a shareholder wishing to make such a nomination must deliver written notice of the nomination to Brunswick’s Secretary not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. For a special meeting of shareholders, a shareholder wishing to make such a nomination must deliver written notice of the nomination to Brunswick’s Secretary not later than the close of business on the tenth day following the date on which notice of the meeting is first given to shareholders. In either case, a notice of nomination submitted by a shareholder must include information concerning the nominating shareholder and the shareholder’s nominee(s) as required by the Company’s By-laws.
Board Leadership Structure
The Board of Directors believes that having the Company’s Chief Executive Officer serve as Chairman of the Board is in the best interest of its shareholders at this time because this structure ensures a seamless flow of communication between management and the Board, in particular with respect to the Board’s oversight of the Company’s strategic direction, as well as the Board’s ability to ensure management’s focused execution of that strategy. Our strong Lead Independent Director position ensures that there are processes in place for robust and independent Board oversight.
The Board believes that the combined role of Chairman and Chief Executive Officer, together with the appointment of a Lead Independent Director by the other independent directors, a substantial majority of independent directors, and the use of regular executive sessions of non-management directors, achieves an appropriate balance between the effective development of key strategic and operational objectives and independent oversight of management’s execution of those objectives.
Additionally, the Board believes that because the Chairman and Chief Executive Officer is the director most familiar with the Company’s business, industry and day-to-day operations, he is well-positioned to help the Board focus on those issues of greatest importance to the Company and its shareholders and to assist the Board with identifying Brunswick’s strategic priorities, as well as the short-term and long-term risks and challenges facing the Company. While independent directors have invaluable experience and expertise from outside the Company and its businesses, giving them different perspectives regarding the development of the Company’s strategic goals and objectives, the Chief Executive Officer is well-suited to bring Company-specific experience and industry expertise to his discussions with non-management directors.
Shareholder Communications with the Board
The Principles provide that Brunswick shareholders or other interested parties may, at any time, communicate in writing with the Board, the Lead Independent Director or the non-management directors as a group, by writing to: Brunswick Corporation, 1 N. Field Court, Lake Forest, IL 60045; Attention: Corporate Secretary’s Office (fax: 847.735.4433; e-mailcorporate.secretary@brunswick.com). The General Counsel will review and distribute to the Board, the Lead Independent Director or the non-management directors as a group, as appropriate, copies of written communications received by any of these means, depending on the subject matter and facts and circumstances described in the communication. Communications that are not related to the duties and responsibilities of the Board, or are otherwise considered to be improper for submission to the intended recipient(s), will not be forwarded to the Board, the Lead Independent Director or the non-management directors.
BRUNSWICK CORPORATION -2016 Proxy Statement19
Review, Approval or Ratification of Transactions with Related PersonsTRANSACTIONS WITH RELATED PERSONS
Pursuant to its charter, the Nominating and Corporate Governance Committee of the Company’s Board of Directors is tasked with the recommendation and review of corporate governance principles, policies, and programs designed to ensure the Company’sour compliance with high ethical standards and with applicable legal and regulatory requirements, including those relating to conflicts of interest and other business practices that reflect upon the Company’sour role as a responsible corporate citizen. The Nominating and Corporate Governance Committee oversees the implementation of theBrunswick Code, of Conduct, which contains Brunswick’sour conflicts of interest policy. The Nominating and Corporate Governance Committee reports on these compliance matters to the Board of Directors, which is ultimately responsible for overseeing the Company’s ethical and legal compliance, including transactions with “related persons.”
The Company’sOur policy regarding related person transactions (the Related Person Transactions Policy) defines “related persons” to include all directorsDirectors and executive officersExecutive Officers of the Company, all beneficial owners of more than 5 percent of any class of voting securities of the Company, and the immediate family members of any such persons. On a regular basis, the Company requests that its directorswe request Directors and executive officersExecutive Officers to complete a questionnaire including questions designed to identify related persons and any potential related person transactions. The Corporation’sOur General Counsel and Controller, or their delegates, review and update a listing of those individuals identified as related persons and provide a copy of this listing to our external auditors on at least an annual basis and more often as warranted. According to the Related Person Transactions Policy, a related person transaction includes certain transactions in which the Company is a participant and in which
a related person has or will have a direct or indirect material interest, including any financial transaction, arrangement, or relationship, or any series of similar transactions, arrangements, or relationships. Certain transactions are excluded from thisthe Related Person Transactions Policy.
If a related person transaction required to be disclosed pursuant to SEC rules is identified, the Related Person Transactions Policy requires that the General Counsel and Controller review the transaction and advise the Chair of the Nominating and Corporate Governance Committee as well as the Chair of the Audit Committee, if appropriate. The Nominating and Corporate Governance Committee may approve or ratify such transaction or, if it determines that the transaction should be considered by the Board of Directors, submit it for consideration by all disinterested members of the Board (the Reviewing Directors). In determining whether to approve or ratify a related person transaction, the Nominating and Corporate Governance Committee and/or the Reviewing Directors will consider relevant factors, including:
• | The size of the transaction and the amount payable to a related person; |
• | The nature of the interest of the related person in the transaction; |
• | Whether the transaction may involve a conflict of interest; and |
• | Whether the transaction involves the provision of goods or services to the Company that are also available from unaffiliated third parties and, if so, whether the terms of the transaction are at least as favorable to the Company as would be available in comparable transactions with unaffiliated third parties. |
The Company’s Related Person Transactions Policy was formally codified in a written document in July 2010. Since January 1, 2015,2017, no transaction has been identified as a related person transaction and, therefore, no transaction was referred to the Board or any Board committee for review in that time period.
Risk ManagementRISK MANAGEMENT
The Board of Directors has an active role in overseeing effective management of the Company’sour risks and regularly reviews information regarding the Company’sour credit, liquidity, cash flow, and business operations, including any associated risks, such as cybersecurity and regulatory risks. The Board conducts an annual, in-depth review of the Company’sour business, which includes detailed analysis and consideration of strategic, operational, financial, legal, competitive, compliance, and compensation risk areas. Although the Board as a whole has responsibility for risk oversight, each Board Committee addresses relevant risk topics as part of its Committee responsibilities. The Committees oversee the Company’sour risk profile and exposures relating to matters within the scope of their authority and provide periodic reports to the full Board about their deliberations and recommendations. The Compensation Committee is responsible for overseeing the management of risks relating to the Company’sour executive compensation plans and its overall compensation philosophy.
2018 PROXY STATEMENT | 27 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
Historically, in an ongoing effort to manage risk, Brunswick haswe have maintained a level of financial prudence associated with itsour compensation programs which it planswe plan to continue. In assessing whether risks arising from Brunswick’sour compensation programs or policies were reasonably likely to have a material adverse effect on the Company, senior management reviewed the Company’sour compensation programs and practices for all employees, the potential risk exposure presented by those programs and practices, and the factors, tools, and processes that mitigate those risks. As part of its 20152017 review, management considered the compensation arrangements currently in place for employees and officers and, following this review, management determined, and the Compensation Committee agreed, that none of Brunswick’sour compensation programs or policies creates risks that are reasonably likely to have a material adverse effect on the Company.
As part of this review, management presented a summary to the Company’s Compensation Committee for discussion. The summary listed each compensation program and policy applicable to the various groups of Brunswick employees and officers, the potential risks presented by that program or policy, and the risk mitigation tools or processes employed by the Company to mitigate the related risks.
The compensation programs and policies covered by the summary included payments in the forms of base salaries, annual incentive compensation, and equity-based awards. The risk mitigation tools covered by the summary included the following: (1) the plans were capped at maximum payout levels that, while creating incentives for superior business performance, were not so great as to entice undue risk-taking; (2) the performance metrics to achieve above-target payouts under the plans were not unduly leveraged (that is, small increments of above-target performance would not result in disproportionate increases in calculated plan bonus amounts); and (3) the plans contain negative discretion provisions that can be (and have been) exercised to reduce or eliminate calculated payout results. This mechanism places final control of plan payouts with the Company’sour Board of Directors. Other compensation risk mitigants in place include robust stock ownership requirements for Executives, an established clawback policy, and no hedging or pledging of shares by employees.
BRUNSWICK CORPORATION -2016 Proxy Statement20
In addition to senior management’s review, members of Brunswick’sour Human Resources Department conduct an annual assessment of all executive and non-executive incentive plans to ensure that they are aligned with the Company’sour strategic business objectives. In 2015, in addition to its standard review process, Brunswick’s2017, our Human Resources representatives conducted a full review of the potential risks associated with the Company’sour incentive plans and engaged in the following analysis:
• | |
• | |
• | |
• | |
• |
An area of focus for 2017 was sales incentive programs and design. After review, management concluded that our sales incentive plans do not pose a material risk to the Company and appropriate risk mitigating factors are in place.
The Human Resources representatives considered all of the foregoing information, specifically assessing each of the Company’sour incentive plans to identify any provisions that might cause employees to act in a manner that would create risks that are reasonably likely to have a material adverse effect on the Company. No such provisions were identified.
In addition, the Compensation Committee engages in a comprehensive annual review of the Brunswick Performance Plan (BPP), the Company’sour primary annual incentive plan, and its performance measures. The Compensation Committee assesses the BPP in conjunction with the Company’sour overall strategic business objectives, as well as its forecast and budget. In 2015,2017, the Committee also assessed each of the Company’sour compensation programs, ensuring that they were consistent with and aligned with Brunswick’sour short- and long-term business objectives. The Compensation Committee reviewed the 20152017 BPP and determined that its plan design would effectively encourage employees to engage in appropriate and responsible behavior without unnecessary risk-taking that could have a negative impact on the Company. In addition, the BPP contains a negative discretion clause that expressly empowers the Compensation Committee to limit or reduce the BPP payout under the BPP’s formula, based on extenuating circumstances and business outlook.
The majority of Brunswick’sour non-executive incentive plans adopt the BPP’s performance metrics, ensuring that the plans encourage and reward appropriate behavior throughout the organization. For those few incentive plans at the division level that do not mirror the BPP, Brunswick management performs a similar analysis of the plans on an annual basis in order to identify and remediate any potential negative behaviors that might result.
BRUNSWICK CORPORATION -2016 Proxy Statement21
2018 PROXY STATEMENT | 28 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
Stock Held by Directors, Executive Officers and Principal Shareholders
2017 DIRECTOR COMPENSATION TABLE
The table below summarizes the compensation we paid to non-employee Directors for the fiscal year ended December 31, 2017.
Director(1) | Fees Earned or Paid in Cash(2) | Stock Awards(3) | All Other Compensation(4) | Total | |||||||
NOLAN D. ARCHIBALD | $90,000 | $135,000 | $30,000 | $255,000 | |||||||
NANCY E. COOPER | $90,000 | $145,034 | — | $235,034 | |||||||
DAVID C. EVERITT | $90,000 | $137,504 | $30,000 | $257,504 | |||||||
MANUEL A. FERNANDEZ | $89,943 | $210,440 | $30,000 | $330,383 | |||||||
DAVID V. SINGER | $89,943 | $157,970 | $29,271 | $277,184 | |||||||
RALPH C. STAYER | $89,943 | $157,970 | $13,987 | $261,900 | |||||||
JANE L. WARNER | $89,943 | $152,953 | $30,000 | $272,896 | |||||||
J. STEVEN WHISLER | $89,936 | $158,497 | $30,000 | $278,433 | |||||||
ROGER J. WOOD | $89,943 | $157,970 | $30,000 | $277,913 |
(1) | Mark D. Schwabero, our Chairman and CEO, is not included in this table as he is an employee of the Company and receives no additional compensation for his service as a Director. The compensation Mr. Schwabero received as a Company employee is shown in the Summary Compensation Table. |
(2) | Amounts in this column reflect the 2017 annual cash fees earned by each non-employee Director. Mr. Fernandez, Mr. Singer, Mr. Stayer, Ms. Warner, Mr. Whisler, and Mr. Wood elected to receive the 2017 annual cash fees in the form of deferred Common Stock, with a 20 percent premium, which reflects variation from cash fees related to number of shares deferred. |
(3) | This column represents the dollar amount recognized for financial statement reporting purposes with respect to the 2017 fiscal year in accordance with FASB ASC Topic 718. Amounts in this column represent the portion of fees required to be paid to Directors in the form of Common Stock, as well as the 20 percent premium that is received by those Directors who elected to receive the cash portion of their fees in the form of deferred Common Stock. For assumptions used in the valuation of such awards, see Note 18 to the financial statements included in the Company’sAnnual Report on Form 10-K for the fiscal year ended December 31, 2017. |
(4) | The amounts shown in this column include our cost of products provided during our fiscal year ended December 31, 2017. |
The grant date fair value of awards in this column is as follows:
Director | Grant Date Fair Values of Shares of Common Stock | Grant Date Fair Values of Shares Attributable to 20% Premium Applied to Deferral of Fees | ||||
NOLAN D. ARCHIBALD | $135,000 | — | ||||
NANCY E. COOPER | $145,034 | — | ||||
DAVID C. EVERITT | $137,504 | — | ||||
MANUEL A. FERNANDEZ | $192,487 | $17,953 | ||||
DAVID V. SINGER | $140,017 | $17,953 | ||||
RALPH C. STAYER | $140,017 | $17,953 | ||||
JANE L. WARNER | $135,000 | $17,953 | ||||
J. STEVEN WHISLER | $145,034 | $13,463 | ||||
ROGER J. WOOD | $145,017 | $17,953 |
2018 PROXY STATEMENT | 29 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
The following table sets forth the aggregate number of outstanding stock awards held by each non-employee Director as of December 31, 2017:
Director | Aggregate Number of Stock Awards Outstanding at December 31, 2017 | ||
NOLAN D. ARCHIBALD | 4,476 | ||
NANCY E. COOPER | — | ||
DAVID C. EVERITT | — | ||
MANUEL A. FERNANDEZ | 4,476 | ||
DAVID V. SINGER | — | ||
RALPH C. STAYER | 4,476 | ||
JANE L. WARNER | — | ||
J. STEVEN WHISLER | 1,634 | ||
ROGER J. WOOD | — |
NARRATIVE TO DIRECTOR COMPENSATION TABLE
ANNUAL FEES AND DEFERRED STOCK AWARDS
Non-employee Directors are entitled to an annual retainer of $215,000, with $90,000 payable in cash and $125,000 payable in Common Stock. The Lead Independent Director, chairs of committees, and members of certain committees receive additional annual retainers paid in Brunswick stock, as follows:
• | Lead Director: $50,000 |
• | Audit Committee Chair: $20,000 |
• | Compensation Committee Chair: $15,000 |
• | Finance and Governance Committee Chairs: $10,000 |
• | Audit Committee members: $10,000 |
• | Compensation Committee members: $7,500 |
• | Finance and Governance Committee members: $5,000 |
For the portion of each Director’s total annual fee paid in Common Stock, the number of shares is determined by the closing price of Common Stock on the date of the award and is reported in the “Stock Awards” column of the Director Compensation Table. The receipt of these shares may be deferred until a Director retires from the Board. Each directorDirector may elect to have the cash portion of the annual fee paid as follows:
• | In cash; |
• | In Common Stock distributed currently; or |
• | In deferred Common Stock with a 20 percent premium. |
For Directors who elect to receive the cash portion in deferred Common Stock, the number of shares to be received upon retirement is determined by multiplying the cash amount by 1.2, then dividing that amount by the closing price of Common Stock on the date of the award.
SHARE OWNERSHIP GUIDELINES
As set forth in the Principles, within five years after the date on which a Director first became a Director, and nomineethereafter for director,so long as each executive officerDirector is a Director of the Company, each Director is required to own Common Stock and deferred stock units of the Company equal to five times the amount of the Director’s annual cash retainer. Once having met this threshold, if a Director falls below the threshold as a result of a decline in our stock price, the Director shall have a two-year period within which to once again achieve the threshold. We calculate compliance with these guidelines annually, using the average Brunswick stock price for the prior calendar year. As of December 31, 2017, all Directors were in compliance with the share ownership requirements.
BRUNSWICK PRODUCT PROGRAM
Directors are encouraged to use Brunswick products to enhance their understanding and appreciation of Brunswick’s business. Directors receive an annual allowance of up to $30,000 which may be applied to purchase Brunswick products at discounted rates and/or fund expenses incurred with regard to the ownership of such products. The value of the products is included in the Directors’ taxable income. Directors may also purchase additional Brunswick products at their own expense, at discounted rates.
2018 PROXY STATEMENT | 30 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
STOCK HELD BY DIRECTORS, EXECUTIVE OFFICERS, AND PRINCIPAL SHAREHOLDERS
Each Director, each Executive Officer listed in the 2017 Summary Compensation Table, and all directorsDirectors and executive officersExecutive Officers as a group owned the number of shares of Brunswick Common Stock set forth in the following table, with sole voting and investment power except as otherwise noted:
Name of Individual or Persons in Group | Number of Shares Beneficially Owned as of March 4, 2016 | Percent of Class | ||||||
Nolan D. Archibald | 79,356 | (1) | * | |||||
Nancy E. Cooper | 5,936 | * | ||||||
David C. Everitt | 9,159 | (1) | * | |||||
Manuel A. Fernandez | 83,814 | (1) | * | |||||
David V. Singer | 10,984 | (1) | * | |||||
Ralph C. Stayer | 40,733 | (1) | * | |||||
Jane L. Warner | 4,586 | (1) | * | |||||
J. Steven Whisler | 46,134 | (1) | * | |||||
Roger J. Wood | 19,050 | (1) | * | |||||
Dustan E. McCoy(3) | 1,155,854 | (2)(6) | 1.3 | % | ||||
Mark D. Schwabero(4) | 233,659 | (2)(6) | * | |||||
William L. Metzger | 229,231 | (2)(6) | * | |||||
John C. Pfeifer | 80,829 | (2) | * | |||||
B. Russell Lockridge(5) | 0 | (6) | * | |||||
All directors and executive officers as a group | 2,260,184 | (2) | 2.5 | % |
Director/Executive Officer | Number of Shares Beneficially Owned as of March 5, 2018 | Percent of Class | ||||
NOLAN D. ARCHIBALD | 86,312(1) | * | ||||
NANCY E. COOPER | 9,517 | * | ||||
DAVID C. EVERITT | 14,607(1) | * | ||||
MANUEL A. FERNANDEZ | 97,413(1) | * | ||||
DAVID V. SINGER | 12,988(1) | * | ||||
RALPH C. STAYER | 46,636(1) | * | ||||
JANE L. WARNER | 13,970(1) | * | ||||
J. STEVEN WHISLER | 54,584(1) | * | ||||
ROGER J. WOOD | 29,018(1) | * | ||||
MARK D. SCHWABERO | 225,285(2)(3) | * | ||||
WILLIAM L. METZGER | 194,741(2)(3) | * | ||||
JOHN C. PFEIFER | 57,217(2) | * | ||||
HUW S. BOWER | 2,657(2) | * | ||||
JAIME A. IRICK(4) | — | — | ||||
ALL DIRECTORS & EXECUTIVES AS A GROUP | 874,675(2) | 1% |
* | Less than 1 percent |
(1) | Includes the following shares of Brunswick Common Stock issuable to non-employee |
Excludes | |
(2) | Includes the following shares of Brunswick Common Stock issuable pursuant to stock-settled SARs exercisable within 60 days of |
Includes the following shares of Brunswick Common Stock held by the Brunswick Savings Plan as of December 31, | |
Excludes the following shares of Brunswick Common Stock issuable to officers, receipt of which has been deferred: Mr. | |
(3) | |
Excludes Restricted Stock Units (RSUs) owned |
BRUNSWICK CORPORATION -2016 Proxy Statement22
(4) | Mr. Irick was hired on January 19, 2017. His RSUs and Performance Shares are not reflected in this table, as they have not yet vested. |
Those shareholders known to Brunswickus to beneficially own more than 5 percent of Brunswick’sour outstanding Common Stock are:
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned as of December 31, 2015 | Percent of Class | ||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 6,721,792 | (1) | 7.40 | % | ||||
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 6,101,151 | (3) | 6.70 | % | ||||
FMR LLC and certain of its affiliates 245 Summer Street Boston, MA 02210 | 5,836,962 | (2) | 6.41 | % |
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percent of Class | ||||
BLACKROCK, INC. 55 East 52nd Street, New York, NY 10055 | 7,354,077(1) | 8.40% | ||||
THE VANGUARD GROUP, INC. 100 Vanguard Blvd., Malvern, PA 19355 | 7,085,418(2) | 8.08% |
(1) | This information is based solely upon a Schedule 13G/A filed by BlackRock, Inc. (BlackRock) with the SEC on January |
(2) | This information is based solely upon a Schedule 13G/A filed by The Vanguard Group, Inc. (Vanguard) with the SEC on February |
Section 16(a) Beneficial Ownership Reporting ComplianceSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Brunswick’s directors, executive officersour Directors, Executive Officers, and beneficial owners of more than 10 percent of Brunswick Common Stock to file initial reports of ownership and reports of changes in ownership with the SEC. Based on a review of the copies of such forms furnished to the Company and written representations from the Company’s directorsDirectors and executive officers,Executive Officers, the Company believes that all forms were filed in a timely manner during 2015.2017 with the exception of the Form 4 filed by Mr. Jaime Irick on January 25, 2017, reporting securities acquired on January 19, 2017. The Form 4 was filed late due to the unavailability of timely SEC EDGAR codes for Mr. Irick, who was a new Brunswick Executive Officer at the time.
BRUNSWICK CORPORATION -2016 Proxy Statement23
2018 PROXY STATEMENT | 31 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
Compensation Discussion and AnalysisCOMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes Brunswick’sour overall executive compensation policies and practices and specifically analyzes the total compensation for the named executive officersNamed Executive Officers (NEOs). The NEOs are:
MARK D. SCHWABERO | WILLIAM L. METZGER | JAIME A. IRICK | JOHN C. PFEIFER | HUW S. BOWER |
Chairman | Senior Vice President | Vice President | Vice President | Vice President |
& Chief Executive Officer | ||||
& President | ||||
Business HighlightsBUSINESS HIGHLIGHTS
Our 20152017 results represent the sixth consecutivereflected another successful year of solid earnings and strong improvements in operating performance. The Companyfree cash flow. We sought to achieve the following financial objectives in 2015:2017:
Achievements against the Company’sour financial objectives in 20152017 were as follows:
Deliver revenue growth:
REVENUE GROWTH |
Fitness segment | ||
2018 PROXY STATEMENT | 32 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
BUSINESS HIGHLIGHTS
EARNINGS BEFORE INCOME TAX |
- | Reported earnings before income taxes of | |
Gross margin declined 100 basis points when compared with | ||
Operating margin declined by 190 basis points when compared with the prior year, due in part to increased pension settlement |
FREE CASH FLOW |
- | Generated strong free cash flow of $243.1 million in 2017(1), enabling the Company to continue executing its capital strategy as follows: | |
- | Organically through capital expenditures, which included | ||
- | Through | ||
Contributed | ||
Enhanced shareholder returns in 2017 by repurchasing |
- | Ended the year with $459.0 million of cash and marketable securities. |
BRUNSWICK CORPORATION -2016 Proxy Statement(1) Please see Appendix 2 for a reconciliation of non-GAAP measures.24
2018 PROXY STATEMENT | 33 |
Deliver Strong Return to Shareholders
Brunswick’s compensation plans are intended to support its strategic focus and reward Company performance. Brunswick’s compensation philosophy is to encourage and reward the creation of sustainable, long-term shareholder value. From a shareholder perspective, Brunswick performed well as illustrated by the total shareholder return (TSR) of 77.3 percent for the three years ended December 31, 2015. The table below highlights Brunswick’s stock price history over a five year period:
STOCK PRICE HISTORY
Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices | ||
Consideration of 2015 Executive Compensation VoteCONSIDERATION OF 2017 EXECUTIVE COMPENSATION VOTE
At its 2015 shareholder meeting, the Company received overwhelming shareholder approval of its2017 Annual Meeting, shareholders overwhelmingly approved our “say on pay” proposal (97.13(shareholders cast 93.75 percent of votes cast were cast for the proposal). The Company wasWe were pleased with this significant vote of confidence in itsour pay practices and did not make any direct changes to itsour compensation programs as a result of the vote. Nevertheless, the Companywe did make some changes to itsour compensation programs in 20152017 to further reinforce the Company’sour pay-for-performance philosophy and align management compensation with shareholder interests.
Key Compensation Decisions in 2015KEY COMPENSATION DECISIONS IN 2017
Annual Incentive Plan
ANNUAL For 2017, Earnings Before Interest and Taxes (EBIT) was used as the funding metric under the Brunswick Corporation Senior Management Incentive Plan (SMIP), the Company’s Section 162(m) performance qualified annual incentive plan. Specifically, the SMIP pool was funded based on 2% of EBIT for the CEO and 1% of EBIT for each of the other NEOs. For purposes of distributing the funding earned under the SMIP, the Brunswick Performance Plan (BPP) is used. For 2017, we designed the BPP to include divisional EBIT to reward division performance, while maintaining a portion of the award tied to overall Brunswick Earnings Per Share (EPS). Specifically, the 2017 BPP for the NEOs contained performance measures attributable to each of the divisions in addition to corporate EPS. Actual performance in 2017 was below the performance targets set for the 2017 BPP, and we paid NEOs aggregate awards under the plan at approximately 66 percent of target opportunity. For additional information on the annual incentive plan, see “Achievement of Targeted Results” on page 37 below. | LONG-TERM We grant performance-based equity in the form of Performance Shares to certain key senior executives, including each of the NEOs. Starting with the awards granted in 2015, performance underlying the awards is measured based on Cash Flow Return on Investment (CFROI) and Operating Margin and Brunswick’s total shareholder return performance relative to the TSR of an established peer group, as measured over a three-year performance period. We believe Performance Shares strengthen our pay-for-performance philosophy and align management’s long-term goals with our key strategic initiatives. Actual performance for the 2015 Performance Shares award exceeded the three-year targets and awards paid under the plan were at 136 percent of target opportunity. For additional information, see page 38. In addition, the Company continues to provide Restricted Stock Units (RSUs) as part of equity compensation delivered to reiterate key retention initiatives and align to shareholder interests. | NEW HIRE ONE-TIME COMPENSATION In January 2017, Mr. Irick was hired as the Vice President and President of the Fitness Division. In consideration of this new hire offer, we provided Mr. Irick the following one-time compensation payments in addition to his annual compensation package: a sign-on RSU grant and cash bonus. The RSU grant represents the value of equity forfeited from a previous employer and one component of the cash sign-on bonus represents the annual incentive foregone by the previous employer. In addition, he received the first installment of a two-installment cash sign-on bonus upon his date of hire; he received the second installment on the first anniversary of his date of employment in January 2018. Future awards to Mr. Irick will coincide with the regular compensation award schedule, similar to the rest of the NEOs. |
For 2015, Earnings Before Interest and Taxes (EBIT) was used as the funding metric under the Brunswick Corporation Senior Management Incentive Plan (SMIP), the Company’s Section 162(m) performance qualified annual incentive plan. Specifically, the SMIP pool was funded based on 2% of EBIT for the CEO and 1% of EBIT for each of the other NEOs. For purposes of distributing the funding earned under the SMIP, the Brunswick Performance Plan (BPP) is used. For 2015, the Company designed the BPP to include divisional EBIT to reward division performance, while still keeping a portion of the award tied to overall Brunswick Earnings Per Share (EPS). Specifically, the 2015 BPP for the NEOs contained performance measures attributable to each of the divisions in addition to corporate EPS. Actual performance in 2015 exceeded the performance targets set for the 2015 BPP, and the Company paid aggregate awards under the plan at approximately 105 percent of target opportunity. For additional information on the annual incentive plan, see “Achievement of Targeted Results” on page 29 below.
Long-Term Incentives
In 2015, the Company granted performance-based equity in the form of performance shares (Performance Shares) to certain key senior executives, including each of the NEOs. Starting with the awards granted in 2015 performance underlying the awards is measured over a three-year performance period. These were the first awards granted under the Brunswick Corporation 2014 Stock Incentive Plan, which was approved by shareholders at the Company’s 2014 Annual Meeting. The Company believes Performance Shares strengthen its pay-for-performance philosophy and align management’s long-term goals with the Company’s key strategic initiatives.
Additionally, the Company has introduced double-trigger Change in Control equity vesting provision for 2016 equity grants. The Company believes that this modification aligns with competitive best practice and shareholder interests.
BRUNSWICK CORPORATION -2016 Proxy Statement25
Pension Plan De-risking
In 2015, the Company executed several strategies to de-risk its frozen defined benefit qualified pension plans, notably the payment of lump sum amounts to certain active participants in connection with a plan termination, including Mr. Metzger, of their entire accrued benefit under the plan. The Company reduced plan liabilities by approximately $200 million as a result of these lump sum payments and other actions taken in 2014 to pay terminated vested participants their full benefit.
Overall Philosophy and Objectives of Our Executive Compensation ProgramsOVERALL PHILOSOPHY AND OBJECTIVES OF OUR EXECUTIVE COMPENSATION PROGRAMS
The overall philosophy of Brunswick’sour compensation programs for itsthe NEOs and other senior executives is to encourage and reward the creation of sustainable, long-term shareholder value. Specifically, the Company haswe have identified the following objectives to help realize this goal:
ALIGNMENT WITH SHAREHOLDERS’ INTERESTS | MOTIVATE ACHIEVEMENT OF FINANCIAL AND STRATEGIC GOALS | REMAIN COMPETITIVE | REWARD SUPERIOR PERFORMANCE |
Reward performance in a given year and achievements over a sustained period that are aligned with the interests of our | |||
shareholders. | |||
structure reinforces achievement of business objectives and execution of our overall | |||
strategy. | |||
the talent required to ensure our continued | |||
success. | |||
performance culture. |
Compensation Design Principles
2018 PROXY STATEMENT | 34 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
COMPENSATION DESIGN PRINCIPLES
In support of theour executive compensation programs’ objectives, identified above, the framework of Brunswick’sour executive compensation programs incorporates the following compensation design principles:principles.
FOCUS ON THE CREATION OF LONG-TERM SHAREHOLDER VALUE
Focus on the Creation of Long-Term Shareholder Value
Brunswick’sOur senior executives are responsible for achieving long-term strategic goals. Accordingly, compensation is weighted towards rewarding long-term value creation for shareholders. For Mr. McCoySchwabero in 2015,2017, approximately 6568 percent of targeted total compensation was based on long-term performance, and for our other NEOs, it was approximately 5250 percent. For Mr. McCoy,Schwabero, approximately 2118 percent of targeted total compensation was based on annual performance against established performance criteria, and for our other NEOs it was approximately 23 percent. The balance consisted of base salary (14 percent for Mr. McCoySchwabero and 2527 percent for the other NEOs in 2015)2017).
Our emphasis on long-term shareholder value creation is best illustrated in the following chart, which shows the portion of total targeted compensation that is attributable to our long-term incentive compensation and the portion attributable to other key elements of our compensation programs. As shown in the chart, long-term incentive compensation accounts for the largest percentage of overall compensation when compared to base salary and annual incentives (bonus). In addition, as a result of the compensation structure, a majority of senior executive compensation is deemed performance-based or “at risk,” with such amounts constituting approximately 86 percent of Mr. McCoy’sSchwabero’s total compensation and approximately 7573 percent of total compensation for our other NEOs in 2015.2017.
Below is a chart comparing the targeted compensation mix of our formerthe CEO and other NEOs:
BRUNSWICK CORPORATION -2016 Proxy Statement26
Provide Incentives for Achievement of the Company’s GoalsPROVIDE INCENTIVES FOR ACHIEVEMENT OF OUR GOALS
In addition to achieving Brunswick’sour long-term and strategic goals, the Company’swe charge our senior executives are charged with the responsibility for meeting the Company’sour strategic, financial and operational goals. As a result, the Company haswe have linked executive compensation to business performance by establishing measurable business metrics against which we measure performance, is measured, and which the Board of Directors has determined are important to Brunswick’sour key stakeholders.
The Company establishesWe establish variable compensation targets (including individual BPP targets) for NEOs and other employees with reference to peermarket median total direct compensation (base salary plus annual bonus plus long-term incentive) minus base salary. This amount is then split between annual and long-term incentives at a ratio that the Compensation Committee feels is appropriate for a company like Brunswick.
AnnualWe base annual incentive metrics are based on a combination of division and overall Brunswick results. Long-term incentives are based on Brunswick’sour consolidated results and total shareholder return.
WHAT WE DO: |
BRUNSWICK CORPORATION -2016 Proxy Statement27Base a very high percentage of executive pay on performance
Require executives to achieve performance-based goals tied to shareholder return
Target median compensation levels and review market data of our peer group when making executive compensation decisions
Apply strict share ownership guidelines to NEOs and Directors
Require vested shares from our equity compensation programs to be held until share ownership guidelines are met
Disclose complete information on annual incentive plans
Evaluate, and manage, risk in our compensation programs
Use an independent compensation consultant
Have an established clawback policy
Maintain double-trigger equity award vesting acceleration upon involuntary termination following a Change in Control (CIC)
Engage in a rigorous and thoughtful executive succession planning process with the Board
WHAT WE DON’T DO: |
No tax gross-ups (including perquisites, excise tax)
No modified single-trigger or single-trigger CIC severance agreements (we only use double-trigger CIC severance provisions)
Expressly forbid option repricing not in accordance with plans already approved by shareholders
Expressly forbid exchanges of underwater options for cash in all of our active equity plans
No hedging of shares by our Directors or employees
No pledging of shares by our Directors or employees
No dividends or dividend equivalents on unearned Performance Shares
2018 PROXY STATEMENT | 35 |
Competitive Compensation
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Brunswick recognizesCOMPETITIVE COMPENSATION
We recognize that, in order to attract and retain the level of talent that is essential to achieving itsour established objectives, itwe must maintain a competitive executive compensation program.
Each year, Frederic W. Cook & Co., Inc., the Compensation Committee’s independent compensation consultant, FW Cook, provides a detailed analysis, utilizing a peer group of 1617 publicly-traded companies with annual revenue levels comparable to Brunswick’s,ours, regarding proposed CEO compensation levels for the CEO. Criteria used to identify the peer group include:
Brunswick’s peer group in 2015 consisted of the following companies:
Consistent with past practice, Brunswick assessed the appropriateness of the peer group during 2015, which resulted in changes to the peer group composition. The result of these peer company changes will take effect for 2016 compensation benchmarking. The next review of the peer group is scheduled for 2017.
Brunswick isand other plan design elements. We are the largest domestic, publicly-traded company in the recreational marine industry, with total revenues approximately 20 times those of the next largest publicly-traded U.S. recreational boat manufacturer as of December 31, 2015.2017. As a result, there are no direct competitors in the compensation peer group. Criteria used to identify the peer group include:
Size: | Companies with revenues that generally range from one-half to two times our total annual revenue. |
Business Focus: | Publicly-traded manufacturing companies. |
Consistency: | The peer group should be relatively stable. Companies historically have been eliminated if they were acquired or if their revenue was outside the range referenced above. |
Consistent with past practice, Brunswick assessed the appropriateness of the peer group during 2017, which resulted in changes to the peer group composition. The result of these peer company changes will take effect for 2018 compensation benchmarking. The next review of the peer group is scheduled for 2019.
For all other NEOs, Brunswick assesseswe assess the competitiveness of executive compensation every two years using manufacturing industry survey data purchased from Aon Hewitt. Brunswick’sEach position is benchmarked based on scope of responsibilities, revenue size of applicable business unit, and level within the organizational hierarchy. We design our target pay mix and total compensation opportunities are designed to approximate the median of the market. In 2015, the Company2017, we completed thea competitive benchmark assessment which confirmed that, on average, Brunswick’sour target total direct compensation (base salary, annual bonus, and long-term incentives) for the senior management positions, including the NEOs, approximates the median of competitive practice. We will complete this analysis again in 2019.
Internal EquityThe chart to the right summarizes the CEO’s total direct compensation as compared to the median of the market data for his role as well as the average NEO total direct compensation compared to the average applicable market data job matches for each of their roles. This chart reinforces that we follow our philosophy to target executive compensation to the median of the market.
Brunswick establishesINTERNAL EQUITY
We establish compensation ranges for positions with similar characteristics and scope of responsibility, including NEO positions, even if such ranges differ somewhat from comparable positions at companies in our peer group.positions. Balancing competitiveness with internal equity helps support management development and movement of talent throughout Brunswick’sour worldwide operations. Differences in actual compensation between employees in similar positions result from individual performance, future potential, and division financial results. This effort also helps Brunswickus promote talented managers to positions with increased responsibilities and provides meaningful developmental opportunities.opportunities for our employees.
Reward Corporate, Division and Individual PerformanceREWARD CORPORATE, DIVISION, AND INDIVIDUAL PERFORMANCE
Recognizing corporate, division, and individual performance in compensation helps reinforce the importance of working together and furthers Brunswick’sour pay-for-performance philosophy. For 2015, Brunswick2017, we funded incentives for all participants based on the achievement of corporate and division performance goals and allocated incentives based on individual contributions. For those NEOs with division responsibility, we focused incentives were focused on the financial performance of their divisions, but also included a significant portion tied to overall corporate results.
2017 PEER GROUP: |
Carlisle
Colfax Corp
Crane
Curtiss-Wright
Dana Holding
Flowserve Corp
Harley-Davidson
Harman International
Hasbro
Leggett & Platt
Mattel
Meritor
Oshkosh
Polaris Industries
Regal-Beloit Corp
Snap-On Tools
Timken
BRUNSWICK CORPORATION -2016 Proxy Statement28AVERAGE NEO TARGET
DIRECT COMPENSATION
VS. MARKET MEDIAN
2018 PROXY STATEMENT | 36 |
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What Is Rewarded?
WHAT IS REWARDED?
Brunswick designsWe design NEO compensation to reward achievement of budgeted financial results, namely EPS, EBIT, Cash Flow Return on Investment (CFROI) and, Operating Margin, Brunswick total shareholder return (both absolute and on a relative basis), and individual performance.
Achievement of Targeted ResultsACHIEVEMENT OF TARGETED RESULTS
Earnings Per Share, Earnings Before Interest and Taxes, Cash Flow Return on Investment, Operating Margin and Relative Total Shareholder Return
The CompanyWe established the 20152017 BPP annual incentive formula to recognize and reward outstanding performance by both the overall Company and by itsour divisions. Specifically, the BPP for the NEOs provides that funding is based on the achievement of corporate EPS and division-specific EBIT. For Corporate NEOs (Messrs. McCoy, Schwabero, Metzger and Lockridge), 2015 BPP was weighted 50 percent on overall Brunswick EPS performance and 50 percent on the EBIT performance of the divisions. In this calculation, each of the divisions was equally weighted. Mr. Pfeifer’s 2015 BPP was also weighted 50 percent on overall Brunswick EPS performance but the remaining 50 percent was based solely on Mercury Marine EBIT.
The following chart shows the relative weighting of the performance measures used under the BPP for NEOs.
Corporate | |||||||
Participants | Results | ||||||
CORPORATE (Messrs. | Boat | Group: 16.67% EBIT | |||||
50% EPS | Mercury Marine: 16.67% EBIT | ||||||
Fitness: 16.67% EBIT | |||||||
DIVISION (Messrs. Pfeifer | 50% EPS | 50% EBIT of their Division |
Each of the NEOs also participate in the three year performance share plan, which rewards performance based on the achievement of both CFROI and Operating Margin over a three-year period in addition to a potential modifier at the end of the three-yearperformance period based on Brunswick’s three yearthree-year TSR performance against the TSR of certain companies in the Global Industry Classification Standard (GICS) “Leisure Products” sub-industry.
The Compensation Committee believes that EPS and division EBIT are appropriate measures to be useduse in our annual incentive plan. Earnings figures, specifically EPS, are widely tracked and reported by analysts and used as a measure to evaluate Brunswick’sour performance. Division EBIT is important as it shows each
division’s contribution to the Company’sour overall earnings performance. Both CFROI and Operating Margin are important within the long-term performance share plan to measure how effective the Company manages itseffectively we manage our cash and business to create long-term sustainable performance for itsour shareholders.
Our grants of Performance Shares and RSUs inherently reward absolute TSR because the ultimate earned value of each share will depend on our TSR during the performance/vesting period. In addition, the number of Performance Shares actually earned will depend on our relative TSR performance against other leisure products companies. BothWe use absolute and relative TSR metrics are used because they align the earned compensation amounts with our market performance and our shareholders’ experience.
Stock Price AppreciationSTOCK PRICE APPRECIATION
Stock price appreciation is a significant component of total shareholder return and thus shareholder value creation. Stock price appreciation affects the value of Brunswick’sour equity grants, including Stock Appreciation Rights (SARs), Restricted Stock Units (RSUs)RSUs and Performance Shares.
Individual PerformanceINDIVIDUAL PERFORMANCE
The Company assesses individual performance viaWe use the Performance Management Process (PMP). to assess individual performance. The PMP was created to help employees better understand Brunswick and division-specific goals, and to define their role in and contribution towardstoward achieving these goals. The Company believesWe believe that the PMP is an effective tool in assessing performance against individual goals.
Once Brunswick and division goals are established, salaried employees (including NEOs) work with their supervisors to set individual goals aligned with the Company’s strategic direction. Employees establish goals for specific initiatives, major responsibilities key to their positions, and individual developmental requirements, and their managers identify specific core competencies that employees are expected to achieve. The Chief Executive Officer’s performance is jointly assessed by the Compensation Committee and the Nominating and Corporate Governance Committee of the Board of Directors jointly assess the CEO’s performance with input from all members of the Board of Directors. The Chief Executive OfficerCEO assesses performance of other NEOs with review by the Compensation Committee.
Individual performance affects base salary increases, annual incentives, and equity grant decision-making. As part of the PMP process, managers have the ability to adjust all elements of compensation based on the individual’s attainment of annual goals and performance against critical competencies, which determines the content of the individual’s annual performance review and the overall PMP rating.
BRUNSWICK CORPORATION -2016 Proxy Statement29
2018 PROXY STATEMENT | 37 |
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Compensation Elements
COMPENSATION ELEMENTS
Brunswick structures itsWe structure our compensation to reflect the Company’sour business objectives and compensation philosophy. The particular elements that comprise the Company’sour compensation programs for senior executives are summarized below,below; along with an explanation of why Brunswickwe selected each compensation element,element; how the amount and formula are determineddetermined; and how decisions regarding that compensation element fit into the Company’sour overall compensation objectives and programs.
Base SalaryBASE SALARY
Base salary is fixed compensation for Brunswick’sour NEOs. It is designed to provide a minimum level of pay that reflects each executive’s position and scope of responsibility, leadership skills, and individual performance, as demonstrated over time. When establishing an executive’s base salary, the Companywe also targetstarget the median pay level offered bywithin the companies in its peer groupmarket for positions with similar responsibilities and business size. A competitive base salary is important for attracting and retaining the executives needed to lead the business.
Brunswick reviewsWe review salaries on an annual basis to ensure they are externally competitive, reflect individual performance, and are internally equitable in relation to other Brunswick executives. The Company makesWe make salary adjustments on a periodic basis in response to market practices and to provide merit increases. Additionally, the base salary component serves as the foundation of executives’ total pay, as incentives and benefits are generally computed as a function of base salary, which allows the Companyus to link performance and pay. As illustrated by the following chart, the average merit increase, excluding promotional or market adjustments, of NEO salary from 20132015 to 20152017 was 4.53.1 percent.
2013 | 2014 | 2015 | Avg | ||||||||||||
McCoy | 5.0 | % | 0.0 | % | 4.8 | % | 3.3 | % | |||||||
Schwabero | 12.4 | % | 10.0 | % | 3.1 | % | 8.5 | % | |||||||
Metzger | 0.0 | % | 5.4 | % | 4.1 | % | 3.2 | % | |||||||
Pfeifer | 4.7 | % | 0.0 | % | 9.2 | % | 4.6 | % | |||||||
Lockridge | 4.9 | % | 0.0 | % | 4.0 | % | 3.0 | % | |||||||
Average Merit Increase | 4.5 | % |
2015 | 2016 | 2017 | Avg | |
SCHWABERO | 3.1% | 0.0% | 5.0% | 2.7% |
METZGER | 4.1% | 0.0% | 5.0% | 3.0% |
IRICK | n/a | n/a | n/a | n/a |
PFEIFER | 9.2% | 0.0% | 5.3% | 4.8% |
BOWER | 2.9% | 0.0% | 3.0% | 2.0% |
Average Merit Increase: 3.1% |
Annual Incentive Plan
Brunswick’sANNUAL INCENTIVE PLAN
Our annual incentive plan, the BPP, is the primary compensation element used to reward accomplishments against established business goals within a given year.
Brunswick setsWe set the BPP target funding based on planned performance for the year, as approved by the Board of Directors. The BPP limits funding to no more than 200 percent of target funding, with the Compensation Committee approving corporate and division plan metric amounts within a range from 0 percent to 200 percent based on its review of the Company’sour performance against pre-established targets. Starting in 2017, the threshold payout level for bonus awards is 25% of final blended corporate and division performance. Target funding is equal to salary paid in the year multiplied by the target percentage for each participant. For 2015,2017, the percentage of salary targets under the BPP for NEOs ranged from 8075 percent to 150125 percent.
The Company determinesWe determine individual awards using: overall funding as approved by the Compensation Committee; the individual’s pro-rata portion of approved funding as adjusted for individual performance; and other factors deemed to be relevant. For 2015,2017, the Compensation Committee approved NEO payouts ranging from 8544 percent to 139103 percent of target opportunity. The performance measures required to support funding at 100 percent of target opportunity for all NEOs in 20152017 were Earnings Per Share of $2.77$3.97 and the following internal EBIT target levels for the business units: Mercury Marine: $327.1$380.6 million; Boat Group: $65.8$102.9 million; and Life Fitness: $125.3Fitness Division: $148.5 million. The BPP plays an important role in the Company’sour overall compensation structure, as it signals “what is important” and “what is expected” for the year from the standpoint of corporate, division, and/or individual results. Additionally, the BPP serves to focus executives on achieving current objectives, which are deemed necessary to attain long-term goals, and it establishes appropriate performance and annual incentives by rewarding divisions and individuals within those units for actual performance.
Long-Term IncentivesThe design of the 2018 annual incentive plan is similar to that of 2017.
BrunswickLONG-TERM INCENTIVES
We continually monitorsmonitor what might be the most appropriate design of itsour long-term incentive plans, taking into consideration both competitive practice and what would drive the most appropriate behavior of the participants. Prior to 2010, SARs were identified as the sole award used to provide annual long-term incentive opportunities to better align the interests of management with those of shareholders. Since then, there has been a shift in long-term incentive mix. To reinforce the use of performance-based compensation, since the 2013 annual grant, certain senior executives, including the NEOs, have had 50 percent of their target long-term incentive opportunity granted in Performance Shares and the balance in RSUs. This progressive transition to incorporateThe use of RSUs and Performance Shares into the Company’sin our long-term incentive mix wasis designed to align the Company’sour incentive program with competitive pay practices and to reinforce pay for performance and an element ofto encourage retention due to the three-year cliff vesting schedule for RSUs. The progression from 2011 through 2015 of the Company’s mix of long-term incentives for the NEOs is shown on the following graph.
LTI Mix
Performance Shares
Shares. In 2015,2017, we granted all NEOs were granted Performance Share awards. The 20152017 Performance Shares are earned over a three-year performance period based on achievement of two financial metrics, with payout between 0 percent and 200 percent of the target opportunity. At the end of the three years, 75 percent of the award will be based on three-year annual average CFROI achievement and 25 percent will be earned based on
BRUNSWICK CORPORATION -2016 Proxy Statement30
three-year annual average Operating Margin attainment. The level of performance required for target payout is based on three-year strategic plan targets. The Compensation Committee believes these targets are challenging yet reasonably attainable. The final payout at the end of the three-year period may be increased or decreased by an additional 20 percent based on Brunswick’s three-year TSR performance against the TSR of certain companies in the Global
2018 PROXY STATEMENT | 38 |
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Industry Classification Standard (GICS) “Leisure Products” sub-industry. Performance in the bottom quartile against the GICS comparator group reduces the Performance Share award payout by 20 percent and performance in the top quartile increases the Performance Share award payout by 20 percent, with a payout cap of 200 percent of target. Performance between the 25th25th and 75th75th percentile of the GICS comparator group results in no modification of the award payout. The design of the Performance Share award provides multiple benefits, including focusing management on the success of key strategic initiatives via theand their impact on CFROI and Operating Margin metrics, as well as strengthening the alignment with long-term shareholder interests with the TSR modifier at the conclusion of the three-year performance period.
The Company revised the design of the 2018 Performance Share award is similar to that of 2017.
The 2015 Performance Share award fromwas earned over a three-year performance period which ended on December 31, 2017. The plan design of these awards is similar to that of the 2014 award. The 20142017 Performance Share award was based on achievementdescribed above. The targets required to support funding at 100 percent of CFROI targets over a 12-month period with an additional two-year vesting period. The final payout is then adjusted attarget opportunity for all NEOs for the end of the three-year2015-2017 performance period by relativewere: CFROI: 25.0 percent and Operating Margin: 10.4 percent. Based on performance against these targets, the Compensation Committee approved an initial share determination of 136 percent of target opportunity. TSR to a comparator group. Whileperformance against the TSR modifier metric and design was maintained with the 2015 Performance Share award,established peer group for the performance period for CFROIresulted in company performance between the 25th and 75th percentile of the peer group. Therefore, this did not result in additional modification of +/- 20 percent of the award and the final award payout was lengthened to align executive focus with our long-term business strategy and shareholder interests. In addition, a three-year Operating Margin metric was incorporated into the 2015 Performance Share award.136 percent.
Other Long-Term Incentives
Incentives. In addition to Performance Shares, Brunswickwe currently utilizesutilize RSUs. Brunswick believesWe believe that RSUs are an important component of itsour compensation structure because each award increases linkage to shareholders’ interests by rewarding stock price appreciation and tying wealth accumulation to performance. Additionally, RSUs help to reinforce team performance, encourage senior executives to focus on long-term performance, and function as a retention incentive through the vesting period. Past long-term incentive awards have included SARs. The recently approved 2014 Stock Incentive Plan does not permit the “re-pricing” of stock options or SARs, including the cancellation of underwater stock options or SARs for cash or another award, without the approval of our shareholders. Although Brunswick believes SARs are an effective way to align executives with the shareholders, Brunswick has not granted SARs since 2013 and has, rather, granted a higher proportion of Performance Shares to better reinforce the Company’s pay-for-performance philosophy.
TheWe base the size of long-term incentive awards for NEOs is based on the following factors:
Share Ownership RequirementsSHARE OWNERSHIP REQUIREMENTS
In order to ensure continual alignment with itsour shareholders, Brunswick maintainswe maintain share ownership requirements for itsour officers. This share ownership policy calculates minimum required ownership levels as a multiple of the officer’s base salary.
The current NEO share ownership requirements are as follows:
MANAGEMENT LEVEL: | Chief Executive Officer | ||||||
TIER II | |||||||
Chief Financial Officer and | |||||||
Designated Executive Officers | |||||||
NEO: Metzger, Irick, Pfeifer, Bower | |||||||
OWNERSHIP REQUIREMENT: 3.0 Times Base Salary |
Officers who do not meetingmeet the ownership requirements will be required tomust retain shares having a value equal to 50 percent of the after-tax profit from the Common Stock acquired under our equity plans. For purposes of calculating compliance with the requirements, “shares owned” include shares directly owned, shares owned by immediate family members residing in the same household, shares held in trust, share equivalents held in the Company’sour tax-qualified defined contribution plans and deferred compensation plans, and RSUs. Unexercised stock options and SARs and outstanding Performance Shares do not count as “shares owned.” For those officers approaching retirement, ownership requirements will beare reduced as follows: 80 percent of target for those age 63; 60 percent of target for those age 64; and 50 percent of target for those age 65 and above.
The Compensation Committee reviews compliance with these share ownership requirements on an annual basis, with allbasis. All NEOs, except for Mr. Irick, who was hired during 2017, and Mr. Bower, who was promoted to his current role during 2016, are currently in compliance with the stated requirements. Therefore, Messrs. Irick and Bower will be subject to the retention ratio until they achieve the required ownership level. Please see the Narrative to Director Compensation Table for information regarding share ownership guidelines for directors.Directors.
ClawbacksCLAWBACKS
The Compensation Committee can require the repayment of all or a portion of previous BPP awards as it deems appropriate in the event of certain misconduct, including misconduct that causes a restatement of financial results. In addition, for those who have entered into Terms and Conditions of Employment with Brunswick, including each of the NEOs, the Compensation Committee has expanded the types of payments the Company can recover in the event of a violation of the restrictive covenants set forth in the Terms and Conditions of Employment to include any severance payments received by the executive and any gain realized as a result of the exercise or vesting of equity awards beginning 12 months prior to termination.
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Anti-Hedging and Anti-Pledging PolicyANTI-HEDGING AND ANTI-PLEDGING POLICY
No director,Director, NEO, or other employee may engage in hedging or monetization transactions or similar arrangements with respect to Common Stock, including the purchase or sale of puts, calls, or options on Common Stock (other than options granted by Brunswick), or the use of any other derivative instruments to hedge or offset any decrease in the market value of the Common Stock. In addition, no director,Director, NEO, or other employee may pledge Common Stock as collateral.
BRUNSWICK CORPORATION - 2016 Proxy Statement31
2018 PROXY STATEMENT | 40 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
Post-Employment Compensation
POST-EMPLOYMENT COMPENSATION
Post-employment compensation elements that are not currently offered to salaried employees in general are summarized below.
Plan | Description | Participant(s) |
BRUNSWICK RESTORATION PLAN | The Restoration Plan is a non-qualified plan that provides a retirement benefit consistent with that of employees who are not affected by the IRS compensation and benefit limits. The Restoration Plan ensures that employees with covered compensation or retirement plan contributions above IRS qualified defined contribution plan limits receive the full amount of their intended retirement benefits. If an employee elects to participate in the Restoration Plan, 401(k) contributions and Brunswick’s match on these contributions above the IRS limit are credited to this plan. In addition, Brunswick’s variable retirement contributions for eligible employees are automatically credited to their Restoration Plan accounts. | All NEOs |
SUPPLEMENTAL PENSION PLAN | The Supplemental Pension Plan ensures that employees with covered compensation or pension benefits above Internal Revenue Service (IRS) qualified defined benefit plan limits receive the full amount of their intended pension benefits. Pursuant to the Supplemental Pension Plan, we pay, on a non-qualified basis, the difference between an employee’s earned defined benefit pension and the level of benefits that is permissible by IRS qualified limits. The Supplemental Pension Plan provides a retirement benefit that is consistent with those who are not affected by the IRS compensation and benefit limits and reflects an individual’s full career and covered pay earned. Of the NEOs, only Mr. Metzger participates, or has a balance, in the Supplemental Pension Plan. Effective December 31, 2009, we froze the Supplemental Pension Plan and ceased all benefit accruals. | Metzger |
THE 2005 ELECTIVE DEFERRED INCENTIVE COMPENSATION PLAN | The 2005 Elective Deferred Incentive Compensation Plan provided eligible employees the opportunity to save in a tax-deferred manner. In 2008, we suspended participation in the plan. The Compensation Committee will continue to assess the competitive and regulatory landscape to determine if future enrollment in this plan is warranted. | Schwabero Pfeifer |
THE 2005 AUTOMATIC DEFERRED COMPENSATION PLAN | The 2005 Automatic Deferred Compensation Plan defers payment of certain compensation that would otherwise be non-tax-deductible to Brunswick by reason of Section 162(m) of the Internal Revenue Code until six months after employment ends. The 2005 Automatic Deferred Compensation Plan preserves our ability to take a tax deduction for senior executives’ compensation. Senior executives are required to defer receipt of non-deductible compensation in excess of $1.5 million in order to limit non-deductible compensation under Section 162(m) of the Internal Revenue Code. For amounts deferred in cash, financial returns on automatic deferrals are based on either: (i) an interest rate equal to the greater of the prime rate at J.P. Morgan Chase plus two percentage points, or Brunswick’s short-term borrowing rate; or (ii) securities selected by the participant. The two percentage point increment is used to recognize that the NEO defers the receipt of earned compensation until sometime in the future, typically upon retirement or other termination of employment. For amounts deferred in stock, the account is credited with the number of share units equal to the number of shares of Company stock as of the date on which the shares would otherwise have been paid. Due to the passage of the Tax Cuts and Job Act in December 2017, Section 162(m) was amended to eliminate the previously available exemptions from the tax deduction limit, including the exemptions for (1) qualified performance-based compensation and (2) compensation paid after the Executive’s termination of employment. As a result, the reasons for maintaining the ADC Plan no longer exist (other than for equity awards that were granted prior to November 2, 2017). For this reason, the plan has been amended to cease deferrals of compensation earned on or after January 1, 2018, except for incentive awards that were outstanding prior to such date. This will effectively “wind down” the plan while preserving the grandfathered status of the previously granted or deferred awards. | Schwabero Pfeifer |
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PERQUISITES AND OTHER BENEFITS
Of theWe extend certain benefits to NEOs only Mr. Metzger participatesthat we do not offer to salaried employees in or has a balance in, the non-qualified defined benefit retirement plan (the Supplemental Pension Plan). Effective December 31, 2009, the Company froze the Supplemental Pension Plangeneral. These programs help NEOs enhance their understanding of our products, protect their physical health, and ceased all benefit accruals. Participation thereafter in any supplemental pension benefit has been through the Brunswick Restoration Plan.maximize their productivity.
Perquisites/Benefits | Description |
EXECUTIVE PRODUCT PROGRAM | The product program is designed to encourage the use of Brunswick products to enhance understanding and appreciation of our businesses and identify product and business development opportunities. The program provides a product allowance equal to $30,000 for all participants. We do not reimburse the participant for the tax liability associated with the program. The allowance may be applied toward the purchase of Brunswick products at the discounted rates established pursuant to the Brunswick Employee Purchase Program, which is available to all Brunswick employees, as well as any freight costs, parts and accessories, service fees, and other expenses related to the ownership of the Brunswick products purchased. |
EXECUTIVE PHYSICAL PROGRAM | We provide a physical examination program to senior executives that is intended to protect the health of such executives and our investment in our leadership team. The Compensation Committee requires senior executives to have an annual physical examination and, as part of this program, they have immediate access to healthcare providers. |
PERSONAL AIRCRAFT USE | The Chairman and CEO may use the Company aircraft for personal use on a limited basis. This benefit allows for the effective use of the Chairman and CEO’s limited personal time. Other NEOs may occasionally use the Company aircraft for personal use with prior approval from the Chairman and CEO. |
LIFE INSURANCE POLICIES | Of the NEOs, only Mr. Metzger has a Split-Dollar Life Insurance replacement policy (Replacement Policy). The Replacement Policy provides an insured death benefit and allows for capital accumulation. The Sarbanes-Oxley Act of 2002 prohibits loans to executive officers and, as a result of this loan prohibition, combined with changes in taxation of Split-Dollar Life Insurance, we restructured the Replacement Policy in 2004 such that the net present value cost to Brunswick did not increase. Although we continue to cover the costs of the Replacement Policy, Mr. Metzger is now responsible for the actual payment of the annual premium and keeping his policy current. Pre-2003 loans on these policies were grandfathered under Sarbanes-Oxley and remain outstanding. The loans must be repaid to Brunswick at the scheduled rollout date or upon death (whichever occurs first) per the terms of the Split Dollar agreement. Executives with Split-Dollar Life Insurance replacements do not receive Company-provided basic life insurance coverage. Executives hired since 2003 receive basic life insurance coverage under the same terms as other salaried employees, except that the Company continues to pay for a life insurance policy for Mr. Schwabero that was provided by his former employer. These are grandfathered benefits not available to Executives who became NEOs since 2003. |
The Supplemental Pension Plan ensures that employees with covered compensation or pension benefits above Internal Revenue Service (IRS) qualified defined benefit plan limits receive the full amount of their intended pension benefits. Pursuant to the Supplemental Pension Plan, the Company pays, on a non-qualified basis, the difference between an employee’s earned defined benefit pension and the level of benefits that is permissible by IRS qualified limits. The Supplemental Pension Plan provides a retirement benefit that is consistent with those who are not affected by the IRS compensation and benefit limits and reflects an individual’s full career and covered pay earned.
Brunswick Restoration Plan
All NEOs participate in the Brunswick Restoration Plan. The Restoration Plan ensures that employees with covered compensation or retirement plan contributions above IRS qualified defined contribution plan limits receive the full amount of their intended retirement benefits. If an employee elects to participate in the Restoration Plan, 401(k) contributions and Brunswick’s match on these contributions above the IRS limit are credited to this plan. In addition, Brunswick’s variable retirement contributions for eligible employees are automatically credited to their Restoration Plan accounts. This is a non-qualified plan.
The Restoration Plan provides a retirement benefit consistent with that of employees who are not affected by the IRS compensation and benefit limits.
The 2005 Elective Deferred Incentive Compensation Plan
Mr. McCoy, Mr. Lockridge, Mr. Schwabero and Mr. Pfeifer currently maintain balances in the 2005 Elective Deferred Incentive Compensation Plan. The 2005 Elective Deferred Incentive Compensation Plan provided eligible employees the opportunity to save in a tax-deferred manner. In 2008, the Company suspended participation in the plan. The Compensation Committee will continue to assess the competitive and regulatory landscape to determine if future enrollment in this plan is warranted.
The 2005 Automatic Deferred Compensation Plan
The 2005 Automatic Deferred Compensation Plan defers payment of certain compensation that would otherwise be non-tax-deductible to Brunswick by reason of Section 162(m) of the Internal Revenue Code until six months after employment ends. The 2005 Automatic Deferred Compensation Plan preserves Brunswick’s ability to take a tax deduction for senior executives’ compensation. Senior executives are required to defer receipt of non-deductible compensation in excess of $1.5 million in order to limit non-deductible compensation under Section 162(m) of the Internal Revenue Code. For amounts deferred in cash, financial returns on automatic deferrals are based on either: (i) an interest rate equal to the greater of the prime rate at J.P. Morgan Chase plus two percentage points, or Brunswick’s short-term borrowing rate; or (ii) securities selected by the participant. The two percentage point increment is used to recognize that the NEO defers the receipt of earned compensation until sometime in the future, typically upon retirement or other termination of employment. For amounts deferred in stock, the account is credited with the number of share units equal to the number of shares of Company stock as of the date on which the shares would otherwise have been paid. As of December 31, 2015, Mr. McCoy, Mr. Schwabero and Mr. Pfeifer were the only participants with automatic deferrals under this plan.
Life Insurance Policies
Of the NEOs, only Mr. Metzger has a Split-Dollar Life Insurance replacement policy (Replacement Policy). The Replacement Policy provides an insured death benefit and allows for capital accumulation. The Sarbanes-Oxley Act of 2002 prohibits loans to executive officers and, as a result of this loan prohibition, combined with changes in taxation of split-dollar life insurance, Brunswick restructured the Replacement Policy in 2004 such that the net present value cost to Brunswick did not increase. Although the Company continues to cover the costs of the Replacement Policy, Mr. Metzger is now responsible for the actual payment of the annual premium and keeping his policy current.
Pre-2003 loans on these policies were grandfathered under Sarbanes-Oxley and remain outstanding. The loans must be repaid to Brunswick at the scheduled rollout date or upon death (whichever occurs first) per the terms of the Split Dollar agreement. Executives with split-dollar life insurance replacements do not receive Company-provided basic life insurance coverage. Executives hired since 2003 receive basic life insurance coverage under the same terms as other salaried employees, except that the Company continues to pay for a life insurance policy for Mr. Schwabero that was provided by his former employer.
Terms and Conditions of EmploymentTERMS AND CONDITIONS OF EMPLOYMENT
All NEOs maintain agreements setting forth their terms and conditions of employment (Agreements). The Agreements memorialize the “at will” nature of the employment relationship, and describe each executive’sExecutive’s duties, compensation, benefits, and perquisites. Additionally, the Agreements consolidate the restrictive covenants that exist during and after employment (e.g., non-competition, confidentiality, non-solicitation).
Finally, the Agreements establish and limit the compensation and benefits to which an executive is entitled in the event of termination.
Brunswick believesWe believe that offering Agreements to itsour executives helps to ensure the retention of executive experience, skills, knowledge, and background for the benefit of the Company, and the efficient achievement of the Company’sour long-term goals and strategy. Additionally, the Agreements reinforce and encourage the executives’Executives’ continued attention and dedication to duties without the distraction arising from the possibility of a Change in Control. The Agreements do not provide excise tax gross-ups.
Perquisites
The Company extends certain benefits to NEOs that it does not offer to salaried employees in general. These programs help NEOs enhance their understanding of Brunswick products, protect their physical health and maximize their productivity.
BRUNSWICK CORPORATION - 2016 Proxy Statement32
2018 PROXY STATEMENT | 42 |
Executive Product Program
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
The product program is designed to encourage the use of Brunswick products to enhance understanding and appreciation of Brunswick’s businesses and identify product and business development opportunities. The program provides a product allowance equal to $30,000 for all participants. The Company does not reimburse the participant for the tax liability associated with the program. The allowance may be applied toward the purchase of Brunswick products at the discounted rates established pursuant to the Brunswick Employee Purchase Program, which is available to all Brunswick employees, as well as any freight costs, parts and accessories, service fees and other expenses related to the ownership of the Brunswick products purchased.
Executive Physical Program
Brunswick provides a physical examination program to senior executives that is intended to protect the health of such executives and Brunswick’s investment in its leadership. The Compensation Committee requires senior executives to have an annual physical examination and, as part of this program, they have immediate access to healthcare providers.
Personal Aircraft Use
The Chairman and Chief Executive Officer may use Company aircraft for personal use on a limited basis. This benefit allows for the effective use of the Chairman and Chief Executive Officer’s limited personal time. Other NEOs may use the Company aircraft for personal use with prior approval from the Chairman and Chief Executive Officer.
Determining Executive CompensationDETERMINING EXECUTIVE COMPENSATION
Decisions with respect to specific BPP awards, equity awards, and base salary increases for the current year are normally made at the first Compensation Committee and Board meeting of each year. At this meeting, the Compensation Committee and the Board of Directors also make decisions with respect to the prior year’s performance and BPP funding. Base salary increases are generally effective as of the first full pay period in April.
The Compensation Committee reviews and approves equity grant terms and conditions and grant size for NEOs and other senior executives at its first meeting of the year, which is generally held following Brunswick’sour public disclosure of itsour financial results for the prior year.
Human Resources and Compensation Committee ReportHUMAN RESOURCES AND COMPENSATION COMMITTEE REPORT
The Human Resources and Compensation Committee reviewed and discussed this Compensation Discussion and Analysis with management.
Based on that review and discussion, the Human Resources and Compensation Committee recommended to the Board of Directors of Brunswick Corporation that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2017, and the Company’s Proxy Statement to be filed in conjunction with the Company’s 20162018 Annual Meeting.
J. Steven Whisler,ChairDavid C. EverittManuel A. Fernandez
HUMAN RESOURCES AND COMPENSATION COMMITTEE | |||||
J. STEVEN | DAVID C. EVERITT | MANUEL A. FERNANDEZ |
BRUNSWICK CORPORATION - 2016 Proxy Statement33
2018 PROXY STATEMENT | 43 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
2015 Summary Compensation Table
2017 SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation earned by each of the Company’s named executive officers (NEOs)our NEOs for the years ended December 31, 2015, 20142017, 2016, and 2013.2015.
Name and Principal Position | Year | Salary(1) | Stock Awards(2) | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value and Non- qualified Deferred Compensation Earnings(4) | All Other Compensation(5) | Total | |||||||||||||
Dustan E. McCoy(6) | 2015 | $ | 1,125,000 | $ | 6,500,604 | $ | 1,777,000 | $ | 188,089 | $ | 452,777 | $ | 10,043,470 | |||||||
Former Chairman and | 2014 | 1,050,000 | 5,248,048 | 1,853,000 | 122,184 | 518,441 | 8,791,673 | |||||||||||||
Chief Executive Officer | 2013 | 1,036,539 | 4,900,084 | 1,900,000 | 134,678 | 498,519 | 8,469,820 | |||||||||||||
Mark D. Schwabero(7) | 2015 | $ | 744,231 | $ | 2,502,375 | $ | 784,000 | $ | - | $ | 181,097 | $ | 4,211,703 | |||||||
Chairman and Chief | 2014 | 598,077 | 1,455,188 | 702,000 | - | 163,496 | 2,918,761 | |||||||||||||
Executive Officer | 2013 | 485,192 | 899,557 | 700,000 | - | 134,898 | 2,219,647 | |||||||||||||
William L. Metzger | 2015 | $ | 517,500 | $ | 1,000,904 | $ | 545,000 | $ | 29,292 | $ | 121,285 | $ | 2,213,981 | |||||||
Senior Vice President and | 2014 | 478,269 | 899,926 | 563,000 | 270,642 | 105,388 | 2,317,225 | |||||||||||||
Chief Financial Officer | 2013 | 433,077 | 899,557 | 490,900 | - | 90,849 | 1,914,383 | |||||||||||||
John C. Pfeifer(8) | 2015 | $ | 479,423 | $ | 1,000,904 | $ | 429,000 | $ | 191 | $ | 115,019 | $ | 2,024,537 | |||||||
Vice President and | 2014 | 396,538 | 671,388 | 370,000 | - | 105,230 | 1,543,156 | |||||||||||||
President – Mercury Marine | ||||||||||||||||||||
B. Russell Lockridge(9) | 2015 | $ | 430,615 | $ | 500,567 | $ | 453,000 | $ | - | $ | 130,217 | $ | 1,514,399 | |||||||
Vice President and Chief | 2014 | 404,000 | 429,508 | 475,000 | - | 149,101 | 1,457,609 | |||||||||||||
Human Resources Officer | 2013 | 398,885 | 430,402 | 471,500 | - | 154,741 | 1,455,528 |
Year | Salary(1) | Bonus(6) | Stock Awards(2) | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings(4) | All Other Compensation(5) | Total | |||||||||||||||||||||||
MARK D. SCHWABERO, Chairman and Chief Executive Officer | ||||||||||||||||||||||||||||||
2017 | $1,036,539 | — | $5,000,340 | $821,000 | — | $259,641 | $7,117,520 | |||||||||||||||||||||||
2016 | $971,154 | — | $4,500,562 | $1,035,000 | — | $195,732 | $6,702,448 | |||||||||||||||||||||||
2015 | $744,231 | — | $2,502,375 | $784,000 | — | $181,097 | $4,211,703 | |||||||||||||||||||||||
WILLIAM L. METZGER, Senior Vice President and Chief Financial Officer | ||||||||||||||||||||||||||||||
2017 | $523,269 | — | $999,930 | $360,000 | $59,931 | $130,101 | $2,073,231 | |||||||||||||||||||||||
2016 | $505,000 | — | $999,224 | $430,500 | $37,684 | $169,272 | $2,141,680 | |||||||||||||||||||||||
2015 | $517,500 | — | $1,000,904 | $545,000 | $29,292 | $121,285 | $2,213,981 | |||||||||||||||||||||||
JAIME A. IRICK(7), Vice President and President – Fitness Division | ||||||||||||||||||||||||||||||
2017 | $451,250 | $460,000 | $1,601,492 | $160,000 | — | $229,558 | $2,902,300 | |||||||||||||||||||||||
JOHN C. PFEIFER, Vice President and President – Mercury Marine | ||||||||||||||||||||||||||||||
2017 | $493,269 | — | $999,930 | $405,000 | $346 | $134,288 | $2,032,833 | |||||||||||||||||||||||
2016 | $475,000 | — | $999,224 | $377,000 | $323 | $123,341 | $1,974,888 | |||||||||||||||||||||||
2015 | $479,423 | — | $1,000,904 | $429,000 | $191 | $115,019 | $2,024,537 | |||||||||||||||||||||||
HUW S. BOWER(7), Vice President and President – Brunswick Boat Group | ||||||||||||||||||||||||||||||
2017 | $399,969 | — | $799,952 | $160,000 | — | $107,256 | $1,467,177 | |||||||||||||||||||||||
2016 | $332,061 | — | $448,768 | $240,000 | — | $301,434 | $1,322,263 |
(1) | The amounts shown in this column constitute actual base salary paid. |
McCoy | Schwabero | Metzger | Pfeifer | Lockridge | |||||||||||||||
$ | 1,100,000 | $ | 750,000 | $ | 505,000 | $ | 475,000 | $ | 420,000 |
Annual salaries as of December 31, 2017 were:
SCHWABERO | METZGER | IRICK | PFEIFER | BOWER |
$1,050,000 | $530,000 | $475,000 | $500,000 | $435,000 |
(2) | The amounts shown in this column constitute the aggregate grant date fair value of |
The amount for Mr. Irick in this column also includes the grant date fair value of Restricted Stock Units awarded to him upon his date of hire. This was a one-time equity award as part of a competitive new hire compensation offer. | |
For further information on these awards, see the Grants of Plan-Based Awards table. | |
(3) | The amounts shown in this column constitute payments made under the annual Brunswick Performance Plan (BPP). |
(4) | The amounts shown in this column include: |
For | |
For Mr. Metzger, the actuarial |
Present Value of | Present Value of | |||||||||||||
Accumulated Benefit | Accumulated Benefit | Change in Pension | ||||||||||||
Name | Plan Name | @ 12/31/2014 | @ 12/31/2015 | Value | ||||||||||
William L. Metzger | Qualified Pension Plans | $ | 849,357 | $ | 0 | $ | - | |||||||
Supplemental Pension Plan | $ | 483,619 | $ | 512,911 | $ | 29,292 |
Name | Plan Name | Present Value Of Accumulated Benefit @ 12/31/2016 | Present Value Of Accumulated Benefit @ 12/31/2017 | Change In Pension Value |
William L. Metzger | Supplemental Pension Plan | $550,595 | $610,526 | $59,931 |
2018 PROXY STATEMENT | 44 |
Proxy Summary | Overview | Proposal 1 | Corporate Governance | Proposal 2 | Governance Policies & Practices | Director Compensation | Executive Compensation | Proposal 3 | Equity Compensation Plan | Audit-Related Matters | Proposal 4 | 2019 Shareholder Submissions | Appendices |
(5) | The amounts shown in this column include the following for fiscal year |
Defined Contribution Plan Contributions: Brunswick contributions to defined contribution programs, including both qualified and non-qualified programs (to provide for contributions in excess of IRS limits) per the contribution formulas detailed in the Narrative to Non-Qualified Deferred Compensation Table are as follows: |
SCHWABERO | METZGER | IRICK | PFEIFER | BOWER | |
QUALIFIED | $26,700 | $26,700 | — | $26,700 | $30,100 |
NON-QUALIFIED | $163,790 | $76,833 | $16,808 | $70,959 | $39,984 |
Due to the sign-on bonus Mr. Irick received on his date of hire, his compensation exceeded the 401(a)(17) qualified compensation limit ($270,000 in 2017) prior to electing to participate in the Rewards Plan, therefore there were no contributions to the Qualified Plan.
McCoy | Schwabero | Metzger | Pfeifer | Lockridge | |||||||||||||||
Qualified | $ | 26,200 | $ | 26,200 | $ | 26,200 | $ | 26,200 | $ | 26,200 | |||||||||
Non-Qualified | $ | 269,920 | $ | 109,534 | $ | 75,170 | $ | 53,469 | $ | 62,555 |
Amounts contributed to the qualified plan include Company match and a Variable Retirement Contribution of four percent and six percent, respectively, on qualified plan limit earnings