DATE:May 5, 2020 TIME:9:00 a.m. MEETING AGENDA:The meeting will cover the proposals listed under voting matters and vote recommendations below, and any other business that may properly come before the meeting. PLACE:Hubbell Incorporated 40 Waterview Drive, Shelton, CT 06484 | | Director | | Committee | | Name | Principal Position | Since | Independent | Membership* | Experience | Carlos M. Cardoso | Retired Chairman, President and CEO, Kennametal Inc. | 2013 | Yes | A / C | Public company officer/director, operations, international, manufacturing | Anthony J. Guzzi | President and CEO,
EMCOR Group, Inc. | 2006 | Yes | E / F / N | Public company officer/director, operations, distribution, manufacturing | Neal J. Keating | Chairman, President and CEO,
Kaman Corporation | 2010 | Yes | C / E / N | Public company officer/director, international, operations, distribution | John F. Malloy | Chairman, President and CEO,
Victaulic Company | 2011 | Yes | A / E / F | Private company officer/director, manufacturing, operations, distribution | Judith F. Marks | CEO, Siemens USA | 2016 | Yes | A / N | Public company officer, operations, strategy, business development | David G. Nord | Chairman, President and CEO,
Hubbell Incorporated | 2013 | No | E | Public company officer/director, finance, operations, strategic planning | John G. Russell | ChairmanRECORD DATE:March 6, 2020 MAILING DATE:This Proxy Statement was first mailed to shareholders on or about March 23, 2020. VOTING:Shareholders as of the Boardsrecord date are entitled to vote. Each share of CMS Energy & Consumers Energy | 2011 | Yes | C / F / N | Public company officer/common stock of Hubbell Incorporated (“Company”) is entitled to one vote for each director finance, governance, utility industry | Steven R. Shawley | Retired Senior Vice Presidentnominee and CFO, Ingersoll-Rand Company | 2014 | Yes | A / E / F | Public company officer/director, finance, auditing, manufacturing | Richard J. Swift | Retired Chairman, President & CEO, Foster Wheeler Ltd. | 2003 | Yes | C / E / N | Public company officer/director, finance, accounting, auditing, engineeringone vote for each of the proposals. |
* | A – Audit, C – Compensation, E – Executive, F – Finance, N – Nominating and Corporate Governance. |
Proposal 2 - Ratification of Auditors (Page 52)
The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP as the independent registered public accounting firm to audit the annual financial statements for the Company for the year 2017. While shareholder ratification of our independent auditors is not required, we are submitting the item to a vote as a matter of good corporate governance.
Proposal 3 (“Say on Pay”) - Approval, by non-binding vote, of the compensation of the Company’s named executive officers as contained in the 2017 Proxy Statement (Page 54)
Our executive compensation program has been designed to attractVoting Matters and retain highly-talented executives, deliver compensation that is competitive and fair compared to relevant benchmarks, reward strong Company performance, and motivate executives to maximize long-term shareholder returns. To achieve our objectives, we have adopted and maintain sound compensation governance practices and a strong pay for performance philosophy pursuant to which the greatest portion of an executive’s total direct compensation is variable and therefore linked to performance on both a short-term and long-term basis. For these reasons, and as described more fully in our Compensation Discussion and Analysis on page 25, the Company is seeking shareholder approval of the compensation of our named executive officers as set forth in this Proxy Statement.
HUBBELL INCORPORATED - 2017 Annual Meeting of Shareholders & Proxy Statement | 8 |
Proposal 4 (“Say When on Pay”) - Recommendation, by non-binding vote, of the frequency with which executive compensation will be subject to a shareholder advisory vote (Page 55)
The Company is seeking a non-binding recommendation from our shareholders on whether shareholders should have an opportunity to provide an advisory approval of the compensation of our named executive officers every year, every two years or every three years. The Board of Directors believes that an advisory vote on the compensation of the Company’s named executive officers should be conducted every year so that shareholders may annually express their views on the Company’s executive compensation program. The Board of Directors believes that holding this advisory vote annually will provide the Company with timely and appropriate feedback on compensation decisions for its named executive officers.
Vote Recommendations and Requirements A quorum is required to transact business at the Annual Meeting. The presence of the holders of Common Stock, in person or by proxy, representing a majority of the voting power of the Company’s outstanding shares constitutes a quorum for the Annual Meeting. Abstentions and broker non-votes are counted as present for quorum purposes. The following table summarizes the voting information for the four proposals to be considered at the Annual Meeting:
Proposal | Board’s Voting Recommendation | | | | | | | | | | | | | Page reference | Proposal 1 – Election of Directors | FOR each Nominee | 1 ELECTION OF DIRECTORS | | | | 2 RATIFICATION OF AUDITORS | | | | 3 SAY ON PAY | | | | 4 SAY WHEN ON PAY12 | Proposal 2 – Advisory Vote to Approve Named Executive Officer Compensation (“Say on Pay vote”) | FOR | | | | | | | | | | | | | 31 | | | Vote Required:
Plurality* with Director Resignation Policy
| | | | Vote Required:
Majority of Votes Cast**
Broker discretionary voting allowed
| | | | Vote Required:
Majority of Votes Cast**
| | | | Vote Required:
Of one year, two years or three years, the option receiving the most votes
| | | | The BoardProposal 3 recommends thatShareholders voteFOR each Nominee | | | | | The Boardrecommends thatShareholders voteFOR this proposal | | | | | The Boardrecommends thatShareholders voteFOR this proposal | | | | | The Boardrecommends thatShareholders voteONE YEAR forthis proposal | | | | | | | | | | | | | | | | | | | |
| | * | Plurality means that the nominees who receive the most votes cast “FOR” their election are elected as directors. Votes withheld and broker non-votes will not affect the election of directors. The terms– Ratification of the Company’s Director Resignation Policy are discussed below. Broker discretionary voting is not allowed. | Selection of PricewaterhouseCoopers LLP as Our Independent Auditor for Fiscal Year 2020 | | ** FOR | Majority of Votes Cast means that the number of votes cast “FOR” the proposal exceed the number of votes cast “AGAINST” the proposal. Abstentions and broker non-votes are not considered to be votes cast and therefore will not affect the voting results with respect to Proposals 2 and 3. Broker discretionary voting is allowed with respect to Proposal 2, but not with respect to Proposals 1, 3 and 4. | | | *** | Abstentions and broker non-votes will not affect this proposal. Broker discretionary voting is not allowed.71 |
If your shares are held by a broker and you have not instructed the broker how to vote, your shares will not be voted with respect to Proposals 1, 3 and 4, but your broker does have the discretion to vote your shares on the ratification of auditors.
The Company does not intend to present any business at the Annual Meeting other than the items described in the Proxy Statement and has no information that others will do so. The proxies appointed by our Board of Directors (and named on your proxy card)Proxy Card) will vote all shares as the Board recommends above, unless you instruct otherwise when you vote. If a matter not described in this Proxy Statement is properly presented at the Annual Meeting, the named proxies will have the discretion to vote your shares in their judgment. Our Vision and Values Hubbell is a global manufacturer of quality electrical and electronic products for a broad range of applications in the Electrical and Power segments. Hubbell is committed to doing business in ways that are principled, transparent and accountable to our shareholders. We believe doing so generates long-term value. Our Vision is to be an exceptional supplier, a valued investment, and a rewarding employer. Our commitment is underscored by the four pillars that guide us as a company. | SERVE OUR CUSTOMERS | | | OPERATE WITH DISCIPLINE | | | GROW THE ENTERPRISE | | | DEVELOP OUR EMPLOYEES | | | | | | | | | | | | We strive to exceed customerexpectations by providingexceptional service andimplementing processes thatmake it easy to do businesswith us. | | We implement industry leadingprocesses to ensure a productive,safe and compliant organization,and maximize our footprint foroperational efficiency. | | We continue to grow ourorganization, both throughdeveloping innovative newproducts and by acquiringcomplementary businesses. | | We recruit, hire and developtalent that meets and anticipatesthe ever-changing needs of ourenterprise, while fostering aninclusive and diverse workplace. |
| HUBBELL INCORPORATED| 2020 Proxy Statement 3 |
2019 Performance Highlights We measure our progress not only in terms of our financial accomplishments, but in the best interests of our shareholders, partners, customers, employees and the communities in which we operate. Financial Results (1) | Adjusted diluted earnings per share and free cash flow are non-GAAP financial measures. A reconciliation to the comparable GAAP financial measures can be found in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 14, 2020. |
2% Net Sales Growth | | 5% Adjusted Diluted EPS Growth | | 18% Free Cash Flow Growth | | | | | | > Growth primarily from price realization | | > Includes$0.51restructuring and related investment | | > Net Income up11% |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 4 |
Business Development Hubbell has a proven history of successfully acquiring and integrating complementary businesses and products. In 2018, Hubbell completed the largest acquisition in its history, Aclara Technologies LLC. In 2019, Hubbell replenished its deal pipeline and closed on three acquisitions and also divested its legacy international high voltage business. | | | | | ELECTRICAL | | UTILITY | | PORTFOLIO MANAGEMENT | | | | | | Acquired a connector business thatdesigns and manufacturers electricalconnectors and accessories for powerutilities and mass transit rail systems. Partof Hubbell’s Construction & Energy Group. | | Acquired a wildlife and asset protectionmanufacturing business for electricalutilities, renewable power generators andindustrial customers. Part of Hubbell’sPower Systems Group. | | Divested our Swiss high voltage businessthat was no longer core to Hubbell’soverall portfolio. Formerly part ofHubbell’s Commercial & Industrial Group. |
Corporate Governance Highlights Hubbell’s Board operates in accordance with its Corporate Governance Guidelines (the “Guidelines”) that establish its governance framework and processes. The Board reviews the Guidelines at least annually and in 2019 revised them to formally document the Board’s commitment to oversight of environmental, social and governance (“ESG”) matters. The Board continues to remain focused on oversight of Company strategy, enterprise risks, financial performance, operational planning, talent, succession, compliance and culture. INDEPENDENT BOARD 8 of 9 directors are independent andthe independent Lead Director hasbroad authority and leads sessionsof the independent directors at everyBoard meeting. All Board committeesexcept one consist entirely ofindependent directors. There are norelated party transactions with ourdirectors. | | VOTING RIGHTS Each share of common stock isentitled to one vote. Annual electionof shareholders. | | OVERSIGHT AND REVIEW Hubbell’s Code of Conduct and Ethicsapplies to all directors. The Board andeach standing committee conductannual self-evaluations and makeadjustments and enhancements asnecessary. The Board takes seriouslyits oversight of the Company’s riskmanagement, succession, strategy andcompliance programs. | | | | | | COMMITMENT The directors meet regularly in Board, Committee or Special Committee meetings. In 2019, our directors reached out to investors representing 65% of our outstanding common shares as well as proxy advisory firms and other third parties. All of our directors attended the 2019 Annual Shareholder meeting. | | COMPENSATION Director compensation is reviewedand benchmarked annually with ourindependent compensation consultant.The majority of our directors’compensation is in equity. There arestock ownership requirements in placefor all directors. | | DIVERSITY Director nominees are evaluated on their background and experience, andalso gender, race and diversity. 2 ofthe 8 current independent directors arediverse. 1 of the 7 independent directornominees is diverse, as Ms. Marks is notstanding for re-election. 86% of theindependent director nominees haveserved for 10 years or less, with 43%serving for 7 years or less. |
| HUBBELL INCORPORATED| 2020 Proxy Statement 5 |
INCREASED SHAREHOLDER OUTREACH AND ENGAGEMENT | | Enhanced existing year-round shareholder engagement programs by adding CompensationCommittee Chair led sessions with shareholders in spring and fall. | | Conducted a third-party shareholder perception study; modified our investor communicationsin response to feedback. | COMMITMENT TO CORPORATE RESPONSIBILITY | | Expanded existing Code of Business Conduct & Ethics (applicable to all Directors, Officers,employees and third parties) to establish a new standalone Third-Party Code of Conduct forthird parties. The new Third-Party Code covers areas such as conflict minerals, anti-humantrafficking, business integrity, and health, safety and environmental policies. | ROBUST OVERSIGHT OF RISKS AND OPPORTUNITIES | | Board responsible for risk oversight, with specific responsibility for key risk areas (including,without limitation, cybersecurity) delegated to relevant Board committees. | | At least annual engagement with business leaders to discuss both short-term plans, long-termstrategic opportunities and their associated risks. | COMMITMENT TO SUSTAINABILITY (ES&G) | | Revised the Guidelines to formally include oversight of the Company’s Environmental, Socialand Governance (ES&G) programs as part of the Board’s responsibilities. | | Further revised Nominating and Corporate Governance Committee (NCGC)’s Charter to designate NCGC with Committee oversight of ES&G related matters. | | 2019 actions formalized the Board’s long-term interest and historic and on-going review andfocus on ES&G. | INCREASED DIRECTOR EDUCATION | | Increased investment in Board education sessions via: third party presentations; a refreshedDirector on-boarding program; and membership in a national non-profit organization dedicatedto director education. |
| Additional detailson Corporate Governance on page. |
Corporate Social Responsibility Hubbell operates its business and executes on strategies that consider Hubbell’s effect on our shareholders, employees, customers, suppliers and communities. At Hubbell, we believe that we can deliver value for our stakeholders beyond mere financial returns. In 2019, Hubbell evidenced its Corporate Social Responsibility (CSR) commitment with a dedicated part of its website,www.hubbell.com, and formalized the Board’s and its Committees’ review and oversight of ES&G matters. Notable CSR achievements in 2019, include: COMMUNITY | DIVERSITY | SAFETY | SUSTAINABILITY | | | | | 170+ CHARITIES ANDNON-PROFITSTHAT EMPLOYEES,DIRECTORS AND THECOMPANY DONATEDTO OR VOLUNTEEREDFOR IN 2019 | JOINED THEPARADIGMFOR PARITY COALITIONAND PARTNERED WITHEMPLOYER SUPPORT OFTHE GUARD & RESERVE | DOWN 11% IMPROVED SAFETYRECORD BYDECREASING THETOTAL RECORDABLEINCIDENT RATE OVER THE LAST 3 YEARS | BASELINED ITSGREENHOUSE GASAND WATER USAGE INADVANCE OF PLAN TOPUBLISH REDUCTIONGOALS IN 2020 |
| Specific detailson Corporate Social Responsibility on page. |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 6 |
Proposal 1 | Election of 8 Directors | See pages12-18 for further information. |
THE BOARD RECOMMENDS A VOTEFOR EACH NOMINEE FOR A ONE-YEAR TERM. The following table provides summary information about each of the eight director nominees. Each director is elected annually by a plurality of votes cast. Existing committee assignments of the directors are described below. Each nominee is a current Director of the Company and possesses the qualifications and experience recommended by the Nominating and Corporate Governance Committee, and is approved by our Board to serve as a Director. Our Director Nominees Age 62 | CARLOS M. CARDOSO INDEPENDENT Director since: 2013 Chairman, Garrett Motion Inc. Committees: Audit, Compensation | Age 56 | ANTHONY J. GUZZI INDEPENDENT, LEAD DIRECTOR Director since: 2006 Chairman, President and CEO,EMCOR Group, Inc. Committees: Executive, Finance, Nominatingand Corporate Governance | Age 64 | NEAL J. KEATING INDEPENDENT Director since: 2010 Chairman, President and CEO,Kaman Corporation Committees: Compensation, Executive,Nominating and CorporateGovernance (Chair) | | | | | | | Age 61 | BONNIE C. LIND INDEPENDENT Director since: 2019 SVP, CFO and Treasurer,Neenah, Inc. Committees: Audit, Finance | Age 65 | JOHN F. MALLOY INDEPENDENT Director since: 2011 Chairman, President and CEO,Victaulic Company Committees: Audit, Executive, Finance (Chair) | Age 62 | DAVID G. NORD NOT INDEPENDENT Director since: 2013 Chairman and CEO, HubbellIncorporated Committees: Executive (Chair) | | | | | | | Age 62 | JOHN G. RUSSELL INDEPENDENT Director since: 2011 Chairman of the Boards ofCMS Energy Corporation,Consumers Energy Company Committees: Compensation (Chair),Executive, Finance,Nominating and CorporateGovernance | Age 67 | STEVEN R. SHAWLEY INDEPENDENT Director since: 2014 Former SVP and CFO,Ingersoll Rand Inc. Committees: Audit (Chair), Executive, Finance | | |
| HUBBELL INCORPORATED| 2020 Proxy Statement 7 |
Proposal 2 | Say on pay: advisory vote on the compensation of the named executive officers. | See pages31-57 for further information. |
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL. Shareholder Engagement Hubbell’s 2019 advisory Say on Pay vote on executive compensation was 58%, significantly lower than the votes we have previously received on Say on Pay, which averaged over 97% support for the last 10 years. The Board of Directors and Hubbell’s management team took these voting results very seriously and intensely engaged with our shareholders in both the spring and the fall on the topic of Hubbell’s executive compensation programs and pay for performance philosophy. JOHN G. RUSSELL Compensation Committee, Chair | Compensation Committee Chair Led Engagements Hubbell reached out to our top 25 shareholders (representing approximately 65% of Hubbell’s share ownership) during both the spring and fall of 2019. The spring calls were led by Hubbell’s now-retired Compensation Committee Chair, Mr. Richard J. Swift, and the fall calls were led by Hubbell’s current Compensation Committee Chair, Mr. John G. Russell, and included senior management from Human Resources, Legal and Finance. The calls were extremely beneficial and helped inform the Compensation Committee’s approach and review of the Company’s compensation programs, along with further advice and benchmarking from Hubbell’s independent compensation consultant, Exequity, LLP. |
Shareholder Outreach In addition to the Say on Pay related calls, the Company regularly engages with its shareholders over the course of a year on diverse topics such as financial performance, compensation and pay for performance matters, corporate governance and corporate social responsibility. These meetings and calls can be in person or via teleconference, management only, or led by one of our independent directors with management present. We are committed to not just continued engagement with our shareholders, but to reviewing and applying the substance of the engagement. Hubbell management routinely reports out to the Board and specific Board committees on the substance and nature of its shareholder communications. Hubbell values the input and insight it receives from its investors. How we engagedwith investors | | | We invited our largest 25 shareholders (representing 65% of our share ownership)to discuss Hubbell’spay for performance program, compensation design, sustainability programs, governance matters andstrategy with our Compensation Committee Chair. | | | We regularly report our investors’ views to our Board of Directors,and the Compensation Committeeconsiders these views when developing our executive compensation program. | | | We engage with analysts through quarterly conference calls,our investor relations website, meetings,conferences and calls. | | | We conducted a third-party investor perception study,led by our investor relations team, that reachedout to approximately 120 investor contacts, generating qualitative and quantitative feedback. |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 8 |
As a part of our shareholder outreach in 2019, we heard many different points of view from our various shareholders. We listened intently to the feedback we heard, sought to understand the perspective of our shareholders and endeavored to be responsive to their input, as outlined in the following table. What We Heard | | How We Responded | Our Proxy could be clearer. | | Enhanced the Proxy and Compensation Discussion and Analysis (CD&A) summarysections; added additional graphics and revisions to improve readability. | Provide more details on the metricsand calculations for the incentive plans. | | Highlighted the Long-Term Incentive (LTI ) metrics in the summaries and detailedtheir linkage to Hubbell’s business strategy and results. | Better explain any compensationdesign or program changes. | | Because we are moving all LTI grants from Q4 2019 to Q1 2020 (and Q1 goingforward), we have dedicated sections explaining this timing change and areincluding a pro forma chart that further clarifies the impact of this change. | Provide more operational andperformance details. | | Increased disclosures on Company performance and the linkage of performancemeasures to Hubbell’s compensation program. | Compensation program is good; noneed for a complete overhaul. | | Made important, but modest adjustments to the compensation design, includingincreasing the linkage between Total Shareholder Return (TSR) performanceand reward value. | Ensure that the compensationprograms are performance oriented. | | Increased the weighting of the performance-oriented equity from 70% to 75%byincreasing the weighting of performance shares from 40% to 50% and changingstock appreciation rights from 30% to 25%, thereby ensuring greater pay forperformance alignment. | Need to understand that pay is alignedwith performance. | | Included new charts comparing our CEO’s pay vs a Realized Pay metric,demonstrating how Hubbell’s compensation is aligned with performance. |
| Additional detailson our compensation related shareholder engagement on page 33 . |
Executive Compensation Highlights Elements of Compensation Hubbell compensated its named executive officers (“NEOs”) using the following elements for total direct compensation in 2019: | | | Target Compensation Mix | Targeted at 50th percentile of peers | Element | Description | CEO | Other NEOs | Salary | A competitive level of cash is provided to attract and retain executive talent. | | | Annual Cash Incentive | Amounts awarded based on achievements with respect to theCompany’s financial goals and individual performance againststrategic objectives (CEO’s design is 100% based on financialgoals). | | | Long-term EquityIncentive | A mix of equity awards designed to drive Hubbell’sperformance, and align executives’ interests with shareholders.75% of equity awards are performance-based. | | |
| HUBBELL INCORPORATED| 2020 Proxy Statement 9 |
Pay for Performance We have executed a strong pay for performance program, with the following principles: Hubbell’s compensation program is designed to achieve the following pay for performance objectives: | Align executive pay to our company performance and drive our business strategy. | | Attract and retain key talent. | | Align the interests of executives with our shareholders with effective pay for performance. | | Deliver competitive and fair compensation. |
Long-Term Incentive Hubbell made changes to its Long-Term Incentive program based on Shareholder feedback: | | Increased weight of performance shares from 40% to 50% | | Increased overall weight of performance-oriented equity from 70% to 75% | | Enhanced TSR Modifier |
Performance Share Metrics – Relevant to our strategy and aligned with investors SALES GROWTH | Drives Hubbell’s growth initiatives, including organic growth, new product development and acquisitionperformance. | | | OPERATING PROFIT MARGIN | Focuses NEOs on improving pricing, productivity and cost while executing operational objectivesincluding footprint optimization and product rationalization. | | | TRADE WORKING CAPITAL | Provides focus on activities that increase Hubbell’s operational effectiveness and cash generation,specifically inventory management and accounts payable/receivables. | | | TSR MODIFIER | Ensures a direct link to shareholders. |
| Specific detailson these metrics may be found on pages 50-51 in the Compensation Discussion & Analysis section. |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 10 |
Management conducted a comprehensive analysis of potential internal metrics based on our strategic plan and the correlation of these metrics with TSR performance in our competitive financial peer set of companies. The Compensation Committee determined these metrics for the long-term plan based on our current and future objectives of growth, productivity and capital management, while ensuring alignment with shareholders through TSR. The Compensation Committee believes that focusing our NEOs to execute on these metrics will drive shareholder value. Long-Term Incentive Timing Change In 2019, Hubbell made the decision to move the timing of our annual equity grant from the fourth quarter of each year into the first quarter of the year, effective in 2020. This change is intended to align all of Hubbell’s compensation discussions with its executives to the first quarter of the calendar year, as merit salary changes and short-term incentive bonuses are already delivered in the first quarter. The result of this change for 2019 is that there were no equity grants delivered to the NEOs in 2019 including Chairman and CEO, David G. Nord, except for those certain mid-year grants associated with 2019 promotions to new roles (including Messrs. Bakker, Sperry, Connolly and Ms. Lane). The equity grants that would have been historically delivered in December of 2019 will now be delivered in February of 2020. To ensure transparency and clarity to our shareholders, we are providing a supplemental Compensation Table in the CD&A (see page49), as well as providing the detail in the footnotes of the Summary Compensation Table (see the footnotes ofpage 58), to show the compensation for 2019 including the grant to be made in 2020, as a more “normalized” look at the true annual pay for the NEOs. | Additional detailson the timing change can be found on page 49 . |
Proposal 3 | Ratification of the selection of Pricewaterhouse Coopers LLP as the Independent Registered Public Accountant for 2020. | See pages71-73 for further information. |
THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL. | HUBBELL INCORPORATED| 2020 Proxy Statement 11 |
Proposal 1 | Election Of Directors |
The Board has fixed the number of Directors who shall be elected by the shareholders at the 2020 Annual Meeting at eight. | | | Each Director nominee possesses the appropriate qualifications and experience for membership on the Board of Directors. | | |
Director Qualifications and Experience The Nominating and Corporate Governance Committee (NCGC) works with the Board at least annually to determine the appropriate characteristics, skills and experience for the Board and its individual members to properly oversee the interests of the Company and its shareholders. The NCGC recommends candidates for Board membership using the selection criteria outlined in the Corporate Governance Guidelines (the “Guidelines”) and other factors it deems necessary to fulfill its objectives. Candidates are evaluated on the basis of their individual qualifications and experience and in the context of the Board as a whole. The NCGC considers diversity when creating the pool of candidates from which it selects potential director nominees. Such diversity includes gender, race and ethnicity and also diversity of experience, professional background, industry exposure and other areas. The objective is to assemble a diverse Board that can best facilitate the success of the business and represent shareholder interests through the exercise of sound judgment. Below is a list of certain of the qualifications and experience sought by the NCGC in recommending candidates for nomination to the Board: | Ability to make independent analytical inquiries | | Marketing, finance, operations, manufacturing or other relevant public company experience | | Financial literacy | | Professional background | | Education | | Corporate governance experience | | Experience as a current or former public company officer | | Experience in the Company’s industry | | Public company board service | | Academic expertise in areas of the Company’s operations |
In determining whether to recommend a current Director for re-election, the NCGC will also consider past attendance at meetings, service on other boards and participation in and contributions to Board activities. Each Director nominee possesses the appropriate qualifications and experience for membership on the Board of Directors. As a result, the Board is comprised of individuals with strong and unique backgrounds, giving the Board competence and experience in a wide variety of areas to serve the interests of the Company and its shareholders. www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 12 |
| | | The Board is committed to integrity, diversity and independence. | | |
Commitment to Board Integrity, Diversity and Independence In addition to ensuring that our director nominees possess the requisite skills and qualifications, the NCGC places an emphasis on ensuring that the nominees demonstrate the right leadership traits, personality, work ethic, independence, and diversity of background to align with our performance culture and our long-term strategic vision. Specifically, these criteria include: | Exemplification of the highest standards of personal and professional integrity | | Potential contribution to the diversity and culture of the Board, including by virtue of age, educational background, global perspective, gender, ethnicity or nationality | | Ability to devote sufficient time to performing their Board and committee duties | | Independence from management | | Willingness to constructively challenge management through active participation in Board and committee meetings | | Subject matter expertise |
The NCGC also believes that, in addition to diversity of personal characteristics and experiences, diversity of service tenures also facilitates effective Board oversight. Though Ms. Marks will not stand for re-election to the Board of Directors at the expiration of her current term, the NCGC remains committed to ensuring its continued focus on selecting diverse nominees. | | | The Board nominated eight candidates for election as Directors. | | |
Nomination and Election Process Hubbell’s Directors are elected at each Annual Meeting of Shareholders and hold office for one-year terms or until their successors are duly elected and qualified. The Board of Directors nominated eight candidates for election as Directors. In the event that any of the nominees for Director should become unavailable, it is intended that the shares represented by the proxies will be voted for any substitutes nominated by the Board of Directors, unless the number of Directors constituting the full Board is reduced. In searching for qualified Director candidates for election to the Board and to fill vacancies on the Board, the Board may solicit current Directors or members of executive management for the names of potentially qualified candidates, consult with outside advisors, retain a Director search firm or consider nominees suggested by shareholders. All Director candidates, including any Director candidates recommended by shareholders, are reviewed and evaluated by the NCGC in relation to the specific qualifications and experience sought by the Board for membership (as discussed in the “Director Qualifications and Experience” section onpage 12), and the Board’s needs at that time. A candidate whose qualifications and experience align with this criteria is then interviewed by members of the NCGC, other Board members and executive management to further assess the candidate’s qualifications and experience and determine if the candidate is an appropriate fit. Candidates may be asked to submit additional information to support their potential nomination and references may be requested. If the Board approves of the NCGC recommendation, the candidate is then nominated for election by the Company’s shareholders or appointed by the Board to fill a vacancy, as applicable. Any shareholder who intends to recommend a candidate to the NCGC for consideration as a Director nominee should deliver written notice, which must include the same information requested by Article I, Section 11(A) (2) of our By-Laws, to the Secretary of the Company. Any such notice should be delivered to the Company sufficiently in advance of the Company’s annual meeting to permit the NCGC to complete its review in a timely fashion. Directors are elected by plurality vote. Plurality means that the nominees who receive the most votes cast “FOR” their election are elected as directors. Votes withheld and broker non-votes will not affect the election of Directors. Pursuant to the terms of our Director Resignation Policy, any director in an uncontested election who receives more votes “withheld” from his or her election than votes “for” his or her election must promptly tender his or her resignation to the Board. See page24 for additional details on this Policy. Broker discretionary voting is not allowed, so if your shares are held by a broker and you have not instructed the broker how to vote, your shares will not be voted with respect to Proposal 1. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES FOR A ONE-YEAR TERM. | HUBBELL INCORPORATED| 2020 Proxy Statement 13 |
| | | All of the nominees are current Directors previously elected by the Company’s shareholders. | | |
Director Nominees The nominees are proposed by the Board to stand for election at the 2020 Annual Meeting of Shareholders and to serve as Directors until the 2021 Annual Meeting. All of the nominees are current Directors previously elected by the Company’s shareholders. During the five years ended December 31, 2019, Mr. Keating, Ms. Lind, Mr. Malloy and Mr. Shawley have held the principal occupation listed in their biographies below or been retired for that period of time, as applicable. The employment history of each of the other Director nominees during such time period is reflected in their biographies. The following biographies provide information on the principal occupation of each of the Director nominees. | | CARLOS M. CARDOSO | | Age 62 Director since: 2013 INDEPENDENT AUDIT COMMITTEE FINANCIAL EXPERT Committees: Audit Compensation | | Skills and Qualifications: Mr. Cardosobrings to the Board CEO, COO, manufacturing, international business and public company board experience, including: Significant manufacturing and operations experience having served as President of the Pump Division of Flowserve Corporation, a manufacturer/provider of flow management products and services; Vice President and General Manager, Engine Systems and Accessories, for Honeywell International, Inc., a technology and manufacturing company; and Vice President Manufacturing Operations for Colt’s Manufacturing Company, LLC, a maker of firearms. Membership on the board of Stanley Black & Decker, Inc., a public company and a diversified global provider of hand and power tools and accessories. Chairman of the Board of Garrett Motion Inc., a public company and a provider of transportation systems. Directorships: Stanley Black & Decker, Inc., since 2007; Garrett Motion Inc., since 2018
| Mr. Cardoso has served as Chairman of Garrett Motion Inc. since July 2018 and as the principal of CMPC Advisors LLC, an investment advisory firm, since January 2015. He previously served as Chairman of Kennametal, Inc. (publicly traded manufacturer of metalworking tools and wear-resistant products) from January 2008 until December 2014. He also served as President and Chief Executive Officer of Kennametal from January 2006 until December 2014. Mr. Cardoso joined Kennametal in 2003 and served as Vice President, Metalworking Solutions and Services Group and then as Executive Vice President and Chief Operating Officer before he became President and Chief Executive Officer. Mr. Cardoso was appointed Chairman of the Board of Garrett Motion Inc. in July 2018. | | | | | |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 14 |
| | ANTHONY J. GUZZI | | Age 56 Director since: 2006 INDEPENDENT LEAD DIRECTOR Committees: Executive Finance Nominating and Corporate Governance | | Skills and Qualifications: Mr. Guzzibrings to the Board CEO, COO, manufacturing, strategic development, operations, consulting and public company board experience, including: Serving as Chairman, President and CEO and a Director of EMCOR Group, Inc., a publicly traded mechanical, electrical construction and facilities services company. Extensive experience in manufacturing and distribution having served as President, North American Distribution and Aftermarket and President, Commercial Systems and Services of Carrier Corporation, a subsidiary of United Technologies Corporation. Past experience as an engagement manager with McKinsey & Company, a prominent management consulting firm. Directorship: EMCOR Group, Inc., since 2009
| Mr. Guzzi has served as Chairman of the Board, President and Chief Executive Officer of EMCOR Group, Inc. (a publicly traded mechanical, electrical construction and facilities services company) since June 2018. Previously, he was President and Chief Executive Officer of EMCOR from January 2011 to June 2018 and President and Chief Operating Officer from 2004 to 2010. He also served as President, North American Distribution and Aftermarket of Carrier Corporation (HVAC and refrigeration systems), a subsidiary of United Technologies Corporation from 2001 to 2004 and President, Commercial Systems and Services in 2001. | | | | | |
| | NEAL J. KEATING | | Age 64 Director since: 2010 INDEPENDENT Committees: Compensation Executive Nominating and Corporate Governance (Chair) | | Skills and Qualifications: Mr. Keatingbrings to the Board an extensive history of senior executive leadership and board experience and a strong background in international operations, distribution, and mergers and acquisitions, including: Serving as Chairman of the Board, President and CEO of Kaman Corporation, a publicly traded aerospace and industrial distribution company. Past experience as COO of Hughes Supply and Executive Vice President and COO of Rockwell Collins, Commercial Systems. Former Managing Director and CEO of GKN Aerospace and Director of GKN plc, an international aerospace, automotive and land systems business. Member of the Executive Committee of the Board of Trustees of the Manufacturers Alliance for Productivity and Innovation (MAPI). Membership on the board of governors of the Aerospace Industry Association (AIA). Member of the Board of Trustees of Embry-Riddle Aeronautical University. Directorship: Kaman Corporation, since 2007
| Mr. Keating has served as the Chairman of the Board, President and Chief Executive Officer of Kaman Corporation (a publicly traded aerospace and industrial distribution company), since 2008. Previously, he held the position of President and Chief Operating Officer of Kaman from 2007 to 2008. From 2004 to 2007, he held the position of Chief Operating Officer of Hughes Supply (a wholesale distributor acquired by Home Depot). | | | | | |
| HUBBELL INCORPORATED| 2020 Proxy Statement 15 |
| | BONNIE C. LIND | | Age 61 Director since: 2019 INDEPENDENT AUDIT COMMITTEE FINANCIAL EXPERT Committees: Audit Finance | | Skills and Qualifications: Ms. Lindbrings to the Board CFO, Treasurer, financing, manufacturing, mergers and acquisitions, and public company board experience, including: Serving as Senior Vice President, CFO and Treasurer of Neenah, Inc., a global manufacturer of technical specialties products, fine paper and packaging. Past experience as Assistant Treasurer of Kimberly-Clark Corporation, a manufacturer of personal care, consumer tissue and health care products. Membership on the Board of U.S. Silica Holdings, a publicly traded performance materials company and one of the largest domestic producers of commercial silica. Formerly served on the Board of Empire District Electric Company, a utility generating, transmitting and distributing power to southwestern Missouri and adjacent areas. Formerly served on the Board of Federal Signal Corporation, a publicly traded international designer and manufacturer of products and solutions that serves municipal, governmental, industrial and commercial customers. Directorship: U.S. Silica Holdings, Inc., since 2019 Prior Directorships: Federal Signal Corporation, 2014-2018; Empire District Electric Company, 2009-2017
| Ms. Lind has served as Senior Vice President, CFO and Treasurer of Neenah, Inc. (a publicly traded technical specialties and fine paper company), since June 2004. Previously, Ms. Lind held a variety of increasingly senior financial and operations positions with Kimberly-Clark Corporation from 1982 until 2004. | | | | | |
| | JOHN F. MALLOY | | Age 65 Director since: 2011 INDEPENDENT AUDIT COMMITTEE FINANCIAL EXPERT Committees: Audit Executive Finance (Chair) | | Skills and Qualifications: Mr. Malloybrings to the Board many years of senior management, operations, economic and strategic planning experience having served as the CEO and COO of a global manufacturing and distribution company, including: Thirteen years of executive management experience at a leading worldwide manufacturing company. Over fifteen years of experience in various senior level strategic planning positions at United Technologies Corporation. Membership on the Board of Trustees of the Manufacturers Alliance for Productivity and Innovation (MAPI). Holds a Ph.D. in economics and has taught courses in Economics at Hamilton College. Directorship: Victaulic Company, since 2006
| Mr. Malloy has served as the Chairman of the Board, President and Chief Executive Officer of Victaulic Company (a privately held mechanical pipe joining systems company) since 2006. Previously, he held the position of President and Chief Executive Officer from 2004 to 2006 at Victaulic and also President and Chief Operating Officer from 2002 to 2004. | | | | | |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 16 |
| | DAVID G. NORD | | Age 62 Director since: 2013 NOT INDEPENDENT Committee: Executive (Chair) | | Skills and Qualifications: Mr. Nordbrings to the Board extensive financial, operational and strategic planning experience and a strong background in the manufacturing industry having served as a senior executive at two global manufacturing companies, including: Served as the Company’s Senior Vice President and CFO for 7 years and as COO prior to his appointment to CEO in 2013. Ten years in various senior leadership positions at United Technologies Corporation including Vice President-Finance and CFO of Hamilton Sundstrand Corporation, one of its principal subsidiaries. Held roles of increasing responsibility at The Pittston Company, a publicly held multinational corporation and Deloitte & Touche. Chairman of the Board of Trustees of the Manufacturers Alliance for Productivity and Innovation (MAPI) and Member and Immediate-Past Chairman of the Board of Governors of the National Electrical Manufacturing Association. Directorship: Ryder Systems, Inc., since 2018
| Mr. Nord has served as Chairman and Chief Executive Officer of the Company since June 2019 and Chairman, President and Chief Executive Officer since May 2014. Previously, he served as the Company’s President and Chief Executive Officer from January 2013 to May 2014, President and Chief Operating Officer from June 2012 to January 2013 and Senior Vice President and Chief Financial Officer from September 2005 to June 2012. | | | | | |
| | JOHN G. RUSSELL | | Age 62 Director since: 2011 INDEPENDENT Committees: Compensation (Chair) Executive Finance Nominating and Corporate Governance | | Skills and Qualifications: Mr. Russellbrings to the Board many years of experience as a public company executive officer and Director in the utility industry and possesses a strong background in operations, regulated utilities and governance, including: Serving as Chairman of the boards of CMS Energy Corporation (“CMS”) and Consumers Energy Company (“Consumers”) and as Director for over fifteen years in the aggregate. Serving as the President and CEO of CMS and Consumers and previously as COO. Over thirty years of both hands-on and leadership experience in the utility industry, an industry that represents a significant part of the Company’s overall business. Directorships: CMS Energy Corporation, since 2010 Consumers Energy Company, since 2010
| Mr. Russell has served as the Chairman of the Boards of CMS and Consumers (a publicly traded electric and natural gas utility) since May 2016. Previously he served as the President and Chief Executive Officer of CMS and Consumers from 2010-2016. He also held the position of President and Chief Operating Officer of Consumers from 2004 to 2010. | | | | | |
| HUBBELL INCORPORATED| 2020 Proxy Statement 17 |
| | STEVEN R. SHAWLEY | | Age 67 Director since: 2014 INDEPENDENT AUDIT COMMITTEE FINANCIAL EXPERT Committees: Audit (Chair) Executive Finance | | Skills and Qualifications: Mr. Shawleybrings to the Board extensive leadership experience as a public company executive officer and Director and a strong background in finance, accounting and audit, including: Over fourteen years of experience as a public company officer, including serving as the Senior Vice President and CFO of Ingersoll Rand Inc. and President of one of its major business sectors. Holding multiple financial roles of increasing responsibility over the course of 30+ years including audit, accounting, financial planning and as the controller of Westinghouse Electric Corporation’s largest manufacturing division and CFO of its Thermo King subsidiary. Served on the board of a public company and as Chair of its Audit Committee. Prior Directorship: GrafTech International (2010 - 2014)
| Mr. Shawley served as the Senior Vice President and Chief Financial Officer of Ingersoll-Rand Company (a publicly traded manufacturer of climate solutions and industrial and security technologies) from 2008 to 2013. Previously, he held the position of Senior Vice President and President of Ingersoll-Rand’s Climate Control Technologies business from 2005 to 2008. | | | | | |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 18 |
CorporateGovernance | | | The Board exercises strong corporate governance practices and principles. | | |
The Board of Directors has adopted the Company’s Corporate Governance Guidelines (the “Guidelines”) to assist the Board in the exercise of its responsibilities and to best serve the interests of the Company and its shareholders. The Guidelines reflect the Board’s commitment to good governance through the establishment of policies and procedures in areas it believes are critical to the enhancement of shareholder value. It is the Board’s intention that these Guidelines serve as a framework within which the Board can discharge its duties and foster the effective governance of the Company. The Board of Directors met 11 times in 2019. GovernanceSnapshot | | | | Shareholders have identicaleconomic and voting rights -each share of Common Stock is entitled to one vote. | | | | Directors areelected annuallyby shareholders to serve a one-year term. | | | | Corporate funds or resources are not used for direct contributions to political candidates or campaigns. | | | | Independent Board members meet regularly inExecutive Sessions, without management present. | | | | 56%of our Board has atenure of seven years or less. | | | | To maintain a diverse Board, Director nominees are evaluated on their background and experience and alsogender, race and ethnicity. | | | | Directorcompensation is reviewed annuallywith advice from our independent compensation consultant and benchmarked for competitiveness. | | | | There areno related party transactionswith our Directors, officers and significant shareholders. | | | | OurDirector Resignation Policyrequires any director who fails to receive a majority of the votes cast to promptly tender his or her resignation. | | | | Board and Committees may hireoutside advisors independentfrom management. | | |
Board Leadership Structure | | | An independent Lead Director counterbalances a unified Chairman/CEO and fosters effective collaboration and communication among independent directors. | | |
Chairman The Company’s By-Laws require the Board to choose the Chairman of the Board from among the Directors and provide the Board with the ability to appoint the CEO of the Company as the Chairman of the Board. This approach gives the Board the necessary flexibility to determine whether these positions should be held by the same person or by separate persons based on the leadership needs of the Company at any particular time. The Board believes that there is no single, generally accepted approach to providing board leadership, and that each of the possible leadership structures for a board must be considered in the context of the individuals involved and the specific circumstances facing a company at any given time. | HUBBELL INCORPORATED| 2020 Proxy Statement 19 |
Mr. Nord has served as Chairman and Chief Executive Officer of the Company since June 2019. Previously, Mr. Nord served as Chairman, President and Chief Executive Officer from May 2014 to June 2019. The Board has determined that combining the roles of CEO and Chairman is best for the Company and its shareholders at this time because it promotes unified leadership from Mr. Nord and allows for a single, clear focus for management to execute the Company’s strategic and business plans. Independent Lead Director The Board has established the position of an independent Lead Director to serve a three-year term. The Board believes that a three-year term is appropriate for the Lead Director as it affords greater continuity and allows the Lead Director to gain a better understanding of Board and management dynamics and build relationships with the other Directors. The Lead Director is responsible for: Board Leadership | Providing leadership to the Board in situations where the Chairman’s role may be perceived to be in conflict. | Executive Sessions | Coordinating the agenda and chairing executive sessions of the independent directors regularly throughout the year and at each regularly scheduled Board meeting. | Liaison | Regularly meeting with the Chairman and facilitating communications among the Chairman, management and the independent Directors. | Spokesperson | Upon request, acting as the spokesperson for the Board in interactions with third parties. | Succession | Working with the NCGC and the Chairman to review and maintain the Company’s succession plans. |
Currently, Mr. Guzzi is the Lead Director and is expected to hold this position until the 2022 Annual Meeting. Following the 2022 Annual Meeting, the Board shall, upon recommendation from the NCGC, appoint a director for the next three year Lead Director term. The Board believes that its present leadership structure and composition provides for independent and effective oversight of the Company’s business and affairs as further demonstrated by the fact that its members are current or former CEOs, CFOs or COOs of major companies in similar industries, its Audit, Compensation, and Nominating and Corporate Governance Committees are composed entirely of Directors who meet the independence requirements of the NYSE and Mr. Nord is the only Director who is a member of executive management. Given the strong leadership of Mr. Nord as Chairman and CEO, the counterbalancing role of the Lead Director, and a Board comprised of effective and independent Directors, the Board believes that its current leadership structure is appropriate at this time. Director Independence | | | Our Board consists of a majority of independent Directors and our Audit, Compensation, Finance and NCGC Board committees are 100% independent. | | |
The Guidelines indicate that the Board shall be composed of a majority of independent Directors. Eight of our nine directors are independent. In evaluating the independence of Directors, each year the NCGC reviews all direct and indirect relationships between Directors (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company or any of its subsidiaries) and the Company and its subsidiaries in accordance with the rules of the New York Stock Exchange (“NYSE”) and the SEC and considers whether any relationship is material. The NCGC also reviews responses to annual questionnaires completed by each of the Directors, a report of transactions with Director-affiliated entities, Code of Conduct compliance certifications, case submissions filed with the Company’s confidential communication resource and Company donations to charitable organizations with which a Director may be affiliated (noting that The Harvey Hubbell Foundation’s various matching gift programs are available to all Directors, officers and employees and that such programs match eligible gifts made to qualifying charitable organizations and educational institutions up to $25,000 in the aggregate in a calendar year). The NCGC considered the nature and dollar amounts of the transactions with Directors and determined that none was required to be disclosed or otherwise impaired the applicable Director’s independence as all of these ordinary course transactions were significantly below the NYSE bright-line independence thresholds. As a result of this review, the Board determined that each of the current Directors is independent other than Mr. Nord. In addition, the Board determined that Mr. Swift, who served as a director during 2019 but did not stand for re-election at the 2019 Annual Meeting, was independent. In evaluating and determining the independence of the Directors, the NCGC considered that in the ordinary course of business, transactions may occur between the Company and its subsidiaries and entities with which some of the Directors are or have been affiliated. www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 20 |
Board Oversight of Risk | | | Our Board oversees risk management activities. | | |
Members of senior management assist the Board and its committees with their risk oversight responsibilities through routine discussions of risks involved in their specific areas of responsibility. For example, our principal business leaders will report to the Board at regular intervals during the year on the Company’s strategic planning activities and risks relevant to execution of the strategy. In addition, from time to time, independent consultants with specific areas of expertise are engaged to discuss topics that the Board and management have determined may present a material risk to the Company’s operations, plans or reputation. In 2019, as part of our risk management activities, the Company reviewed with the Compensation Committee its compensation policies and practices applicable to all employees that could affect the Company’s assessment of risk and risk management and determined that such compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. The Board does not believe that its role in the oversight of the Company’s risks affects the Board’s leadership structure. | HUBBELL INCORPORATED| 2020 Proxy Statement 21 |
Board Committees The Board of Directors has established the following standing Committees to assist it in fulfilling its responsibilities: Audit, Compensation, Executive, Finance and Nominating and Corporate Governance. The principal responsibilities of each of these Committees are described generally below and in detail in their respective Committee Charters which are available on the Company’s website atwww.hubbell.com, or in the case of the Executive Committee Charter, in Article III, Section 1, of the Company’s By-Laws. The Board has determined that each member of the Audit, Compensation and Nominating and Corporate Governance Committees is independent for purposes of the NYSE listing standards and Security and Exchange Commission (“SEC”) regulations. Audit Committee STEVEN R. SHAWLEY (CHAIR) Members: Carlos M. Cardoso Bonnie C. Lind John F. Malloy | | 9 Meetings in 2019 | 98% Attendance | Independence 4/4 | | Key Oversight Responsibilities Oversees the Company’s accounting and financial reporting and disclosure processes. Appoints the independent auditor and evaluates its independence and performance annually. Reviews the audit plans and results of the independent auditors. Approves all audit and non-audit fees for services performed by the independent auditors. Reviews and discusses with management and the independent auditors matters relating to the quality and integrity of the Company’s financial statements, the adequacy of its internal controls processes and compliance with legal and regulatory requirements. Reviews the Company’s cybersecurity plans, policies, threats and prevention strategies with management. |
The Board of Directors has determined that all members of the Audit Committee are financially literate and meet the NYSE standard of having accounting or related financial management expertise. Each member of the Audit committee is an “audit committee financial expert” as defined by the SEC. Compensation Committee JOHN G. RUSSELL (CHAIR) Members: Carlos M. Cardoso Neal J. Keating Judith F. Marks(1) | | 5 Meetings in 2019 | 95% Attendance | Independence 4/4 | | Key Oversight Responsibilities Determines and oversees the Company’s execution of its compensation programs and employee benefit plans. Reviews and approves all compensation of the CEO and officers of the Company, with input from the independent compensation consultant. Appoints the independent compensation consultant and evaluates its independence and performance annually. Determines stock ownership guidelines for the CEO and officers of the Company. Reviews and approves of the Company’s peer companies. |
| | (1) | Ms. Marks will not stand for re-election to the Board of Directors at the expiration of her current term. |
| | www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 22 |
Executive Committee DAVID G. NORD (CHAIR) Members: Anthony J. Guzzi Neal J. Keating John F. Malloy John G. Russell Steven R. Shawley | | Did not meet in 2019 | Did not meet in 2019 | Independence 5/6 | | Key Oversight Responsibilities The Executive Committee may meet during intervals between meetings of the Board of Directors and may exercise all the powers of the Board of Directors in the management of the business and affairs of the Company, except certain powers set forth in the By-Laws of the Company. |
Finance Committee JOHN F. MALLOY (CHAIR) Members: Anthony J. Guzzi Bonnie C. Lind John G. Russell Steven R. Shawley | | 4 Meetings in 2019 | 95% Attendance | Independence 5/5 | | Key Oversight Responsibilities Oversees the Company’s financial and fiscal affairs and reviews proposals regarding long-term and short-term financing, material acquisitions, dividend policies, stock repurchase programs and changes in the Company’s capital structure. Reviews the Company’s major capital expenditure plans and monitors the Company’s insurance programs. Reviews the administration and management of the Company’s pension plans and investment portfolios. |
Nominating and Corporate Governance Committee NEAL J. KEATING (CHAIR) Members: Anthony J. Guzzi Judith F. Marks(1) John G. Russell | | 5 Meetings in 2019 | 95% Attendance | Independence 4/4 | | Key Oversight Responsibilities Develops the Company’s corporate governance guidelines and monitors adherence to its principles. Approves related person transactions. Evaluates director independence and compensation. Identifies qualified individuals to become Board members, recommends nominees for election or appointment to the Board and oversees the Board’s and management’s performance evaluation and succession planning process. Oversees the development and administration of the Company’s corporate social responsibility/ES&G program. |
See the “Nomination and Election Process” section onpage 13 and the “Director Independence” section onpage 20 for more information on the actions taken by the Nominating and Corporate Governance Committee in these areas. (1) | Ms. Marks will not stand for re-election to the Board of Directors at the expiration of her current term. |
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Board Practices and Procedures Code of Business Conduct and Ethics The Company requires its Directors and officers to act in accordance with the highest standards of ethical conduct and has adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) that supports the Company’s commitment to the people we serve, the communities we work in, the Company and each other. Our Code of Conduct covers many areas of professional conduct ranging from conflicts of interest, ethical business conduct, employment practices, compliance with applicable laws and regulations, protection of Company assets and confidential information and reporting obligations. Each year, to strengthen the Company’s commitment to ethical conduct, we provide training on various aspects of the Code of Conduct and require all Directors and officers to certify compliance with the Code of Conduct policy. The Code of Conduct can be viewed on the Company’s website atwww.hubbell.com. Director Resignation Policy In 2016, the Board of Directors adopted a director resignation policy whereby any director in an uncontested election who receives more votes “withheld” from his or her election than votes “for” his or her election will promptly tender his or her resignation to the Board. Following receipt of the tendered resignation and within 60 days of certification of the shareholder vote, the NCGCNominating and Corporate Governance Committee (“NCGC”) will consider and recommend to the Board whether to accept or reject the resignation, or whether other action should be taken. The Board will then, within 90 days of certification of the shareholder vote, make a determination taking into consideration the recommendation of the NCGC, the vote results, shareholder input and other relevant factors. The Board’s decision will be disclosed in a Form 8-K furnished by the Company to the SEC within four days after the decision. Business HighlightsShareholder Outreach and Engagement
Hubbell isWe value shareholders’ perspectives and have a performance-driven companyregular process throughout each year to discuss a range of topics, including our performance, strategy, executive compensation, environmental, social and governance matters. Discussions with an impressive track recordour shareholders assist us to set goals and expectations for our performance and facilitate identification of consistently delivering increased valueemerging issues that may affect our strategies, corporate governance, compensation practices and returning cash toother aspects of our operations.
Our shareholder engagement program includes investor conferences, investor events and one-on-one discussions with our shareholders. Net salesIn 2019, our Board’s Compensation Committee Chairs (retired and new), participated in 2016 were $3.5 billion, an increase16 conference calls with shareholders (representing approximately 65% of 3% comparedoutstanding shares) to 2015; reported operating margindiscuss a wide range of 13.6% in 2016 decreased 40business performance, governance, sustainability and compensation topics. In addition, our Chairman and CEO, Chief Financial Officer, General Counsel and other members of senior management engaged with our shareholders on a frequent basis points comparedyear-round, to 2015; reported earnings per diluted share in 2016 was $5.24 compared to $4.77 in 2015;discuss Hubbell’s strategy, financial and free cash flow (defined as cash flow from operations less capital expenditures) as a percentage of net income attributable to Hubbell was 113% in 2016. Each of these measures are critical components to our pay for performance compensation structure as they are indicators of strong Companybusiness performance, and shareholder value. The Company rewards its executives for achievements in these areas as further described in the Compensation Discussion and Analysis beginning on page 25. We also remained committed to deploying our capital in value creating ways. We increased the annual dividend 11% to $2.80 per share - the 9thconsecutive year of increased dividends. Finally, acquisitions continue to be a core strategic objective and we invested approximately $173 million on three acquisitions in 2016; one that will join our Electrical segment, the other two will be reported in the Power segment.ES&G programs.
www.hubbell.com | HUBBELL INCORPORATED - |2017 Annual Meeting of Shareholders & 2020 Proxy Statement | 9 24 |
ELECTION OF DIRECTORS - PROPOSAL 1
The Company’s By-Laws provide that the Board of Directors shall consist of between three and thirteen Directors who shall be elected annually by the shareholders. The Board has fixed the number of Directors at nine as of the 2017 Annual Meeting.
Director Qualifications and Experience
The Nominating and Corporate Governance Committee (“NCGC”) works with the Board annually to determine the appropriate characteristics, skills and experience for the Board and its individual members to properly oversee the interests of the Company and its shareholders.
The NCGC recommends candidates for Board membership using the selection criteria outlined in the Corporate Governance Guidelines and other factors it deems necessary to fulfill its objectives. Candidates are evaluated on the basis of their individual qualifications and experience, and in the context of the Board as a whole. The NCGC considers diversity when creating the pool of candidates from which it selects potential director nominees. Such diversity includes not only gender, race and ethnicity, but also diversity of experience, professional background, industry exposure and other areas. The objective is to assemble a diverse Board that can best perpetuate the success of the business and represent shareholder interests through the exercise of sound judgment. Below is a list of some of the qualifications and experience sought by the NCGC in recommending candidates for nomination to the Board:
• Ability to make independent analytical inquiries
• Marketing, finance, operations or other relevant public company experience
• Gender, race and ethnicity
• Financial literacy
• Professional background
• Corporate governance experience
• Experience as a current or former public company officer
• Experience in the Company’s industry
• Public company board service
• Academic expertise in an area of the Company’s operations
• Education
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In determining whether to recommend a current Director for re-election, the NCGC will also consider:
| • | Past attendance at meetings | | | | | • | Service on other boards | | | | | • | Participation in and contributions to Board activities |
Each Director nominee possesses the appropriate qualifications and experience for membership to the Board of Directors. As a result, the Board is comprised of individuals with strong and unique backgrounds, giving the Board competence and experience in a wide variety of areas to serve the interests of the Company and its shareholders.
Director Nominees
The following nominees are proposed by the Board to stand for election at the 2017 Annual Meeting of Shareholders and to serve as Directors until the 2018 Annual Meeting and until their successors have been elected and qualified. All of the nominees are current Directors and were elected by the Company’s shareholders. In the event that any of the nominees for Director should become unavailable, it is intended that the shares represented by the proxies will be voted for any substitutes nominated by the Board of Directors, unless the number of Directors constituting the full Board is reduced. The following biographies provide information on the principal occupation of each of the Director nominees.
The Board of Directors Recommends that Shareholders Vote “FOR” all of the Nominees.
HUBBELL INCORPORATED - 2017 Annual Meeting of Shareholders & Proxy Statement | 10 |
| Carlos M. Cardoso | Age: 59
Director Since: 2013
Committees: Audit and Compensation
Designation: Independent
Directorships: Stanley Black & Decker, Inc., since 2007; (Kennametal Inc. 2006 - 2014)
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Mr. Cardoso served as Chairman, President and Chief Executive Officer of Kennametal Inc. (publicly traded manufacturer of metalworking tools and wear-resistant products) from January 2008 to December 2014. Previously, he held the position of President and Chief Executive Officer (2006 – 2008), and also served as Kennametal’s Executive Vice President and Chief Operating Officer from January 2005 to December 2005, and Vice President and President, Metalworking Solutions and Services Group from 2003 to 2004.
Skills and Qualifications
Mr. Cardoso brings to the Board CEO, COO, manufacturing, international business and public company Board experience, including:
Significant manufacturing and operations experience having served as President of the Pump Division of Flowserve Corporation, a manufacturer/ provider of flow management products and services, Vice President and General Manager, Engine Systems and Accessories, for Honeywell International, Inc., a technology and manufacturing company, and Vice President Manufacturing Operations for Colt’s Manufacturing Company, LLC, a maker of firearms
Membership on the Boards of Stanley Black & Decker, Inc., a diversified global provider of hand and power tools and accessories, and the National Association of Manufacturers (NAM)
| Anthony J. Guzzi | Age: 53
Director Since: 2006
Committees: Executive, Finance, and Nominating and Corporate Governance
Designations: Independent; Lead Director
Directorship: EMCOR Group, Inc., since 2009
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Mr. Guzzi has served as President and Chief Executive Officer of EMCOR Group, Inc. (a publicly traded mechanical, electrical construction and facilities services company) since January 2011. Previously, he was President and Chief Operating Officer from 2004 to 2010. He also served as President, North American Distribution and Aftermarket of Carrier Corporation (HVAC and refrigeration systems), a subsidiary of United Technologies Corporation from 2001 to 2004, and President, Commercial Systems and Services in 2001.
Skills and Qualifications
Mr. Guzzi brings to the Board CEO, COO, manufacturing, strategic development, operations, consulting, and public company board experience, including:
Serving as President and CEO and a Director of EMCOR Group, Inc., a corporation specializing in electrical and mechanical construction and facilities services
Extensive experience in manufacturing and distribution having served as President, North American Distribution and Aftermarket, and President, Commercial Systems and Services of Carrier Corporation, a subsidiary of United Technologies Corporation
Past experience as an engagement manager with McKinsey & Company, a prominent management consulting firm
HUBBELL INCORPORATED - 2017 Annual Meeting of Shareholders & Proxy Statement | 11 |
| Neal J. Keating | Age: 61
Director Since: 2010
Committees: Nominating and Corporate Governance (Chair), Compensation and Executive
Designation: Independent
Directorship: Kaman Corporation, since 2007
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Mr. Keating has served as the Chairman of the Board, President and Chief Executive Officer of Kaman Corporation (a publicly traded aerospace and industrial distribution company), since 2008. Prior to that, he held the position of President and Chief Operating Officer of Kaman from 2007 to 2008. From 2004 to 2007, he held the position of Chief Operating Officer of Hughes Supply (a wholesale distributor acquired by Home Depot).
Skills and Qualifications
Mr. Keating brings to the Board an extensive history of senior executive leadership and board experience, and a strong background in international operations, distribution, and mergers and acquisitions, including:
| • | Serving as Chairman of the Board and CEO of Kaman Corporation, a public manufacturing corporation that serves the aerospace and industrial distribution industries | | | | | • | Past experience as COO of Hughes Supply and Executive Vice President and COO of Rockwell Collins, Commercial Systems | | | | | • | Former Managing Director and CEO of GKN Aerospace, and Director of GKN plc, an international aerospace, automotive and land systems business | | | | | • | Member of Board of Trustees of the Manufacturers Alliance for Productivity and Innovation (MAPI) |
| John F. Malloy | Age: 62
Director Since: 2011
Committees: Finance (Chair), Audit and Executive
Designation: Independent
Directorships: Victaulic Company, since 2006
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Mr. Malloy has served as the Chairman of the Board, President and Chief Executive Officer of Victaulic Company (a privately held mechanical pipe joining systems company) since 2006. Prior to that, he held the position of President and Chief Executive Officer from 2004 to 2006 at Victaulic, and also President and Chief Operating Officer from 2002 to 2004.
Skills and Qualifications
Mr. Malloy brings to the Board many years of senior management, operations, economic and strategic planning experience having served as the CEO and COO of a global manufacturing and distribution company, including:
| • | Twelve years of executive management experience at a leading worldwide manufacturing company | | | | | • | Over fifteen years of experience in various senior level strategic planning positions at United Technologies Corporation | | | | | • | Holds a Ph.D. in economics and has taught courses in Economics at Hamilton College |
HUBBELL INCORPORATED - 2017 Annual Meeting of Shareholders & Proxy Statement | 12 |
| Judith F. Marks | Age: 53
Director Since: 2016
Committee: Audit, and Nominating and Corporate Governance
Designation: Independent
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Ms. Marks was appointed CEO of Siemens USA on January 1, 2017. Previously, she served as the Executive Vice President, Global Solutions at Dresser-Rand (a global supplier of custom-engineered rotating equipment for the oil, gas and power industries), a subsidiary of Siemens Corporation from 2015-2016. Prior to that, she was the President and CEO of Siemens Government Technologies, Inc. from 2011-2015, and Vice President, Strategy and Business Development at Lockheed Martin Corporation (a publicly traded global company engaged in aeronautical and space systems, integration and technology services) from 2009-2011.
Skills and Qualifications
Ms. Marks brings to the Board strong multi-disciplinary experience in the areas of corporate strategy, operations, business development, and leadership for emerging geographies, including:
| • | Served as President and CEO of Siemens Government Technologies, Inc., a subsidiary of Siemens AG and leading integrator of innovative products, technologies and services for the government | | | | | • | Led all strategy, planning, customer relations and new business capture across Lockheed Martin Corporation’s (“Lockheed”) $14 billion electronic systems business | | | | | • | Held the position of President of Lockheed’s Global Business Division, a developer and manufacturer software and hardware solutions for global customers. |
| David G. Nord | Age: 59
Director Since: 2013
Committee: Executive (Chair)
Designation: Not Independent
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Mr. Nord has served as Chairman of the Board, President and Chief Executive Officer of the Company since May 2014, and President and Chief Executive Officer since January 2013. Previously, he served as the Company’s President and Chief Operating Officer from June 2012 to January 2013, and Senior Vice President and Chief Financial Officer from September 2005 to June 2012.
Skills and Qualifications
Mr. Nord brings to the Board extensive financial, operational, and strategic planning experience, and a strong background in the manufacturing industry having served as a senior executive at two global manufacturing companies, including:
| • | Serving as the Company’s Senior Vice President and CFO for 7 years and as COO prior to his appointment to CEO in 2013 | | | | | • | Ten years in various senior leadership positions at United Technologies Corporation including Vice President-Finance and CFO of Hamilton Sundstrand Corporation, one of its principal subsidiaries | | | | | • | Roles of increasing responsibility at The Pittston Company, a publicly held multinational corporation, and Deloitte & Touche | | | | | • | Vice Chair of the Board of Governors of the National Electrical Manufacturing Association (NEMA), and Vice Chair of Board of Trustees of the Manufacturers Alliance for Productivity and Innovation (MAPI) |
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| John G. Russell | Age: 59
Director Since: 2011
Committees: Compensation, Finance, and Nominating and Corporate Governance
Designation: Independent
Directorships: CMS Energy Corporation and Consumers Energy Company, since 2010
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Mr. Russell has served as the Chairman of the Board of CMS Energy Corporation (“CMS”) and Consumers Energy Company (“Consumers”) since May 2016. Previously he served as the President and Chief Executive Officer of CMS and Consumers (a publicly traded electric and natural gas utility) from 2010-2016. He also held the position of President and Chief Operating Officer of Consumers from 2004 to 2010.
Skills and Qualifications
Mr. Russell brings to the Board many years of experience as a public company executive officer and Director in the utility industry, and possesses a strong background in operations, regulated utilities and governance, including:
| • | Serving as Chairman of the boards of CMS and Consumers, and as director for over fifteen years | | | | | • | Serving as the President and CEO of CMS and Consumers, and previously as COO | | | | | • | Over thirty years of both hands-on and leadership experience in the utility industry which represents a significant part of the Company’s overall business |
| Steven R. Shawley | Age: 64
Director Since: 2014
Committees: Audit (Chair), Executive, and Finance
Designations: Independent; Audit Committee Financial Expert
Directorship: GrafTech International (2010 - 2014)
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Mr. Shawley served as the Senior Vice President and Chief Financial Officer of Ingersoll-Rand Company (a publicly traded manufacturer of climate solutions, and industrial and security technologies) from 2008 to 2013. Previously, he held the position of Senior Vice President and President of Ingersoll-Rand’s Climate Control Technologies business from 2005 to 2008.
Skills and Qualifications
Mr. Shawley brings to the Board extensive leadership experience as a public company executive officer and Director, and a strong background in finance, accounting and audit, including:
| • | Over fourteen years of experience as a public company officer, including serving as the Senior Vice President and CFO of Ingersoll-Rand and President of one of its major business sectors | | | | | • | Holding multiple financial roles of increasing responsibility over the course of 30+ years including audit, accounting, financial planning and as the controller of Westinghouse Electric Corporation’s largest manufacturing division and CFO of its Thermo King subsidiary | | | | | • | Served on the board of a public company and as Chair of its Audit Committee |
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| Richard J. Swift | Age: 72
Director Since: 2003
Committees: Compensation (Chair), Executive, and Nominating and Corporate Governance
Designation: Independent
Directorships: CVS/Caremark Corporation, since 2006; Ingersoll-Rand Company, PLC, since 1995;
Kaman Corporation, since 2002; Public Service Enterprise Group Incorporated, since 1994
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Mr. Swift served as the Chairman of the Financial Accounting Standards Advisory Council from 2002 to 2006. Previously, he held the position of Chairman, President and Chief Executive Officer of Foster Wheeler Ltd. (design, engineering, construction and other services) from 1994 to 2001.
Skills and Qualifications
Mr. Swift possesses CEO experience, extensive public company board experience, and a strong finance, engineering and corporate governance background, including:
| • | Former Chairman, President and CEO of Foster Wheeler Ltd. | | | | | • | Former Chairman of the National Foreign Trade Council and the Financial Accounting Standards Advisory Council, which advises the Financial Accounting Standards Board on accounting standards | | | | | • | Membership on the boards of 4 public companies | | | | | • | Former licensed professional engineer |
During the five years ended December 31, 2016, Mr. Guzzi, Mr. Keating, Mr. Malloy and Mr. Swift have held the principal occupation listed in their biography above or been retired for that period of time. The employment history of each of the other Director nominees during such time period is reflected in their biographies above.
Vote Requirement
Directors are elected by plurality vote. Votes withheld and broker non-votes will not affect the election of Directors. Pursuant to the terms of our Director Resignation Policy, any director in an uncontested election who receives more votes “withheld” from his or her election than votes “for” his or her election will promptly tender his or her resignation to the Board. See page 9 for additional details on this Policy.
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COMPENSATION OF DIRECTORS
The NCGC annually reviews all forms of independent Director compensation in relation to other U.S. companies of comparable size and the Company’s competitors, and recommends changes to the Board, when appropriate. The NCGC is supported in this review by Exequity LLP (“Exequity”), an independent outside compensation consultant engaged by the NCGC, which provides compensation consultation and competitive benchmarking.
As a result, the Director compensation program reflects a mainstream approach to the structure of the compensation components and the method of delivery. In 2016, following the annual review, the Board of Directors, upon the recommendation of the NCGC, determined to maintain the value of total director compensation as reflected in the table below.
Compensation Component | | | Annual Board Retainer | | $75,000 | Lead Director Retainer | | $20,000 | Committee Chair Retainer | | $20,000 – Audit | | | $15,000 – Compensation | | | $13,000 – Finance | | | $13,000 – NCGC | Committee Member Retainer | | $10,000 – Audit | | | $7,000 – Compensation | | | $5,000 – Finance | | | $5,000 – NCGC | Board / Committee Meeting Fees | | None | Annual Restricted Share Grant (upon election at Annual Meeting) | | $120,000 in value of Common Stock that vests on the date of the next Annual Meeting if the Director is still serving (or earlier, upon death or a change in control) | Stock Ownership Guidelines(1) | | Within five years of joining the Board, ownership in Common Stock or deferred stock units valued at 4 times the average annual retainer paid to the Director in the past 5 years | Discretionary Fee(2) | | Upon NCGC recommendation and consent of the Chairman of the Board, fees commensurate with any activities performed outside the scope of normal Board and Committee service, at the Company’s request |
(1) | Directors who are first standing for election are encouraged to own 1,000 shares of the Company’s Common Stock prior to the filing of the proxy statement for the meeting at which the Director is standing for election. | | | (2) | Activities may include customer visits, conference attendance, or training meetings. |
Deferred Compensation Plan
The Company maintains a Deferred Compensation Plan for non-management Directors (“Deferred Plan for Directors”) which enables Directors, at their election, to defer all or a portion of their annual Board and Committee retainers into:
| • | A Stock Unit account in which each stock unit consists of one share of the Company’s Common Stock. Dividend equivalents are paid on the stock units contained in the Director’s account and converted into additional stock units. Upon distribution, all stock units are payable in shares of Common Stock. | | | | | • | A Cash account which is credited with interest at the prime rate in effect at the Company’s principal commercial bank on the date immediately following each regularly scheduled quarterly Board meeting. |
The Deferred Plan for Directors also enables such Directors, at their election, to defer all or a portion of their annual restricted share grant into:
A Restricted Stock Unit account providing for the credit of one restricted stock unit for each share of restricted stock deferred. Restricted stock units are subject to the same vesting terms described in the table above and are payable in the form of one share of Common Stock for each restricted stock unit. Dividend equivalents are paid on the restricted stock units contained in the account and converted into additional restricted stock units.
Generally, all distributions under the Deferred Plan for Directors are paid only after termination of service, and may be paid in a lump sum or in annual installments, at the Director’s election. However, in the event of a change of control, all amounts credited to a Director’s account are paid in a lump sum, with amounts credited as stock units immediately converted into a right to receive cash.
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Director Compensation Table for Fiscal Year 2016
The following table shows the compensation paid by the Company to non-management Directors for service on the Company’s Board of Directors during fiscal year 2016. Mr. Nord receives no compensation beyond that described in the Executive Compensation section on page 41 for his service as Director.
Name(1) | | Fees Earned or Paid in Cash(2) ($) | | Stock Awards(3) ($) | | All Other Compensation(4)(5) ($) | | Total ($) | Carlos M. Cardoso | | 92,000 | | 119,931 | | 5,330 | | 217,261 | Anthony J. Guzzi | | 100,945 | | 119,931 | | 4,330 | | 225,206 | Neal J. Keating | | 93,310 | | 119,931 | | 330 | | 213,571 | John F. Malloy | | 95,297 | | 119,931 | | 1,580 | | 216,808 | Judith F. Marks | | 82,472 | | 119,931 | | 330 | | 202,733 | David G. Nord | | — | | — | | — | | — | Carlos A. Rodriguez | | 32,102 | | — | | 137 | | 32,239 | John G. Russell | | 90,310 | | 119,931 | | 5,050 | | 215,291 | Steven R. Shawley | | 100,000 | | 119,931 | | 330 | | 220,261 | Richard J. Swift | | 95,000 | | 119,931 | | 330 | | 215,261 |
(1) | Mr. Rodriguez retired from the Board effective May 3, 2016. The amounts shown in the table reflect compensation paid to him from January 1, 2016 through his retirement date. | | | (2) | Includes the following amounts deferred and held under the Company’s Deferred Plan for Directors: Mr. Guzzi — $100,945, Mr. Keating — $46,655, Mr. Rodriguez — $32,102, Mr. Russell — $90,310, and Mr. Shawley — $100,000. | | | (3) | Amounts shown represent the grant date fair value of 1,141 shares of restricted stock granted to each Director at the Company’s May 3, 2016 Annual Meeting of Shareholders as computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation reflected in these columns, see Note 16 to the Notes to Consolidated Financial Statements for 2016 contained in the Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 16, 2017. These shares will vest as of the date of the 2017 Annual Meeting of Shareholders if the Director is still serving at that time (or earlier, upon death or a change in control). Mr. Cardoso, Mr. Guzzi, Mr. Keating, Ms. Marks, Mr. Russell and Mr. Shawley each elected to defer their entire 2016 annual restricted stock grant pursuant to the terms of the Deferred Plan for Directors as discussed on page 16. See the table below for the aggregate number of stock awards held by each Director as of December 31, 2016. | | | (4) | Includes the Company’s payment of $330 for life and business travel accident insurance premiums for each Director. Mr. Rodriguez’s premium was prorated to reflect his retirement from the Board in May 2016. | | | (5) | Includes a Company matching contribution to an eligible educational institution under The Harvey Hubbell Foundation Educational Matching Gifts Program in the following amounts: Mr. Cardoso — $5,000, Mr. Guzzi — $4,000, Mr. Malloy — $1,250 and Mr. Russell — $4,720. |
As of December 31, 2016, the following table shows the balance in each non-management Directors’ (i) stock unit account (each stock unit consists of one share of Common Stock) and (ii) restricted stock unit account (each restricted stock unit consists of one share of Common Stock) under the Deferred Plan for Directors. See the “Deferred Plan for Directors” section on page 16 for additional information:
Name | | Aggregate No. of Stock Units Held at Year End (#) | | Aggregate No. of Restricted Stock Units Held at Year End (#) | Carlos M. Cardoso | | 1,996 | | 4,431 | Anthony J. Guzzi | | 22,129 | | 5,975 | Neal J. Keating | | 4,135 | | 5,975 | John F. Malloy | | 1,502 | | 1,543 | Judith F. Marks | | — | | 1,162 | David G. Nord | | — | | — | Carlos A. Rodriguez(1) | | 7,824 | | 4,812 | John G. Russell | | 5,304 | | 5,975 | Steven R. Shawley | | 2,867 | | 3,204 | Richard J. Swift | | 17,123 | | — |
(1) | At the time of his retirement, Mr. Rodriguez’s stock unit account balance was 7,683 stock units and his restricted stock unit account balance was 4,725 stock units. The first of multiple tranches of these stock units were paid out in shares of the Company’s Common Stock in January, 2017, pursuant to his election under the Deferred Plan for Directors. |
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CORPORATE GOVERNANCE
The Board of Directors has adopted the Company’s Corporate Governance Guidelines (“Guidelines”) to assist the Board in the exercise of its responsibilities and to best serve the interests of the Company and its shareholders. The Guidelines reflect the Board’s commitment to good governance through the establishment of policies and procedures in areas it believes are critical to the enhancement of shareholder value. It is the Board’s intention that these Guidelines serve as a framework within which the Board can discharge its duties and foster the effective governance of the Company. The Board of Directors met 10 times in 2016.
Governance Snapshot | • Shareholders have identicaleconomic and voting rights – each share of Common Stock is entitled to one vote
• Anindependent Lead Director counterbalances a unified Chairman/ CEO and fosters effective collaboration and communication among independent directors
• Directors areelected annually by shareholders to serve a one-year term
• Directors arerequired to own Company stock equal in value to four times their annual retainer – all directors are in compliance with this policy
•All directors attended our Annual Shareholder meeting, and eight directors attended 100% of all Board and committee meetings on which they are a member
• Our Board and managementannually certify compliance with our Code of Business Conduct and Ethics
• No director serves on more than fiveoutside Boards, or more than two outside Audit Committees
• Independent Board members meetregularly in Executive Session, without management present
| | • The Company’s formershareholder rights plan expired in December 2016 and was not renewed
• Ourdirector resignation policy requires any director who fails to receive a majority of the votes cast to tender his or her resignation
• Our Board consists of amajority of independent directors and our Audit, Compensation, and Nominating and Corporate Governance Committees are 100% independent
• In compiling a diverse Board, director nominees are evaluated on their background and experience, and alsogender, race and ethnicity
• Directorcompensation is reviewed annually with advice from our outside compensation consultant, and benchmarked for competitiveness
• The Board and each committee annually conduct aperformance evaluation
• There areno related party transactions with our directors or officers and significant shareholders
• 67% of our Board has atenure of less than six years
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Director Independence
The Guidelines indicate that the Board shall be comprised of a majority of independent Directors. In evaluating the independence of Directors, each year the NCGC reviews all relationships between Directors (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company or any of its subsidiaries) and the Company and its subsidiaries in accordance with the rules of the New York Stock Exchange (“NYSE”) and the Securities and Exchange Commission (“SEC”) and considers whether any relationship is material. The NCGC also reviews responses to annual questionnaires completed by each of the Directors, a report of transactions with Director-affiliated entities, Code of Conduct compliance certifications, case submissions filed with the Company’s confidential communication resource, and Company donations to charitable organizations with which a Director may be affiliated (noting that The Harvey Hubbell Foundation Educational Matching Gifts Program is available to all Directors, officers and employees and matches eligible gifts up to a maximum of $5,000 made by an individual in a calendar year, and contributions to qualifying charitable organizations up to $10,000).
The NCGC considered the nature and dollar amounts of the transactions below and determined that none were required to be disclosed or otherwise impaired the applicable Director’s independence as all of these ordinary course transactions were significantly below the NYSE bright-line independence threshold of the greater of $1 million, or 2% of the other company’s sales, and were immaterial to all companies involved. As a result of this review, the Board has determined that each of the current Directors is independent other than Mr. Nord. In addition, the Board determined that Mr. Rodriguez, who served as a director during 2016 but did not stand for re-election at the 2016 Annual Meeting, was independent. In evaluating and determining the independence of the Directors, the NCGC considered that in the ordinary course of business, transactions may occur between the Company and its subsidiaries and entities with which some of the Directors are or have been affiliated. For example:
| • | Mr. Cardosois a former executive officer of Kennametal, Inc. and as a director of Stanley Black & Decker, Inc., with which the Company engages in ordinary course business transactions. In 2016, the Company purchased tools and component parts from Kennametal and tools and maintenance supplies from Stanley Black & Decker which purchases constituted less than 0.5% of each of Kennametal’s and Stanley Black & Decker’s sales during 2016. | | | | | • | Mr. Guzziserves as a director and executive officer of EMCOR Group, Inc., with which the Company engages in ordinary course business transactions. In 2016, the Company sold cable glands and enclosure products to EMCOR Group. These transactions constituted less than 0.5% of EMCOR’s sales during 2016. | | | | | • | Mr. Keatingserves as a director and executive officer of Kaman Corporation, with which the Company engages in ordinary course business transactions. In 2016, the Company sold ethernet and business access equipment to Kaman Corporation and purchased certain component parts from Kaman. These transactions constituted less than 0.5% of Kaman’s sales during 2016. | | | | | • | Mr. Malloyserves as a director and executive officer of Victaulic Company, with which the Company engages in ordinary course business transactions. In 2016, the Company sold motor control products to Victaulic which transactions constituted less than 0.5% of Victaulic’s sales during 2016. | | | | | • | Ms. Marksserves as an executive officer of Siemens Corporation, with which the Company engages in ordinary course business transactions. In 2016, the Company sold lighting, connectors and compression products to Siemens which transactions constituted less than 0.5% of Siemen’s sales during 2016. | | | |
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| • | Mr. Rodriquezserves as a director and executive officer of ADP, with which the Company engages in ordinary course business transactions. In 2016, the Company purchased payroll processing services from ADP which purchases constituted less than 0.5% of ADP’s sales during 2016. | | | | | • | Mr. Russellserves as a director of CMS Energy and Consumers Energy, with which the Company engages in ordinary course business transactions. In 2016, the Company sold power transmission and distribution products, and communications equipment to CMS Energy and Consumers Energy. These transactions constituted less than 0.5% of each of CMS Energy’s and Consumers Energy’s respective sales during 2016. | | | | | • | Mr. Shawleyis a former executive officer Ingersoll-Rand Company with which the Company engages in ordinary course business transactions. During 2016, the Company sold motor controls to Ingersoll-Rand Company and purchased tools and maintenance related items from Ingersoll-Rand. These transactions constituted less than 0.5% of Ingersoll-Rand’s, sales during 2016. | | | | | • | Mr. Swiftserves as a director of Ingersoll-Rand Company, Kaman Corporation, CVS Caremark and Public Service Enterprise Group Inc. (“PSEG”) with which the Company engages in ordinary course business transactions. During 2016, the Company sold motor controls to Ingersoll-Rand Company, ethernet and business access equipment to Kaman Corporation, and electrical enclosures to PSEG. In addition, during 2016 the Company purchased tools and maintenance related items from Ingersoll-Rand, tools and component parts from Kaman, prescription management services from CVS Caremark and utility power service products from PSEG. These transactions constituted less than 0.5% of each of Ingersoll-Rand’s, Kaman’s, CVS Caremark’s, and PSEG’s respective sales during 2016. |
Director Nomination Process
In searching for qualified Director candidates for election to the Board and to fill vacancies on the Board, the Board may solicit current Directors or members of executive management for the names of potentially qualified candidates, consult with outside advisors, retain a director search firm or consider nominees suggested by shareholders. All nominees for election of Director in 2017 are current Directors of the Company. In 2016, the Company did not utilize the services of any third party firms or advisors to identify or assist in the evaluation of director candidates.
All Director candidates, including any Director candidates recommended by shareholders, are reviewed and evaluated by the NCGC in relation to the specific qualifications and experience sought by the Board for membership (as discussed in the “Election of Directors” section on page 10), and the Board’s needs at that time. A candidate whose qualifications and experience align with this criteria is then interviewed by members of the NCGC, other Board members, and executive management to further assess the candidate’s qualifications and experience and determine if the candidate is an appropriate fit. Candidates may be asked to submit additional information to support their potential nomination and references may be requested. If the Board approves of the NCGC recommendation, the candidate is then nominated for election by the Company’s shareholders or appointed by the Board to fill a vacancy, as applicable.
Any shareholder who intends to recommend a candidate to the NCGC for consideration as a Director nominee should deliver written notice, which must include the same information requested by Article I, Section 11(A) (2) of our By-Laws, to the Secretary of the Company with the following information about the candidate:
| • | Biographical data (business experience, board service, academic credentials) | | | | | • | Transactions between the shareholder and the candidate, and the Company or its management | | | | | • | Relationships or arrangements between the shareholder and the candidate | | | | | • | Any other transactions or relationships which the Board of Directors should be aware of in order to evaluate the candidate’s independence | | | | | • | Details of any litigation involving the shareholder and candidate adverse to the Company or associated with an entity engaged in such litigation | | | | | • | Whether the candidate or any company at which the candidate is a current or former officer or director is, or has been, the subject of any SEC, criminal or other proceedings or investigations related to fraud, accounting or financial misconduct, or any other material civil proceedings or investigations | | | | | • | Written consent confirming the candidate’s (i) consent to be nominated and named in the Company’s Proxy Statement and, if elected, to serve as a Director of the Company and (ii) agreement to be interviewed by the NCGC and to submit additional information if requested |
Any such notice should be delivered to the Company sufficiently in advance of the Company’s annual meeting to permit the NCGC to complete its review in a timely fashion.
Board Leadership Structure
The Company’s By-Laws require the Board to choose the Chairman of the Board from among the Directors and provide the Board with the ability to appoint the CEO of the Company as the Chairman of the Board. This approach gives the Board the necessary flexibility to determine whether these positions should be held by the same person or by separate persons based on the leadership needs of the Company at any particular time. The Board believes that there is no single, generally accepted approach to providing Board leadership, and that each of the possible leadership structures for a board must be considered in the context of the individuals involved and the specific circumstances facing a company at any given time. Accordingly, the optimal board leadership structure for a particular company may vary as circumstances change.
Mr. Nord has served as Chairman, President and CEO of the Company since May 2014. The Board has determined that combining the roles of CEO and Chairman is best for the Company and its shareholders at this time because it promotes unified leadership by Mr. Nord and allows for a single, clear focus for management to execute the Company’s strategy and business plans.
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Lead Director
The Board has established the position of an independent Lead Director to serve a three-year term commencing immediately following the Company’s Annual Meeting. The Board believes that a three-year term is appropriate for the Lead Director as it affords greater continuity and allows the Lead Director to gain a better understanding of Board and management dynamics and build relationships with the other Directors. The Lead Director is responsible for:
| • | Board Leadership | Providing leadership to the Board in situations where the Chairman’s role may be perceived to be in conflict | | • | Executive Sessions | Coordinating the agenda and chairs executive sessions of the non-management directors regularly throughout the year | | • | Liaison | Regularly meeting with the Chairman and facilitates communications between the Chairman, management and the independent directors | | • | Spokesperson | Upon request, acting as the spokesperson for the Board in interactions with third parties | | • | Succession | Working with the NCGC and the Chairman to review and maintain the Company’s succession plans |
Currently, Mr. Guzzi is the Lead Director and is expected to hold this position until the 2019 Annual Meeting. The Board believes that its present leadership structure and composition provides for independent and effective oversight of the Company’s business and affairs as further demonstrated by the fact that its members are current or former CEOs, CFOs or COOs of major companies in similar industries, its Audit, Compensation, and Nominating and Corporate Governance Committees are comprised entirely of Directors who meet the independence requirements of the NYSE, and Mr. Nord is the only Director who is a member of executive management. Given the strong leadership of Mr. Nord as Chairman, President and CEO, the counterbalancing role of the Lead Director and a Board comprised of effective and independent Directors, the Board believes that its current leadership structure is appropriate at this time.
Board Oversight of Risk
The Board of Directors is responsible for overseeing the Company’s risk management practices, and Committees of the Board assist it in fulfilling this responsibility.
The Audit Committee routinely discusses with management the Company’s policies and processes with respect to risk assessment and risk management, the Company’s major financial risk exposures, and the actions management has taken to limit, monitor or control such exposures. Annually, the Board reviews with management the implementation and results of the Company’s enterprise risk management program which identifies and quantifies a broad spectrum of enterprise-wide risks in various categories, such as strategic, operational, compliance, financial and information technology, and related action plans.
The Board’s other committees - Compensation, Nominating and Corporate Governance, and Finance – oversee risks associated with their respective areas of responsibility as set forth in their charters. For example, the Finance Committee considers risks associated with the Company’s capital structure or acquisition strategy, and the Compensation Committee considers risks associated with its compensation plans and policies. The committees provide detailed reports to the full Board of Directors on risks and other matters that may have been considered and evaluated during its meetings.
Members of senior management assist the Board and committees with their risk oversight responsibilities through routine discussions of risks involved in their specific areas of responsibility. For example, our principal business leaders will report to the Board at regular intervals during the year on the Company’s strategic planning activities and risks relevant to execution of the strategy. In addition, from time to time, independent consultants with specific areas of expertise are engaged to discuss topics that the Board and management have determined may present a material risk to the Company’s operations, plans or reputation.
In 2016, as part of its risk management activities, the Company reviewed with the Compensation Committee its compensation policies and practices applicable to all employees that could affect the Company’s assessment of risk and risk management and determined that such compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. The Board does not believe that its role in the oversight of the Company’s risks affects the Board’s leadership structure.
Code of Business Conduct and Ethics
The Company requires its Directors and officers to act in accordance with the highest standards of ethical conduct and has adopted a Code of Business Conduct and Ethics (“Code of Conduct”) that supports the Company’s commitment to the people we serve, the communities we work in, the Company and each other. Underlying this commitment is a strong set of core values – integrity, discipline, collaboration, and excellence – that guide our actions and decisions. Our Code of Conduct covers many areas of professional conduct ranging from conflicts of interest, ethical business conduct, employment practices, compliance with applicable laws and regulations, protection of Company assets and confidential information, and reporting obligations. Each year, to strengthen the Company’s commitment to ethical conduct, we provide training on various aspects of the Code of Conduct and require all Directors and officers to certify compliance with the Code of Conduct Policy. Waivers to the Code of Conduct for Directors and executive officers may be granted only by the Board of Directors or an appropriate Board Committee and, along with any amendments, will be promptly disclosed to Company shareholders on the Company’s website. The Code of Conduct can be viewed on the Company’s website atwww.hubbell.com.
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Communications with Directors Shareholders and interested parties may communicate with the full Board, the Lead Director, the non-management Directors as a group, or with individual Directors by using either of the following methods: By Writing: | Board of Directors Hubbell Incorporated c/o Megan C. Preneta, CorporateKatherine A. Lane, Vice President, General Counsel and Secretary 40 Waterview Drive Shelton, Connecticut 06484 | | | By Email: | Secretary@hubbell.com |
Communications will be forwarded to the specific Director(s) requested by the interested party. General communications will be distributed to the full Board or to a specific member of the Board depending on the material outlined in the communication. Certain items unrelated to the duties and responsibilities of the Board will not be forwarded including job inquiries and resumes, business opportunities, junk or mass mailings, spam, or any hostile, improper, threatening or illegal communication.communications. Board Committees
The Board of Directors has established the following standing Committees to assist it in fulfilling its responsibilities: Audit, Compensation, Executive, Finance, and Nominating and Corporate Governance. The principal responsibilities of each of these Committees are described generally below, and in detail in their respective Committee Charters which are available on the Company’s website atwww.hubbell.com, or in the case of the Executive Committee Charter, in Article III, Section 1, of the Company’s By-Laws. The Board has determined that each member of the Audit, Compensation and Nominating and Corporate Governance Committees is independent for purposes of the NYSE listing standards and SEC regulations.Attendance
Audit Committee | 8 meetings in 2016 | Members:
Steven R. Shawley (Chair)
Carlos M. Cardoso
John F. Malloy
Judith F. Marks
| Key Oversight Responsibilities
•
Oversees the Company’s accountingAll Directors attended our 2019 Annual Meeting and financial reporting and disclosure processes
•
Appoints the independent auditors and evaluates their independence and performance annually
•
Reviews the audit plans and resultsall Board meetings. Seven Directors attended 100% of the independent auditors
•
Approves all audit and non-audit fees for services performed by the independent auditors
•
Reviews and discusses with management and the independent auditors matters relating to the quality and integrity of the Company’s financial statements, the adequacy of its internal controls processes, and compliance with legal and regulatory requirements committee meetings on which they are a member. | | |
The Board of Directors has determined that each member ofheld 11 total meetings during the Audit Committee is financially literate, at least one member of the Audit Committee meets the NYSE standard of having accounting or related financial management expertise, and that Mr. Shawley is an “audit committee financial expert” as defined by the SEC. Compensation Committee | 5 meetings in 2016 | Members:
Richard J. Swift (Chair)
Carlos M. Cardoso
Neal J. Keating
John G. Russell
| Key Oversight Responsibilities
• Determines and oversees the Company’s execution of its compensation philosophy
• Approves all compensation of the CEO and other members of senior management
• Oversees the development and administration of the Company’s compensation and benefit plans
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Executive Committee | Did not meet in 2016 | Members:
David G. Nord, (Chair)
Anthony J. Guzzi
Neal J. Keating
John F. Malloy
Richard J. Swift
Steven R. Shawley
| Key Oversight Responsibilities
The Executive Committee may meet during intervals between meetings of the Board of Directors and may exercise all the powers of the Board of Directors in the management of the business and affairs of the Company, except certain powers set forth in the By-Laws of the Company.
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Finance Committee | 6 meetings in 2016 |
Members:
John F. Malloy (Chair)
Anthony J. Guzzi
John G. Russell
Steven R. Shawley
| Key Oversight Responsibilities
•
Oversees the Company’s financial and fiscal affairs and reviews proposals regarding long- and short-term financing, material acquisitions, dividend policies, stock repurchase programs, and changes in the Company’s capital structure
•
Reviews the Company’s major capital expenditure plans, monitors the Company’s insurance programs
•
Reviews the administration and management of the Company’s pension plans and investment portfolios
|
Nominating and Corporate Governance Committee | 4 meetings in 2016 |
Members:
Neal J. Keating (Chair)
Anthony J. Guzzi
Judith F. Marks
John G. Russell
Richard J. Swift
| Key Oversight Responsibilities
•
Develops the Company’s corporate governance guidelines and monitors adherence to its principles
•
Approves related person transactions
•
Evaluates director independence and compensation
•
Reviews matters relating to the Code of Business Conduct and Ethics
•
Identifies qualified individuals to become Board members, recommends nominees for election or appointment to the Board, and oversees the Board’s and management’s performance evaluation and succession planning process
|
See the “Director Independence” and “Director Nomination Process” sections on page 19 for more information on the actions taken by the Committee in these areas.
Attendance
last full fiscal year. During 2016,2019, no DirectorDirectors attended fewerless than 75%82% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by allof the Committees of which such Director served as a member. Board members are expected to attend the Annual Meeting of Shareholders. At the 20162019 Annual Meeting, all Directors then in office were in attendance. Additional Resources The Corporate Governance Guidelines and the following additional materials relating to corporate governance are published on our website atwww.hubbell.com. • | Board of Directors - Current Members and Experience | | | • | Code of Business Conduct and Ethics | | | • | Amended and Restated By-Laws | | | • | Compensation Recovery Policy | | | • | Board Committees - Members and Charters | | | • | Amended and Restated Certificate of Incorporation | | | • | Stock Ownership Guidelinesand Retention Policy | | | • | Contacting our Board of Directors |
| | | HUBBELL INCORPORATED| 2020 Proxy Statement 25 |
CorporateSocial Responsibility | | | Hubbell’s corporate social responsibility programs align with driving long-term shareholder growth. | | |
Hubbell is committed to operating as a responsible global citizen that promotes a culture of compliance, safety, inclusion and diversity, and investment in our people. This approach aligns with our foundational pillars and positively impacts our shareholders, employees, customers, suppliers and local communities. Hubbell’s Board is committed to these issues and provides regular oversight on related initiatives. In 2019, the Board formally memorialized its commitment to and oversight of environmental, social and governance (“ES&G”) issues in its Corporate Governance Guidelines. The Nominating and Corporate Governance Committee (“NCGC”) has primary jurisdictional review of management’s approach to ES&G, as further reflected in the revised NCGC charter, and reports regularly on ES&G matters to the full Board. In 2019, Hubbell evidenced its commitment to ES&G and sustainability issues via a dedicated section of its website atwww.hubbell.com. COMMUNITY | | DIVERSITY | | SAFETY | | SUSTAINABILITY | | | | | | | | 170+ CHARITIES AND NON-PROFITSTHAT EMPLOYEES,DIRECTORS AND THECOMPANY DONATEDTO OR VOLUNTEEREDFOR IN 2019 | | JOINED THEPARADIGM FOR PARITY COALITIONAND PARTNERED WITHEMPLOYER SUPPORT OFTHE GUARD & RESERVE | | DOWN 11% IMPROVED SAFETYRECORD BYDECREASING THE TOTALRECORDABLE INCIDENTRATE OVER THE LAST 3 YEARS | | BASELINED ITSGREENHOUSE GASAND WATER USAGE INADVANCE OF PLAN TOPUBLISH REDUCTIONGOALS IN 2020 |
2019Snapshot | | | | COMMUNITY PARTNERSHIPS | | INVESTING IN OUR PEOPLE | | | | The Harvey Hubbell Foundation (the “Foundation”), donated over $1,000,000 to local and national charities and educational institutions, with a special focus on STEM initiatives. Through its “Dollars for Doers” program, the Foundationmade matching donations to the charities for which Hubbell employees volunteer. Hubbell employees led Habitat for Humanity builds,Make-A-Wish Foundation fundraisers, and AmericanCancer Society walks across the United States. | | Hubbell signed onto the Paradigm for Parity coalition, joining over 100 companies in committing to achieve gender parity in its senior leadership by 2030. Hubbell signed the Employer Support of the Guard andReserve (ESGR), evidencing our continued support ofour military and reservist employees. To help facilitate Hubbell’s commitment to inclusion anddiversity, Hubbell’s executive population and leaders allreceived unconscious bias training. | | | | SAFETY AND ENVIRONMENTAL | | BUSINESS INTEGRITY | | | | Hubbell dedicated safety teams that implementsafety standards, policies and deliverables at allmanufacturing locations. Baselined greenhouse gas emissions and water usageat manufacturing facilities in 2019. Reviewed and updated safety policies for the enterprise. Hubbell management regularly engaged with E&Sfocused shareholders. | | In 2019, Hubbell issued a Third-Party Code of Conductthat defines our expectations for our partners around the globe. Continued to require all employees and directors toannually review and certify to Hubbell’s Code of Business Conduct and Ethics. Conducted a first-ever ethics and compliance survey ofHubbell’s leadership team (150 respondents). |
| | www.hubbell.com | HUBBELL INCORPORATED| - 2020 Proxy Statement 26 |
Culture and Human Capital At Hubbell, our most valuable asset is our employees. We encourage a workplace environment that is safe, respectful, inclusive and open to new ideas and thinking. Hubbell’s Board regularly receives updates and presentations on key culture topics, including ES&G, compliance, inclusion and diversity, employee education, development, and succession. One of Hubbell’s key business strategies is the fostering of a more inclusive and diverse company. Hubbell understands the value that this brings not just to employees, but to its overall business. Fostering aproductive, inclusive culture | | | | Created a multi-year enterprise-wide strategic initiative dedicated to inclusion and diversity. | | | | Issued new and revised Work From Home and Flexible Work Arrangements policies. | | | | Developed a Diversity Celebrations annual calendar for Hubbell. | | | | Created a cultural awareness “I AM Hubbell” and “Inclusion at Hubbell” campaign to show our commitment to inclusion and diversity. | | | | Expanded employee inclusion group focus at Hubbell. | | | | Increased course offerings on inclusion and diversity topics in Hubbell University learning management system. | | | | Updated recruitment plans to include additional diverse national partners and educational institutions. | | |
Investing inour people | | | | Sponsored a WATCH (Women Advancing Their Careers at Hubbell) conference for over 175 female employees of all levels from around the globe. | | | | Expanded company-wide internship programs to continue to develop new talent. | | | | Expanded learning management system content and training across the enterprise via Hubbell University. | | | | Expanded Hubbell’s patent invention award program internationally. | | | | Expanded maternity and parental leave benefits in the U.S. | | | | Introduced a minimum annual training hours requirement of 24 hours for all mid- to senior level employees. | | |
| HUBBELL INCORPORATED| 2020 Proxy Statement 27 |
DirectorCompensation | | | Benchmarked director compensation program, reviewed by independent compensation consultant. | | |
The Nominating and Corporate Governance Committee (NCGC) annually reviews all forms of independent Director compensation in relation to other U.S. companies of comparable size and the Company’s competitors, and recommends changes to the Board, when appropriate. The NCGC is supported in this review by Exequity LLP (“Exequity”), an independent outside compensation consultant engaged by the NCGC, which provides compensation consultation and competitive benchmarking. The NCGC targets director compensation at the median of our benchmarked GICS (Global Industry Classification Standard) Group. Elements of Compensation In 2019, following the annual review, the Board of Directors, upon the recommendation of the NCGC, determined to maintain the value of total director compensation as reflected in the table below. Annual Compensation Compensation Component | | Payment or Value of Equity | | | Board Service | | | | | | | | | | Annual Board Retainer | | $ | 85,000 | | | | | | | | | | | | | | | | Annual Restricted Share Grant(1) | | $ | 130,000 | | | | | | Lead Director Retainer | | $ | 25,000 | | | | | | | | | | | | | | | Committee Service | | | | | | | | | Committee Annual Retainer | | Chair | | Member | | | Audit Committee | | $ | 20,000 | | $ | 10,000 | | | Compensation Committee | | $ | 15,000 | | $ | 7,000 | | | Finance Committee | | $ | 13,000 | | $ | 5,000 | | | NCGC Committee | | $ | 13,000 | | $ | 5,000 | | | Board/Committee Meeting Fees | | | None | | | | | | Discretionary Fee(2) | | | Upon NCGC recommendation and consent of the Chairman of the Board, fees commensurate with any activities performed outside the scope of normal Board and Committee service, at the Company’s request. |
2017(1) | The value of Company Common Stock that vests on the date of the next Annual Meeting of Shareholders &if the Director is still serving (or earlier, upon death or a change in control). | (2) | Activities may include customer visits, conference attendance or training meetings. |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement | 22 28 |
VOTING RIGHTS AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTDeferred Compensation Plan
The Company hasmaintains a single classDeferred Compensation Plan for non-management Directors (“Deferred Plan for Directors”) which enables Directors, at their election, to defer all or a portion of their annual Board and Committee retainers into: | A Stock Unit account in which each stock unit consists of one share of the Company’s Common Stock. Dividend equivalents are paid on the stock units contained in the Director’s account and converted into additional stock units. Upon distribution, all stock units are payable in shares of Common Stock. | | A cash account which is credited with interest at the prime rate in effect at the Company’s principal commercial bank on the date immediately following each regularly scheduled quarterly Board meeting. |
The Deferred Plan for Directors also enables such Directors, at their election, to defer all or a portion of their annual restricted share grant into a Restricted Stock Unit account providing for the credit of one restricted stock unit for each share of restricted stock deferred. Restricted stock units are subject to the same vesting terms described above and eachare payable in the form of one share of Common Stock is entitledfor each restricted stock unit. Dividend equivalents are paid on the restricted stock units contained in the account and converted into additional restricted stock units. Generally, all distributions under the Deferred Plan for Directors are paid only after termination of service and may be paid in a lump sum or in annual installments, at the Director’s election. However, in the event of a change of control, all amounts credited to one vote. On March 3, 2017,a Director’s account are paid in a lump sum, with amounts credited as stock units immediately converted into a right to receive cash. Charitable Match The Harvey Hubbell Foundation matches, dollar for dollar, eligible charitable contributions made by a Director to qualifying charitable organizations and educational institutions up to $25,000 in the Company had outstanding 55,381,614 shares Common Stock. aggregate in a calendar year. Director Compensation Table The following table sets forth as of March 3, 2017shows the beneficial owners knowncompensation paid by the Company to us of more than 5% ofnon-management Directors for service on the Company’s Common Stock:Board of Directors during fiscal year 2019. Mr. Nord receives no compensation beyond that described in the Executive Compensation section onpage 58 for his service as Director. Name(1) | | Fees Earned or Paid in Cash(2) ($) | | | Stock Awards(3) ($) | | | All Other Compensation(4) ($) | | | Total ($) | | Carlos M. Cardoso | | | 102,000 | | | | 129,926 | | | | 20,000 | | | | 251,926 | | Anthony J. Guzzi | | | 120,000 | | | | 129,926 | | | | 23,000 | | | | 272,926 | | Neal J. Keating | | | 105,000 | | | | 129,926 | | | | 0 | | | | 234,926 | | Bonnie C. Lind | | | 100,000 | | | | 129,926 | | | | 0 | | | | 229,926 | | John F. Malloy | | | 108,000 | | | | 129,926 | | | | 0 | | | | 237,926 | | Judith F. Marks | | | 98,047 | | | | 129,926 | | | | 0 | | | | 227,973 | | John G. Russell | | | 107,209 | | | | 129,926 | | | | 5,000 | | | | 242,135 | | Steven R. Shawley | | | 110,000 | | | | 129,926 | | | | 25,000 | | | | 264,926 | | Richard J. Swift | | | 36,635 | | | | — | | | | 5,000 | | | | 41,635 | |
Title of Class(1) | Name and Address of Beneficial Owner | Amount and Nature of
Beneficial Ownership | Percent of
ClassMr. Swift retired from the Board effective May 7, 2019. The amounts shown in the table reflect compensation paid to him from January 1, 2019 through his retirement date. | Common Stock(2) | The Vanguard Group
100 Vanguard Blvd.
Malvern, Pennsylvania 19355 | 4,254,546(1) | 7.7%Includes the following amounts deferred and held under the Company’s Deferred Plan for Directors: Mr. Guzzi - $120,000, Mr. Keating - $52,500, and Mr. Shawley - $110,000. | Common Stock(3) | BlackRock, Inc.
55 East 52ndStreet
New York, New York 10055 | 3,959,337(2) | 7.2% | Common Stock | Capital World Investors
333 South Hope Street
Los Angeles, California 90071 | 3,430,000(3) | 6.2% |
(1) | The Company has receivedAmounts shown represent the grant date fair value of 1,027 shares of restricted stock granted to each Director at the Company’s May 7, 2019, Annual Meeting of Shareholders as computed in accordance with FASB ASC Topic 718. For a copydiscussion of Schedule 13G, as amended, asthe assumptions made in the valuation reflected in these columns, see Note 16 to the Notes to Consolidated Financial Statements for 2019 contained in the Form 10-K filed with the SEC on February 13, 201714, 2020. These shares will vest as of the date of the 2020 Annual Meeting of Shareholders if the Director is still serving at that time (or earlier, upon death or a change in control). Mr. Guzzi, Mr. Keating, Ms. Lind, Ms. Marks and Mr. Shawley each elected to defer their entire 2019 annual restricted stock grant pursuant to the terms of the Deferred Plan for Directors. See the table below for the aggregate number of stock awards held by The Vanguard Group (“Vanguard”) reporting ownership of these shareseach Director as of December 31, 2016. According to the Schedule 13G, Vanguard has sole voting power as to 31,225 of these shares, sole dispositive power as to 4,220,397 of these shares, shared voting power as to 5,735 of these shares, and shared dispositive power as to 34,149 of these shares. Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., wholly-owned subsidiaries of Vanguard, serve as investment managers of certain collective trust accounts and non-U.S. investment offerings, and may be deemed to beneficially own 28,414 and 8,546 of such shares, respectively.2019. | (2)(4) | Represents a Company matching contribution to an eligible institution under The Company has received a copy of Schedule 13G, as amended, as filed with the SEC on January 24, 2017 by BlackRock, Inc. (“BlackRock”) reporting ownership of these shares as of December 31, 2016. According to the Schedule 13G, BlackRock has sole voting power as to 3,727,868 of these shares, and sole dispositive power with respect to all 3,959,337 shares. The shares were acquired by the following subsidiaries of BlackRock: BlackRock (Netherlands) B.V., BlackRock Asset Management Schweiz AG, BlackRock Advisors (UK) Limited, BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock Advisors, LLC, BlackRock Investment Management, LLC, BlackRock International Limited, BlackRock Financial Management, Inc., BlackRock Life Limited, BlackRock Asset Management Ireland Limited, and BlackRock Investment Management (UK) Ltd. | (3) | The Company has received a copy of Schedule 13G, as amended, as filed with the SEC on February 13, 2017 by Capital World Investors (“Capital World”) reporting ownership of these shares as of December 30, 2016. According to the Schedule 13G, Capital World, a division of Capital Research and Management Company (“CRMC”), is deemed to be the beneficial owner of 3,430,000 shares as a result of CRMC acting as investment advisor to various investment companies registered under Section 8 of the Investment Company Act of 1940. Capital World has sole voting and dispositive power for all such shares.Harvey Hubbell Foundation Matching Gifts Program. |
| HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement | 23 29 |
TheAs of December 31, 2019, the following table sets forth as of March 3, 2017 information regardingshows the beneficial ownership ofbalance in each non-management Director’s (i) stock unit account (each stock unit represents the Company’s Common Stocks by each Director, the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and the three other most highly paid executive officers of the Company (collectively, the “named executive officers” or “NEOs”), and by all Directors and executive officers of the Company as a group.
In additionright to the sharesreceive one share of Common Stock reflected below, our Directors hold stock unitsStock) and (ii) restricted stock units, as applicable,unit account (each restricted stock unit represents the right to receive one share of Common Stock) under the Deferred Plan for Directors. These deferred stock units are reflected in footnotes (2) and (3) inSee the table below, and in the Director“Deferred Compensation Plan” section onpage 16.29 for additional information:
Name and Title of Class | | Common Stock | | | Shares Obtainable Upon Exercise of Options/SARs(1) | | | Total Beneficial Ownership | | | Percent of Class | | Cardoso | | | 1,000 | | | | — | | | | 1,000 | (2)(3) | | | * | | Guzzi | | | 6,480 | | | | — | | | | 6,480 | (2)(3) | | | * | | Keating | | | 5,571 | | | | — | | | | 5,571 | (2)(3) | | | * | | Malloy | | | 9,794 | | | | — | | | | 9,794 | (2)(3)(4) | | | * | | Marks | | | 1,000 | | | | — | | | | 1,000 | (3) | | | * | | Russell | | | 1,100 | | | | — | | | | 1,100 | (2)(3) | | | * | | Shawley | | | 1,000 | | | | — | | | | 1,000 | (2)(3) | | | * | | Swift | | | 5,081 | | | | — | | | | 5,081 | (2)(4) | | | * | | Nord | | | 103,643 | | | | 245,685 | | | | 349,328 | (5) | | | * | | Sperry | | | 36,999 | | | | 32,518 | | | | 69,517 | (5) | | | * | | Ruland | | | 7,153 | | | | 17,214 | | | | 24,367 | (5) | | | * | | Hsieh | | | 10,905 | | | | 35,423 | | | | 46,328 | (5) | | | * | | Bakker | | | 9,763 | | | | 27,561 | | | | 37,324 | (5) | | | * | | All Directors and executive officers as a group (19 persons) | | | | | | | | | | | | | | | | | Common Stock | | | 707,515 | | | | 434,080 | | | | 1,141,595 | (2)(6)(7) | | | 1.28% | |
Name | | Aggregate No. of Stock Units Held at Year End (#) | | | Aggregate No. of Restricted Stock Units Held at Year End (#) | | Carlos M. Cardoso | | | 2,155 | | | | 7,150 | | Anthony J. Guzzi | | | 26,791 | | | | 9,864 | | Neal J. Keating | | | 5,748 | | | | 9,864 | | Bonnie C. Lind | | | — | | | | 1,047 | | John F. Malloy | | | 1,623 | | | | 1,666 | | Judith F. Marks | | | — | | | | 4,668 | | John G. Russell | | | 5,726 | | | | 6,451 | | Steven R. Shawley | | | 5,794 | | | | 6,872 | | Richard J. Swift(1) | | | 18,486 | | | | — | |
*(1) | Less than 1%. | (1) | RepresentsAt the time of his retirement in May, 2019, Mr. Swift’s stock unit account balance was 18,132 stock units. These stock units were paid out in shares of the Company’s Common Stock obtainable upon the exercise of stock appreciation rightsin January, 2020, pursuant to his election under the Company’s Second Amended and Restated 2005 Incentive Award Plan. See the section “Outstanding Equity Awards at Fiscal Year End” on page 43. | (2) | Does not include stock units (each stock unit consisting of one share of Common Stock) held under the Company’s Deferred Plan for Directors, as of March 3, 2017: Mr. Cardoso — 1,996, Mr. Guzzi — 22,344, Mr. Keating — 4,232, Mr. Malloy — 1,502, Mr. Russell — 5,304, Mr. Shawley — 3,072 and Mr. Swift —17,123. | (3) | Does not include vested and unvested restricted stock units (“RSU’s”) (each RSU consisting of the right to receive one share of Common Stock) held under the Company’s Deferred Plan for Directors, as of March 3, 2017: Mr. Cardoso — 4,431, Mr. Guzzi — 5,975, Mr. Keating — 5,975, Mr. Malloy — 1,543, Ms. Marks — 1,162, Mr. Russell — 5,975 and Mr. Shawley — 3,204. | (4) | Includes 1,141 shares of Common Stock granted as restricted stock under the Company’s Second Amended and Restated 2005 Incentive Award Plan, on May 3, 2016 which vest on the date of the 2017 Annual Meeting of Shareholders if the Director is still serving (or earlier, upon death or a change in control). | (5) | Includes the following shares of Common Stock granted as restricted stock under the Second Amended and Restated 2005 Incentive Award Plan which vest on the following terms, as applicable: (i) three equal annual installments on the anniversary of the grant date; or (ii) at the end of a three year performance period subject to achievement of certain performance goals. Mr. Nord — 24,009, Mr. Sperry — 6,326, Mr. Ruland — 3,561, Mr. Hsieh — 5,237 and Mr. Bakker — 4,544; and all executive officers as a group — 55,974 shares. See the section “Outstanding Equity Awards at Fiscal Year End” on page 43. | (6) | Includes 125,162 shares of Common Stock held by The Harvey Hubbell Foundation of which two corporate officers and two employees of the Company are co-trustees and have shared voting and investment power. | (7) | Includes 343,176 shares of Common Stock held by the Company’s Pension Trust the voting and investment powers of which are controlled by a “Retirement Committee” of which Mr. Stephen M. Mais, Senior Vice President, Human Resources, Ms. Maria R. Lee, Treasurer and Vice President, Corporate Strategy and Investor Relations, one corporate officer, and one employee of the Company are co-members and have shared voting and investment power.Directors. |
www.hubbell.com | HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement 30 |
Proposal 2 | Advisory Vote to Approve Named Executive Officer Compensation |
We have determined that our shareholders should vote on the compensation of our NEOs each year, consistent with the preference expressed by our shareholders at the 2017 Annual Meeting. In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities Exchange Act of 1934, as amended, we are requesting shareholder approval, on an advisory (non-binding) basis, of the compensation of our NEOs as presented in this Proxy Statement in the Compensation Discussion and Analysis beginning onpage 32 and the compensation tables and accompanying narrative disclosure in the Executive Compensation section beginning onpage 58. It is expected that the next vote on the frequency of a vote on the compensation of our NEOs will occur at the 2023 Annual Meeting of shareholders. Accordingly, we will present the following resolution for vote at the Annual Meeting: “RESOLVED, that the shareholders of Hubbell Incorporated (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers as described in the Compensation Discussion and Analysis and disclosed in the 2019 Summary Compensation Table and related compensation tables and narrative disclosure as set forth in this Proxy Statement.” As described more fully in the Compensation Discussion and Analysis section of this Proxy Statement, our executive compensation program has been designed to attract and retain highly talented executives, deliver compensation that is competitive and fair compared to relevant benchmarks, reward strong Company performance and motivate executives to maximize long-term shareholder returns. To achieve our objectives, we have adopted and maintain sound compensation governance practices and a strong pay for performance philosophy pursuant to which the greatest portion of an executive’s total direct compensation is variable and therefore linked to performance on both a short-term and long-term basis. As an advisory vote, the outcome of this proposal is not binding upon the Company. However, our Compensation Committee and our Board value the opinions of our shareholders and will consider the outcome of this vote when making future compensation decisions for our NEOs. The affirmative vote of a majority of the votes cast by the holders of the outstanding shares of Common Stock is required to approve, on an advisory, non-binding basis, the compensation of our NEOs. Majority of votes cast means that the number of votes cast “FOR” the proposal exceed the number of votes cast “AGAINST” the proposal. Abstentions and broker non-votes will not affect the voting results. Broker discretionary voting is not allowed, so if your shares are held by a broker and you have not instructed the broker how to vote, your shares will not be voted with respect to Proposal 2. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL BY NON-BINDING VOTE OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. | HUBBELL INCORPORATED| 2020 Proxy Statement 31 |
CompensationDiscussion and Analysis (CD&A) COMPENSATION DISCUSSION AND ANALYSISOur Named Executive Officers
Executive SummaryOur business benefits from a diverse leadership team with deep experience within and outside our industry. In 2019, we executed our succession plan to elevate several key employees to critical leadership roles and continued the integration of the Aclara business within Hubbell.
This Compensation Discussion and Analysis (“CD&A”) section of the Proxy Statement describes the material elements of the 20162019 compensation program for the following named executive officers:officers (NEOs): Name | | Position | Mr. David G. Nord | | Chairman and Chief Executive Officer | Mr. William R. Sperry(1) | | Executive Vice President, Chief Financial Officer and Treasurer | Mr. Gerben W. Bakker(1) | | President and Chief Operating Officer | Mr. Allan J. Connolly(2) | | Group President, Power Systems | Ms. Katherine A. Lane(1) | | Vice President, General Counsel and Secretary |
(1) | Mr. Sperry, Mr. Bakker and Ms. Lane were appointed to their respective positions effective June 6, 2019. | (2) | Mr. Connolly was appointed Group President, Power Systems effective July 1, 2019. |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 32 |
2019 Highlights The Compensation Discussion and Analysis (CD&A) reviews the objectives and components of Hubbell’s executive compensation program and discusses the 2019 compensation earned by our NEOs. The CD&A also discusses actions taken based on our ongoing commitment to consider shareholder feedback and to ensure our executive team continues to deliver exceptional shareholder value. During 2019, we: | | ROBUST SHAREHOLDER ENGAGEMENT | | Contacted shareholders representing more than 65% of our outstanding common stock to obtain their views on our compensation program in the spring and fall. | | See Page33 | | | | | | | | | | BOARD INVOLVEMENT IN SHAREHOLDER ENGAGEMENT | | The Compensation Committee Chair led shareholder outreach regarding our compensation programs. | | See Pages33-34 | | | | | | | | | | ELIMINATED CERTAIN EXECUTIVE PERQUISITES | | Amended our policies to eliminate the use of a Company-provided leased vehicle or annual vehicle allowance to our NEOs. | | SeePage 56 | | | | | | | | | | INCREASED PERFORMANCE WEIGHTING OF EQUITY AWARDS | | Increased performance-based portion of Long-Term Incentives from 70% to 75%. | | SeePage 48 | | | | | | | | | | CHANGED TIMING OF EQUITY GRANTS | | Changed the timing of our annual equity grant to our NEOs to align performance and compensation discussions to the same time annually. | | SeePage 49 |
In 2019, Hubbell had record net sales of $4.6 billion and earnings per share on an adjusted(1)basis of $8.12, a 5% increase over the prior year. We also generated $498 million in free cash flow(1), and increased our dividend for the 12thconsecutive year. Additional information on our 2019 business performance, and the resulting compensation decisions taken by the Compensation Committee, are further summarized in this CD&A. Notable Activities and Changes Engagement With Shareholders On Compensation | | | Engaging with our shareholders informs our approach to our executive compensation program. | | |
Hubbell engages with shareholders throughout the year on diverse topics such as financial performance, compensation and pay for performance, corporate governance, and corporate social responsibility matters. In 2019, our Compensation Committee Chair and members of our senior management engaged in a targeted outreach with Hubbell shareholders representing 65% of Hubbell’s ownership. Results of 2019 Advisory Vote on Executive Compensation Hubbell’s 2019 Say on Pay advisory vote on executive compensation was 58%, significantly lower than the votes we had previously received on Say on Pay, which averaged over 97% support for the last 10 years. The Compensation Committee took the voting results very seriously and its Chair, along with members of management, met with shareholders representing 65% of our outstanding Common Stock ownership. Hubbell solicited shareholder feedback on company strategy and financial performance, corporate governance, executive compensation, corporate social responsibility and other topics. Their key feedback was that although our overall compensation program design is appropriate, we should be clearer on identifying how executive pay is aligned with performance. | •HUBBELL INCORPORATED| 2020 Proxy Statement 33 |
Following our shareholder engagement outreach, we adjusted certain elements of our compensation program as part of our commitment to being responsive to shareholder feedback. | What We Heard | | | | | How We Responded | We should highlight and Chief Executive Officerbetter explain any changes to our compensation design program. | | | | Because of the timing change of our long-term incentive grants from Q4 2019 to Q1 2020, we are including a pro forma chart evidencing the impact to our NEOs. Seepage 49. | Importance of performance orientation to a compensation program. | | | | Increased the weighting of performance-oriented equity from 70% to 75% by increasing the weighting of performance shares from 40% to 50%, and changing stock appreciation rights from 30% to 25%, thereby ensuring greater pay for performance alignment. | Clarify how executive pay is aligned with performance. | | | | Incorporated additional charts comparing our CEO’s pay to Realized Pay to demonstrate the link between pay and performance. |
Changes In 2019 | | | All changes to our compensation program were discussed in shareholder calls and informed by shareholder input. | | |
Modified the mix of equity incentive grants to have a greater weight towards performance. Component | Previous Weighting | Weighting | | Performance Share Metrics | Performance Shares | 40% | 50% | | Performance is measured over a three-year period based on the following metrics: Sales growth Operating profit margin Trade working capital Total Shareholder Return (TSR) | Stock Appreciation Rights | 30% | 25% | | Restricted Shares | 30% | 25% | | Total Performance Oriented Awards | 70% | 75% | | | | | |
Enhanced the role of Total Shareholder Return in the Performance Share Program Changed the design of the TSR modifier to provide a greater reward for outperformance and a larger penalty for under-performance. Changed the timing of Long-Term Incentive grants Annual equity grants were moved from the 4thquarter of each year into the 1stquarter. Whywe made the change: | | Impactof the change: | | | | Align timing of pay for performance compensation delivery. Maximize performance discussions with executives. Aligns with market practice. | • | Mr. William R. Sperry, Senior Vice President and Chief Financial Officer Summary Compensation table (seepage 58) only includes grants associated with promotions/new roles. Supplemental table included to demonstrate value of normalized compensation as if LTI grant would have been delivered in Q4 of 2019 (seepage 49). |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 34 |
Performance Summary We measure our progress not only in terms of our financial accomplishments, but also in running our business in the best interests of our shareholders, partners, customers, employees and the communities in which we operate. Our accomplishments in 2019 included: | | | • | Mr. Rodd R. Ruland, Group President, ConstructionWe delivered on our commitments to shareholders and Energyexecuted a disciplined plan of capital deployment. | | | | | • | Mr. An-Ping Hsieh, Senior Vice President, General Counsel | | | | | • | Mr. Gerben W. Bakker, Group President, Power Systems |
Our BusinessIn 2019, we grew net sales, adjusted diluted earnings per share and free cash flow year over year. The following table highlights our success on these metrics over the past three years:
We are an international manufacturer of quality electrical and electronic products for a broad range of non-residential and residential construction, industrial and utility applications. Our operations are organized into two business segments - the Electrical segment and the Power segment. The Electrical and Power segments represent approximately 70% and 30%, respectively, of our total revenue for 2016. For more information about our business, please see our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 16, 2017.
Our Business Highlights
In the face of choppy end markets in 2016, we continued to focus on providing our customers with superior products and solutions while improving the competitiveness of our cost structure. Highlights of our financial performance are discussed below.
Year Ended December 31, | | 2014 | | | 2015 | | | 2016 | | Net Sales ($ Millions) | | $ | 3,359 | | | $ | 3,390 | | | $ | 3,505 | | Adjusted Operating Income(1)($ Millions) | | $ | 522.5 | | | $ | 513.5 | | | $ | 512.8 | | Adjusted Operating Margin (% of Net Sales)(1) | | | 15.6 | % | | | 15.1 | % | | | 14.6 | % | Adjusted Diluted EPS(1) | | $ | 5.54 | | | $ | 5.52 | | | $ | 5.66 | | Free Cash Flow (% of Net Income Attributable to Hubbell)(1) | | | 102 | % | | | 92 | % | | | 113 | % |
(1) | Adjusted operating income, adjusted operating margin, adjusted diluted earnings per share and free cash flow are non-GAAP financial measures. A reconciliation to the comparable GAAP financial measures can be found in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2016,2019, filed with the SEC on February 16, 2017.14, 2020. |
Net Sales
| | | | | 2% | | 5% | | 18% | Net Sales Growth | | Adjusted Diluted EPS Growth | | Free Cash Flow Growth | | | | | | >Growth primarily from price realization | | >Includes$0.51restructuring and related investment | | >Net Income up11% | | | | | |
Net sales for the year ended 2016 were $3.5 billion, an increase of three percent over the comparable period of 2015. Acquisitions added three percentage points to net sales in 2016 compared to 2015, offset by the impact of foreign currency translation which reduced net sales by one percentage point. Organic volume, including pricing headwinds, added one percentage point to net sales in 2016 as we saw growth in non-residential and residential markets, continued declines in core industrial and oil markets and flat growth in transmission and distribution markets. Net sales for the year ended 2015 were $3.4 billion, an increase of one percent over the year ended 2014. Acquisitions added three percentage points to net sales in 2015 compared to 2014 offset by the impact of foreign currency translation which reduced net sales by two percentage points. Organic volume was flat in 2015.
Operating Income
Operating income of $477.8 million in 2016 increased 1% from the comparable period in 2015, while operating margin declined by 40 basis points to 13.6% when compared to 2015. Excluding restructuring and related costs, adjusted operating income of $512.8 million was in line with the comparable period in 2015, and the adjusted operating margin was 14.6% in 2016 compared to 15.1% in 2015. Savings from cost actions helped support operating margins and partially offset unfavorable price, foreign exchange, and mix impact of industrial and oil market declines. Operating income decreased eight percent in 2015 to $474.6 million, while operating margin declined by 140 basis points to 13.4% when compared to 2014. Excluding restructuring and related costs, adjusted operating income decreased two percent and the adjusted operating margin was 15.1% in 2015 compared to 15.6% in 2014.The decrease in operating income is primarily due to unfavorable product and business mix, and the unfavorable impact of foreign exchange, partially offset by the favorable net impact of price and material costs as well as productivity in excess of cost inflation.
Earnings Per Diluted Share
Earnings per diluted share in 2016 increased 10% compared to 2015. Excluding restructuring and related costs, and costs associated with the reclassification of Common Stock, adjusted earnings per diluted share increased 3% in 2016 as compared to 2015 driven primarily by a lower
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average number of diluted shares outstanding for the year, which declined by approximately 2.3 million, more than offset tax headwinds. Earnings per diluted share in 2015 decreased 13% compared to 2014. Adjusted earnings per diluted share declined slightly in 2015 as compared to 2014 due to lower adjusted operating income, partially offset by the impact of a lower average number of diluted shares outstanding for the year, which declined by approximately 1.2 million as compared to 2014.Our Compensation Program
Free Cash Flow as a % of Net IncomeExecutive Compensation Objectives
Free cash flow (defined as cash flow from operations less capital expenditures) as a percentage of net income attributableHubbell’s compensation program is designed to Hubbell was 113% in 2016 compared to 92% in 2015, and 102% in 2014.
In addition toachieve the following pay for performance achievements noted above, during 2016 the Company also:objectives:
Increased the quarterly dividend
11%
| Align executive pay to $0.70 per share – the 9thour company performance in order to drive our business strategy. |
| Attract and retain key talent. | consecutive year | Align interests of increaseexecutives with our shareholders. | | | Invested over
$173M
on three acquisitions across
both reporting segments | | Repurchased
$247M
of sharesDeliver competitive and invested
$67M
in capital expendituresfair compensation. |
Additionally, the Company also reached the following milestones as part of its restructuring program. Since 2014:
Realized approximately
$0.45
of cumulative savings per diluted EPS | | Exited
20
facilities representing almost
10% of our total square footage |
We believe that our collective focus on furthering the vision of One Hubbell – serving our customers, operating with discipline, growing the enterprise and developing our people – provides the means for the Company to continue to grow profits and deliver attractive returns to our shareholders.
Our Compensation Practices and Decisions
Our compensation decisions for 20162019 were directly influenced by the 2019 operating results for the year described above, our extensive shareholder outreach, and reflect the strong relationship betweenof our commitment to pay and performance.for performance compensation practices. We use the following objectives to guide our decisions: ATTRACT, RETAIN, AND MOTIVATE | | Attract, retainand motivate high-quality executive talent essential to our immediate and long-term successsuccess. | COMPETITIVE AND FAIR | | Deliver target compensation to our executives that is competitive and fair as compared to our relevant external benchmarks. | PAY FOR PERFORMANCE | | Align the interests of executives with our shareholders withby ensuring our compensation program has a
compensation structure that
reflects strongpay for performance orientation | | Deliver compensation to our
executives that iscompetitive
and fair as compared to
relevant external benchmarks orientation. |
Our Compensation Committee has designed our compensation program to fulfill these objectives. The following page contains highlights of our compensation practices and decisions which exemplify our commitment to sound compensation governance and shareholder interests.
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Compensation Governance Snapshot The following are highlights of our compensation practices and decisions which exemplify our commitment to sound compensation governance and shareholders’ interests. WHAT WE DOWhat We Do | | What We Don’t Do | | Align CEO and NEO Pay with Shareholder Interestsfor Performance. | | Designate 70% of NEO total compensation and 100% of their long-term incentive award opportunity as performance-based, linked to TSR, growing sales profitably, and our share price | | | | Ensure the long-term orientation of our performance awards by aligning vestingWe closely align pay and performance periods at 3 years | | | | Limits on Executive Compensation | | Cap our short-and long-term incentive awards payouts at 200%by placing a significant portion of target level and eliminate payouts entirely for performance below a minimum threshold level | | | | Risk Mitigation | | We annually assess ourtotal direct compensation programs and policies to ensure that the features of our program do not encourage excessively risky business decisions | | | | Robust Stock Ownership: | | We require senior executives, including our named executive officers, to acquire and maintain ownership in Company stock equal to 3 and 5 times their base salary for the duration of their employment | | | | Strong Governance Practices: | | • | We ensure the independence of the Compensation Committee’s outside consultant each year by validating that the consultant perform no work other than as prescribed by the Compensation Committee and NCGC | be at-risk. | | | | • | We maintain a Compensation Recovery Policy to recover performance-based compensation from our senior executives, including the named executive officers, under certain prescribed acts of misconduct | | | | | • | We require a double-trigger (change in control plus termination of employment) to trigger cash severance payments under ourNo Single Trigger on Change in Control Severance Agreements | | | | | • | OnBenefits.Change in control benefits are provided only upon both a change in control unvested equity awards wouldand qualifying termination. | Robust Performance Goals.We establish clear and measurable goals and targets and hold our executives accountable for achieving specified targets to earn a payout under our incentive plans. Performance goals are linked to operating priorities designed to create long-term shareholder value. | | No Guaranteed Annual Salary Increases or Bonuses.Annual salary increases are based on evaluations of individual performance and the competitive market. In addition, we do not automatically accelerate unlessprovide guarantees on bonus payouts. | Independent Compensation Consultant.We retain an acquiring company were to choose not to assume them, orindependent compensation consultant on behalf of the Compensation Committee were to exercise its discretionreview and advise on executive compensation matters. | | No Consultant Conflicts.The independent compensation consultant cannot provide any other services to vest such awardsHubbell without the Compensation Committee’s approval. | WHAT WE DON’T DOAnnual Benchmarking. | | No Above-Median Targeting of Executive Compensation: | | We target the total direct compensation,review peer and each compensation element, of our executive officers at the median of our Peer Group | market practice, as well as pay levels on an annual basis. | | | No Hedging or PledgingPledging. | | We prohibit our executives, including our named executive officers,NEOs, from hedging or engaging in derivatives trading with respect to Companycompany stock. | Shareholder Engagement.Led by our Compensation Committee Chair, we conducted formal outreach with our investors to discuss our compensation program in the Spring and Fall. | | No Excessive Perks.The only perquisites provided are financial and tax planning and limited use of the corporate aircraft subject to Board oversight. | Strong Governance.We have a robust stock ownership policy, a strong clawback policy, and our Short-Term Incentive plans include the option for only negative discretion by the Compensation Committee regarding award amounts paid. | | No Tax Gross Ups.We do not provide tax “gross ups” for severance, perquisites, or any other benefits provided to our executives, including the NEOs. | | | No Excessive Supplemental Retirement Plans.We have frozen our supplemental executive retirement plan and only provide new benefits under qualified retirement plans that are made available generally to employees and non-qualified plans that are made available to certain executives. | | | No Repricing or Cash BuyoutsBuyouts. | | We prohibit the repricing or buyout of options and SARs without shareholder approvalapproval. | | | | No Tax Gross UpsEmployment Agreement with CEO. | | We doMr. Nord, our CEO, does not provide tax “gross ups” for perquisites, severance, or any other benefits provided to our executives, includinghave and has never had an employment agreement with the named executive officers | | | | Don’t Maintain Excessive Supplemental Retirement Plans | | We only allow participation in qualified and non-qualified retirement plans that are made available to all employees |
2016 Key Compensation Decisions
Froze | | Eliminated | | Adopted | | Recommended | Froze the Company’s Supplemental Executive Retirement Plan which had been closed to new participants since 2007
Effective: 12/31/16 | | Eliminated the single trigger vesting of equity awards on a change in control in our 2005 Incentive Award Plan, as amended and restated
Effective: 12/06/16 | | Adopted asafe harbor 401(k) plan with an automatic, non-discretionary participant contribution of 4% of eligible earnings
Effective: 01/01/17 | | Recommended moving from a three year say on pay advisory vote to anannual say on pay advisory vote
Effective: 05/02/17Company. |
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Our Shareholders’ Feedback
Say onCEO Pay / Say When onvs. Realized Pay
As describedThe Summary Compensation Table onpage 58 provides annual compensation for our NEOs in accordance with the Securities and Exchange Commission (“SEC”) regulations. These regulations provide that the long-term incentive awards be presented as their grant date value according to accounting rules. While this CD&A, we believe that our executive compensation program is designed both appropriatelyview of grant-date pay can be helpful to compare target pay across companies, it does not provide an accurate assessment of actual value delivered to NEOs based on Company performance.
Therefore, in order to better assess the relationship between pay and effectively to achieve its overall objectives. At the Company’s 2011 and 2014 Annual Meeting of Shareholders, 97% and 98%, respectively, of the votes cast on our say on pay proposal were voted in favor of the Company’s executive compensation program. We believe these strong results indicate that our shareholders are generally supportive of our compensation approach. Accordingly,performance, the Compensation Committee has chosen largelyreviews Hubbell’s NEOs’ realized compensation and performance, as well as realized compensation and performance relative to maintain the structure and componentsour Peer Group. The following Table provides descriptions of the executive compensation program, while continually evaluating its effectiveness in meeting the Company’s compensation objectives. At the 2011 Annual Meeting, 76% of our shareholders also voted in favor of the proposal to hold say on pay votes every three years. Since then, theboth Summary Compensation Committee considered the evolution of the advisory vote on compensation, the prevalence of annual say on pay votes within our peer group and general industry, and the level of shareholder support garnered for the triennial say on pay vote back in 2011. In keeping with its objective to continually monitor the effectiveness of the Company’s compensation program, and the voice of our shareholders, the Board of Directors is proposing to move to an annual say on pay advisory vote commencing with the 2018 Annual Meeting of Shareholders.
Although both the say onTable pay and say when on pay votes are non-binding, the Compensation Committee values the opinions of shareholders and will continue to consider the outcome of the vote when making future compensation decisions.
The Board of Directors recommends that shareholders vote for a say on pay advisory vote every year.
realized compensation. Pay Summary | | Description | Summary Compensation Table (SCT) | | SEC mandated disclosure | | | | | | Compensation awarded in the reporting year, as well as value estimates for othertypes of compensation. | | | | | | Base salary, bonuses, and cash incentives reflect amounts earned relative to yearof service. Long-term incentive awards reflect grant-date fair value of restrictedshares, stock appreciation rights, and performance shares | | | | Realized Compensation | | Used to measure impact of performance on pay | | | | | | Compensation earned during the reporting year, including the actual results ofperformance-based LTI, plus compensation awarded prior to the reporting yearthat remains dependent on Company performance. | | | | | | Base salary, bonuses, and cash incentives reflect amounts earned relative to yearof service (consistent with Summary Compensation Table). Long-term incentiveawards reflect the value of restricted shares that vested during the period,performance awards paid out during the period, the value of stock appreciationrights exercised during the period, and changes in the value of unvestedrestricted shares and stock appreciation rights based on changes in stock priceduring the period. | | | |
| | | On an annual basis, the Compensation Committee compares both SCT and Realized pay to company performance to evaluate pay for performance effectiveness. | | |
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COMPENSATION PROGRAMThe following charts compare Hubbell’s CEO’s Realized compensation to our TSR performance for the last three years. The below chart entitled Total Shareholder Return shows our TSR annual performance for the same three-year period. The below chart entitled Realized Compensation compares Hubbell’s CEO’s Realized compensation relative to our cumulative TSR performance for the three-year period 2017-2019. The two charts demonstrate a strong link between the compensation realized by our CEO and our TSR performance. In 2019, Hubbell’s TSR was 53% and the Realized compensation to the CEO was $30.6M, whereas in 2018, the realized pay to the CEO was negative when Hubbell’s TSR performance was below expectations.
Overview
TOTAL SHAREHOLDER RETURN (BY YEAR) | REALIZED COMPENSATION | | | | | | |
The Company’sgraph below identifies for Hubbell and for the companies within our 2019 Peer Group (as described onpage 42) the relationship between CEO pay rank and relative return to shareholders. Each blue dot represents a company in the Peer Group, and the two yellow dots represent Hubbell in 2018 and 2019. Companies within the shaded areas have ideal pay for performance relationships and show that the compensation realized by the CEO is directly aligned with company performance as measured by TSR. 1-YEAR CEO REAL COMPENSATION PERCENTILE VS. TOTAL SHAREHOLDER PERCENTILE | | |
| | | Hubbell’s CEO Pay is aligned with company performance, both on an absolute basis and relative to the Peer Group. | | |
| HUBBELL INCORPORATED| 2020 Proxy Statement 39 |
Elements of Compensation | | | Compensation program puts the majority of pay at risk dependent on Hubbell’s performance. | | |
Our pay for performance compensation philosophy is intended to reward our executives for their contributions toward achievement of the Company’s business strategy and goals. To achieve our compensation objectives, the Company provides its executives with a total direct compensation package consisting of the following fixed and variable compensation elements that provide executives with income that is reflective of competitive benchmarks and enhances the Company’s ability to attract and retain high quality management talent. Our compensation objectives and business strategy drive how our Compensation Committee designs the elements of our compensation program, as outlined in the following table. 2016 Elements of Compensation
| ElementWhat? | | TypeWhen? | | TermsHow? | | Link to Strategy and Performance | Base Salary | FixedCash | Fixed amount of compensation for performing day-to-day job responsibilities. | Annual | | Reviewed annually for potentialadjustment based on factors such as market levels, individual performanceasmarket competitiveness, individualperformance and scope of responsibility. | | A competitive cash compensation thatattracts high caliber executives to lead ourCompany. | Short-TermShort-term Incentive | Variable Cash | Variable performance-based award opportunity based | Annual | | Based on achievements with respectto the Company’s financial goals (earnings per share, free and operating cash flow) andandindividual performance against theCompany’s strategic objectives. | | Designed to motivate our executives toattain short-term performance goals thatare linked to our long-term financial andstrategic performance objectives. | Long-TermLong-term Incentive
Compensation | | | | | | | | 50% PerformanceShares | Variable Equity | | 3-year period | | Performance Shares (PS) | Vest at the end of a three year performance period based 50% on Hubbell’s TSR performance and 50% on net metrics:sales growth, (with aoperating profit margin, modifier) as compared toand trade working capital. All performance results can be eitherenhanced or lessened by the companies in the S&P Capital Goods 900. The rangeCompany’sTSR. | | Aligns executives’ interests with achievingcritical long-term financial goals of payout for TSR and net sales performance is between 0% and 200%. The net sales payout is further modifiedthecompany. Further aligns executives with shareholderinterests through share price appreciation. | 25% StockAppreciation Rights(SARs) | Variable Equity | | 3-year period | | Award that provides value based on Hubbell’s cumulative net income margin performance in the range of 0% to 125%. Dividends do not accrue with respect to PS. PS are settled in shares of Common Stock. | | Stock Appreciation Rights (SARs) | Vests generally in three equal annual installments on each anniversary of the grant date. Represents right to receive, in Common Stock, the appreciation in value between the stock pricestockprice on the date of grant and the date of exercise. | | Performance-Based Restricted Stock (PBRS) | Vests at the end of a three year performance period if Hubbell’s TSR is greater than the 20thpercentile of the comparator group. Dividends are received during the vesting period. | Retirement | Pension Plans* | Defined Benefit Plan (DB Plan). A qualified plan providing retirement income for eligible participants based on years of service and average earnings up to tax code limitations. Closed to new participants in 2004. | * In 2016, the Committee approved a “soft freeze” of the DB Plan and DB Restoration Plan. Service credit under these plans would freeze February 28, 2017 but compensation credit would continue to accrue through December 31, 2020, at which time both plans would be fully frozen.
The Executive Plan was also frozen effective December 31, 2016.ofexercise. | | Defined Contribution Plan (DC Plan). A qualified plan under whichAligns executives with shareholdersthrough the Company can make a discretionary profit sharing contribution to eligible participantsappreciation of value based on a multiple of salary and short-term incentive award.stock price performance. | Restoration Plans*25% RestrictedShares | DB Restoration Plan. Provides retirement income relating to compensation in excess of tax code limitations under same formula as the DB Plan above.Variable Equity | | DC Restoration Plan. Enables3-year period | | Represents a grant of Hubbell Shares thatvest after a three-year period. | | Promotes the Company to make additional profit sharing and other contributions to those participants in the DC Plan whose contributions are subject to tax code limitations. | Executive Plan* | Provides designated executives the opportunity to earn pension benefits supplementing those earned under the DB Plan. Closed to new participants in 2007 and frozen in 2016 including further accrualsretention of service and compensation credit. | 401(k) | A qualified 401(k) plan that provides participants with the opportunity to defer a portion of their eligible compensation, up to tax code limitations, and receive a Company matching contribution (up to 6% of salary). | Executive Deferred Compensation Plan (EDCP) | Enables participants to defer up to 100% of their annual short-term incentive award and 50% of their salary into investments selected by the participant. | Other | Perquisites | Limited benefits provided by the Company to executiveskey executives. |
The Compensation Committee reviews a number of factors when establishing target total compensation for executives including, but not limited to, market data, tenure in position, experience, performance and internal pay equity. www.hubbell.com | HUBBELL INCORPORATED - |2017 Annual Meeting of Shareholders & 2020 Proxy Statement | 29 40 |
Roles for Designing and Delivering Compensation Hubbell has a clearly defined process and roles in making decisions about compensation over the course of each year. Role | Process | Compensation Committee | Oversees programs and has ultimate responsibility | Compensation Consultant | Provides market data, insight, and support to the Compensation Committee | CEO and Management | Provides data and limited input to the Compensation Committee | Shareholders | Feedback drives our program |
Process and Timeline for Designing and Delivering Compensation | | | The Compensation Committee follows a robust process to determine compensation values and program design that is informed by Peer Group and market data and supported by the review and advice of an independent compensation consultant. | | |
Over the course of four planned committee meetings each year, consistent Compensation Committee agendas ensure thorough review of compensation design and levels for our NEOs. In addition to the planned meetings set forth below, the Compensation Committee also may schedule additional meetings throughout the year on any of the subjects set forth below. FEBRUARY | Approval of base pay changes, STI targets and LTI grant values.LTI grants moved to Februarybeginning in 2020. | | Finalization of performance share payouts for the three-year performance period ending the previous December. | | Performance goals for the Long-term and Short-term programs are approved. | | Tally Sheets(1)for all executive officers are reviewed. | JUNE | Executive compensation design trends and regulatory review. | | Pay for performance and realized compensation analysis for prior year and three-year periods. | | Review of Peer Group. | SEPTEMBER | Executive compensation benchmarking review, relative to the Peer Group and general market. | | Review/discuss any program design changes for upcoming year. | | Performance review of current short- and long-term performance grants. | DECEMBER | Initial review of individual executive compensation changes for upcoming year. | | Review/discuss any program design changes for upcoming year. | | Performance review of current short- and long-term performance grants. |
(1) | Tally Sheets identify and value each element of compensation, including base salary, short-term and long-term incentive awards, pension benefits, deferred compensation, perquisites, potential change in control and severance benefits and provide an aggregate sum for each executive. |
Role of the Compensation Committee and the Independent Compensation Consultant The Compensation Committee determines the Company’s compensation philosophy and approves each element of executive compensation. The Compensation Committee relies on advice and data provided by Exequity LLP (“Exequity”), an independent outside compensation consultant engaged by the Compensation Committee to assist in its determination of the appropriate amount of total direct compensation for the named executive officers.NEOs. Exequity does not advise the management of the Company and receives no compensation from the Company for services other than as directed by the Compensation Committee and the NCGC for which it provides guidance on independent Director compensation. See the “Compensation of Directors”“Director Compensation” section onpage 16.28. Although the Compensation Committee considers recommendations made by the CEO with respect to executive compensation, the Compensation Committee is solely responsible for determining all executive compensation decisions. The Compensation Committee discusses its compensation philosophy with Exequity and expects Exequity to present options for award practices and provide context for any proposals, but otherwise does not impose any specific limitations or constraints on or direct the manner in which Exequity performs its advisory services. As advisor to the Compensation Committee, Exequity reviews the total compensation strategy and pay levels for the Company’s named executive officers,NEOs, examines all aspects of the Company’s | HUBBELL INCORPORATED| 2020 Proxy Statement 41 |
executive compensation programs to ensure their ongoing support of the Company’s business strategy and objectives, informs the Compensation Committee of developing legal and regulatory considerations affecting executive compensation and benefit programs and provides general advice to the Compensation Committee with respect to all compensation decisions pertaining to the CEO and to all senior executive compensation recommendations submitted by management. Although theThe Compensation Committee considers recommendations made by the CEO with respect to executive compensation, the Compensation Committee is solely responsible for determining all executive compensation decisions.
The Committee has assessed the independence of Exequity and concluded that no conflict of interest currently exists or existed in 20162019 that would prevent Exequity from providing independent advice to the Compensation Committee regarding executive compensation matters. In making this determination, the Compensation Committee considered, among other things, the following factors: (1) Exequity did not provide any non-compensation-related services (and did not receive any fees for any non-compensation-related services); (2) compliance with Exequity’s conflict of interest policies; (3) there are no other business or personal relationships between Company management or members of the Compensation Committee and any representatives of Exequity who provide services to the Company; and (4) neither Exequity nor any representatives of Exequity who provide services to the Company own any Common Stock or other securities of the Company.
BenchmarkingCompensation Peer Group
The Compensation Committee benchmarksassesses each element of executive total compensation toagainst the median compensation levels paid to executives in comparable positions in similar industries. In 2016, theThe Compensation Committee reviewed benchmark data from two sources –- the Peer Group and the general industryGeneral Industry data as described below. For cash compensation for 2019, set prior to the start of 2019, the Committee reviewed 2018 benchmarking data. No Long-term incentive awards were provided in 2019 due to the change in grant date from December to February 2020 as discussed earlier. The table below reflects the 2018 Peer Group used to determine pay levels for 2019. Peer Group Data
The Compensation Committee benchmarks Hubbell’s executive pay practices to a group of organizations (the “Peer Group”) that are similar to the Company in size, industry affiliation and performance compatibility, and that are representative of the types of companies with which Hubbell competes for executive talent. When setting 2016 pay for Hubbell’s executives, the Compensation Committee considered the remuneration practices within the community of 19 Peer Group companies listed below.
| | | | | Industry Affiliation Companies in the Peer Group are manufacturing or distribution companies in the electrical space. | | Similar Size Companies in the Peer Group are between 1.5 and 3X the revenue size of Hubbell, with Hubbell at the 50th percentile of revenue. | | Competitors for Talent Companies in the Peer Group are ones we would consider as competing for the critical sales, engineering and other functional talent that drives our business. |
Acuity Brands, Inc. | Pall | EnerSys Inc. | | Parker-Hannifin Corporation | | Snap-on Incorporated | AMETEK, Inc. | | Fastenal Company | | Pentair Ltd. | | Valmont Industries, Inc. | Babcock & Wilcox Co.Carlisle Companies Incorporated | | Flowserve Corporation | | Regal-Beloit Corp. | Belden Inc. | Rockwell Automation,W.W. Grainger, Inc. | Crane Co. | Roper Industries, | IDEX Corporation | | Rockwell Automation, Inc. | | Woodward, Inc. | Curtiss-Wright Corporation | | Lincoln Electric Holdings, Inc. | | Rockwell Collins, Inc. | | Xylem, Inc. | Donaldson Company, Inc. | Sensata Technologies Holding NV | Eaton Corporation | Terex Corporation | EnerSys, Inc. | Valmont Industries, Inc. | General Cable Corp. | Woodward, Inc. | Lincoln Electric Holdings Inc. | |
In the third quarter of 2016, management reviewed the peer group composition to assess its continued relevance in terms of operational comparability and organization size. Based on this review, the Compensation Committee approved a new Peer Group of 25 companies for use in benchmarking 2017 compensation. The new Peer Group consists of 12 new companies (bolded in the table below) and 13 existing peers that collectively fit the Compensation Committee’s stipulated benchmarking criteria. Six companies were removed from the former Peer Group due to their impending or completed acquisition by another company or their low performance compatibility. Peer Group data is sourced from a mix of proxy statements, Forms-4 filings, and the Aon Hewitt 2016 Total Compensation Database™. The new Peer Group companies are as follows:
Acuity Brands, Inc. | Parker-Hannifin Corporation | AMETEK, Inc. | Pentair Ltd. | Carlisle Companies Incorporated | Regal-Beloit Corp. | Crane Co. | Rockwell Automation, Inc. | Curtiss-Wright Corporation | Rockwell Collins, Inc. | Donaldson Company, Inc. | Roper Technologies, Inc. | Dover Corporation | Sensata Technologies Holding NV | EnerSys Inc. | Snap-on Incorporated | Fastenal Company | Valmont Industries, Inc. | Flowserve Corporation | W.W. Grainger, Inc. | IDEX Corporation | Woodward, Inc. | Lincoln Electric Holdings Inc. | Xylem Inc. | MSC Industrial Direct Co., Inc. | | Roper Technologies, Inc. | | | Dover Corporation | | | | Sensata Technologies Holding NV | | |
HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement | 30 |
General Industry Data TheAs a secondary reference, the Compensation Committee also benchmarked pay for Hubbell executives to general industry practices as a secondary reference for most positions, and a primary benchmark for those jobs with an insufficient number of matches in the Peer Group.General Industry data. The general industryGeneral Industry data reflects the norms among all the companies that participate in Aon Hewitt’s 20162018 and 2019 Total Compensation Database, excluding companies that operate within the financial services, retail, utility, hospital and hospitality sectors.
Peer Group and general industry General Industry data areis size-adjusted to reflect pay practices at companies of Hubbell’s size. In its review of the benchmark communities,companies, the Compensation Committee focusesfocused on 50thpercentile practices and, in 2016, the Committee determined that aggregate target total compensation expenditures for the Company’s executives trailed behind the 50thpercentile of the Peer Group, which is the Company’s stated compensation principle.practices.
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The2019 Compensation Committee reviews a number of factors when establishing target total compensation for executives including, but not limited to, market data, tenure in position, experience, performance, and internal pay equity. In addition to reviewing the compensation levels of the benchmark groups, the Compensation Committee also reviews tally sheets totaling 2016 compensation for each of the named executive officers. These tally sheets identify and value each element of the named executive officer’s compensation, including base salary, short-term and long-term incentive awards, pension benefits, deferred compensation, perquisites, and potential change in control and severance benefits, and provide an aggregate sum for each executive. This analysis aids in the Compensation Committee’s assessment and administration of the Company’s compensation program.
Compensation MixResults
Consistent with our philosophy of linking pay to performance, a significant portion of the total compensation paid to our named executive officers is performance-based, taking the form of short- and long-term incentive award opportunities. As shown in the charts below, the Company’s compensation mix is consistent with our Peer Group’s practices:
| | | The Committee targets the 50thpercentile of the Peer Group data for compensation elements. | | |
Base Salary Base salary is the principal fixed component of total direct compensation paid to our named executive officers.the NEOs. Salaries are determined by reference to prevailing market pay rates, scope of job responsibility and incumbent performance considerations. The Company intends its base salary expenditures to be consistent with those incurred by similarly positioned companies elsewhere, so the Compensation Committee expects base salaries to approximate the 50thpercentile of the benchmark community practices. In December 2015,Annually, the Compensation Committee approved ofreviews and approves increases as appropriate for the named executive officers that ensuredNEOs to ensure their base salaries remain close to market-representative pay levels effective in 2016.levels. Short-term Incentive Compensation | | | Hubbell’s Short-term Incentive Program drives our most critical annual financial metrics, Earnings Per Share and Cash Flow. | | |
The elements of the short-term incentive (STI) program are: | STI target payout percentage for the NEOs is set at the 50thpercentile of benchmark practices. | | 100% of STI compensation for the CEO is based on the financial performance of the enterprise, while the STI mix for the other NEOs is 80% financial performance, and 20% their individual contributions to Hubbell’s strategic objectives. | | Challenging financial goals are set consistent with the Compensation Committee’s view of strong business performance, as communicated to investors. | | Plan documents set out a cap on payouts and provide for the Compensation Committee to use negative, but not positive, discretion for all payouts. | | Payouts for threshold performance are 50% of target, and payouts are capped at 200% of target for maximum performance. No payout is provided if threshold performance is below 50% of target. Payouts are limited to no more than $5 million per person per year. | | Metrics are evaluated annually and are reviewed to ensure they drive business performance and complement, but do not overlap with, the metrics in the long-term incentive program. | | Payouts are delivered as cash, subject to applicable tax withholdings. |
Annual Short-term Incentive Targets The Compensation Committee approves annual STI targets based on Peer Group data review. STI targets are expressed as a percentage of base salary, and if targets are changed during the course of the year, the full year target is pro-rated to reflect pre- and post-change periods. Below are the 2019 Targets for each NEO. | | Annual Bonus Target/2019 Pro-ration | | | NEO | | (if applicable) | | Comment | David G. Nord | | 125% | | | William R. Sperry | | 85% | | | Gerben W. Bakker | | 90%/86% | | Target changed from 80% to 90% when promoted to President and COO role effective June, 2019. | Allan J. Connolly | | 75%/63% | | Target changed from 50% to 75% when promoted to Group President role effective July, 2019. | Katherine A. Lane | | 55%/53% | | Target changed from 50% to 55% when promoted to General Counsel role effective June, 2019. |
| HUBBELL INCORPORATED -|2017 Annual Meeting of Shareholders & 2020 Proxy Statement | 31 43 |
STI Design and Metrics Hubbell’s STI program is designed to drive performance on our most critical annual objectives. The below tables outline the program design as well as the detailed metrics and measurements. Metric | | Level Measured | | How is it calculated? | | Why is it included in the STI Program? | Earnings Per Share (EPS) | | Enterprise | | Net income divided by outstanding shares of common stock. | | Affects TSR most directly and is the most critical metric of growth. | Operating Profit (OP) | | Business Segment | | Segment level net sales less cost of goods sold and selling and administrative expenses. | | The most comprehensive metric of business segment performance; represents the direct impact of the leader on the business. | Free Cash Flow (FCF) | | Enterprise | | Defined as cash flow from operations less capital expenditures. | | Demonstrates management’s ability to generate cash for the business for on-going operations and future investments. | Operating Cash Flow (OCF) | | Business Segment | | Defined as net cash from operating activities. | | Demonstrates leaders’ ability to manage on-going operations in a positive manner, generating cash for the enterprise. | Strategic Objectives | | Individual | | Compensation Committee evaluation, with CEO input for the other NEOs of each individual’s impact on Hubbell’s strategic objectives. | | Strategic objectives prioritize the most critical short-term and long-term actions for the business in order to deliver shareholder value. |
STI Calculations Per the elements described above, each NEO has a slightly different calculation methodology for his or her payout. The below graphic outlines the calculations. Step 1 - Determine the STI Target www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 44 |
Step 2 - Multiply the STI Target by STI Payout Factors IShort-Term Incentive CompensationMr. David G. Nord Annual
Mr. Nord’s STI is based 100% on enterprise results as described in the 2019 Compensation Results section onpage 43. IMr. William R. Sperry and Ms. Katherine A. Lane The STI payout factors for Mr. Sperry and Ms. Lane are based 80% on enterprise financial results and 20% on results from their individual contributions to our strategic objectives. IMr. Gerben W. Bakker Mr. Bakker was promoted from Group President of Hubbell’s Power Systems Group (HPS) to President and Chief Operating Officer of Hubbell effective June 6, 2019. IMr. Allan J. Connolly Mr. Connolly was promoted from the leader of the Aclara business segment within HPS to the Group President, HPS, effective July 1, 2019. | HUBBELL INCORPORATED| 2020 Proxy Statement 45 |
Enterprise and Business Level Measures Payout factors begin at 50% of target (for threshold performance) and are capped at 200% of target (for maximum performance). No payout is provided below threshold performance and the Committee may not approve a payout factor of greater than 200%. The table below outlines the targets that were approved by the committee for the Enterprise Metrics in February of 2019. Enterprise Metrics | | Threshold | | | Target | | | Max | Earnings Per Share (65% weighting) | | | $ | 6.39 | | | $ | 7.10 | | | $ | 7.81 | Payout Factor | | | | 50% | | | | 100% | | | | 200% | Free Cash Flow (35% weighting) | | | $ | 356M | | | $ | 445M | | | $ | 534M | Payout Factor | | | | 50% | | | | 100% | | | | 200% |
In addition to the enterprise measures above, which are a part of the STI Design for all NEOs, NEOs who are responsible for business segments within the enterprise are also measured on the financial performance of their segments. Strategic Objective Measures For all the NEOs except the CEO, a portion of their STI award is based on the performance of Hubbell’s strategic objectives. Strategic objectives are set at the beginning of each year in the categories listed below. At the end of the annual performance period, the Compensation Committee, with input from management, evaluates the enterprise performance on these objectives, and assigns a payout factor for this portion (20%) of the NEO’s overall STI payout. Payout factors can range from 0-200%. The objectives that were set for 2019 are outlined below. | SERVE OUR CUSTOMERS | | | OPERATE WITH DISCIPLINE | | | GROW THE ENTERPRISE | | | DEVELOP OUR PEOPLE | We strive to exceed customer expectations by providing exceptional service and implementing processes that make it easy to do business with us. | | We implement industry leading processes to ensure a productive, safe and compliant organization, and maximize our footprint for operational efficiency. | | We continue to grow our organization, both through developing innovative new products and by acquiring complementary businesses. | | We recruit, hire and develop talent that meets and anticipates the ever-changing needs of our enterprise, while fostering an inclusive and diverse workplace. |
2019 Performance Results and Payout Enterprise Level Measures For 2019, reported EPS was $7.31 which the Compensation Committee then adjusted for pre-determined discrete items not considered in determining the performance versus target, including unplanned restructuring and related, and a one-time item associated with a divestiture as well as a settlement related to a multi-employer pension plan, which resulted in a payout lower than $7.31. Metric | | Target | | | Perf vs. Target | | Payout % | EPS | | $ | 7.10 | | | 101% | | 112% | FCF | | $ | 445M | | | 111% | | 157% | Blended Payout for Enterprise Financial Metrics | | | | | | | | 128% |
Business Level Measures Two of our NEOs had a portion of their STI based on the performance of one of our business segments. Mr. Bakker led the Power Segment from January through June 2019, and Mr. Connolly led the Power Segment from July through December 2019. Therefore, the OP and OCF performance of that Business Segment is a portion of their overall STI payout. Metric | | Target | | Perf vs. Target | | Payout % | OP | | 112% (% vs. PY) | | 104% | | 122% | OCF | | 118% (% of OP) | | 112% | | 160% | Blended Payout for Business Level Financial Metrics | | | | | | 136% |
Additionally, for the first part of the year, Mr. Connolly led the Aclara business, and his overall score reflects a payout of 124% for the business level measures for that leadership. www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 46 |
Strategic Objective Measures At the end of the performance period, the enterprise performance on the strategic objectives for 2019 was evaluated to determine the payout percentage for the portion of the short-term incentive awards are also targeted at the 50thpercentile of the benchmark community practices. Short-term incentive awards are paid pursuant to the Company’s Incentive Compensation Plan (“Incentive Plan”) and Senior Executive Incentive Compensation Plan (“Senior Plan”) (collectively, “STI Plans”). Short-term incentive award target levels (“STI Targets”)(20% for the NEOs, reflect considerationexcept the CEO, whose design is 100% based on financial metrics). Over the course of 2019, the market data Exequity provides while short-term incentive awards actually paid forCompany made progress against all the year reflect achievement of financial and strategic plan goals approved byobjectives as outlined below. Strategic Objective | | | Achievements | Serve our Customers | | | Further development of e-commerce business team and process. | | | | Strategic approach to vertical markets identified and executed. | Operate with Discipline | | | Achieved targets for footprint optimization. | | | | Significant progress on product (SKU) rationalization. | Grow the Enterprise | | | Three acquisitions over the course of 2020, continued pipeline development. | | | | Innovation tracking and new product development focus over course of year. | Develop our People | | | Created a multi-year Inclusion and Diversity strategy, trained all executives. | | | | Progress on employee development plans and training. |
In considering the achievements above, the Compensation Committee including factors like freeapproved a 115% payout for the NEOs for the Strategic Objectives portion of their short-term incentive. Short-term Incentive Payout The following table shows the short-term incentive award earned by each of the NEOs applying the composite payout percentages achieved on their individual performance measures to each of their STI Targets. Their 2019 STI Award is reflected below and operating cash flow, earnings per diluted share (“EPS”), and operating profit performance. STI Targets are based on a percentage of 2016 base salaries and payable from the compensation plans noted in the table and discussed below:Non-Equity Incentive Plan Compensation column of the Summary Compensation Table onpage 58. Additionally, the Compensation Committee agreed with Mr. Nord’s recommendation to reduce his 2019 short-term incentive award payout percentage to the level of payout of the other corporate NEOs. The resulting payout for Mr. Nord is 125%. This decision highlights the importance of the achievement of the 2019 strategic objectives by the other NEOs on Mr. Nord’s 2019 short-term incentive award. Name | | STI Target Percentage(1) | | | Base Salary | | | STI Target | | | Compensation Plan | D. G. Nord | | | 115 | % | | $ | 1,000,000 | | | $ | 1,150,000 | | | Senior Plan | W. R. Sperry | | | 80 | % | | $ | 525,000 | | | $ | 420,000 | | | Senior Plan | R. R. Ruland | | | 70 | % | | $ | 430,000 | | | $ | 301,000 | | | Incentive Plan | A. Hsieh | | | 70 | % | | $ | 440,000 | | | $ | 308,000 | | | Senior Plan | G. W. Bakker | | | 70 | % | | $ | 450,000 | | | $ | 315,000 | | | Senior Plan |
(1) | For 2016, the Compensation Committee adjusted Mr. Sperry’s STI Target from 70% to 80% in order to ensure competitive positioning as compared to external benchmarks. |
| | Performance Measures/Results | | | | | | | EPS and Free Cash Flow (Enterprise Level) | | Operating Profit and Operating Cash Flow (Business Level) | | Strategic Objectives (Individual) | | Total Composite Payout | | STI Target ($) | | STI Award ($) | David G. Nord | | 128% | | — | | — | | 125% | | 1,313,125 | | 1,641,400 | William R. Sperry | | 128% | | — | | 115% | | 125% | | 544,000 | | 680,000 | Gerben W. Bakker | | 128% | | 136% | | 115% | | 126% | | 584,800 | | 738,500 | Allan J. Connolly | | 128% | | 136% / 124% | | 115% | | 126% | | 356,895 | | 449,800 | Katherine A. Lane | | 128% | | — | | 115% | | 125% | | 233,200 | | 291,500 |
Incentive Compensation Plan TheHubbell’s Incentive Compensation Plan is similar to the design of executive short-term incentive award plans that are common at other companies in the general manufacturing environment. Maintaining a short-term incentive award plan that typifies those used elsewhere enhances the appeal of the Company’s compensation program generally and strengthens the Company’s ability to attract and retain high quality executive talent.
The Incentive Compensation Plan authorizes the creation of an incentive compensation pool each year equal to 15% of the excess of the Company’s consolidated earnings over 10% of the invested capital and long-term debt as of the beginning of the year. Actual short-term incentive awards are paid from the authorized pool based on the extent to which the Company achieves certain performance goals established by the Compensation Committee at the beginning of each year. Depending on performance in relation to the goals, earned awards can range in size from 0% to 200% of the named executive officer’sNEO’s STI Target. However, if performance falls below a minimally acceptable threshold, as described below, then no short-term incentive award is payable at all. The 20162019 performance goals and thresholds are described belowabove under a section entitled “2016titled “2019 Performance Measures”Results and Payout”.
Senior Plan
In 2019, Hubbell amended its short-term incentive plan structure to reflect the changes in regulations under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), imposes a $1 million limit on the amount that a public company may deduct for compensation paid to. Specifically, Hubbell eliminated its CEO and its three other most highly paid executives, other than the CFO, who are employed asSenior Plan portion of the end ofIncentive Plan, which previously set forth the fiscal year. This limitation does not apply to compensation that meets the requirements under Section 162(m) for “qualifying performance based” compensation. Short-term incentive awards paidcompensation under the Company’s Senior Plan are intended to be exempt from the deduction limit of Code Section 162(m). Like many other public companies that utilize similar plans, the Senior Plan is intended to provide the Company with the ability to pay performance based compensation to senior executives that are deductible by the Company for federal income tax purposes to the extent permitted by the Code. The maximum amounts that may be paid to participants pursuant to the Senior Plan are determined by reference to the incentive compensation fund established under the Company’s Incentive Compensation Plan described in the prior section above.
UnderIn place of the Senior Plan, the maximum amounts that may be earned are as follows:
Mr. Nord was eligibleCompensation Committee adopted Executive Award Guidelines reflecting the material terms from the Senior Plan, including the establishment of performance measures. Hubbell also amended its Incentive Compensation Plan to earn a maximum amount for 2016 equal toretain the lesser of:
15% of$5,000,000 cap on Short-term incentive payouts previously set forth in the amount of the incentive compensation fund established underSenior Plan. The Company further amended the Incentive Compensation Plan or $5,000,000.
Mr. Sperry, Mr. Hsieh and Mr. Bakker were each eligible to earn a maximum amount for 2016 equalalign to the lesser of:market practice of funding on the basis of target payouts.
| HUBBELL INCORPORATED| 2020 Proxy Statement 47 |
Actual short-term incentive awards are only paid to the extent to which the Company achieves certain performance goals established by the Compensation Committee at the beginning of the amount of the incentive compensation fund established under the Incentive Compensation Plan, or $5,000,000.each year. After the maximum possible payout under the SeniorIncentive Compensation Plan is determined, the Compensation Committee may use its discretion to decrease (but not increase) the actual amount of the short-term incentive award paid under the Senior Plan. In exercising this discretion, the Compensation Committee decided to apply the same methodology used in determining payments under the Incentive Compensation Plan described in the prior section above to the participants in the Senior Plan.paid. The amounts actually awarded to the NEOS are displayed in the SummaryLong-term Incentive (LTI) Compensation Table on page 41 based upon the performance results shown in the tables on page 34.
2016 Performance Measures
This section reflects the applicable short-term incentive award measures, weighting and thresholds applied to participants in the Incentive Compensation Plan and the Senior Plan:
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Enterprise Level Measures
For 2016, the Compensation Committee identified EPS and free cash flow (defined as cash flow from operations less capital expenditures) at the Company level as the two primary performance measures it would use to determine short-term incentive award eligibility for Mr. Nord, Mr. Sperry and Mr. Hsieh. EPS was selected because it was deemed by the Committee to affect shareholder value most directly and to be an important variable in determining share price. Free cash flow was selected because it is an important determinant in Company performance. The 2016 short-term incentive award for Mr. Nord was based solely on these two measures while the award measures for Mr. Sperry and Mr. Hsieh also includedHubbell maintains a strategic objective component as discussed below.
Enterprise Level Measures | | | | | Mr. Sperry and | Mr. Nord | Measures | Threshold | Mr. Hsieh Weighting | Weighting | EPS (75% weight) | Minimum | $4.77 = | 50% | | | Target | $5.30 = | 100% | | | Maximum | $5.83 = | 200% | | | Free Cash Flow (25% weight) | Minimum | 214 = | 50% | 85% | 100% | Target | 268 = | 100% | | | Maximum | 322 = | 200% | | | Strategic Objectives | As described below | 15% | – |
Business Level Measures
Hubbell’s businesses are divided among two operating segments: The Electrical Segment (which is comprised of the Commercial & Industrial, Construction & Energy, and Lighting business groups) and the Power Segment (which is comprised of our Power Systems business group). The Compensation Committee selected operating profit and operating cash flow as the two primary performance measures it would use to determine short-term incentive award eligibility for Mr. Bakker and Mr. Ruland to promote decision making that would best increase the value of the businesses over which they have direct oversight and control. In addition to these measures, a portion of Mr. Bakker’s and Mr. Ruland’s award also included a strategic objective component as discussed below.
Business Level Measures | | | | | Mr. Bakker and | Measures | Threshold | Mr. Ruland Weighting | Business Level Operating Profit (75% weight) Group Business Level Operating Cash Flow (25% weight) | Minimum | < 80% = | 0% | | Target | 100% = | 100% | 60% | Maximum | ≥ 120% = | 200% | | EPS and Free Cash Flow (Enterprise level) | See table above | 25% | Strategic Objectives | As described below | 15% |
Strategic Objective Measures
The EPS, cash flow and operating profit targets were the only targets material to the consideration of the NEO’s annual short-term incentive awards. The Compensation Committee, upon consultation with management, also identified certain objectives central to the Company’s strategy upon which it based a component of Mr. Sperry’s, Mr. Hsieh’s, Mr. Bakker’s and Mr. Ruland’s short-term incentive award. No single strategic objective was a material consideration in the Committee’s determination of an annual short-term incentive award. Specific targets within each strategic objective are set each year. At the end of the annual performance period, the Compensation Committee evaluates each NEO based on their contributions to the specific targets, as well as the strategic objectives as a whole. The specific targets for 2016 are outlined in the table below.
Strategic Objective | | Description and Measure | Serving Our Customers | | Use all means to drive positive customer experience and sales growth | Operating with Discipline | | Commitment to productivity / restructuring savings | Growing the Enterprise | | Make growth happen – regardless of market conditions | Developing Our People | | Accelerate performance culture across enterprise |
For Mr. Nord, the Compensation Committee continued to base his short-term incentive award eligibility entirely on EPS and free cash flow performance measures at the Company level as the Committee considered such measures to better reflect his responsibility to the Company as a whole. Further, the Committee recognized that achievement of the strategic objectives by the other NEOs would directly and indirectly impact the Company wide performance measures used to determine Mr. Nord’s short-term incentive award.
Mr. Sperry’s, Mr. Ruland’s, Mr. Hsieh’s and Mr. Bakker’s individual performance with respect to these strategic objectives is set forth in the Short-Term Incentive Payout table on page 34.
HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement | 33 |
Performance Results and Payout
Enterprise Level Measures
For 2016, actual EPS was $5.24 and free cash flow was $331 million which the Compensation Committee then adjusted for predetermined discrete items not considered in determining the threshold including foreign currency translation and unplanned restructuring and related activities, resulting in EPS and free cash flow performance of 99% and 182%, respectively.
Enterprise | | EPS 75% weight | | Free Cash Flow 25% weight | | Composite Payout | Actual Performance | | 99% | | 182% | | 120% | Weighted Performance | | 74% | | 45% | |
Business Level Measures
Construction and Energy
Mr. Ruland leads the Construction and Energy (“C & E”) business group, and therefore is measured on the performance of this business group. This business group had an operating profit performance target of 5% less than prior year and an operating cash flow target equivalent to 108% of operating profit. The C & E business group achieved operating profit performance that was 14% above target which translated to a performance result of 171% on the operating profit measure. The C & E business group also achieved operating cash flow performance of 130% of target. This performance translated to a performance result of 200% on the operating cash flow measure. When blended together, the composite measure resulted in a payout of 178% as shown below.
Construction and Energy | | Operating Profit 75% weight | | Operating Cash Flow 25% weight | | Composite Payout | Actual Performance | | 171% | | 200% | | 178% | Weighted Performance | | 128% | | 50% | |
Power Systems
Mr. Bakker leads the Power Systems business group, and therefore is measured on the performance of this business group. The Power Systems business group had an operating profit performance target of 6% above prior year and an operating cash flow target equivalent to 109% of operating profit. The Power Systems business group achieved operating profit performance that was 1% lower than target which translated to a performance result of 98% on the operating profit measure. The Power Systems business group achieved operating cash flow performance of 100% of target. This performance translated to a performance result of 99% on the operating cash flow measure. When blended together, the composite measure resulted in a payout of 98% as shown below.
Power Systems | Operating Profit 75% weight | Operating Cash Flow 25% weight | Composite Payout | Actual Performance | 98% | 99% | 98% | Weighted Performance | 73% | 25% |
Short-Term Incentive Payout
The following table shows the short-term incentive award earned by each of the named executive officers applying the Composite Payout percentages achieved on their individual performance measures to each of their STI Targets. The resulting amount reflects their 2016 STI Award as shown below and in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table on page 41.
| | Performance Measures / Results | | | | | | | | | | EPS and Free | | Operating Profit and | | Strategic | | Total | | | | | | | Cash Flow | | Operating Cash Flow | | Objectives | | Composite | x | STI Target | = | STI Award | | | (Enterprise Level) | | (Business Level) | | (Individual) | | Payout | | ($) | | ($) | Mr. Nord | | 120% | | | — | | | | — | | | 120% | | 1,150,000 | | 1,380,000 | Mr. Sperry | | 120% | | | — | | | | 95 | % | | 116% | | 420,000 | | 487,200 | Mr. Ruland | | 120% | | | 178 | % | | | 113 | % | | 154% | | 301,000 | | 463,500 | Mr. Hsieh | | 120% | | | — | | | | 95 | % | | 116% | | 308,000 | | 357,300 | Mr. Bakker | | 120% | | | 98 | % | | | 107 | % | | 105% | | 315,000 | | 330,800 |
HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement | 34 |
Long-Term Incentive Compensation
The Company matches long-term incentive compensation practices in the general manufacturing sector by extendingplan that extends to its executivestop talent the opportunity to earn rewards in the form of Company Common Stock pursuant to the Company’s Amended and Restated 2005 Incentive Award Plan (“Equity(as amended and in effect, the “Equity Plan”). The objectives of the long-term incentive compensation program areEquity Plan is designed to:
| • | Generate growth in the Company’s share price by rewarding activity that enhances enterprise valuevalue. | | | | | • | Ensure long-term rewards are commensurate with performanceperformance. | | | | | • | Facilitate the accumulation of shares by executives, thereby enhancing ownership levels and promoting value-added decision making | | | | | • | Ensureleadership, ensuring greater alignment with shareholdersshareholders. | | Motivate, retain and reward the NEOs. |
Changes made to LTI program based on Shareholder feedback: | Increased weight of performance shares from 40% to 50% | | Increased overall weight of performance equity from 70% to 75% | | Enhanced TSR Modifier |
The above design of the long-term incentive award program reflects a strong performance-based orientation as demonstrated by the following: | 75% of the overall award mix is performance-based, enhancing the connection between long-term achievements and awards. | | Focused on critical performance metrics: relative sales growth, operating profit margin, trade working capital, modified by relative Total Shareholder Return. | | Vesting period for performance shares and restricted stock is three years. |
This encourages a long-term view and promotes executive retention The value of long-term incentive awards granted to executives each year is based on several factors, including external practices, the Company’s financial performance in the short-short-term and long-term, the value of awards granted in prior years, succession considerations and individual performance. The design of the long-term incentive award program reflects a strong performance-based orientation as demonstrated by the following: | • | 100% of the overall long-term incentive award mix is performance-based to further enhance the connection between long-term achievements and awards | | | | | • | In 2015, we added net sales growthOur LTI program includes financial metrics aligned with a margin modifier to the performance share award program to supplement totalour business strategy and that are most closely correlated with shareholder return and to focus attention on profitably growing the enterprise consistent with the Company’s strategic objectiveswithin our Peer Group. | | |
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LTI Grant Timing Change The Compensation Committee awards Long-term Incentive grants annually, with a limited number of grants issued mid-year for newly hired or promoted executives. For 2019, an annual equity grant did not occur (with a few exceptions, as described below), because of the Compensation Committee’s decision to move the Long-term Incentive award grant timing to the 1stquarter of each year.This change is intended to align all of Hubbell’s compensation discussions with its executives to the first quarter of the calendar year, and therefore maximize our pay for performance approach.Other compensation changes (salary changes and short-term incentive bonuses) have historically been delivered in the first quarter. The result of this change for 2019 is that, except for certain mid-year grants associated with 2019 promotions to new roles (including Messrs. Bakker, Sperry, Connolly and Ms. Lane), there were no equity grants delivered to executives in 2019 and therefore there was no equity grant issued to Chairman and CEO, David G. Nord, in 2019. The equity grants that would have been historically delivered in December of 2019 will now be delivered in February of 2020. The below table shows the current compensation for 2019, as reviewed in the Summary Compensation Table onpage 58, as well as a pro-forma of “normalized” compensation for 2019, which shows the grant that was delivered in February of 2020 as a part of 2019 Compensation, as if it had been delivered in December of 2019, consistent with historic practice. | 2019 Summary Compensation Table Values | | 2019 “Normalized” Compensation | Named Executive Officer | Salary ($) | Short-term Incentive ($) | Long-term Incentive ($) | Total Compensation | | Long-termIncentive ($) | Total Compensation | David G. Nord | 1,050,500 | 1,641,400 | — | 2,691,900 | | 5,098,000 | 7,789,900 | William R. Sperry | 615,200 | 680,000 | 299,969 | 1,595,169 | 1,600,000 | 3,195,169 | Gerben W. Bakker | 601,800 | 738,500 | 585,067 | 1,925,367 | 3,354,000 | 5,279,367 | Allan J. Connolly | 591,821 | 449,800 | 250,007 | 1,291,628 | 1,000,000 | 2,291,628 | Katherine A. Lane | 366,200 | 291,500 | 344,968 | 1,002,668 | 750,000 | 1,752,668 |
| | | •Our LTI Grants will now be delivered in the 1stquarter of each year, consistent with all other pay for performance compensation elements | | The performance period for all of our performance based awards is three years further promoting attention to long-term Company performance while strengthening the program’s retention character |
As a result of these decisions, the mix of long-term incentive awards the NEOs are eligible to earn is 40% performance shares, 20% PBRS and 40% stock appreciation rights (“SARs”). The Compensation Committee deems this blend of awards to:
| • | Strengthen the performance character of the award programHUBBELL INCORPORATED| 2020 Proxy Statement 49 |
Performance Share Awards | | | •For all relative measures in the Performance Share Program, Hubbell uses the S&P Capital Goods 900 Index which provides the most applicable and direct comparison to Hubbell’s business than any other index. | | Optimize |
Our performance share program continues to evolve in response to our shareholders’ feedback and to ensure alignment with our business strategy. The below table outlines the outstanding performance awards granted to our NEOs. Grant Date | | Performance Period | | Program Metrics | | Status | | See Page(s) | Feb. 2020 | | 2020 – 2022 | | Relative Sales Growth Operating Profit Margin Trade Working Capital % of Sales Relative TSR Modifier | | Pending end of performance period | | 50-51 | Dec. 2018 | | 2019 – 2021 | | Same as above (targets evaluated for each performance period per the program’s abilitybelow) | | Pending end of performance period | | 50-51 | Dec. 2017 | | 2018 – 2020 | | Sales Growth/Net Income Margin Relative TSR | | Pending end of performance period | | 52 | Dec. 2016 | | 2017 – 2019 | | Sales Growth/Net Income Margin Relative TSR | | Pending finalization of performance shares vested per performance in February 2020 | | 52 |
In all cases, the actual number of performance shares earned by each NEO will be determined at the end of the three-year period based on Company performance as measured by the performance metrics and targets set out at the time of the grant, all of which are described in the following pages. Performance Share Grant Design (2018 and 2020 Grants) Performance Share Grants made in December of 2018 and February 2020 are comprised of three equally weighted metrics: Relative Sales Growth, Operating Profit Margin, and Trade Working Capital as a Percentage of Sales. All three metrics are further modified by Relative Total Shareholder Return. The table below details the metrics and calculation methodology, and why they are important to the business. Metric | | Weight | | How is it calculated? | | Why is it included in the LTI Program? | Relative SalesGrowth | | 1/3rd | | Hubbell’s Compounded Annual Growth rate as compared to motivate, retainthe companies that comprise the S&P Capital Goods 900 | | Drives growth initiatives, including organic growth, new product development, innovation, and rewardacquisition performance | Operating ProfitMargin | | 1/3rd | | Operating income divided by net sales, as compared to a target set at the beginning of the performance period | | Focuses NEOs on improving pricing, productivity, and costs while executing operational objectives including footprint optimization and SKU rationalization | Trade WorkingCapital as a % ofSales | | 1/3rd | | Accounts Receivable plus Inventory minus Accounts payable, the result of which is divided by net sales, as compared to a target set at the beginning of the performance period | | Provides focus on activities that improve operational effectiveness and cash generation, specifically inventory management and accounts payable/ receivable | Relative TSR | | Modifier | | Total Shareholder Return (average of the last 20 trading days of the performance period as compared to the average of the first 20 trading days of the performance period, with dividends reinvested as shares), as compared to the companies that comprise the S&P Capital Goods 900 | | Ensures pay is aligned to shareholder interests |
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Performance Share Grant Targets (2018 and 2020 Grants) For the metrics described above, absolute targets are evaluated for each performance period to ensure that the program is designed to deliver continued improvement in the metrics. Relative targets encourage improvement by delivering greater payout for the highest percentile ranking. The table below sets out each metric at the enterprise level, the respective goals for the three-year period, and the payout percentage of performance shares that would be earned at each specified level of performance. RELATIVE SALES GROWTH | | | Target | Payout | | • | Build equity ownership and thereby align the interests of our executives with those of our shareholders | Max | | > 80thpercentile | 200% | | • | Efficiently deliver value to executives while qualifying expenditures as deductible performance-based compensation under Section 162(m) of the Internal Revenue Code | Target | | 50thpercentile | 100% | | • | Represent the prevailing mix of long-term equity awards in the general manufacturing sector | Threshold | | 35thpercentile | 50% | No Payout | • | Reward performance that executives can directly influence< 35thpercentile | 0% |
OPERATING PROFIT MARGIN | | Target | | 2020 - 2022 | 2019 - 2021 | Payout | Max | 16% | 15.5% | 200% | Target | 14.5% | 14% | 100% | Threshold | 13% | 12.5% | 50% | No Payout | < 13% | < 12.5% | 0% | | TRADE WORKING CAPITAL(as % of sales) | | Target | | 2020 - 2022 | 2019 - 2021 | Payout | Max | 18.5% | 19% | 200% | Target | 19% | 19.5% | 100% | Threshold | 20% | 20.5% | 50% | No Payout | > 20% | > 20.5% | 0% |
TSR MODIFIER | Target | Relative TSR Percentile | 2020 – 2022 | | Relative TSR Percentile | | 2019 – 2021 | = or > 75th | X 150% | | > 80th | | X 120% | 25th- 75th | X 100% | | 20th- 80th | | X 100% | < or = 25th | X 50% | | < 20th | | X 80% |
Long-term incentive grants are usually made onceNo performance shares will be earned for a year, aftermetric if performance falls below the Compensation Committee has assessednoted threshold. If the Company’s performance for such year. Historically, such grants have been made at the Compensation Committee’s regularly scheduled meeting held in early December, with limited exceptions related to newly appointed or promoted executives.
Performance Share Awards
2014, 2015 and 2016 Grants
Performance share awards were granted to the NEOs in 2014, 2015 and 2016 providing the ability to earn shares of the Company’s Common Stock upon satisfaction of pre-established performance measures within a stated period of time. The table below summarizes the key termsany of the performance share award:metrics falls between the percentages listed on the table, the percentage of performance shares earned will be determined by linear interpolation.
Performance Measures | | Weight | | Index | | Performance Range | | Payout | Total Shareholder Return | | 50% | | S&P Capital Goods 900 | | > 80thpercentile of Index | | 200% | | At 50thpercentile of Index | | 100% | Net Sales Growth(1) | | 50% | | | At 35thpercentile of Index | | 50% | | < 35thpercentile of Index | | 0% |
(1) | HUBBELL INCORPORATED| 2020 Proxy Statement 51 |
Performance Share Grant Design (2017 and 2018 Grants) Prior to the re-design of the LTI program for the December 2018 grant, Hubbell’s Performance Share Program was based on Total Shareholder Return and Relative Sales Growth, modified by Net Income Margin, as outlined below. 2017-2019 and 2018-2020 Performance Share Grant Targets Performance Measures | | | Weight | | Performance Range | Payout | Total Shareholder Return (TSR) | 50% | | S&P Capital Goods 900 | | > 80thpercentile of Index | 200% | At 50thpercentile of Index | 100% | Relative Sales Growth(1) | 50% | At 35thpercentile of Index | 50% | < 35thpercentile of Index | 0% |
(1) | Relative Sales Growth is measured using the Company’s Compounded Annual Growth Rate (CAGR). The CAGRsales growth, which is then modified by the Company’s cumulative net income margin performance over the three year performance period, as compared to the net income target set by the Company at the beginning of the period, utilizing the following schedule: |
| | Margin Target | | Payout | | | 10.0% | | 125% | Net Income Margin Modifier | | 9.0% | | 100% | | | 8.0% | | 75% | | | <8.0% | | 0% |
| Margin Target | Payout | Net Income Margin Modifier | 10.0% | 125% | 9.0% | 100% | 8.0% | 75% | <8.0% | 0% |
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The number of performance shares eligible to be earned under this grant is based equally on the Company’s relative TSR and CAGRSales Growth performance compared to other companies in the S&PStandard & Poor’s Capital Goods 900 Index (“S&P 900 Index”) measured over a three year period. After a detailed review, the Company determined that the S&P 900 Index provides a higher level of comparability to Hubbell than any other index. Specifically, the S&P 900 Index performs most similarly to Hubbell in terms of stock price movement and volatility thereby dampening the effect of macroeconomic factors that play a lesser role in determining relative performance. The level of TSR and CAGR Therefore, the performance within the ranges set forth above corresponds with the payout percentages noted and are roundedshares only provide compensation to the nearest percentage. The final award earned reflects a percentageextent of the target award granted. EachCompany’s performance, measure is subject to a minimum vesting threshold such that no shares will be paid on a given measure if the Company’s TSR and/or CAGR over the three-year performance period falls below the 35thpercentile of the applicable index. The performance shares therefore provide pay only in the event of performance thereby linking the named executive officer’sNEOs’ incentives to shareholder interests and returns.
2013Performance Share Grant Payout (2016 Grant)
The 2013 performance shares grantedperiod for the 2014 -Performance Share grant made in December of 2016 performance period is earned basedended on December 31, 2019. The table below outlines the Company’s total shareholder return (“TSR”) over a three-yearactual performance period compared to the TSR of other companies in the S&P Mid-Cap 400 Index (“Index”). The number of performance shares to be paid under this grant is determined based on the Company’s relative performance per the following schedule which shows the potential payout as a percent of the target award. The performancemetrics within the program, and payouts will be rounded to the nearest percentage.associated payouts. Metric | Weight | Target for 100% Payout | Actual Performance | Payout | | FINAL PAYOUT | Relative TSR | 50% | 50thpercentile | 42ndpercentile | 72% | | 72% | Projected Relative Sales Growth** | | 50thpercentile | 61stpercentile | 179% | | 143% | Net Income Margin (modifier) | 50% | 9.00% | 8.20% | 80% | | BLENDED PAYOUT ACROSS PERFORMANCE SHARES | | | | 108% |
Performance Measure** | | Performance | | Payout | | | ≥ 80thpercentileThe calculation of the relative sales growth measure is dependent upon public availability of financial results from our peer companies.Due to the timing of the availability of this information, the Compensation Committee cannot determine the level of achievement of theperformance criteria until a sufficient number of S&P 900 Index | | 200% | companies report their earnings for the year ended December 31, 2019. Asa result, the actual payout results for the 2017-2019 performance share award grants based on Relative Total Shareholder Return | | At 50thpercentileSales Growth will not be determined until March 2020 and such payouts will not be approved by the Compensation Committee until April 2020 after the filing of Index | | 100% | | At 35thpercentilethis ProxyStatement. The above projections reflect the results available as of Index | | 50% | | | Below 35thpercentileMarch 23, 2020, including consensus estimates for sales growth for thePeer Group. Shareholders are cautioned, however, that the information that follows is preliminary in nature, is subject to change based onthe actual reported results of the S&P 900 Index | | 0% companies and has not been approved by the Compensation Committee. |
All performance share awards are subject to a minimum vesting threshold such that no shares will be paid in the event the Company’s TSR over the three-year performance period falls below the 35th percentile of the Index. The performance shares therefore provide pay only in the event of performance thereby linking the named executive officer’s incentives to shareholder interests and returns. See the section entitled “Equity Award Plan Vesting Provisions” on page 44 for additional information on the terms of performance share awards.
Performance shares were granted on December 10, 2013, having a performance period of January 1, 2014 to December 31, 2016 were paid out in February 2017 based upon the Company’s TSR achievements as shown in the following table:
At the end of the performance period, the Company achieved TSR performance at the 20% percentile of the Index resulting in a 64% payout thereby earning the named executive officers the following shares of Common Stock: Mr. Nord – 6,364, Mr. Sperry – 1,591, Mr. Ruland – 415, Mr. Hsieh – 1,237 and Mr. Bakker – 415.
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Performance-Based Restricted Stock AwardsIMPACT TO SHARES RECEIVED – TSR
Performance-Based Restricted Stock (“PBRS”) provides executives with the opportunity to earn shares of the Company’s Common Stock upon satisfaction of certain pre-established performance measures. PBRS awards replaced the time-based vested restricted stock awards that had been granted to the NEOs in prior years.
NEO | Target Shares (Dec 2016) | Final Shares (Feb 2020) | David G. Nord | 8,621 | 6,207 | William S. Sperry | 2,406 | 1,732 | Gerben W. Bakker | 1,569 | 1,129 |
2014, 2015 and 2016 Grants
PBRS were granted to the NEOs in 2014, 2015 and 2016 and will be earned if the Company’s relative TSR performance over a three year period ending December 31, 2017, December 31, 2018 and December 31, 2019, respectively, exceeds the 20th percentile as compared to the TSR of other companies in the S&P Capital Goods 900 Index. In the event the Company fails to meet the performance threshold the executive will forfeit the entire PBRS award. As such, PBRS awards link the NEO’s incentives to long-term shareholder interests. See the section entitled “Equity Award Plan Vesting Provisions” on page 44 for further information on the terms of these awards.
2013 Grant
The PBRS grant made in 2013 could be earned in three equal installments based on the Company’s EBITDA performance as a percentage of net sales for the 12 months preceding the applicable measurement date being greater than 10%, as measured on December 31, 2014, December 31, 2015 and December 31, 2016. In the event the Company fails to meet the performance threshold in any given year, the executive would forfeit one-third of the PBRS award. At the end of December 31, 2016, the Company’s EBITDA performance was 16% of net sales thereby earning the named executive officers the following shares of Common Stock representing one-third of their 2013 PBRS grant: Mr. Nord – 2,781, Mr. Sperry – 695, Mr. Ruland – 182, Mr. Hsieh – 541 and Mr. Bakker – 182.
SARSAppreciation Rights (SARs)
A SAR gives the holder the right to receive, once vested, the value in shares of the Company’s Common Stock equal to the positive difference between the base price and the market value of a share of Common Stock upon exercise. Generally, SARs vest in three equal installments on each of the first three anniversaries of the grant date. The base price pursuant to which the value of the SARs granted in 20162019 is measured is the mean between the high and low trading prices of the Company’s Common Stock as reported on the NYSE on the trading day immediately preceding the date of grant (i.e. December 6, 2016 — $113.69)for the July 1, 2019 grants, June 28, 2019 - $129.28). For future grants, the base price will equal the mean between the high and low trading prices of our Common Stock as reported on the NYSE on the trading day immediately preceding the date of grant. The Company uses the mean between the high and low trading prices on the date immediately before the date of grant and not the closing price of its stock on the date of grantthis measure for two reasons: First,first, using the trading prices from the day before the grant enables the Compensation Committee to know the exact grant price and therefore the exact value of each grant before it is made. Second,made; and second, because of the relatively low volume at which the Company’s stock trades, it suggests that the mean represents a more accurate picture of the fair market value of the stock than does the closing price. For purposes of determining individual award levels, the number of shares subject to each SAR is formulated on the basis of a modified Black-Scholes calculation. See the section entitled “Equity Award Plan Vesting Provisions” onpage 4460 for additional information on the terms of this award.these awards. Time-BasedTime Based Restricted Stock and Performance Based Restricted Stock
RestrictedTime based restricted stock provides incentives for executives to remain employed by the Company and to create and maintain value for shareholders sincebecause the value of a restricted share depends on the executive’s continued employment and the value of the Company’s stock on the vesting date. Restricted share awards are granted in shares of the Company’s Common Stock and generally vest in three equal installments on the third-year anniversary of the grant date. No time-basedRestricted Stock with a minimum performance criteria was previously provided to take advantage of tax deductibility favorability under the tax regulations in place prior to the Tax Cuts and Jobs Act (TCJA) enactment in late 2017. Performance based restricted stock awards(“PBRS”) grants vest on the third-year anniversary of the grant date, if the performance criteria is met.
PBRS grants were grantedprovided to the NEOs in 2016 but may remain outstanding from prior grants. Compensation Policiesand 2017 and will be earned if the Company’s relative TSR performance over a three-year period ending December 31, 2019, and December 31, 2020, respectively, is equal to or exceeds the 20thpercentile as compared to the TSR of other companies in the S&P 900 who are classified as Capital Goods by the General Industry Classification System. See the section entitled “Equity Award Plan Vesting Provisions” onpage 60 for further information on the terms of these awards. At the end of the performance period of December 31, 2019, the Company achieved the performance criteria, and the applicable NEOs earned the following shares of Common Stock of the Company representing their 2016 PBRS grant: Mr. Nord - 7,701, Mr. Sperry - 2,149, and Mr. Bakker - 1,402.
Other Compensation Policies and Benefit Programs Stock Ownership and Retention Policy | | | Hubbell has long encouraged stock ownership by its Directors, officers and employees to align their interests with the long-term interests of our stockholders. | | |
The Company has a stock ownershipStock Ownership and retention policyRetention Policy which is applicable to the named executive officersNEOs as well as certain other officers and designated employees. Theemployees and the Directors. Regarding employees, the policy requires such covered employees, consistent with their responsibilities to the shareholders of the Company, to hold a significant equity interest in the Company. The terms and | HUBBELL INCORPORATED| 2020 Proxy Statement 53 |
conditions of the policy are routinely examined to ensure consistency with current market practices and external benchmarks and alignment between the interests of the employees covered by the policy and the interests of the Company’s shareholders. The policy provides: Until an employee meets their ownership minimum, an employee must retain fifty percent (50%) of the net shares acquired pursuant to the exercise of a SAR.
| | Until a covered employee meets his or her ownership minimum, a covered employee must retain 100% of the net shares acquired pursuant to the exercise of a SAR and all other shares directly or indirectly acquired by such covered employee. | | • | Once the minimum share ownership level is satisfied, the covered employee is expected to continue to satisfy such requirement for so long as he or she is subject to the policy. | | | | | • | Shares that count toward the minimum share ownership requirement include shares held directly and indirectly by the covered employee, including restricted stock granted under the Equity Plan.Plan, and in-the-money vested (but unexercised) SARs. Shares underlying unexercised SARs, and unearned performance shares are not counted. | | | | | • | Covered employees have approximately five years from the earliest date such employee is granted an optionsubject to acquire Company securitiesthe policy (in such applicable position) to achieve their minimum ownership requirement | | | | Accordingly, the policy expects employees to attain a minimum share ownership level equal to their base salary times a certain multiplier, as indicated in the following table: |
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Executive Level | | Multiple of Base Salary | Chief Executive Officer | | 5x | Chief Financial Officer, Group Presidents and General Counsel | | 3x | Other Corporate Officers | | 2x | Other Executives (non-Corporate Officers) | | 1xrequirement. |
Accordingly, the policy expects employees to attain a minimum share ownership level equal to their base salary times a certain multiplier, as indicated in the below table. All NEOs are in compliance with the stock ownershipStock Ownership and retention policy.Retention Policy. MINIMUM STOCK OWNERSHIP REQUIREMENT | 5x | | 4x | | 3x | | | BASE SALARY | | BASE SALARY | | BASE SALARY | | | CEO | | President, COO | | CFO, Group Presidents, General Counsel | |
The Stock Ownership and Retention Policy can be viewed on the Company’s website atwww.hubbell.com. Compensation Recovery Policy (Clawback) The Company has a Compensation Recovery Policy which provides that an executive, including the named executive officers,a NEO, who is determined to have engaged in fraud or other gross misconduct which contributed in whole or in part to a restatement of the Company’s financial results, may be subject to any one or more of the following disciplinary actions: | • | Termination of employment | | | | | • | Recovery of all or any portion of any performance-based cash or equity paid or vested during the previous three years and that would otherwise not have been paid or vested based on the restated financial results | | Cancellation or forfeiture of any performance-based cash or equity awards not yet paid or vested or offset against future awards |
Cancellation or forfeiture of any performance-based cash or equity awards not yet paid or vested, or offset against future awards
All actions taken under this policy will be determined by the Board of Directors in its sole discretion upon consultation with the Audit Committee and the NCGC. Policy Prohibiting Hedging and Pledging Our insider trading policy contains a strict policy against the hedging and pledging of our securities. Our officers, directors, and certain employees designated by Hubbell’s Vice President, General Counsel and Secretary who may have access to material, non-public information about Hubbell and its financial condition, as well as all persons living in such restricted persons’ households and any entities directly or indirectly controlled by such restricted persons, are prohibited from (i) engaging in hedging, monetization transactions or similar arrangements involving our stock, including short sales, margin transactions, and buying put or call options, as well as derivatives such as swaps, forwards, and futures transactions, (ii) pledging our stock as collateral for a loan, credit, stop loss or any other limit orders placed with a broker, except pursuant to an approved 10b5-1 plan and (iii) purchasing our stock on margin or holding our securities in a margin account. Employee Benefits Named executive officersNEOs also receive employee health & welfare and retirement benefits that are generally available to all employees, as well as certain retirement benefits, limited perquisites (as detailed onpage 56), severance and change in control protections. These additional benefits are similar to the types and amounts available to other senior executives of manufacturing companies as demonstrated in the benchmark data. After consideringThe table onpage 55 outlines the declining prevalence of traditional pensionbenefits plans inavailable to the marketplace, and the importance of offering consistent, sustainable retirement benefitsNEOs.
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Plan | | Description | Hubbell Health & Welfare Benefits | | Cafeteria-style plans that provide medical, dental, prescription, life insurance, disability and the option to purchase other voluntary benefits. | Qualified Pension Plan | | Defined Benefit plan providing annuity-option benefits at retirement based on a pre-determined formula taking into account service and compensation. Plan was closed to new entrants in 2004, service accruals were frozen in February 2017, and compensation will be frozen at the end of 2020. | Qualified 401(k) Plan | | Defined Contribution Safe-Harbor plan providing for tax-deferred savings options to employees up to IRS guidelines. Plan provides for a 4% automatic contribution and a 50% match on the first 6% of employee contributions. | Non-Qualified Defined Benefit Restoration Plan | | Restoration or excess benefit plan for Defined Benefits for employees with earnings in excess of IRS limits. Plan was closed to new entrants in 2004, service accruals were frozen in February 2017, and compensation accruals will be frozen at the end of 2020. | Non-Qualified Defined Contribution Restoration Plan | | Restoration or excess benefit plan for Defined Contribution for employees with earnings in excess of IRS limits. Plan provides for a 4% contribution for those earnings in excess of the limits, and for a restoration match for employees who also participate in the Executive Deferred Compensation Plan. | Executive Deferred Compensation Plan | | Permits eligible executives to defer up to 50% of short-term incentive and 100% of their base salary. |
Note that all employees, in 2016 the Compensation Committee determined to freeze the Company’s tax-qualified defined benefit plan (“DB Plan”) and non-qualified defined benefit pension plans and add a safe harbor non-elective contribution to its tax-qualified defined contribution plan (“DC Plan”). The impact of these decisions is discussed below.plans are offered to NEOs on the same basis as all other eligible employees and executives. Retirement Plans and Nonqualified Deferred Compensation Plans Qualified Pension Plans In addition to the retirement plans which are made generally available to employees of theThe Company which includemaintains a defined benefit pension plan (“DB(the “DB Plan”) and a defined contribution retirement plan (“DC(the “DC Plan”) that allows for employee and employer contributions, thein which named executive officers and certainparticipate along with the other selected executive officers participate in various supplemental retirement plans and deferred compensation plans, which allow them to earn additional retirement benefits.employees of Hubbell.
The DB Plan and DC Plan provide employees, including named executive officers, with retirement income. The Company contributes to the DB Plan whereas both the Company and the employee contribute to the DC Plan. Employees hired after December 31, 2003 are not eligible to participate in the DB Plan but may participate in the DC Plan. The Company closed the DB Plan to new employees after 2003 following its determination that it was no longer necessary in order to attract talent in the marketplace. Instead, the Company emphasized participation in the DC Plan with matching contributions and a discretionary profit sharing contribution which are more in line with current competitive retirement compensation practices.
2016 Qualified Plan Changes
In 2016, due to the declining prevalence of defined benefit plans in the marketplace, the Compensation Committee approved a “soft freeze” ofService credit under the DB Plan which will be implemented first as a freeze on credited service,ceased effective February 28, 2017 and a subsequent freeze on eligible compensation will be effective December 31, 2020. At that time, all benefit accruals underMr. Bakker is the only NEO who participates in the DB Plan will cease. This “soft freeze” approach was designed to afford all DB Plan participants the opportunity to make any necessary adjustments to their retirement planning and afford immediate participation in a safe harbor DC Plan (discussed below) as a means of transition relief.Plan.
In 2016, the Compensation Committee also approved adding a safe harbor non-elective contribution to the DC Plan, effective January 1, 2017, to ensure that the DC Plan will pass its annual discrimination testing and to enhance the DC Plan benefits in connection with the DB Plan freeze. With the new safe harbor contribution, theThe DC Plan provides that the Company will make a fully vested annual non-elective Company contribution of 4% of eligible earnings on behalf of all eligible participants, including the named executive officers.NEOs. Additionally, the Company will continue to makemakes a matching contribution equal to 50% of the first 6% of a participant’s eligible earnings that he or she contributes to the DC Plan. The matching contribution will bePlan, subject to a vesting schedule.Code limitations. All of the NEOs are participants in the DC Plan on the same terms as other employees in the Company.
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Non-Qualified Supplemental Retirement Plans In 2016,Certain Senior Executives of the named executive officers also participatedCompany, including the NEOs, are eligible to participate in supplemental retirement plans including the Top Hat Restoration Plan (“DB Restoration Plan”) and the Defined Contribution Restoration Plan (“DC Restoration Plan”) which are available to selectedDB Plan and DC Plan participants, respectively, with compensation in excess of Code limitations applicable to qualified plans, as well as the Supplemental Executive Retirement Plan (“Executive Plan”) which was previously available to select senior executives of the Company, which include the Top Hat Restoration Plan (the “DB Restoration Plan”), the Defined Contribution Restoration Plan (the “DC Restoration Plan”),if eligible, and the Supplemental Executive Retirement Plan (the “Executive Plan”) which is closednow frozen to new participants.future accruals.
The DB Restoration Plan is an “excess benefit plan” under which participants in the DB Plan receive additional retirement benefits, calculated in the same manner as benefits are calculated under the DB Plan, but without regard to the applicable limits on compensation or benefit accruals required by the tax-qualified plan rules. Mr. Bakker is the only NEO that participates in the DB Restoration Plan. The DC Restoration Plan, also an “excess benefit plan,” enables participants in the DC Plan to receive Company contributions equal to the additional contributions such employee would have received under the DC Plan, but for the compensation limits imposed by the tax-qualified plan rules. The DB Restoration Plan, DC Restoration Plan and Executive Plan are intended to promote the retention of our eligible senior management employees by providing them with the opportunity to earn pension and retirement benefits which supplement the benefits available under the Company’s tax-qualified retirement plans. 2016 Non-Qualified Plan Changes
Because the DB Restoration Plan provides Only Mr. Nord is eligible for accruals in tandem with those under the DB Plan and the DB Plan was the subject of a soft freeze, the Compensation Committee approved an amendment of the DB Restoration Plan to provide that benefits under the DB Restoration Plan would cease accruing on the same schedule as the DB Plan, with a freeze on credited service, effective February 28, 2017, and a subsequent freeze on eligible compensation, effective December 31, 2020.Executive Plan.
| HUBBELL INCORPORATED| 2020 Proxy Statement 55 |
To reflect the changes to the DC Plan, the Committee approved an amendment to the DC Restoration Plan, effective January 1, 2017, to provide each participant with (i) an annual non-elective contribution equal to the excess of 4% of eligible earnings over the amount credited as a safe harbor non-elective contribution to the DC Plan for that year and (ii) an annual matching contribution equal to 50% of the first 6% of a participant’s eligible earnings that he voluntary contributes to the DC Plan and/or defers to the Executive Deferred Compensation Plan less the maximum amount of matching contributions that could have been credited under the DC Plan if he had contributed the maximum amount permitted under the DC Plan for that year.
In connection with these changes, the Committee also approved a freeze of the Executive Plan effective December 31, 2016 (including the accrual of both service and compensation credit). The Executive Plan had been closed to new participants since 2007.
Executive Deferred Compensation Plan
The Company also has a non-qualified Executive Deferred Compensation Plan (“EDCP”), which permits selected individuals, including our named executive officers,NEOs, to defer the receipt of up to 50% of their base salary and 100% of their short-term incentive award. The EDCP also provides for discretionary contributions by the Company. No such discretionary contributions were made in 2019. Amounts deferred under the EDCP are credited with earnings on the basis of individual investment directions made by each participant. The purpose of the EDCP is to provide a tax and retirement planning tool to selected individuals and thus assist the Company in attracting and retaining senior management. See also the “Retirement Plans” section on page 46 and the “Non-Qualified Deferred Compensation” section onpage 48.65. Perquisites The Company providesEffective March 1, 2019, the following limited perquisites to its named executive officers:Compensation Committee eliminated the Company’s program that provided certain executives the use of a Company-provided leased vehicle or an annual vehicle allowance given the relative decline of this benefit in the Company’s Peer Group and general marketplace. In 2019, the Company provided the following limited perquisites to its NEOs: use of a Company-provided leased vehicle or an annual vehicle allowance from January 1, 2019 through February 28, 2019, financial planning and tax preparation services, and limited personal travel on the Company aircraft and executive physicals.aircraft. These perquisites provide flexibility to the executives and increase travel efficiencies, thereby allowing more productive use of the executives’ time and protect the executives’ personal and financial health and thus the Company’s investment in their development. The Company routinely examines the competitiveness of the perquisites offered in light of the evolving competitive landscape and determines whether any modifications are appropriate. See footnote 6Footnote 5 to the “Summary Compensation Table” onpage 41.59 outlines the benefits received by each NEO in 2019.
Severance and Change in Control Benefits The Company has entered into Change in Control Severance Agreements (“CIC Agreements”) with certain of its named executive officersNEOs which provide certain severance benefits in the event the named executive officer’sNEOs’ employment is involuntarily or constructively terminated.terminated in connection with a change in control. Such severance benefits are designed to alleviate the financial impact of termination of employment through base salary and health benefit continuation and outplacement services, with the intent of providing for a stable work environment. In 2019, Hubbell amended its Policy for Providing Severance to Senior Employees (the “Severance Plan”) in order to ensure the organization would not be required to pay severance to executives that engage in misconduct. In addition to general severance, the Company provides enhanced benefits to its senior executives in the event of a change in control as a means of reinforcing and encouraging their continued attention and dedication to their duties of employment without the personal distraction or conflict of interest that could arise from the occurrence of a change in control. The Company extends severance and change in control benefits because they are essential to help the Company fulfill its objectives of attracting and retaining key managerial talent. The decision to offer these benefits does not influence the Compensation Committee’s determinations concerning other direct compensation or benefit levels. In making the decision to extend the benefits, the Compensation Committee relied on its independent compensation consultant, Exequity, to ensure that such severance and change in control benefits align with the policy statements put forth by governance rating agencies and market practices in the area of severance and change in control compensation.
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Accordingly, the Company’s Change in Control SeveranceCIC Agreements contain the following provisions and reflect the types and amounts of compensation benefits payable to senior executives upon a change in control: | • | Double trigger (change in control plus termination of employment) required to obtain cash severance benefitbenefit. | | | | | • | Lump sum cash payments not to exceed 2.75 times base salary plus short-term incentive awardaward. | | | “Responsive Trigger” LTI awards do not automatically become vested and payable upon a change in control (as described below). | | • | Elimination of gross ups to cover excise taxestaxes. |
In 2016, the Board of Directors amended the Company’s Equity Plan to remove the single trigger change in control vesting provision. Under the amended Plan, awards granted on and after December 6, 2016 will no longer automatically become vested and payable upon a change in control. Instead, uponUpon a change in control, all LTI awards (other than any portion subject to performance-based vesting) will continue in effect or be assumed or substituted by an acquiring company, unless the Compensation Committee elects to terminate the award or cause it to fully vest. The portion of an award that is subject to performance-based vesting will be subject to the terms of the award agreement or the Compensation Committee’s discretion, as applicable.
In 2016, the Board of Directors eliminated the single trigger vesting of equity awards upon a change in control.
If an award continues in effect or is assumed or substituted and a grantees’grantee’s employment is terminated without cause or within twelve months following a change in control, then the award will fully vest. Similarly, if the acquiring corporationcompany refuses to assume or substitute an award, the Compensation Committee may exercise its discretion to terminate the award in exchange for cash, rights or property, or cause the awards to become fully exercisable prior to the change in control. For additional information relating to the Company’s change in control and severance benefits, see the “Potential Post-Employment Compensation Arrangements” section onpage 49.66. www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 56 |
Tax Deductibility of Compensation
Section 162(m) of the Code establishes an annual $1 million limit on the amount that the Company can deduct for compensation paid to its Chief Executive Officer and its three other most highly paid executive officers (other than its Chief Financial Officer), unless the compensation in excess of $1 million is performance-based. Payments under the Senior Plan, SARs granted under the Company’s Equity Plan with an exercise price of at least fair market value, and PBRS and performance shares granted under the Equity Plan are intended to qualify as performance-based compensation under Section 162(m) of the Code. Committee Report
The Compensation Committee believes that it is in the Company’s best interests to maintain flexibility in the administration of the compensation program. In order to retain the flexibility to compensate the Company’s management in the manner best promoting the Compensation Committee’s policy objectives, the Compensation Committee does not require that all compensation be deductible. Accordingly, certain payments, including payments under the Incentive Compensation Plan and grants of restricted stock are not intended to qualify as performance-based compensation and may be subject to the $1 million deductibility limitation of Section 162(m) of the Code. Compensation Committee Report
The Committee has reviewed the Compensation Discussion and Analysis and discussed its contents with members of the Company’s management and theits independent compensation consultants.consultant, Exequity. Based on this review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in this Proxy Statement.2019.
Compensation Committee Richard J. Swift,John G. Russell, Chair
Carlos M. Cardoso
Neal J. Keating
John G. Russell Judith F. Marks
| HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement | 40 57 |
EXECUTIVE COMPENSATIONExecutiveCompensation
Summary Compensation Table Summary Compensation Table for Fiscal Year 2016
The following table sets forth the total compensation of Company’s named executive officers for the years ended December 31, 2016, December 31, 2015, and December 31, 2014.
Name and Principal Position | | Year | | Salary(1) ($) | | Stock Awards(2) ($) | | Option Awards(2) ($) | | Non-Equity Incentive Plan Compensation(3) ($) | | Change in Pension Value and Nonqualified Deferred Compensation Plan Earnings(4)(5) ($) | | All Other Compensation(6) ($) | | Total ($) | | D. G. Nord | | 2016 | | 1,000,000 | | 2,809,259 | | 1,765,939 | | 1,380,000 | | 2,598,258 | | 159,153 | | 9,712,609 | | Chairman, President and | | 2015 | | 968,700 | | 2,748,086 | | 1,359,166 | | 980,300 | | 2,714,019 | | 135,085 | | 8,905,356 | | Chief Executive Officer | | 2014 | | 940,500 | | 2,574,942 | | 1,062,572 | | 984,000 | | 4,501,039 | | 137,088 | | 10,200,141 | | W. R. Sperry | | 2016 | | 525,000 | | 784,000 | | 492,916 | | 487,200 | | — | | 80,251 | | 2,369,367 | | Senior Vice President and | | 2015 | | 505,000 | | 686,920 | | 339,788 | | 328,800 | | — | | 64,753 | | 1,925,261 | | Chief Financial Officer | | 2014 | | 490,000 | | 677,691 | | 279,630 | | 308,700 | | — | | 66,351 | | 1,822,372 | | R. R. Ruland | | 2016 | | 430,000 | | 477,318 | | 300,038 | | 463,500 | | — | | 48,808 | | 1,719,664 | | Group President, | | | | | | | | | | | | | | | | | | Construction and Energy | | | | | | | | | | | | | | | | | | A. Hsieh | | 2016 | | 440,000 | | 501,190 | | 315,049 | | 357,300 | | — | | 73,433 | | 1,686,972 | | Senior Vice President, | | 2015 | | 425,000 | | 619,627 | | 350,837 | | 256,900 | | — | | 68,869 | | 1,721,233 | | General Counsel | | 2014 | | 413,000 | | 487,862 | | 201,332 | | 225,500 | | — | | 65,527 | | 1,393,221 | | G. W. Bakker | | 2016 | | 450,000 | | 511,324 | | 321,463 | | 330,800 | | 588,207 | | 22,757 | | 2,224,551 | | Group President, | | 2015 | | 425,000 | | 446,497 | | 220,870 | | 345,100 | | 174,024 | | 22,339 | | 1,633,830 | | Power Systems | | 2014 | | 380,833 | | 590,347 | | 306,902 | | 255,100 | | 378,779 | | 21,037 | | 1,932,998 | |
Named Executive Officer | | Year | | Salary ($) | | Stock Awards(2) ($) | | Option Awards(2) ($) | | Non-Equity Incentive Plan Compensation(3) ($) | | Change in Pension Value and Nonqualified Deferred Compensation Plan Earnings(4) ($) | | All Other Compensation(5) ($) | | Total ($) | David G. Nord | | 2019 | | 1,050,500 | | — | | — | | 1,641,400 | | 2,702,891 | | 244,034 | | 5,638,825 | Chairman and | | 2018 | | 1,050,500 | | 3,275,446 | | 1,456,492 | | 1,680,800 | | — | | 157,425 | | 7,620,663 | Chief Executive Officer | | 2017 | | 1,030,000 | | 2,752,368 | | 1,840,819 | | 1,220,000 | | 1,454,235 | | 233,749 | | 8,531,171 | William R. Sperry | | 2019 | | 615,200 | | 149,965 | | 150,004 | | 680,000 | | — | | 108,932 | | 1,704,101 | Executive | | 2018 | | 570,000 | | 877,061 | | 389,994 | | 620,200 | | — | | 102,771 | | 2,560,026 | Vice President, Chief Financial Officer and Treasurer | | 2017 | | 550,000 | | 768,359 | | 513,825 | | 453,200 | | — | | 100,751 | | 2,386,135 | Gerben W. Bakker | | 2019 | | 601,800 | | 292,561 | | 292,506 | | 738,500 | | 914,348 | | 81,517 | | 2,921,232 | President and | | 2018 | | 500,000 | | 674,648 | | 299,997 | | 405,000 | | — | | 87,441 | | 1,967,086 | Chief Operating Officer | | 2017 | | 470,000 | | 501,054 | | 335,092 | | 381,600 | | 567,886 | | 87,086 | | 2,342,718 | Allan J. Connolly(1) | | 2019 | | 591,821 | | 125,014 | | 124,993 | | 449,800 | | — | | 338,984 | | 1,630,612 | Group President, | | | | | | | | | | | | | | | | | Power Systems | | | | | | | | | | | | | | | | | Katherine A. Lane(1) | | 2019 | | 366,200 | | 172,460 | | 172,508 | | 291,500 | | — | | 37,974 | | 1,040,642 | Vice President, General Counsel and Secretary | | | | | | | | | | | | | | | | |
(1) | First reported as NEOs in 2019. | (1)(2) | The amounts reported in theSalary column reflect salaries paid in the years indicated. | (2) | The amounts reported in theStock Awards andOption Awards columns reflect the aggregate grant date fair value of performance-based restricted stock, performance shares and SARs granted in 20162019 as calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation, see Note 1617 to the Consolidated Financial Statements for 20162019 in the Form 10-K filed with the SEC on February 16, 2017.14, 2020. The actual value that an executive may realize from an award is contingent upon the satisfaction of the vesting conditions of the award. For SARs, the actual value of the award is based upon the positive difference between the base price and the market value of a share of Common Stock on the date of exercise. Thus, there is no assurance that the value, if any, eventually realized by the executive will correspond to the amount shown. For performance sharesMr. Nord, there is no reported equity grant for 2019, in accordance with a total shareholder return metric, fair value is based upon the assumptions disclosedLTI Grant timing changes and table as described onpage 49. The equity grants above for the other 4 NEOs (Mr. Bakker, Mr. Sperry, Mr. Connolly, and Ms. Lane) are associated with promotions and not on-going, annual, equity awards. The annual grant occurred in Note 16 toFebruary 2020 for each of the Consolidated Financial Statements containedNEOs. These grants will be included in the Company’s 2016 Annual Report2021 Proxy as a part of annual compensation for full year 2020. The amounts for each NEO are as follows: D. Nord – 5,098,000, W. Sperry – 1,600,000, G. Bakker – 3,354,000, A. Connolly – 1,000,000, K. Lane – 750,000. As described on Form 10-K. For performance shares with a net sales growth performance metric, fair valuepage 48, these grants were delivered as 50% Performance Shares, 25% Restricted Shares, 25% Stock Appreciation Rights. Additionally, the impact of this grant is based uponalso included in the average between the high and low trading prices“Stock Ownership of the Company’s Common StockDirectors And Executive Officers” table on the date preceding the grant date and assumes that the award will vest at target.page 75. | (3) | The amounts reported in theNon-Equity Incentive Plan Compensation column reflect short-term incentive awards earned under the Company’s Incentive Plan and Senior Plan. | (4) | The amounts reported in theChange in Pension Value column reflect the aggregate change in the actuarial present value of each named executive officer’sNEO’s accumulated benefit under the retirement plans in which he participates.they participate. See the “Employee Benefits” section onpage 3854 and “Retirement Plans and Nonqualified Deferred Compensation Plans” section onpage 46.55. The present valuevalues of these accrued benefits at December 31, 20152017 and December 31, 2016 is2018 are based on the RP-2000 CombinedRP-2014 Healthy Annuitant Mortality tables (gender distinct)Tables, gender distinct, with generational projections from 2006 using Scale BB-2DMP-2017 (for 2017) and Scale MP-2018 (for 2018) and a discount rate of 4.80%3.80% and 4.30%4.40%, respectively. The present value of accrued benefits at December 31, 2019 is based on the Pri-2012 Healthy Annuitant Mortality Tables, sex distinct, with generational projection from 2012 using Scale MP-2019 and using a discount rate of 3.30%. Participants are assumed to retire at age 62 or current age, if later. |
(5)www.hubbell.com | The increase in the present value of Mr. Nord’s pension benefit in 2014 is dueHUBBELL INCORPORATED| 2020 Proxy Statement 58 |
(6)(5) | The amounts reported in theAll Other Compensation column for 20162019 are detailed in the table below: | | |
| Name | | Perquisites(a) ($) | | Retirement Plan Contributions(b) ($) | | Total(c) ($) | | | D. G. Nord | | 71,991 | | 87,162 | | 159,153 | | | W. R. Sperry | | 38,149 | | 42,102 | | 80,251 | | | R. R. Ruland | | 14,323 | | 32,985 | | 48,808 | | | A. Hsieh | | 37,607 | | 35,826 | | 73,433 | | | G. W. Bakker | | 14,807 | | 7,950 | | 22,757 | |
Name | | Retention(a) ($) | | Perquisites(b) ($) | | Retirement Plan Contributions(c) ($) | | Total ($) | David G. Nord | | — | | 52,843 | | 191,191 | | 244,034 | William R. Sperry | | — | | 24,687 | | 84,245 | | 108,932 | Gerben W. Bakker | | — | | 13,667 | | 67,850 | | 81,517 | Allan J. Connolly | | 283,333 | | — | | 55,651 | | 338,984 | Katherine A. Lane | | — | | 4,776 | | 33,198 | | 37,974 |
(a) | | | | (a) | The amounts in the Retention column reflect a value paid to Mr. Connolly related to an employment agreement provided to him as a part of the acquisition of the Aclara business in 2018 (as amended and in effect). This value described was a cash bonus paid on the one-year anniversary of the acquisition date. | (b) | The amounts in the Perquisites column reflect the incremental cost to the Company for providing the use of an automobile to Mr. Sperry ($29,649), Mr. Ruland, Mr. Hsieh ($27,607) and Mr. Bakker which includes lease payments, fuel, taxes, maintenance, insurance and registration less monthly payments made by the NEO multiplied by the percentage attributable to personal use; a 12-monthan automobile allowance for Mr. Nord and a one month automobile allowance for Mr. Sperry and Mr. Ruland to be applied toward automobile related expenses; the actual cost of financial planning or tax preparation services up to a maximum of $10,000 for Mr. Nord, Mr. Sperry Mr. Ruland and Mr. Hsieh;Bakker, the actual cost of an executive physical for Mr. Nord and Mr. Ruland;matching gifts made by The Harvey Hubbell Foundation; and personal use of the Company aircraft for Mr. Nord ($33,746),- $18,843 and for Mr. Sperry - $8,663, which includes fuel landing, hangar and maintenance fees,costs, crew expenses, and costs associated with deadhead flights.landing, hangar, airplane parking, ramp, and maintenance fees. | (c) | (b) | The amounts in theRetirement Plan Contributions column reflect Company 401(k) matching contributions of $7,950$8,400 and an automatic company retirement contribution of $11,200 for each named executive officerNEO under the DC Plan. This column also includes the following Company Retirement contribution earned under the DC Restoration Plan and a profit sharing contribution of $10,600 forin 2019 to be contributed in 2020: Mr. Nord - $98,052, Mr. Sperry - $38,216, Mr. RulandBakker - $29,072, Mr. Connolly - $31,951 and Mr. Hsieh. AlsoMs. Lane $7,770. This column also includes the following restoration match contributions under the DC Restoration Plan earned in 20162019 to be made in 2017. See the “Non-Qualified Deferred Compensation” section on page 48:2020: Mr. Nord – $68,612,- $73,539, Mr. Sperry – $23,552,- $26,429, Mr. Ruland – $14,435Bakker - $19,178, Mr. Connolly - $4,100 and Mr. Hsieh – $17,276. | | (c) | Includes for Mr. Ruland a payment of $1,500 that he received as payment for a patent award pursuant to the Company’s patent award program.Ms. Lane - $5,828. |
| | HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement | 41 59 |
Other Compensation Tables Grants of Plan-Based Awards in Fiscal Year 20162019 The following table presents information concerning plan-based awards granted in 20162019 to the named executive officersNEOs under the Company’s Incentive Plan, Senior Plan and Equity Plan. All stock awards are payable in shares of the Company’s Common Stock. | | | | | | Est. Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Est. Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: | | All Other Option Awards: | | Exercise | | Grant Date Fair | | Name | | Type of Award | | Grant Date | | Threshold ($) | | Target ($) | | Max ($) | | Threshold (#) | | Target (#) | | Max (#) | | Number of Shares of Stock or Units(3) (#) | | Number of Shares Underlying Options(3) (#) | | or Base Price of Option Awards(4) ($/Sh) | | Value of Stock and Option Awards(5) ($) | | D. G. Nord | | STI | | 02/11/16 | | 575,000 | | 1,150,000 | | 2,300,000 | | — | | — | | — | | — | | — | | — | | — | | | | PBRS | | 12/06/16 | | — | | — | | — | | — | | — | | — | | 7,701 | | — | | — | | 808,066 | | | | SAR | | 12/06/16 | | — | | — | | — | | — | | — | | — | | — | | 93,883 | | 113.69 | | 1,765,939 | | | | PS/TSR | | 12/06/16 | | — | | — | | — | | 4,311 | | 8,621 | | 17,242 | | — | | — | | — | | 1,091,850 | | | | PS/NS | | 12/06/16 | | — | | — | | — | | 3,233 | | 8,621 | | 19,397 | | — | | — | | — | | 909,343 | | W. R. Sperry | | STI | | 02/11/16 | | 210,000 | | 420,000 | | 840,000 | | — | | — | | — | | — | | — | | — | | — | | | | PBRS | | 12/06/16 | | — | | — | | — | | — | | — | | — | | 2,149 | | — | | — | | 225,495 | | | | SAR | | 12/06/16 | | — | | — | | — | | — | | — | | — | | — | | 26,205 | | 113.69 | | 492,916 | | | | PS/TSR | | 12/06/16 | | — | | — | | — | | 1,203 | | 2,406 | | 4,812 | | — | | — | | — | | 304,720 | | | | PS/NS | | 12/06/16 | | — | | — | | — | | 902 | | 2,406 | | 5,414 | | — | | — | | — | | 253,785 | | R. R. Ruland | | STI | | 02/11/16 | | 150,500 | | 301,000 | | 602,000 | | — | | — | | — | | — | | — | | — | | — | | | | PBRS | | 12/06/16 | | — | | — | | — | | — | | — | | — | | 1,308 | | — | | — | | 137,248 | | | | SAR | | 12/06/16 | | — | | — | | — | | — | | — | | — | | — | | 15,951 | | 113.69 | | 300,038 | | | | PS/TSR | | 12/06/16 | | — | | — | | — | | 733 | | 1,465 | | 2,930 | | — | | — | | — | | 185,542 | | | | PS/NS | | 12/06/16 | | — | | — | | — | | 549 | | 1,465 | | 3,296 | | — | | — | | — | | 154,528 | | A. Hsieh | | STI | | 02/11/16 | | 154,000 | | 308,000 | | 616,000 | | — | | — | | — | | — | | — | | — | | — | | | | PBRS | | 12/06/16 | | — | | — | | — | | — | | — | | — | | 1,374 | | — | | — | | 144,174 | | | | SAR | | 12/06/16 | | — | | — | | — | | — | | — | | — | | — | | 16,749 | | 113.69 | | 315,049 | | | | PS/TSR | | 12/06/16 | | — | | — | | — | | 769 | | 1,538 | | 3,076 | | — | | — | | — | | 194,788 | | | | PS/NS | | 12/06/16 | | — | | — | | — | | 577 | | 1,538 | | 3,461 | | — | | — | | — | | 162,228 | | G. W. Bakker | | STI | | 02/11/16 | | 157,500 | | 315,000 | | 630,000 | | — | | — | | — | | — | | — | | — | | — | | | | PBRS | | 12/06/16 | | — | | — | | — | | — | | — | | — | | 1,402 | | — | | — | | 147,112 | | | | SAR | | 12/06/16 | | — | | — | | — | | — | | — | | — | | — | | 17,090 | | 113.69 | | 321,463 | | | | PS/TSR | | 12/06/16 | | — | | — | | — | | 785 | | 1,569 | | 3,138 | | — | | — | | — | | 198,714 | | | | PS/NS | | 12/06/16 | | — | | — | | — | | 588 | | 1,569 | | 3,530 | | — | | — | | — | | 165,498 | |
| | | | | | Est. Future Payouts Under Non-Equity Incentive Plan Awards(1) | | All Other Stock Awards: | | All Other Option Awards: | | Exercise | | Closing | | Grant Date Fair | Name | | Type of Award | | Grant Date | | Threshold ($) | | Target ($) | | Max ($) | | Number of Shares of Stock or Units(2) (#) | | Number of Shares Underlying Options(2) (#) | | or Base Price of Option Awards(3) ($/Sh) | | Stock Price of Option Awards ($/Sh) | | Value of Stock and Option Awards(4) ($) | David G. Nord | | STI | | 02/14/19 | | 656,563 | | 1,313,125 | | 2,626,250 | | — | | — | | — | | — | | — | William R. Sperry | | STI | | 02/14/19 | | 272,000 | | 544,000 | | 1,088,000 | | — | | — | | — | | — | | — | | | RS | | 07/01/19 | | — | | — | | — | | 1,160 | | — | | — | | — | | 149,965 | | | SAR | | 07/01/19 | | — | | — | | — | | — | | 7,059 | | 129.28 | | 130.40 | | 150,004 | Gerben W. Bakker | | STI | | 02/14/19 | | 292,400 | | 584,800 | | 1,169,600 | | — | | — | | — | | — | | — | | | RS | | 07/01/19 | | — | | — | | — | | 2,263 | | — | | — | | — | | 292,561 | | | SAR | | 07/01/19 | | — | | — | | — | | — | | 13,765 | | 129.28 | | 130.40 | | 292,506 | Allan J. Connolly | | STI | | 02/14/19 | | 178,448 | | 356,895 | | 713,790 | | — | | — | | — | | — | | — | | | RS | | 07/01/19 | | — | | — | | — | | 967 | | — | | — | | — | | 125,014 | | | SAR | | 07/01/19 | | — | | — | | — | | — | | 5,882 | | 129.28 | | 130.40 | | 124,993 | Katherine A. Lane | | STI | | 02/14/19 | | 116,600 | | 233,200 | | 466,400 | | — | | — | | — | | — | | — | | | RS | | 07/01/19 | | — | | — | | — | | 1,334 | | — | | — | | — | | 172,460 | | | SAR | | 07/01/19 | | — | | — | | — | | — | | 8,118 | | 129.28 | | 130.40 | | 172,508 |
(1) | | (1) | The amounts reported in theEstimated Future Payouts Under Non-Equity Incentive Plan Awardscolumns reflect the target, threshold and maximum short-term incentive award opportunity for each of the named executive officersNEOs under the Company’s Incentive Plan and Senior Plan. The named executive officersNEOs are eligible for a payout within the threshold and maximum range depending upon several performance factors such as earnings per share, free and operating cash flow, operating profit improvement and strategic objectives. See the “Short-Term Incentive Compensation” section onpage 31.43. | (2) | | (2) | The amounts reported in theEstimated Future Payouts Under Equity Incentive Plan Awardscolumns reflect the target number of performance shares awarded to the named executive officers under the Equity Plan on December 6, 2016, and the threshold and maximum number of performance shares that may be earned. Performance shares are earned based on two equally weighted measures: (i) Total shareholder return (“PS / TSR”) and net sales performance (“PS / NS”) at the end of a three-year performance period compared to that of other companies in the Standard & Poor’s Capital Goods 900 Index. The PS / NS measure is then modified by the Company’s cumulative net income margin performance over the same period, as compared to the target set by the Company at the beginning of the period. See the “Performance Share Awards” section on page 35. | | | (3) | The amounts reported in theAll Other Stock Awards and All Other Option Awards columns reflect the number of PBRSshares of Restricted Stock (RS) and SARs awarded to each of the named executive officers under the Equity Plan on December 6, 2016.July 1, 2019. SARs are subject to vesting in three equal annual installments on the anniversary of the grant date. PBRS vests if the Company’s total shareholder return performance is greater than or equal to the 20th percentile of the Standard & Poor’s Capital Goods 900 Index at the end of a three year performance period. Upon “Retirement”, as defined on page 45, PBRS remains eligible toretirement, RS will vest subject to the Company performance with respect to said criteria as measured at the end of the three year performance period.in full. SARs and PBRSRS become fully vested upon death or disability. | (3) | | (4) | The amount reported in theExercise or Base Price of Option Awards column reflects the mean between the high and low trading prices of the Company’s Common Stock on the trading day immediately preceding the date of grant which was the fair market value of the Company’s Common Stock as defined under the Equity Plan. | (4) | | (5) | The amounts reported in theGrant Date Fair Value of Stock and Option Awards column reflect the aggregate fair value of the PBRS,RS and SARs and performance share awards granted to each named executive officerNEO on December 6, 2016,July 1, 2019, based upon the probable outcome of performance conditions, as applicable, as determined under FASB ASC Topic 718 and disclosed in Note 1617 within the Notes to the Consolidated Financial Statements in the Company’s 20162019 Annual Report on Form 10-K filed with the SEC on February 16, 2017. For performance shares with a total shareholder return metric, fair value is based upon the assumptions disclosed in Note 16 to the Consolidated Financial Statements contained in the Company’s 2016 Annual Report on Form 10-K. For performance shares with a net sales growth performance metric, fair value is based upon the average between the high and low trading prices of the Company’s Common Stock on the date preceding the grant date and assumes that the award will vest at target.14, 2020. |
Equity Award Plan Vesting Provisions - Grant Terms The following table describes the terms of each of the equity incentive awards granted to the applicable NEOs in July 2019. | | Restricted Stock | | Stock Appreciation Rights | Description | | A promise to receive a number of shares on the third-year anniversary of the grant date. | | Right to receive, in stock, the appreciation in value between the stock price on the date of grant and date of exercise. | Abbreviation | | RS | | SARs | Vesting Period | | 3-year cliff vesting on the anniversary of the grant date | | 1/3 per year on the anniversary of the grant date |
www.hubbell.com | HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement | 42 60 |
Outstanding Equity Awards at 2019 Fiscal Year End The following table provides information on all restricted stock, PBRS, SARSARs and performance share awards held by the named executive officersNEOs of the Company and the value of such holdings measured as of December 31, 2016.2019. All outstanding equity awards are in shares of the Company’s Common Stock. | | | | Option Awards(1) | | Stock Awards(2) | | Name | | Grant Date | | No. of Securities Underlying Unexercised Options Exercisable (#) | | No. of Securities Underlying Unexercised Options Unexercisable (#) | | Option Exercise Price ($) | | Option Expiration Date | | No. of Shares or Units of Stock that have not Vested (#) | | Market Value of Shares or Units that have not Vested(3) ($) | | Equity Incentive Plan Awards: No. of Unearned Shares, Units, or other Rights that have not Vested(4) (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares Units or other Rights that have not Vested(5) ($) | | D. G. Nord | | 12/06/2010 | | 19,531 | | — | | 59.950 | | 12/06/2020 | | | | | | | | | | | | 12/05/2011 | | 22,647 | | — | | 64.480 | | 12/05/2021 | | | | | | | | | | | | 06/06/2012 | | 27,910 | | — | | 76.015 | | 06/06/2022 | | | | | | | | | | | | 12/04/2012 | | 47,569 | | — | | 83.725 | | 12/04/2022 | | | | | | | | | | | | 12/10/2013 | | 60,837 | | — | | 107.865 | | 12/10/2023 | | 2,782 | | 324,659 | | 9,945 | | 1,160,582 | | | | 12/02/2014 | | 38,858 | | 19,429 | | 106.440 | | 12/02/2024 | | 7,588 | | 885,520 | | 16,490 | | 1,924,383 | | | | 12/08/2015 | | 28,333 | | 56,668 | | 97.480 | | 12/08/2025 | | 8,720 | | 1,017,624 | | 19,524 | | 2,278,451 | | | | 12/06/2016 | | — | | 93,883 | | 113.690 | | 12/06/2026 | | 7,701 | | 898,707 | | 17,242 | | 2,012,141 | | W. R. Sperry | | 06/06/2012 | | 10,033 | | — | | 76.015 | | 06/06/2022 | | | | | | | | | | | | 12/04/2012 | | 11,892 | | — | | 83.725 | | 12/04/2022 | | | | | | | | | | | | 12/10/2013 | | 15,209 | | — | | 107.865 | | 12/10/2023 | | 695 | | 81,107 | | 2,486 | | 290,116 | | | | 12/02/2014 | | 10,226 | | 5,113 | | 106.440 | | 12/02/2024 | | 1,997 | | 233,050 | | 4,340 | | 506,478 | | | | 12/08/2015 | | 7,083 | | 14,167 | | 97.480 | | 12/08/2025 | | 2,180 | | 254,406 | | 4,880 | | 569,496 | | | | 12/06/2016 | | — | | 26,205 | | 113.690 | | 12/06/2026 | | 2,149 | | 250,788 | | 4,812 | | 561,560 | | R. R. Ruland | | 12/05/2011 | | 1,266 | | — | | 64.480 | | 12/05/2021 | | | | | | | | | | | | 12/04/2012 | | 4,162 | | — | | 83.725 | | 12/04/2022 | | | | | | | | | | | | 12/10/2013 | | 3,971 | | — | | 107.865 | | 12/10/2023 | | 182 | | 21,239 | | 649 | | 75,738 | | | | 12/02/2014 | | 2,556 | | 1,279 | | 106.440 | | 12/02/2024 | | 499 | | 58,233 | | 1,084 | | 126,503 | | | | 07/01/2015 | | 1,009 | | 2,020 | | 109.065 | | 07/01/2025 | | 446 | | 52,048 | | | | | | | | 12/08/2015 | | 4,250 | | 8,500 | | 97.480 | | 12/08/2025 | | 1,308 | | 152,644 | | 2,928 | | 341,698 | | | | 12/06/2016 | | — | | 15,951 | | 113.690 | | 12/06/2026 | | 1,308 | | 152,644 | | 2,930 | | 341,931 | | A. Hsieh | | 12/04/2012 | | 8,919 | | — | | 83.725 | | 12/04/2022 | | | | | | | | | | | | 12/10/2013 | | 11,829 | | — | | 107.865 | | 12/10/2023 | | 541 | | 63,135 | | 1,934 | | 225,698 | | | | 12/02/2014 | | 7,362 | | 3,682 | | 106.440 | | 12/02/2024 | | 1,438 | | 167,815 | | 3,124 | | 364,571 | | | | 12/08/2015 | | 7,313 | | 14,628 | | 97.480 | | 12/08/2025 | | 2,425 | | 282,998 | | 3,514 | | 410,084 | | | | 12/06/2016 | | — | | 16,749 | | 113.690 | | 12/06/2026 | | 1,374 | | 160,346 | | 3,076 | | 358,969 | | G. W. Bakker | | 12/06/2010 | | 3,486 | | — | | 59.950 | | 12/06/2020 | | | | | | | | | | | | 12/05/2011 | | 3,146 | | — | | 64.480 | | 12/05/2021 | | | | | | | | | | | | 12/04/2012 | | 2,596 | | — | | 83.725 | | 12/04/2022 | | | | | | | | | | | | 12/10/2013 | | 3,971 | | — | | 107.865 | | 12/10/2023 | | 182 | | 21,239 | | 649 | | 75,738 | | | | 02/01/2014 | | 3,112 | | 1,556 | | 117.160 | | 02/01/2024 | | 427 | | 49,831 | | | | | | | | 12/02/2014 | | 6,646 | | 3,324 | | 106.440 | | 12/02/2024 | | 1,298 | | 151,477 | | 2,820 | | 329,094 | | | | 12/08/2015 | | 4,604 | | 9,209 | | 97.480 | | 12/08/2025 | | 1,417 | | 165,364 | | 3,172 | | 370,172 | | | | 12/06/2016 | | — | | 17,090 | | 113.690 | | 12/06/2026 | | 1,402 | | 163,613 | | 3,138 | | 366,205 | |
| | | | Option Awards(1) | | Stock Awards | Name | | Grant Date | | No. of Securities Underlying Unexercised Options Exercisable (#) | | No. of Securities Underlying Unexercised Options Unexercisable (#) | | Option Exercise Price ($) | | Option Expiration Date | | No. of Shares or Units of Stock that have not Vested(2) (#) | | Market Value of Shares or Units that have not Vested(3) ($) | | Equity Incentive Plan Awards: No. of Unearned Shares, Units, or other Rights that have not Vested(4) (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares Units or other Rights that have not Vested(5) ($) | David G. | | 12/4/2012 | | 23,785 | | | | 83.73 | | 12/4/2022 | | | | | | | | | Nord | | 12/10/2013 | | 60,837 | | | | 107.87 | | 12/10/2023 | | | | | | | | | | | 12/2/2014 | | 58,287 | | | | 106.44 | | 12/2/2024 | | | | | | | | | | | 12/8/2015 | | 85,001 | | | | 97.48 | | 12/8/2025 | | | | | | | | | | | 12/6/2016 | | 93,883 | | | | 113.69 | | 12/6/2026 | | 7,701 | | 1,138,362 | | 17,242 | | 2,548,712 | | | 12/5/2017 | | 70,206 | | 35,104 | | 127.51 | | 12/5/2027 | | 7,218 | | 1,066,965 | | 14,436 | | 2,133,930 | | | 12/14/2018 | | 26,778 | | 53,558 | | 105.49 | | 12/14/2028 | | 13,808 | | 2,041,099 | | 18,410 | | 2,721,366 | William R. | | 12/6/2016 | | 26,205 | | | | 113.69 | | 12/6/2026 | | 2,149 | | 317,665 | | 4,812 | | 711,310 | Sperry | | 12/5/2017 | | 19,596 | | 9,799 | | 127.51 | | 12/5/2027 | | 2,015 | | 297,857 | | 4,030 | | 595,715 | | | 12/14/2018 | | 7,170 | | 14,341 | | 105.49 | | 12/14/2028 | | 3,697 | | 546,491 | | 4,930 | | 728,753 | | | 7/1/2019 | | | | 7,059 | | 129.28 | | 7/1/2029 | | 1,160 | | 171,471 | | | | | Gerben W. | | 12/5/2011 | | 3,146 | | | | 64.48 | | 12/5/2021 | | | | | | | | | Bakker | | 12/4/2012 | | 2,596 | | | | 83.73 | | 12/4/2022 | | | | | | | | | | | 12/10/2013 | | 3,971 | | | | 107.87 | | 12/10/2023 | | | | | | | | | | | 2/1/2014 | | 4,668 | | | | 117.16 | | 2/1/2024 | | | | | | | | | | | 12/2/2014 | | 9,970 | | | | 106.44 | | 12/2/2024 | | | | | | | | | | | 12/8/2015 | | 13,813 | | | | 97.48 | | 12/8/2025 | | | | | | | | | | | 12/6/2016 | | 17,090 | | | | 113.69 | | 12/6/2026 | | 1,402 | | 207,244 | | 3,138 | | 463,859 | | | 12/5/2017 | | 12,780 | | 6,390 | | 127.51 | | 12/5/2027 | | 1,314 | | 194,235 | | 2,628 | | 388,471 | | | 12/14/2018 | | 5,515 | | 11,032 | | 105.49 | | 12/14/2028 | | 2,844 | | 420,400 | | 3,792 | | 560,533 | | | 7/1/2019 | | | | 13,765 | | 129.28 | | 7/1/2029 | | 2,263 | | 334,517 | | | | | Allan J. | | 2/8/2018 | | | | | | | | | | 7,561 | | 1,117,667 | | | | | Connolly | | 12/14/2018 | | 1,379 | | 2,758 | | 105.49 | | 12/14/2028 | | 711 | | 105,100 | | 948 | | 140,133 | | | 7/1/2019 | | | | 5,882 | | 129.28 | | 7/1/2029 | | 967 | | 142,942 | | | | | Katherine A. | | 7/1/2017 | | 588 | | 295 | | 113.03 | | 7/1/2027 | | 50 | | 7,391 | | | | | Lane | | 12/5/2017 | | 1,628 | | 814 | | 127.51 | | 12/5/2027 | | 112 | | 16,556 | | 168 | | 24,834 | | | 12/14/2018 | | 956 | | 1,912 | | 105.49 | | 12/14/2028 | | 329 | | 48,633 | | 246 | | 36,364 | | | 7/1/2019 | | | | 8,118 | | 129.28 | | 7/1/2029 | | 1,334 | | 197,192 | | | | |
(1) | | (1) | TheOption Awards column reflects SARs that were granted to each named executive officerNEO on the dates shown. SARs entitle the recipient to receive the value in shares of the Company’s Common Stock equal to the positive difference between the base price and the fair market value of a share of Common Stock upon exercise. Generally, SARs vest and become exercisable in three equal installments on each of the first three anniversaries of the grant date. See the “Equity Award Plan Vesting Provisions” section onpage 44.60. | (2) | | (2) | TheNo. of Shares or Units of Stock that have not Vested column reflects restricted stock granted on the following dates and terms: (i) 12/05/17, and 12/06/16 12/08/15 and 12/02/14 PBRS grants - Vest at the end of a three year period provided that the Company’s TSR performance is greater than the 20% 20thpercentile of the S&P Capital GoodsStandard & Poor’s 900 index;Index; and (ii) 7/1/19, 12/10/13 PBRS grant - Vests in three equal installments subject to the Company’s EBITDA performance as a percentage of net sales for the preceding 12 months being greater than 10% as measured on December 31, 2014, 201514/18, 2/8/18, 12/5/17, and 2016; and (iii)12/08/15, 07/01/15 and 02/01/147/1/17 RS grants - Vest in three equal installments on the anniversary of the grant date. See the “Equity Award Plan Vesting Provisions” section onpage 44.60. |
| HUBBELL INCORPORATED| 2020 Proxy Statement 61 |
(3) | TheMarket Value of Shares or Units that have not Vested is based upon the closing market price of the Company’s Common Stock on December 30, 2016, the last business day31, 2019 of 2016, of $116.70.$147.82. | (4) | | (4) | TheEquity Incentive Plan Awards column reflects performance shares granted on the following dates and terms for the performance periods noted: (i)12/06/16, 12/08/15 and 12/02/14 grants14/18 - Vest based on two equally weighted measures: Total shareholder return (“PS / TSR”) and net sales performance (“PS / NS”)achievement of each of three measures as described in the “Performance Share Awards” section onpage 50 at the end of a three-year performance period compared to that of other companies in the Standard & Poor’s Capital Goods 900 Index. The PS / NS measure is then modified by the Company’s cumulative net income margin performance over the same period, as compared to the target set by the Company at the beginning of the period. The performance periods are 01/01/17(1/1/19 - 12/31/19, 01/01/21), as adjusted based on TSR performance. 12/05/17 and 12/06/16 - 12/31/18 and 01/01/15 -12/31/17 and 01/01/14 - 12/31/16, respectively; (ii)12/10/13 grant - VestsVest based upon the satisfaction of performance criteria related to the Company’s total return to shareholderson two equally weighted measures as compared to the total return to shareholders for companiesdescribed in the Standard & Poor’s Mid-Cap 400 Index. The performance period is 01/01/14 - 12/31/16. See the “Performance Share Awards” section onpage 35.52 at the end of a three-year performance period (1/1/18 - 12/31/20 and 1/1/17 - 12/31/19, respectively). | (5) | | (5) | TheMarket or Payout Value of Unearned Shares, Units or Other Rights that have not Vested column is based upon the closing market price of the Company’s Common Stock on December 30, 2016, the last business day31, 2019 of 2016, of $116.70. |
| | HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement$147.82. | 43 |
Equity Award Plan Vesting Provisions
2016 Grant Terms
The following table describes the terms of each of the equity incentive awards granted to the named executive officers in December 2016.
| | Performance Based Restricted Stock | | Performance Shares | | Stock Appreciation Rights | Description | | Award of shares that vest subject to achievements relative to the performance metrics and ranges described below. | | A promise to receive a number of shares, the ultimate payout of which can vary based upon achievements relative to the performance metrics and ranges described below. | | Right to receive, in stock, the appreciation in value between the stock price on the date of grant and date of exercise. | Abbreviation | | PBRS | | PS/TSR | PS/NS | | SARs | Weighting | | 20% | | 20% | 20% | | 40% | Metric | | Total Shareholder Return | | Total Shareholder Return | Net Sales Growth (with modifier) | | — | Comparator | | S&P Capital Goods 900 | | S&P Capital Goods 900 | S&P Capital Goods 900 | | — | Vesting Period | | January 1, 2017 to December 31, 2019 | | January 1, 2017 to December 31, 2019 | | 1/3 on the anniversary of the grant date | Range/Payout | | 100% of shares will vest if, at the end of the performance period, Hubbell’stotal shareholder return is > than the 20thpercentile of the comparator group. Performance below the 20thpercentile results in no payout. | | Payout can range from 0 to 200% of the original grant amount based on Hubbell’stotal shareholder return performance relative to the comparator group. | Payout can range from 0 to 200% of the original grant amount based on Hubbell’snet sales performance relative to the comparator group | | | | | | | Performance Range and Payout | | | | | | | > 80thpercentile of Index | 200% | | | | | | | At 50thpercentile of Index | 100% | | | | | | | At 35thpercentile of Index | 50% | | — | | | | | Below 35th percentile of Index | 0% | | | | | | | | Modifier | | | | | | | — | The payout is further modified based on Hubbell’s cumulativenet income margin performance compared to the following preestablished targets: | | | | | | | | 10% | growth = 125% payout | | | | | | | | 9% | growth = 100% payout | | | | | | | | 8% | growth = 75% payout | | | | | | | | <8% | growth = 0% payout | | |
| | HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement | 44 |
Post-Termination Vesting Terms
The following table shows the vesting provisions of equity awards post-termination under the scenarios shown. For each of these award types, “Retirement” shall mean that the named executive officer has terminated employment with the Company, is minimum age 55 and the executive’s age plus years of service with the Company equals or exceeds 70.
Award Type | | Involuntary Termination
(without cause) and
Voluntary Termination | | Retirement | | Death/Disability | Restricted Stock | | | | | | | | | | | | | | PBRS
(performance-based) | | Unvested PBRS forfeited | | Unvested PBRS remain eligible to vest provided that the performance conditions are met during the performance period | | Unvested PBRS fully vest | | | | | | | | RS
(time-based) | | Unvested shares forfeited | | Unvested shares fully vest
| | Unvested shares fully vest | | | | | | | | Performance Shares | | | | | | | | | | | | | | | | Unvested shares forfeited | | Eligible for a pro-rata portion of shares based on the number of months the executive served during the performance period | | Target number of shares fully vest | | | | | | | | SARs | | | | | | | | | | | | | | | | Unvested SARs forfeited. Vested SARs are exercisable for the earlier of 90 days after the termination date or the 10thanniversary of the grant date. | | Unvested SARs continue to vest in the normal course. Vested SARs are exercisable until the10th anniversary of the grant date. | | Unvested SARs fully vest. Upon death (or if the NEO dies within 90 days of termination of service due to disability) SARs are exercisable for the earlier of 1 year after death or the 10thanniversary of the grant date. | | | | | | | |
Option Exercises and Stock Vested During Fiscal Year 20162019 The following table provides information on the number of shares acquired and the value realized by the named executive officersNEOs during fiscal year 20162019 on the exercise of SARs and on the vesting of restricted stock. | | Option Awards(1) | | Stock Awards | Name | | No. of Shares Acquired on Exercise (#) | | Value Realized Upon Exercise ($) | | No. of Shares Acquired on Vesting (#) | | Value Realized Upon Vesting ($) | | D. G. Nord | | 43,143 | | 2,316,757 | | 2,781 | | | 248,510 | (2) | | | | | | | 6,364 | | | 781,945 | (3) | W. R. Sperry | | 21,971 | | 860,902 | | 695 | | | 62,105 | (2) | | | | | | | 1,591 | | | 195,486 | (3) | R. R. Ruland | | — | | — | | 405 | | | 39,801 | (2) | | | | | | | 415 | | | 50,991 | (3) | A. Hsieh | | — | | — | | 968 | | | 97,342 | (2) | | | | | | | 1,237 | | | 151,990 | (3) | G. W. Bakker | | — | | — | | 609 | | | 54,736 | (2) | | | | | | | 415 | | | 50,991 | (3) |
| | Option Awards(1) | | Stock Awards | Name | | No. of Shares Acquired on Exercise (#) | | Value Realized Upon Exercise ($) | | No. of Shares Acquired on Vesting (#) | | Value Realized Upon Vesting ($) | | David G. Nord | | 51,694 | | 2,607,843 | | 8,720 | | 1,024,600 | (2) | | | — | | — | | 15,619 | | 2,335,353 | (3) | William R. Sperry | | 51,798 | | 1,213,493 | | 2,180 | | 256,150 | (2) | | | — | | — | | 3,904 | | 583,726 | (3) | Gerben W. Bakker | | — | | — | | 1,417 | | 166,498 | (2) | | | — | | — | | 2,537 | | 379,332 | (3) | Allan J. Connolly | | — | | — | | — | | — | | | | — | | — | | — | | — | | Katherine A. Lane | | — | | — | | 449 | | 65,187 | (2) | | | — | | — | | — | | — | |
(1) | | (1) | The amounts reported in theOption Awards - Value Realized Upon Exercisecolumn reflect the number of shares acquired upon exercise multiplied by the difference between the base price of the SAR and the market price of the Company’s Common Stock on the date of exercise. | (2) | | (2) | The amounts reported in theStock Awards - Value Realized Upon Vestingcolumn reflect the number of shares of PBRS and time-based restricted stock, as applicable, acquired upon vesting multiplied by the closing market price of the Company’s Common Stock on the following vesting dates: DecemberFebruary 8, 20162019 - $114.75,$114.97, February 15, 2019 - $117.50, July 1, 20162019 - $105.55, February 11, 2016$131.26, December 5, 2019 - $89.36$146.29, December 6, 2019 - $147.74 and February 1, 2016December 13, 2019 - $90.10.$146.75. | (3) | | (3) | The amounts reported in theStock Awards - Value Realized Upon Vestingcolumn reflect the number of performance shares earned multiplied by the closing market price of the Company’s Common Stock on February 9, 2017, $122.87,13, 2020, $149.52, the date the delivery of the performance shares was approved for the performance period ending December 31, 2016.2019. |
www.hubbell.com | | HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement | 45 62 |
Retirement PlansPost-Termination Vesting Terms for Equity Plan Grants
The following table shows the vesting provisions of equity awards post-termination under the scenarios shown. For each of these award types, “Retirement” means that the NEO has terminated employment with the Company, is of a minimum of age 55 and the executive’s age plus years of service with the Company equals or exceeds 70. Award Type | | Involuntary Termination | | Retirement(1) | | Death/Disability | PBRS | | Unvested PBRS forfeited | | Unvested PBRS are eligible to vest provided that the performance conditions are met | | Unvested PBRS fully vest | Performance Shares | | Unvested shares forfeited | | Eligible for a pro-rata portion of shares based on the number of months the NEO served during the performance period | | Target number of shares fully vest | RS (time-based) | | Unvested shares forfeited | | Unvested shares fully vest | | Unvested shares fully vest | SARs | | Unvested SARs forfeited. May exercise vested SARs for the earlier of 90 days after the termination date or the 10thanniversary of the grant date | | Unvested SARs continue to vest in the normal course. Vested SARs exercisable until the 10thanniversary of the grant date | | Unvested SARs fully vest. Following disability termination, vested SARs are exercisable for the earlier of 90 days after the termination date or the 10thanniversary of the grant date. Upon death (or if the NEO dies within 90 days of termination due to disability) SARs are exercisable for the earlier of one year after death or the 10thanniversary of the grant date |
(1) | Retirement means that the NEO has terminated employment with the Company, is at a minimum age of 55 and the executive’s age plus years of service with the Company equals or exceeds 70. |
Pension Benefits in Fiscal Year 20162019 The following table provides information on the retirement benefits for the named executive officersNEOs under the Company’s DB Plan, and DC Plan (tax qualified plans) and the DB Restoration Plan, DC Restoration Plan and Executive Plan (non-qualified plans, collectively, “Supplemental Plans”) in which they participate. See the “Employee Benefits” section onpage 38.54. Name | | Plan Name | | No. of Years Credited Service (#) | | Present Value of Accumulated Benefit(1) ($) | | Payments During the Last Fiscal Year ($) | | D. G. Nord | | DC Plan | | 11.25 | | 130,424 | | — | | | | DC Restoration Plan | | 11.25 | | 448,548 | | — | | | | Executive Plan | | 10.00 | | 15,482,857 | | — | | W. R. Sperry | | DC Plan | | 8.33 | | 130,131 | | — | | | | DC Restoration Plan | | 8.33 | | 173,668 | | — | | R. R. Ruland | | DC Plan | | 7.17 | | 69,611 | | — | | | | DC Restoration Plan | | 7.17 | | 96,648 | | — | | A. Hsieh | | DC Plan | | 4.25 | | 50,108 | | — | | | | DC Restoration Plan | | 4.25 | | 64,305 | | — | | G. W. Bakker | | DB Plan | | 25.75 | | 665,402 | | — | | | | DB Restoration Plan | | 25.75 | | 1,111,362 | | — | |
Name | | | Plan Name | | No. of Years Credited Service (#) | | Present Value of Accumulated Benefit(1) ($) | | Payments During the Last Fiscal Year ($) | David G. Nord | | | Executive Plan | | 10.00 | | 19,004,593 | | — | Gerben W. Bakker | | | DB Plan | | 25.92 | | 887,607 | | — | | | | DB Restoration Plan | 25.92 | | 2,327,821 | | — |
(1) | | (1) | For the DB Plan and Supplemental Plans, the present value of accrued benefits at December 31, 20162019 are determined based on the RP-2000 CombinedPri-2012 Healthy Annuitant Mortality tables, (gender distinct)sex distinct, with generational projectionsprojection from 2012 using Scale BB-2D,MP-2019 and using a discount rate of 4.30%3.30%. Participants are assumed to retire at age 62 or current age, if later. |
Pension Benefit Calculations The following paragraphs describe the manner in which benefits are calculated under each of the Company’s retirement plans: DB Plan and DB Restoration Plan The DB Plan provides for participation by all regular full-time salaried employees (other than employees who are subject to a collective-bargaining agreement) who were employed by covered Company businesses on December��December 31, 2003. | HUBBELL INCORPORATED| 2020 Proxy Statement 63 |
The annual benefits under the DB Plan upon normal retirement (age 65) are calculated under the following two formulas in which Final Average Pay refers to the average of the executive’s highest three consecutive earnings (base salary and short-term incentives) in the last ten years: For participants age 50 with 10 years of service at January 1, 2004 (“Grandfathered Participants”):
| For participants age 50 with 10 years of service at January 1, 2004 (“Grandfathered Participants”): |
For all other participants hired before January 1, 2004, the formula is as follows:
| For all other participants hired before January 1, 2004, the formula is as follows: |
Grandfathered Participants will have benefits earned after 2003 calculated under whichever of the above two formulas produces a higher benefit. Early retirement (age 55 and at least 10 years of service) benefits are calculated under the same formula as normal retirement benefits, but reduced by 0.6% (0.3% for Grandfathered Participants) for each month by which the executive’s early retirement is after age 60, but before age 65, and 0.3% (0.5% for Grandfathered Participants) for each month by which the executive’s early retirement precedes age 60. Lump sum payments cannotcan be elected under the Basic Plan.DB plan within one year from separation of employment. HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement | 46 |
Benefits under the DB Restoration Plan are calculated in the same manner as benefits under the DB Plan, but without regard to any limits on compensation or benefit accruals that may apply under the DB Plan as required by the tax-qualified plan rules. DB Restoration benefits are payable based on a life annuity distribution (although 50% of the benefits are payable to the participant’s surviving spouse in the event of his or her death after commencing benefits), except that benefits are paid out as a lump sum if a participant as of the date of a change in control experiences a termination of employment within 2 years following the change in control. As describedBeginning in 2017, the “Employee Benefits” section on page 38,DB Plan began a transition to being fully frozen. Years of Service will bewas frozen under the DB Plan and the DB Restoration Plan effective February 28, 2017 and Final Average Pay, Social Security Covered Compensation, and Social Security Benefit will be frozen under the DB Plan and the DB Restoration Plan effective December 31, 2020.
Executive Plan The Executive Plan provides designated executives the opportunity to earn pension benefits supplementing those earned under the DB Plan. Executive Plan benefits upon normal retirement (age 65) are calculated using the following formula in which Final Total Compensation refers to the average of the executive’s highest three earnings (base salary and short-term incentive) over the last ten years:years prior to December 31, 2016:
Executive Plan benefits upon early retirement (on or after age 55) are calculated under the same formula as normal retirement benefits except that the early retirement benefit is reduced by 0.3% for each month by which the executive’s early retirement precedes age 62, and by an additional 0.2% for each month by which the executive’s early retirement precedes age 60. Executive Plan benefits are payable based on a 50% joint and survivor form oflife annuity distribution (although 50% of the benefits are payable to the participant’s surviving spouse in the event of his or her death after commencing benefits), except that benefits are paid out as a lump sum uponif a participant as of the date of a change in control experiences a termination of employment within 2 years following the change in control. Participation in the Executive Plan is at the sole discretion of the Compensation Committee which closed the Plan to new participants in 2007. As described under the Employee Benefits section on page 38,a part of Hubbell’s Retirement Plans changes in 2016 and 2017, all benefit accruals under the Executive Plan were frozen effective as of December 31, 2016. www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 64 |
Except as otherwise provided, for Executive Plan participants who have entered into Change in Control Severance Agreements with the Company, no benefit is payable under the Executive Plan if a participant terminates employment prior to age 55 with less than 10 years of service under the Executive Plan, but such participant may be entitled to a benefit under the DB Plan, DC Plan, and DB Restoration and DC Restoration Plans.
DC Plan and DC Restoration Plan Under the DC Plan as in effect through December 31, 2016, the Company provided a discretionary profit sharing contribution. Full-time salaried employees hired on or after January 1, 2004 were eligible to receive such discretionary contribution, which was made after year end at the discretion of the Board of Directors. The amount was determined by multiplying the sum of the employee’s base salary and short-term incentive compensation by a certain percentage approved by the Board of Directors, which in recent years has been 4%. There was no guarantee, however, that that percentage would continue in future years.
As described under the Employee Benefits section onpage 38, effective January 1, 2017,54, the DC Plan provides eligible participants with a fixed non-elective contribution of 4% of eligible earnings and a matching contribution equal to 50% of the first 6% of a participant’s eligible earnings that he or she voluntarily contributes to the DC Plan. Effective January 1, 2011, theThe Company adopted thealso provides a DC Restoration Plan to allow for additional profit sharing and otherexcess contributions foron behalf of those employees whose contributions are limited under the tax-qualified DC Plan due to compensation limits imposed by the IRS. Employees impacted by those limitations receive a contribution under the DC Restoration Plan equal to the same percentage used for the DC Plan multiplied by their eligible earnings in excess of the IRS limits.
As described above, effective January 1, 2017, the Company amended theThe DC Restoration Plan to provideprovides each participant with (i) an annual non-elective contribution equal to the excess of 4% of eligible earnings over the amount credited as a safe harbor non-elective contribution to the DC Plan for that year and (ii) an annual matching contribution equal to 50% of the first 6% of a participant’s eligible earnings that he or she voluntarily contributes to the DC Plan and/or defers to the Executive Deferred Compensation Plan less the maximum amount of matching contributions that could have been credited under the DC Plan if he had contributed the maximum amount permitted under the DC Plan for that year.
HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement | 47 |
Non-Qualified Deferred Compensation Executive Deferred Compensation Plan The Executive Deferred Compensation Plan (“EDCP”)EDCP enables certain designated executives to defer up to 50% of their annual base salary and up to 100% of their annual short-term incentive compensation. Amounts deferred intounder the EDCP are nominally invested at the discretion of the participant in the same mutual funds selected byavailable to all employees in the Compensation Committee,DC plan and all participants are immediately 100% vested in the amounts they elect to defer. The Company is permitted to make discretionary contributions to EDCP participants and to make contributions subject to vesting conditions or other restrictions. Since the EDCP’s adoption in 2008, however, no discretionary Company contributions have been made. Participants are generally required to make their deferral elections by December 31 of the year prior to the year in which the base pay is paid, and the short-term incentive award is earned. At that time, participants also elect the future date on which they want their deferrals for that year and related earnings to be distributed.distributions. Distributions can be made at any time while the participant remains an employee (but no sooner than two years after the year for which the deferral is made) or upon separation from service or a change in control. Distributions upon separation from service may be made in lump sum or installments over 5, 10 or 15 years. In service distributions and distributions upon a change in control are made in a lump sum. Participants may also access their accounts under the EDCP in the event of an unforeseen emergency. Non-Qualified Deferred Compensation in Fiscal Year 20162019 The following table provides information on the benefits payable toearned by each NEO under the Company’s EDCP and DC Restoration Plan: | Executive | Registrant | Aggregate | Aggregate | Aggregate | | Contributions | Contributions | Earnings in | Withdrawals/ | Balance at | | in 2016(1) | in 2016(2) | Last FY(3) | Distributions | 12/31/16(4) | Name | ($) | ($) | ($) | ($) | ($) | D. G. Nord | 323,500 | 67,697 | 222,983 | — | 3,015,936 | W. R. Sperry | — | 21,948 | 10,272 | — | 150,116 | R. R. Ruland | — | 11,224 | 5,459 | — | 83,348 | A. Hsieh | — | 15,424 | 3,116 | — | 47,029 | G. W. Bakker | 86,250 | — | 6,323 | — | 92,573 |
Name | | Executive Contributions in 2019(1) ($) | | Registrant Contributions in 2019(2) ($) | | Aggregate Earnings in Last FY(3) ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at 12/31/19(4) ($) | David G. Nord | | 840,400 | | 83,820 | | 675,471 | | — | | 5,161,004 | William R. Sperry | | 44,658 | | 52,374 | | 58,742 | | — | | 439,165 | Gerben W. Bakker | | 30,155 | | 40,764 | | 102,189 | | — | | 529,754 | Allan J. Connolly | | — | | — | | — | | — | | — | Katherine A. Lane | | 10,805 | | 4,260 | | 3,551 | | — | | 29,290 |
(1) | The amounts reported in theExecutive Contributions in 20162019 column reflect an elective contribution by Mr. Nord and Mr. Bakkerdeferrals of 50% and 20%, respectively, of their short-term incentive awards into the EDCP. This amount wasEDCP as follows: Mr. Nord - 50% and Ms. Lane - 10%, and elective deferral of base salary as follows: Mr. Sperry - 7% and Mr. Bakker - 5%. The short-term incentive amounts were earned and deferred for services in 2015,2018 but contributedcredited to the EDCP in April 2016, and2019, which is the time payments under the Incentive Plan are generally made. The amounts in this column include amounts also included in the Summary Compensation Table for 20162019 under the Salary column (for 2019) and the Non-Equity Incentive Compensation Plan column.column (for 2018). | (2) | The amount reported in theRegistrant Contributions in 20162019 column reflects a profit sharing contributioncredits for Mr. Nord, Mr. Sperry, Mr. RulandBakker and Mr. HsiehMs. Lane under the DC Restoration Plan earned for services in 20152018 and contributedcredited in 2016, but2019. The amount does not include the following accrued profit sharingrestoration company retirement contribution and restoration match contributions earned in 20162019 to be contributedcredited in 20172020 which amounts are detailed in the footnote and included in the All Other Compensation column of the Summary Compensation Table onpage 4158 for 2016:2019: Mr. Nord – $68,612,- $171,591, Mr. Sperry – $23,552,- $64,645, Mr. Ruland – $14,435Bakker - $48,250, Mr. Connolly - $35,412 and Mr. Hsieh – $17,276.Ms. Lane - $13,598. | (3) | The amounts reported in theAggregate Earnings in Last FY column include aggregate notional earnings on the EDCP account balances and the DC Restoration Plan balances in 2016.2019. Amounts deferred under the EDCP and the DC Restoration Plan are credited with earnings on the basis of individual notional investment directions made by each participant. | (4) | The amounts reported in theAggregate Balance at 12/31/1619 column reflect Mr. Nord’seach NEOs balance incredited to the EDCP and in the DC Restoration Plan, and for Mr. Bakker his balance in the EDCP. For Mr. Sperry, Mr. Ruland and Mr. Hsieh, the amounts shown reflect their balances in the DC Restoration Plan. |
The material terms of the non-qualified deferred compensation plans are further described under the “Pension Benefit Calculations” section onpage 63 and the “Non-Qualified Deferred Compensation” section above. | HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement | 48 65 |
Potential Post-Employment Compensation Arrangements The Company offers post-employment compensation and benefits to the named executive officersNEOs under its general Severance Policy (which is also available to senior level employees)employees in addition to NEOs), Equity Plan, STI Plans, benefit plans andits retirement plans and pursuant to individual change in control severance agreements (“CIC Agreements”), as applicable, that provide compensation and benefits only in the event of a change in control.control (as defined in the CIC Agreements). In addition, NEOs may be entitled to post termination compensation and benefits under the terms of the Company’s Equity Plan, STI Plans and other benefit plans. The section below describes the types of compensation and benefits a named executive officerNEO is eligible forto receive under these plans, policies and agreements based on five termination scenariosscenarios: (i) involuntary termination, (ii) death, (iii) disability, (iv) Retirement,retirement and (v) following a change in control and involuntary termination. No incremental amounts in excess of vested rights under any of the Company’s plans are generally payable to the named executive officersNEOs upon voluntary termination or termination for cause. Severance Policy The Company has a Severance Policy for Senior Executives which offers severance benefits to the named executive officersNEOs and other members of senior management in the event of involuntary termination or termination for reasons other than cause (“Severance(the “Severance Policy”). The Severance Policy offers the following benefits:benefits to NEOs: | • | 4 weeks base salary continuation for each year of service with a minimum of 26 weeks and a maximum of 78 weeksweeks. | | | | | • | Continued medical, dental and life insurance benefits for the salary continuation periodperiod. | | | | | • | Pro-rated portion of their target short-term incentive award earned through the date of terminationtermination. | | | | | • | Outplacement services for up to 12 monthsmonths. |
InInvoluntary termination includes, for purposes of the event of termination of employmentseverance policy, a resignation by the NEO due to Retirement, death, disability,a material change in the NEO’s authority, duties, responsibilities or base compensation, or a significant change in control, there are no benefits payable under the general Severance Policy. However, inlocation of the NEO’s employment location. In the event of a change in control followed by an involuntary termination, in lieu of any benefits under the named executive officersSeverance Policy, the NEOs would be eligible for severance benefits pursuant to the terms of their CIC Agreements as described on page 50.Agreements.
Equity Plan AllCertain of the named executive officersNEOs received grants under the Equity Plan in 2016.2019, but others have received such types of prior, outstanding awards. The treatment of equity awards upon involuntary termination Retirement,(i.e. termination by the Company without cause), retirement and death and disability is set forth in the table below.onpage 69.
Award Type | | Involuntary Termination | | Retirement(1) | | Death / Disability | PBRS | | Unvested PBRS forfeited | | Unvested PBRS are eligible to vest provided that the performance conditions are met | | Unvested PBRS fully vest | Performance Shares | | Unvested shares forfeited | | Eligible for a pro-rata portion of shares based on the number of months the NEO served during the performance period. | | Target number of shares fully vest | RS (time-based) | | Unvested shares forfeited | | Unvested shares fully vest | | Unvested shares fully vest | SARs | | Unvested SARs forfeited. May exercise vested SARs for the earlier of 90 days after the termination date or the 10thanniversary of the grant date. | | Unvested SARs continue to vest in the normal course. Vested SARs exercisable until the 10th anniversary of the grant date. | | Unvested SARs fully vest. Upon death (or if the NEO dies within 90 days of termination due to disability) SARs are exercisable for the earlier of one year after death or the 10thanniversary of the grant date. |
(1) | Retirement means that the named executive officer has terminated employment with the Company, is minimum age 55 and the executive’s age plus years of service with the Company equals or exceeds 70. |
In 2016, the Board of Directors amendedOutstanding awards under the Equity Plan to eliminate the single trigger vesting of equity awards upon a change in control. Under the amended Equity Plan, awards granted on or after December 6, 2016 will no longerdo not automatically vest and become vested and payable upon a change in control rather(as defined in the Equity Plan). Instead, the awards will be subject tomay vest in the discretion of the Compensation Committee in the event they are not assumed anby the acquiring company. The table below shows the treatment of equity awards upon a change in control:control under the Equity Plan:
Change in Control | | Change in Control and Involuntary Termination | Pre 12/06/16 Equity Grants | 12/06/16 Equity Grants | Pre 12/06/16 Equity Grants | 12/06/16 Equity Grants | Unvested awards fully vest | Unless otherwise determined by the Compensation Committee, unvested time-based RS and SARs will be assumed by the acquirer and continue to vest. Treatment of unvested PBRS and PS are subject to discretion of the Compensation Committee.Committee | Unvested awards fully vest | Unvested awards fully vest only if the NEO is involuntarily terminated within 12 months following a change in control |
HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement | 49 |
Short-Term Incentive Award Plans In 2016,2019, the named executive officersNEOs participated the Senior Plan orin the Incentive Plan, as applicable. InPlan. As described above, in the event of involuntary termination without cause, the named executive officersNEOs would be entitled to receive a pro-rated portion of their target short-term incentive award earned through the date of termination pursuant to the Severance Policy (as discussed above). If a named executive officers’ employment is terminated due to Retirement, death or disability, generally the executive would also receive a pro-rated incentive award earned through the date of termination.Policy. In the event of a change in control, the named executive officersNEOs would only be eligible to receive the short-term incentive award benefits prescribed under their CIC Agreements discussed below. www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 66 |
Change in Control SeveranceService Agreements The Company is a party to CIC Agreements with the named executive officersNEOs (as applicable) which provide severance benefits in the event of a termination of employment by the executive for good reason or by the Company (other than for cause or due to the executive’s death, disability or retirement) within two years after a change in control or, in certain circumstances, in anticipation of a change in control. A “change in control” is generally defined as a change in the majority of the Company’s Board of Directors during any 12 month period, the acquisition by a party directly or indirectly of 30% or more of the voting power of the Company during any 12 month period, a sale of substantially all of the Company’s assets and the acquisition by a party of more than 50% of either the voting power of the Company or the fair market value of the Company. CIC Agreements may only be granted with the approval of the Board of Directors upon the recommendation of the Compensation Committee. In the event of a change in control, the benefits provided to the named executive officersNEOs under their CIC Agreements are as follows: | • | LumpA lump sum payment of the named executive officers’NEO’s base salary multiplied by 2.75 for Mr. Nord, and 2.5 for the other named executive officers.Messrs. Bakker and Sperry, and 2 for Ms. Lane. Mr. Connolly does not have a CIC Agreement. | | | | | • | Continued medical, dental, vision and life insurance benefits under the Company’s benefit plans after termination for 2.75 years for Mr. Nord, and 2.5 years for the other named executive officers.Messrs. Bakker and Sperry and 2 years for Ms. Lane. | | | | | • | TheA lump sum payment of the average short-term incentive awards received by the named executive officerNEO in the three years preceding the change in control multiplied by 2.75 for Mr. Nord, 2.5 for Messrs. Bakker and aSperry, and 2 for Ms. Lane. | | A lump sum payment of the pro-rated portion of their annual short-term incentive award target for the year in which the termination occurs. | | | | | • | The incremental value of additional age and service credit under all applicable Supplemental Plans (subject to the terms of each plan freeze) payable as a lump sum. | | | | | • | Outplacement services up to 12 months following termination at a cost not to exceed 15% of the named executive officer’sNEO’s annual base salary. |
The CIC Agreements contain a provision whereby the severance multiple is reduced in monthly increments over the two-year period following the named executive officer’sNEO’s 63rdbirthday until it reaches one times the executive’s base salary and average short-term incentive award. Payments under the CIC Agreements are offset by severance or similar payments and/or benefits received by the executive under any other Company plan or policy. The CIC Agreements also provide that if an executive would have otherwise incurred excise taxes under Section 4999 of the Code, such payments may be reduced to the “safe harbor amount” so that no excise taxes would be due, if such reduction would result in the executive being in a better net after tax position. The CIC Agreements do not provide for any tax-grosstax gross up in the event the payments are not reduced and thus the executive would be required to pay any excise taxes under Section 4999 of the Code. No benefitsBenefits described above in this subsection are only payable under the CIC Agreements if a named executive officerNEO is terminated by the Company other than for “cause” or if the named executive officerNEO terminates employment other than for “good reason”, as each term is defined in the CIC Agreements. The Company has established a grantor trust to secure the benefits to be provided under the CIC Agreements, the Executive Plan, DB Restoration Plan, and DC Restoration PlanSupplemental Plans and other plans maintained by the Company for the benefit of members of the Company’s senior management. Employment Agreement The Company has not entered into employment agreements with Messrs. Nord, Bakker or Sperry or Ms. Lane. In connection with its acquisition of the Aclara business in 2018, the Company entered into a three-year employment agreement with Mr. Connolly effective February 2, 2018 for his role as Division Vice President, President of Aclara, which was subsequently amended on July 1, 2019 in connection with his promotion to the role of Group President, Hubbell Power Systems. If Mr. Connolly remains employed when the agreement expires, his employment will continue on an at-will basis. Under his agreement, Mr. Connolly is paid an annual base salary of $550,000, subject to the Company’s discretionary adjustments. The agreement provides eligibility to receive an annual performance bonus of up to 50% of his base salary for the portion of the fiscal year prior to July 1, 2019 and an annual performance bonus of up to 75% of his base salary for the balance of 2019 and each following fiscal year. The agreement also provides for an annual equity-based award having an aggregate grant date fair value equal to no less than $250,000 and, commencing in February 2020, $750,000, consistent with the types of awards and amounts allocated to similarly situated executives. Mr. Connolly also received a $250,000 one-time equity grant in connection with his promotion. The agreement also provides for an $850,000 cash retention award, vesting and payable in three equal installments on the first three anniversaries of the effective date of the employment term, subject to continued employment with the Company, and an equity retention award of $1,000,000 in restricted stock, vesting in equal installments on the second and third anniversaries of the effective date of the employment term, subject to continued | HUBBELL INCORPORATED| 2020 Proxy Statement 67 |
employment with the Company. The employment agreement contains usual and customary restrictive covenants, including non-competition, non-solicitation of employees or customers, non-disclosure and non-disparagement provisions. If Mr. Connolly’s employment is terminated by the Company without “cause” or by him for “good reason” (each, as defined in the employment agreement) or if his employment terminates due to his death or disability, then Mr. Connolly is entitled to receive (i) the sum of his annual base salary through the date of termination, plus any unpaid annual bonus from any prior completed fiscal year, plus any accrued but unpaid reimbursable expenses and vacation pay (the “Accrued Obligations”), (ii) the unvested portion of the cash retention award or equity retention award, and (iii) any benefits due under any plan, program, policy, or agreement through the date of termination (the “Other Benefits”). In the event of termination by the Company for “cause” or by Mr. Connolly without “good reason”, then he is entitled to receive the Accrued Obligations through the date of termination (excluding payment of any unpaid annual bonus from any prior completed fiscal year) and the Other Benefits. Supplemental Plans Under the terms of the Supplemental Plans,Executive Plan and the DB Restoration Plan, upon a termination of employment due to disability, a participant is entitled to an unreduced immediate pension benefit based upon such participant’s service projected to age 65 (subject toas of the terms ofdate service was frozen under each plan freeze)(January 1, 2017 for the Executive Plan and February 28, 2017 for the DB Restoration Plan). Certain provisions of the Executive Plan do not take effect until the occurrence of certain change ofin control events.events such as funding obligations. Among others,other provisions, in the Executive Plan and DB Restoration Plan provide for the (i) suspension, reduction or termination of benefits in cases of gross misconduct by a participant; (ii) forfeiture of benefits if a retired participant engages in certain competitive activities; (iii) reduction in benefits upon early retirement; and (iv) offset of amounts which a participant may then owe the Company against amounts then owingowed to the participant under the Executive Plan are automatically deleted upon the occurrence of a change of control event.Plan. In addition, a participant’s years of service with the Company (as calculated for the purpose of determining eligibility for Supplementalthe Executive Plan and the DB Restoration Plan benefits) and Supplemental Plan benefits accrued prior to the change ofin control event, may not be reduced after the occurrence of a change ofin control. If a participant’s employment is terminated within 2 years after a change ofin control, unless the participant elects to receive a distribution of Supplemental Plan benefits in installment payments, the participant will receive payment of Executive Plan and DB Restoration Plan benefits in one lump sum within 10 days after termination. In addition, all amounts under the DC Restoration Plan are paid in a lump sum within 60 days following a change in control. As described above, the CIC Agreements also provide for additional incremental benefits based on age and service credit under the Supplemental Plans upon qualifying terminations of employment in connection with a change in control. HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement | 50 |
The following table reflects the estimated incremental post-termination amounts that would have been payable to a named executive officerNEO on December 31, 20162019 in the event of death, disability, involuntary termination Retirement,without cause, retirement (if potentially applicable, as of December 31, 2019), or a change in control andcombined with an involuntary termination. There is no incremental benefitNo benefits are provided to a named executive officerNEO solely upon a change in control unless such officer experiences a qualifying termination following a change in control. The amounts in the table are calculated in accordance with the terms of the applicable plans, policies and agreements described in the preceding table and assume that the named executive officerNEO has met the applicable eligibility requirements. The amounts in the table DO NOT include (i) any value that would be realized upon the exercise of vested SARs or settlement of vested PBRS, Performance Shares or RS to the extent the awards were vested prior to December 31, 2019 by their terms, and (ii) the estimated value of www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 68 |
vested and accrued pension benefits that would be received upon any termination of employment under the terms of the Company’s retirement plans. Post-Employment and Change in Control Payment Table | | | | Equity Awards with | | | | | | | | | Severance(1) | | Accelerated Vesting(2)(3) | | Pension Benefits(4) | | Welfare Benefits(5) | | Total | Name | | ($) | | ($) | | ($) | | ($) | | ($) | D. G. Nord | | | | | | | | | | | Death | | — | | 10,587,913 | | — | | — | | 10,587,913 | Disability | | — | | 10,587,913 | | — | | — | | 10,587,913 | Involuntary Termination | | 1,996,164 | | 2,801,850 | | — | | 136,368 | | 4,934,382 | Retirement | | — | | 2,801,850 | | — | | — | | 2,801,850 | Change in Control and | | | | | | | | | | | Involuntary Termination(6) | | 4,409,577 | | 10,587,913 | | 5,048,324 | | 203,235 | | 20,249,049 | W. R. Sperry | | | | | | | | | | | Death | | — | | 2,779,405 | | — | | — | | 2,779,405 | Disability | | — | | 2,779,405 | | — | | — | | 2,779,405 | Involuntary Termination | | 743,072 | | — | | — | | 131,168 | | 874,240 | Change in Control and | | | | | | | | | | | Involuntary Termination(6) | | 1,652,593 | | 2,779,405 | | — | | 124,145 | | 4,556,143 | R. R. Ruland | | | | | | | | | | | Death | | — | | 1,465,628 | | — | | — | | 1,465,628 | Disability | | — | | 1,465,628 | | — | | — | | 1,465,628 | Involuntary Termination | | 797,140 | | 415,569 | | — | | 133,080 | | 1,345,789 | Retirement | | — | | 415,569 | | — | | — | | 415,569 | Change in Control and | | | | | | | | | | | Involuntary Termination(6) | | 994,678 | | 1,465,628 | | — | | 92,848 | | 2,553,154 | A. Hsieh | | | | | | | | | | | Death | | — | | 2,114,124 | | — | | — | | 2,114,124 | Disability | | — | | 2,114,124 | | — | | — | | 2,114,124 | Involuntary Termination | | 528,012 | | — | | — | | 129,464 | | 657,476 | Change in Control and | | | | | | | | | | | Involuntary Termination(6) | | 1,343,857 | | 2,114,124 | | — | | 113,275 | | 3,571,256 | G. W. Bakker | | | | | | | | | | | Death | | — | | 1,858,298 | | — | | — | | 1,858,298 | Disability | | — | | 1,858,298 | | 831,490 | | — | | 2,689,788 | Involuntary Termination | | 990,012 | | — | | — | | 142,698 | | 1,132,710 | Change in Control and | | | | | | | | | | | Involuntary Termination(6) | | 915,773 | | 1,858,298 | | — | | 105,393 | | 2,879,464 |
Name | | Severance(1) ($) | | Equity Awards with Accelerated Vesting(2)(3) ($) | | Pension Benefits(4) ($) | | Welfare Benefits(5) ($) | | Total ($) | David G. Nord | | | | | | | | | | | Death | | — | | 14,630,774 | | — | | — | | 14,630,774 | Disability(6) | | — | | 14,630,774 | | — | | — | | 14,630,774 | Involuntary Termination(7) | | 2,444,437 | | 4,246,426 | | — | | 174,263 | | 6,865,126 | Retirement(8) | | — | | 4,246,426 | | — | | — | | 4,246,426 | Change in Control and Involuntary Termination(9),(10),(11) | | 5,507,366 | | 14,630,774 | | 2,589,497 | | 204,589 | | 22,932,226 | William R. Sperry | | | | | | | | | | | Death | | — | | 4,306,280 | | — | | — | | 4,306,280 | Disability(6) | | — | | 4,306,280 | | — | | — | | 4,306,280 | Involuntary Termination(7) | | 1,085,552 | | — | | — | | 108,692 | | 1,194,244 | Change in Control and Involuntary Termination(9),(10),(11) | | 2,188,256 | | 4,306,280 | | — | | 144,603 | | 6,639,139 | Gerben W. Bakker | | | | | | | | | | | Death | | — | | 3,421,282 | | — | | — | | 3,421,282 | Disability(6) | | — | | 3,421,282 | | 194,316 | | — | | 3,615,598 | Involuntary Termination(7) | | 1,604,806 | | 1,156,396 | | — | | 115,854 | | 2,877,056 | Retirement(8) | | — | | 1,156,396 | | — | | — | | 1,156,396 | Change in Control and Involuntary Termination(9),(10),(11) | | 1,299,808 | | 3,421,282 | | 129,605 | | 136,335 | | 4,987,030 | Allan J. Connolly | | | | | | | | | | | Death | | — | | 1,731,654 | | — | | — | | 1,731,654 | Disability | | — | | 1,731,654 | | — | | — | | 1,731,654 | Involuntary Termination(7) | | 1,206,805 | | — | | — | | 88,773 | | 1,295,578 | Change in Control and Involuntary Termination(9),(10),(11) | | — | | — | | — | | — | | — | Katherine A. Lane | | | | | | | | | | | Death | | — | | 589,220 | | — | | — | | 589,220 | Disability | | — | | 589,220 | | — | | — | | 589,220 | Involuntary Termination(7) | | 537,832 | | — | | — | | 60,078 | | 597,910 | Change in Control and Involuntary Termination(9),(10),(11) | | 553,088 | | 589,220 | | — | | 70,988 | | 1,213,296 |
(1) | The amounts reported in theSeverancecolumn are equal to the product of (a) a multiple specified in each NEO’s CIC Agreement and (b) the sum of (x) the NEO’s base salary and (y) the average of the actual bonuses payable to the executive over the most recent three years. The specified multiple may be reduced pursuant to the CIC Agreements, as discussed further in the “Change in Control Severance Agreements” section below.above. In addition, Severance includes a proratapro rata portion of the NEO’s target bonus through the date of termination. | (2) | The amounts reported in theEquity Awards with Accelerated Vestingcolumn reflect the value realized by the NEO upon the exercise of all unvested SARs, and the vesting of all unvested PBRS, time-based restricted stock and performance shares upon death, disability, or a qualifying change in control. Upon a change in control, if the unvested time-based restricted stock and SARs are assumed by the acquiroracquirer and ana NEO is terminated without cause within one year of such change in control, such awards will become fully vested prior to the date of termination. If the NEO is not terminated without cause within one year of the change in control, such equity awards will not accelerate. Treatment of unvested PBRS and PS upon a change in control shall be subject to the discretion of the Compensation Committee. | (3) | For Mr. Nord and Mr. Ruland, both of whomBakker, who meet the definition of Retirement,retirement, the amounts shown reflect the value realized upon the vesting of all unvested restricted shares upon Retirement.retirement. No other executive officer will be retirement eligible during the open vesting period of outstanding equity awards. The value realized is calculated using the closing market price of the Company’s Common Stock on December 30, 2016,31, 2019, the last business day of 2016,2019, of $116.70.$147.82. The amounts shown do not include the value of (i) SARs that are unvested at Retirementretirement, but become exercisable post-Retirement,post-retirement, or (ii) outstanding performance shares at Retirementretirement which may vest on a pro-rated basis at the end of the applicable performance period.period, because in each case the value would not be determinable as of the last day of the calendar year as it would not have vested on such date. |
(4) | HUBBELL INCORPORATED| 2020 Proxy Statement 69 |
(4) | The amounts reported in theDisabilityPension Benefitscolumn include amounts payable under the Company’s qualified and nonqualified pension plans and nonqualified deferred compensation plans only to the extent the amounts are not described in the Pension Benefit Calculations section discussed above onpage 63 or the Non-Qualified Deferred Compensation section discussed onpage 65. In the event of a Change in Control, even without termination of employment, amounts under the EDCP distributions will be paid in a lump sum, but no additional value is allocated to the payment in this table. The value listed represents the present value of the payments under EDCP in the Non-Qualified Deferred Compensation section discussed above onpage 65. | (5) | The amounts reported in theWelfare Benefitscolumn include the payment of outplacement services for the NEOs for up to twelve months and insurance benefit continuation calculated in accordance with the terms of the Severance Policy and CIC Agreements, as applicable. | (6) | The amounts reported in the “Disability” rows are calculated based on a 4.30%4.40% discount rate and using the disability mortality table published in Internal Revenue Ruling 96-7. This table assumes a different life expectancy than the tables used to calculate the present value of accumulated benefits under the Company’s retirement plans. In the event of disability, the incremental retirement plan benefit was calculated by comparing the disability benefit to the vested accrued benefit under the qualified and non-qualified plans as of December 31, 2016.2019 | (5)(7) | “Involuntary Termination”, for purposes of this row, refers to a termination by the Company without cause as described in the Severance Policy prior to the occurrence of a Change in Control. NEOs are not entitled to these benefits in the event of a termination for cause. | (8) | “Retirement”, for purposes of this row, refers to a voluntary termination by the NEO (after age 55 and 10 years of service). In addition to the amounts described in this chart, the executive will be entitled to payout of the amounts described under the Pension Benefit Calculations section discussed above onpage 63. | (9) | The amounts reported in theWelfareSeverancecolumn includefor Change in Control and Involuntary Termination are equal to the paymentproduct of outplacement services for(a) a multiple specified in each NEO’s CIC Agreement and (b) the NEOs for up to twelve monthssum of (x) the NEO’s base salary and insurance benefit continuation calculated in accordance with(y) the termsaverage of the Severance Policy andactual bonuses payable to the executive over the most recent three years. The specified multiple may be reduced pursuant to the CIC Agreements, as applicable.discussed further in the “Change in Control Severance Agreements” section above. In addition, Severance includes a pro rata portion of the NEO’s target bonus through the date of termination. | (6)(10) | “Change in Control and Involuntary Termination”, for purposes of this row, refers to a termination by the Company without cause (as defined in the CIC Agreement) or by the NEO for good reason (as defined in the CIC Agreement) within 2.75 years (for Mr. Nord), 2.5 years (for Messrs. Bakker and Sperry), and 2 years (for Ms. Lane) following a change in control (as defined in the CIC Agreement). As noted above, the amounts payable include (a) a lump sum payment of the NEO’s base salary multiplied by 2.75 for Mr. Nord, and 2.5 for Mr. Sperry and Mr. Bakker and 2 for Ms. Lane. | (11) | No benefits shall become payable to the NEOs upon a change in control (as defined in the Equity Plan) due to their unvested time-based restricted stock and SARs until and unless the NEO experiences a qualifying termination related to such change in control. This row assumes such a qualifying termination (a termination by the Company without cause) occurs within 12 months following a change in control. Treatment of unvested PBRS and PS upon a change in control shall be subject to the discretion of the Compensation Committee. |
CEO Pay Ratio The SEC requires annual disclosure of the ratio of the CEO’s annual total compensation to the annual total compensation of the Company’s median employee. Mr. Nord had a 2019 annual total compensation of $5,638,825 as reflected in the above Summary Compensation Table. Hubbell’s median employee’s annual total compensation for 2019, as described more fully below, was estimated as $42,893. As a result, we estimate that Mr. Nord’s annual compensation was approximately 131 times that of Hubbell’s median employee. There have not been any significant changes to our employee base, our compensation program or our median employee’s situation that would significantly affect our pay ratio disclosure. Accordingly, as permitted by SEC rules, we calculated the 2019 pay ratio using the same median employee we used for purposes of calculating our 2018 pay ratio. What follows is a description of the methodology used from 2018. For our 2018 proxy, we identified the median of the annual total compensation of all our employees by examining the 2018 annual salary for all employees, excluding the CEO, who were employed by us on October 23, 2018, as reflected in our payroll records as reported to the Internal Revenue Service on Form W-2 for 2018, as well as our payroll records for all non-U.S. entities. We did not make any assumptions, adjustments, or estimates with respect to this compensation measure and we did not annualize the compensation for any full-time employees that were not employed by us for all of 2018. After identifying the median employee, we calculated annual total compensation for 2019 for such employee in accordance with SEC rules. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column reported in the above Summary Compensation Table. Due to the use by other companies of estimates, assumptions, adjustments, and statistical sampling permitted by SEC rules, pay ratio disclosures generally may involve a degree of imprecision. Accordingly, our pay ratio is merely a reasonable estimate calculated in a manner consistent with SEC Rules and may not be comparable to the pay ratio disclosures of other companies. www.hubbell.com | HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement | 51 70 |
RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - PROPOSAL 2
General
Proposal 3 | Ratification of the Selection of Independent Accountants |
The Audit Committee of the Board of Directors, has appointed PricewaterhouseCoopers LLP aswhich consists entirely of independent Directors, is responsible for the appointment, compensation, retention, evaluation and termination of the Company’s independent registered public accounting firm (independent auditor). The Audit Committee is also responsible for 2017. overseeing the negotiation of the audit fees associated with the retention of the independent auditor. The Audit Committee has appointed PricewaterhouseCoopers LLP as the Company’s independent auditor for 2020. In executing its responsibilities, the Audit Committee engages in an annual evaluation of the independent auditor’s qualifications, performance and independence. The Audit Committee regularly meets with the lead audit partner without members of management present which provides the opportunity for continuous assessment of the independent auditor’s effectiveness and independence and for consideration of rotating audit firms. Although ratification of our selection of independent auditors is not required, we value the opinions of our shareholders and wish to submit the matter to a vote at the 20172020 Annual Meeting as a matter of sound corporate governance. PricewaterhouseCoopers LLP has served as the Company’s independent auditors since at least 1961. The Audit Committee periodically takes into consideration whether there should be a regular rotation of the independent auditor. In accordance with SEC rules, the independent auditor’s lead engagement partner rotates every five years. The Audit Committee is directly involved in the selection of the independent auditor’s lead engagement partner. The Audit Committee and Hubbell’s Board of Directors believe that the continued retention of PricewaterhouseCoopers LLP to serve as the Company’s independent external audit firm for many years.2020 is in the best interests of the Company and its shareholders. We have been advised that a representative of PricewaterhouseCoopers LLP will attend the 20172020 Annual Meeting of Shareholders to respond to appropriate questions and will be afforded the opportunity to make a statement if desired. In the event the selection of PricewaterhouseCoopers LLP is not ratified by the shareholders, the Audit Committee would reconsider the selection of PricewaterhouseCoopers LLP as the Company’s independent auditor. Even if the selection of independent auditors is ratified, the Audit Committee still retains the discretion to select a different independent auditor at any time if it determines that such a change would be in the best interests of the Company and our shareholders. Vote Required The affirmative vote of a majority of the votes cast by the holders of our Common Stock is required to ratify the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company. Majority of Votes Cast means that the number of votes cast “FOR” the proposal exceed the number of votes cast “AGAINST” the proposal. Abstentions and broker non-votes are not considered to be votes cast and therefore will not affect the voting results. Because brokersBrokers have the discretionary authority to vote on the ratification of auditors and therefore we do not expect any broker non-votes in connection with the ratification. The Board of Directors Unanimously Recommends that the Shareholders Vote “FOR” the Ratification of the
Selection of PricewaterhouseCoopersTHE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP. |
Audit and Non-Audit Fees
The following table shows the aggregate fees for professional services provided by PricewaterhouseCoopers LLP to the Company and its subsidiaries for the years ended December 31, 2016 and December 31, 2015:
| | 2016 | | | 2015 | | Audit Fees(1) | | $ | 2,810,000 | | | $ | 2,896,500 | | Audit-Related Fees(2) | | | 57,000 | | | | 106,000 | | Tax Fees(3) | | | 15,000 | | | | 140,000 | | All Other Fees(4) | | | 184,000 | | | | 6,200 | | TOTAL FEES | | $ | 3,066,000 | | | $ | 3,148,700 | |
(1) | The amount included underAudit Fees consist of fees for professional services rendered for the audits of the Company’s consolidated annual financial statements and the effectiveness of internal control over financial reporting. Audit Fees also include review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by PricewaterhouseCoopers LLP in connection with statutory and regulatory filings or engagements. | (2) | The amount included underAudit-Related Fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under Audit Fees. This category includes fees principally related to audits of employee benefit plans. | (3) | The amount included underTax Fees include fees for domestic and international income tax planning assistance and foreign entity compliance services. | (4) | The amount included underAll Other Fees consists of fees for products and services other than the services reported above. These services include fees related to information technology assessments as well as technical publications purchased from the independent registered public accounting firm. |
| HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement | 52 71 |
Independent Accounting Firm Fees PricewaterhouseCoopers LLP provided the following audit and other services during 2019 and 2018. | | | 2019 | | | 2018 | | | | Audit Fees | | $ | 3,604,300 | | $ | 4,315,000 | | | Audit Fees consist primarily of annual integrated audit of the Company’s annual consolidated financial statements, and internal control over financial reporting, review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by PricewaterhouseCoopers LLP in connection with statutory and regulatory filings or engagements. | Audit Related Fees | | $ | 829,000 | | $ | 110,000 | | | Audit Related Fees primarily include accounting advisory services as well as quality of earnings support associated with acquisition and divestiture related activity. In addition, Audit Related Fees also include assurance and related services that are reasonably related to performance of the audit of the Company’s consolidated financial statements and are not reported under Audit Fees. This category includes fees principally related to the adoption of ASC 842 and audits of employee benefit plans. | Tax Fees | | $ | 25,000 | | $ | 33,000 | | | Tax Fees consists primarily of services associated with international tax compliance. | All Other Fees | | $ | 6,900 | | $ | 7,000 | | | All Other Fees are primarily for products and services other than the services reported above. These services are related to subscription services purchased from the independent registered public accounting firm. | TOTAL FEES | | $ | 4,465,200 | | $ | 4,465,000 | | | |
Audit and Non-Audit Services Pre-Approval Policy The Company’s Audit and Non-Audit Services Pre-Approval Policy (“Services(the “Services Policy”) sets forth the policies and procedures by which the Audit Committee reviews and approves all services to be provided by the independent auditors prior to their engagement. The Services Policy underscores the need to ensure the independence of the independent auditor while recognizing that the independent auditor may possess the expertise on certain matters that best position it to provide the most effective and efficient services on certain matters unrelated to accounting and auditing. The Audit Committee will only pre-approve the services that it believes enhance the Company’s ability to manage or control risk. The Audit Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services. The Services Policy provides the Audit Committee with a description of services that can be performed such as audit, audit-related, tax and other permissible non-audit services. The Audit Committee periodically monitors the services rendered and actual fees paid to the independent auditors. Any proposed services exceeding pre-approved amounts also requires pre-approval by the Audit Committee. In the interim periods during which the Audit Committee is not scheduled to meet, the Chairman of the Audit Committee can authorize spending which exceeds pre-approved levels. As part of the process, the Audit Committee shall consider whether such services are consistent with SEC rules and regulations on auditor independence. www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 72 |
Audit Committee Report The Audit Committee of the Board of Directors is comprised of independent Directors functioning in accordance with a written charter adopted and approved by the Board of Directors effective December 6, 2016,5, 2017, which Charter is reviewed annually by the Audit Committee. As provided in the Charter, the Audit Committee assists the Company’s Directors in fulfilling their responsibilities relating to corporate accounting, the quality and integrity of the Company’s financial reports, and the Company’s reporting practices. The functions of the Audit Committee are further described in the “Corporate Governance” section onpage 18.19. In connection with the discharge of its responsibilities, the Audit Committee has taken a number of actions, including, but not limited to, the following: | • | The Audit Committee reviewed and discussed with management and the independent registered public accounting firm the Company’s audited financial statements;statements. | | | | | • | The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by statement on Auditing Standards No. 16, as adopted byper applicable requirements of the Public Company Accounting Oversight Board;Board and the SEC. | | | | | • | The Audit Committee received from the independent registered public accounting firm the written disclosures and letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, discussed their independence with them and satisfied itself as to the independence of the independent registered public accounting firm. |
Based on the foregoing reviews and discussions, the Audit Committee recommended to the Company’s Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for filing2019 filed with the SEC. Audit Committee Steven R. Shawley, Chair Carlos M. Cardoso
Bonnie C. Lind John F. Malloy Judith F. Marks
| HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement | 53 73 |
ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS - PROPOSAL 3AdditionalInformation
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities Exchange Act of 1934, as amended, we are requesting shareholder approval, on an advisory (non-binding) basis, of the compensation of our named executive officers as presented in this Proxy Statement in the Compensation Discussion and Analysis beginning at page 25 and the compensation tables and accompanying narrative disclosure in the Executive Compensation section beginning on page 41.
Accordingly, we will present the following resolution for vote at the Annual Meeting:
“RESOLVED, that the shareholders of Hubbell Incorporated (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers as described in the Compensation Discussion and Analysis and disclosed in the 2016 Summary Compensation Table and related compensation tables and narrative disclosure as set forth in this Proxy Statement.”
As described more fully in the Compensation Discussion and Analysis section of this Proxy Statement, our executive compensation program has been designed to attract and retain highly-talented executives, deliver compensation that is competitive and fair compared to relevant benchmarks, reward strong Company performance, and motivate executives to maximize long-term shareholder returns. To achieve our objectives, we have adopted and maintain sound compensation governance practices and a strong pay for performance philosophy pursuant to which the greatest portion of an executive’s total direct compensation is variable and therefore linked to performance on both a short-term and long-term basis. Highlights of our program include:
| • | Base salaries and annual short-term incentive awards targeted at the 50% percentile for similarly sized companies, with awards paid upon achievement of established targets | | | | | • | A mixture of salary and incentive compensation that provides for an average of 70% of the named executive officers’ compensation to be “at-risk” and dependent on individual and company performance | | | | | • | Caps on incentive award payouts and the elimination payouts for performance below a minimum threshold | | | | | • | Performance goals designed to challenge executives to high levels of performance and offer incentive compensation only upon achievement of such goals | | | | | • | Requirement for senior executives, including the NEOs, to own and retain Company stock equal to between 3 and 5 times their base salary | | | | | • | A Compensation Recovery Policy to recover performance-based compensation under certain prescribed acts of misconduct and/or terminate the executive | | | | | • | Limited perquisites and no tax gross ups of any kind | | | | | • | Closed participation in all Company supplemental retirement plans in 2007 and froze the plans effective December 31, 2016 | | | | | • | Annual risk assessment to determine whether the Company’s compensation policies encourage risk taking |
As an advisory vote, the outcome of this proposal is not binding upon the Company. However, our Compensation Committee and our Board value the opinions of our shareholders and will consider the outcome of this vote when making future compensation decisions for our named executive officers.
Vote Required
The affirmative vote of a majority of the votes cast by the holders of the outstanding shares of Common Stock is required to approve, on an advisory, non-binding basis, the compensation of our named executive officers. Abstentions and broker non-votes will not affect the voting results.
The Board Of Directors Unanimously Recommends that the Shareholders Vote “FOR” the
Approval by Non-Binding Vote of the Compensation of our Named Executive Officers. |
HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement | 54 |
ADVISORY VOTE ON THE FREQUENCY OF SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION - PROPOSAL 4
The Company is seeking a non-binding recommendation from our shareholders on whether shareholders should have an opportunity to provide an advisory approval of the compensation of our named executive officers every year, every two years or every three years. Accordingly, we are asking shareholders to vote on the following advisory resolution:
“RESOLVED, that the shareholders of Hubbell Incorporated (the “Company”) recommend, on an advisory basis, that the frequency with respect to which the Company’s shareholders are presented with an advisory vote on the compensation of the Company’s named executive officers shall be every one (1) year; two (2) years; or three years.”
The Board of Directors believes that an advisory vote on the compensation of the Company’s named executive officers should be conducted every year so that shareholders may annually express their views on the Company’s executive compensation program. The Board of Directors believes that holding this advisory vote annually will provide the Company with timely and appropriate feedback on compensation decisions for its named executive officers.
Although the Board of Directors recommends a vote every year, shareholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. Shareholders are not voting to approve or disapprove of the Board’s recommendation.
Because this vote is advisory and not binding on the Board of Directors or the Company in any way, the Board may decide that it is in the best interests of our shareholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option approved by our shareholders. However, we value the opinions of our shareholders, and we will consider the outcome of the vote when determining the frequency of the shareholder vote on executive compensation.
Vote Required
The option of one year, two years or three years that receives the highest number of votes cast by shareholders will be considered the frequency recommended by shareholders. Abstentions and broker non-votes will therefore have no effect on this vote.
The Board of Directors Unanimously Recommends that the Shareholders Select “ONE (1) YEAR” for the
Advisory Vote on the Frequency of Shareholder Vote on Executive Compensation. |
HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement | 55 |
GENERAL
Solicitation Expenses The Company will pay the cost of soliciting proxies for the 20172020 Annual Meeting. Original solicitation of proxies may be supplemented by telephone, facsimile, electronic mail or personal solicitation by the Company’s directors,Directors, officers or employees. No additional compensation will be paid to the Company’s directors,Directors, officers or employees for such services. The Company has retained MacKenzie Partners, Inc. to assist in the solicitation of proxies at an estimated cost of $15,000,$20,000, plus reasonable expenses. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s officers, Directors and persons owning more than ten percent of a registered class of the Company’s equity securities to file reports of ownership and changes in ownership of all equity and derivative securities of the Company with the SEC and the NYSE. SEC regulations also require that a copy of all Section 16(a) forms filed be furnished to the Company by its officers, Directors and greater than ten-percent shareholders. Based solely on a review of the copies of such forms and related amendments received byfiled electronically with the CompanySEC during the registrant’s most recent fiscal year and, where applicable, written representations from the Company’s officers and Directors that no Form 5s were required to be filed, the Company believes that during and with respect to fiscal year 20162019 all Section 16(a) filing requirements applicable to its officers, Directors and beneficial owners of more than ten percent of any class of its equity securities were met, except that due to an administrative oversight a Form 3 for Ms. Judith F. Marks was not timely filed.met. Stock Ownership Information Five Percent Owners Of Company Stock The Company has a single class of Common Stock and each share of Common Stock is entitled to one vote. On March 6, 2020, the Company had outstanding 54,378,499 shares of Common Stock. The following table sets forth as of March 6, 2020 the beneficial owners of more than 5% of the Company’s Common Stock: Title of Class | | Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | | Percent of Class | Common Stock | | BlackRock, Inc. 55 East 52ndStreet New York, New York 10055 | | 6,560,936 | (1) | | 12.1 | % | Common Stock | | The Vanguard Group 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | | 5,812,701 | (2) | | 10.7 | % | Common Stock | | American Century Investment Management, Inc. 4500 Main Street, 9thFloor Kansas City, Missouri 64111 | | 3,647,434 | (3) | | 6.7 | % | Common Stock | | Capital World Investors 333 South Hope Street Los Angeles, California 90071 | | 3,430,000 | (4) | | 6.3 | % |
(1) | The Company received a copy of Schedule 13G, as amended as filed with the SEC on February 4, 2020 by BlackRock, Inc. (“BlackRock”) reporting ownership of these shares as of December 31, 2019. According to the Schedule 13G, BlackRock has sole voting power as to 6,152,052 of these shares, and sole dispositive power with respect to 6,560,936 shares. The shares were acquired by the following subsidiaries of BlackRock: BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock (Singapore) Limited, BlackRock Fund Managers Ltd. | (2) | The Company received a copy of Schedule 13G, as amended, as filed with the SEC on February 12, 2020, by The Vanguard Group (“Vanguard”) reporting ownership of these shares as of December 31, 2019. According to the Schedule 13G, Vanguard has sole voting power as to 29,739 of these shares, sole dispositive power as to 5,781,701 of these shares, shared voting power as to 8,405 of these shares, and shared dispositive power as to 31,119 of these shares. Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., wholly-owned subsidiaries of Vanguard, serve as investment managers of certain collective trust accounts and non-U.S. investment offerings, and may be deemed to beneficially own 22,714 and 15,430 of such shares, respectively. |
www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 74 |
(3) | The Company received a copy of Schedule 13G, as amended, as jointly filed with the SEC on February 11, 2020, by American Century Companies, Inc. (“ACC”), American Century Investment Management, Inc. (“ACIM”), and Stowers Institute for Medical Research (“Stowers”), reporting ownership of these shares as of December 31, 2019. According to the Schedule 13G, ACC beneficially owned 3,647,434 shares with sole voting power over 3,537,112 shares and sole dispositive power over 3,647,434 shares, ACIM beneficially owned 3,647,434 shares with sole voting power as to 3,537,112 of these shares, and sole dispositive power with respect to 3,647,434 shares, and Stowers beneficially owned 3,647,434 shares with sole voting power over 3,537,112 shares and sole dispositive power over 3,647,434. | (4) | The Company received a copy of Schedule 13G, as amended, as filed with the SEC on February 14, 2020 by Capital World Investors (“Capital World”) reporting ownership of these shares as of December 31, 2019. According to the Schedule 13G, Capital World, a division of Capital Research and Management Company (“CRMC”), is deemed to be the beneficial owner of 3,430,000 shares as a result of CRMC acting as investment advisors to various investment companies registered under Section 8 of the Investment Company Act of 1940. Capital World has sole voting and dispositive power for all such shares. |
Stock Ownership Of Directors And Executive Officers | | Hubbell’s stock ownership policy for directors and officers aligns their interests with our shareholders. |
Directors are subject to our Stock Ownership and Retention Policy and arerequired to own Company stockequal in value to five times their average annual base cash retainer no later than the fifth (5th) anniversary of the date on which such Director receives his or her first annual restricted share grant. Until a director meets his or her ownership minimum, the Director must retain all Company shares he or she directly or indirectly obtains.All directors are in compliance with this policy. The Board and executive officers are subject to a stock ownership commitment, which requires these individuals to maintain a minimum ownership level of Hubbell stock. The Stock Ownership and Retention Policy section onpage 53 further describes stock ownership requirements and the policy can be viewed on the Company’s website atwww.hubbell.com. The following table sets forth as of March 6, 2020 information regarding the beneficial ownership of the Company’s Common Stock by each Director, the CEO, CFO and the three other most highly paid executive officers of the Company (collectively, the NEOs), and by all Directors and executive officers of the Company as a group. In addition to the shares of Common Stock reflected in the Total Beneficial Ownership column below, our Directors hold stock units and restricted stock units, as applicable, under the Deferred Plan for Directors. These deferred stock units are reflected in footnotes (2) and (3) in the table below and are further detailed in the Director Compensation section onpage 28. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons listed in the table have sole investment and voting power with respect to all Company securities owned by them. Name and Title of Class | | Common Stock | | | Shares Obtainable Upon Exercise of Options/SARs(1) | | | Total Beneficial Ownership | | | Aggregate No. of Stock Units Held(2) | | | Aggregate No. of Restricted Stock Units Held(3) | | | Total Ownership | Carlos M. Cardoso | | 2,027 | | | — | | | 2,027 | (4) | | 2,155 | | | 7,150 | | | 11,332 | Anthony J. Guzzi | | 6,480 | | | — | | | 6,480 | | | 26,995 | | | 9,864 | | | 43,339 | Neal J. Keating | | 8,071 | | | — | | | 8,071 | | | 5,837 | | | 9,864 | | | 23,772 | Bonnie C. Lind | | 600 | | | — | | | 600 | | | 169 | | | 1,047 | | | 1,816 | John F. Malloy | | 14,047 | | | — | | | 14,047 | (4) | | 1,623 | | | 1,666 | | | 17,336 | Judith F. Marks | | 1,000 | | | — | | | 1,000 | | | — | | | 4,668 | | | 5,668 | John G. Russell | | 4,359 | | | — | | | 4,359 | (4) | | 5,726 | | | 6,451 | | | 16,536 | Steven R. Shawley | | 1,000 | | | — | | | 1,000 | | | 5,980 | | | 6,872 | | | 13,852 | David G. Nord | | 115,558 | | | 394,992 | | | 510,550 | (5) | | — | | | — | | | 510,550 | William R. Sperry | | 47,653 | | | 26,766 | | | 74,419 | (5) | | — | | | — | | | 74,419 | Gerben W. Bakker | | 13,465 | | | 73,549 | | | 87,014 | (5) | | — | | | — | | | 87,014 | Allan J. Connolly | | 2,633 | | | 1,379 | | | 4,012 | (5) | | — | | | — | | | 4,012 | Katherine A. Lane | | 877 | | | 3,172 | | | 4,049 | (5) | | — | | | — | | | 4,049 | All Directors and executiveofficers as a group (21 persons) | | | | | | | | | | | | | | | | | | Common Stock | | 368,467 | | | 661,997 | | | 1,030,464 | (5)(6) | | — | | | — | | | 1,030,464 |
| HUBBELL INCORPORATED| 2020 Proxy Statement 75 |
(1) | Represents shares of Common Stock obtainable upon the exercise of stock appreciation rights under the Company’s Second Amended and Restated 2005 Incentive Award Plan. See the section “Outstanding Equity Awards at 2019 Fiscal Year End” onpage 61. | (2) | Represents stock units (each stock unit consisting of one share of Common Stock) held under the Company’s Deferred Plan for Directors, as of March 6, 2020. See the section “Deferred Compensation Plan” onpage 29. | (3) | Represents vested and unvested restricted stock units (“RSUs”) (each RSU consisting of the right to receive one share of Common Stock) held under the Company’s Deferred Plan for Directors, as of March 6, 2020. See the section “Deferred Compensation Plan” onpage 29. | (4) | Includes 1,027 shares of Common Stock granted as restricted stock under the Company’s Second Amended and Restated 2005 Incentive Award Plan, on May 7, 2019 which vest on the date of the 2020 Annual Meeting of Shareholders if the Director is still serving (or earlier, upon death or a change in control). | (5) | Does not include the following shares of Common Stock granted as restricted stock under the Second Amended and Restated 2005 Incentive Award Plan which vest on the following terms, as applicable: (i) three equal annual installments on the anniversary of the grant date; or (ii) at the end of a three-year performance period subject to achievement of certain performance goals. Mr. Bakker -12,030, Mr. Connolly - 7,130, Ms. Lane - 3,079, Mr. Nord - 29,552 and Mr. Sperry - 9,548; and all other executive officers as a group – 83,901 shares. See the section “Outstanding Equity Awards at 2019 Fiscal Year End” onpage 61. | (6) | Includes 115,162 shares of Common Stock held by The Harvey Hubbell Foundation of which one corporate officer (Ms. Lane) and one senior employees of the Company are co-trustees and have shared voting and investment power. |
Compensation Committee Interlocks and Insider Participation During our last completed fiscal year, no member of the Compensation Committee was an employee, officer or former officer of the Company.Company, or had any relationship requiring disclosure under Item 404 of Regulation S-K. None of our executive officers served on the board or compensation committee of any entity in 20162019 that had an executive officer serving as a member of our Board of Directors or Compensation Committee. Review and Approval of Related Person Transactions The Board of Directors has adopted a written related person transaction policy. The NCGC administers the policy, which applies to all transactions in which the Company is or will be a participant and the amount exceeds $100,000 and in which any related person was or will be a participant or had, has or will be a participant or have a direct or indirect material interest. A related person includes any person who is or was since the beginning of the last fiscal year a director,Director, executive officer, nominee for director,Director or beneficial owner of more than 5% of the Company’s Common Stock, or any of his or her immediate family members. The NCGC will determine, based on the facts and circumstances it deems appropriate, whether such related person transaction should be approved. As required under SEC rules, transactions that are determined to be directly or indirectly material to the Company or a related person are disclosed in the Company’s Proxy Statement. For fiscal year 2016,2019, the Company had no related person transactions that were required to be disclosed in the Company’s Proxy Statement. See the discussion under “Director Independence” above onpage 18.20. HUBBELL INCORPORATED -2017 Annual Meeting of Shareholders & Proxy Statement
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Shareholder Proposals and Nominations for Director Proposals Intended for Inclusion in the 20182021 Proxy Materials Shareholder proposals to be considered for inclusion in the Company’s proxy materials related to the 20182021 Annual Meeting of Shareholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, must be received by the Company no later than November 15, 2017.23, 2020. Proposals Not Intended for Inclusion in the 20182021 Proxy Materials The Company’s By-Laws set forth specific procedures and requirements in order to nominate a director or submit a proposal to be considered at the 20182021 Annual Meeting of Shareholders. These procedures require that any nominations or proposals must be received by the Company no earlier than February 1, 20184, 2021, and no later than February 21, 201824, 2021, in order to be considered. www.hubbell.com | HUBBELL INCORPORATED| 2020 Proxy Statement 76 |
If, however, the date of the 20182021 Annual Meeting is more than 20 days before or more than 70 days after May 2, 2018,5, 2021, shareholders must submit such nominations or proposals not earlier than the 90thday prior to the meeting and not later than the close of business on the later of the 70thday prior to the meeting or the 10thday following the day on which public announcement of the date of the meeting is first made by us. In addition, with respect to nominations for directors,Directors, if the number of directorsDirectors to be elected at the 20182021 Annual Meeting is increased and there is no public announcement by us naming all of the nominees for directorDirector or specifying the size of the increased Board at least 80 days prior to May 2, 2018,5, 2021, notice will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to the Secretary at our principal executive offices not later than the close of business on the 10thday following the day on which such public announcement is first made by us. A shareholder’s notice to nominate a director or bring any other business before the 20182021 Annual Meeting must set forth certain information specified in our By-Laws. For additional information on the time limitations and requirements related to director nominations or other shareholder proposals, see the Company’s By-Laws at www.hubbell.com in the Investors section. By OrderEliminating Duplicative Proxy Materials (“Householding”)
A single annual report and proxy statement may be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. If at any time, a stockholder no longer wishes to participate in “householding” and would prefer to receive such stockholder’s own separate copy of the Board2020 proxy statement and 2019 annual report, and/or wishes to receive separate copies of Directors Hubbell Incorporated
Shelton, Connecticut
March 15, 2017these documents in the future, or if at any time, stockholders who share an address and receive separate copies of the 2020 proxy statement and 2019 annual report, would like to receive a single copy of these documents in the future, such stockholder or stockholders may (1) notify its broker or (2) direct its written or oral request to our transfer agent, Computershare, via regular mail to, Computershare, PO Box 50500, Louisville, KY 40233, or via phone, toll-free 800-874-1136. Upon written or oral request of a stockholder at a shared address to which a single copy of the 2020 proxy statement and 2019 annual report was delivered, they will deliver promptly separate copies of these documents.
| HUBBELL INCORPORATED -| 2017 Annual Meeting of Shareholders &2020 Proxy Statement | 57 77 |
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