(2)
| Time-Based Restricted Stock Unit Awards are awards that vest at the time we enter into an agreement. As a result, our agreements have changedrate of 1/3 per year over time, with more recent agreements generally offering reduced payments and multi-year vesting obligations.These arrangements are designed to protect stockholder interests by stabilizing management during periods of uncertainty. Generally, executives are more willing to accept risks and costs if they are protected in the event their employment is terminated due to unanticipated changes, including a change in control. Additionally, executives often assign significant value to severance agreements because they provide compensation for lost professional opportunities in the event of a change in control. These arrangements also can be a powerful tool to discourage entrenchment of management, in that severance agreements can offset the risk of financial and professional loss that management may face when recommending a sale to or merger with another company.
In the case of certain terminations following a change in control, the NEOs become immediately vested in all previously granted unvested SPX FLOW equity, including shares and units subject to performance vesting at the target level of vesting. This feature is designed to be equitable in the event of dismissal without cause or resignation for good reason, and we believe it is appropriate in the event of termination following a change in control. Additionally, other benefits may be paid in the event the executive is terminated following a change in control (sometimes called a “double trigger”).
| | | | | | three years based on continued employment. |
The 2018 rTSR Award vested at 90.2% at the beginning of 2021 as a result of the Company’s rTSR ranking in the 47th percentile against the S&P MidCap 400 Capital Goods Industry Group. The 2018 ROIC Award vested at 0% at the beginning of 2021 as a result of the Company’s ROIC of 7.39% compared against predetermined targets. These predetermined targets were as follows: 8.25% ROIC for Threshold, 8.75% ROIC for Target and 9.25% ROIC for Maximum. A full review of executive compensation, including equity awards, is conducted at least annually. Equity awards were reviewed, approved and granted within the first quarter of the award year. Dividends and dividend equivalents with respect to any shares of unvested restricted stock or restricted stock units are deposited in the NEO’s name in an escrow or similar account maintained by SPX FLOW for that purpose. The NEO receives these dividends or dividend equivalents only if and when the related shares of equity or restricted stock units vest. Dividends and dividend equivalents are forfeited if the equity or restricted stock unit on which those dividends or dividend equivalents were paid is forfeited. The Company did not pay a dividend in 2020. In the event of retirement, unvested time-based restricted stock and restricted stock unit awards will vest immediately and unvested performance-based restricted stock and restricted stock unit awards will remain subject to the original performance requirements and vesting schedule (to the extent provided under such agreement). Other Benefits and Perquisites We provide perquisites to attract and retain executives in a competitive marketplace, and believe these benefits are generally consistent with market practices of our peer group and other comparable public industrial manufacturing companies. See the Summary Compensation Table and accompanying footnotes on pages 27 and 28 for a full listing of benefits and perquisites. We do not provide tax gross-up payments for perquisites. The CEO may utilize the Company-leased aircraft for personal travel for himself and his family. Other NEOs may be permitted personal use of the Company-leased aircraft for themselves and their families if approved by our CEO. This benefit enhances security for our officers and allows them to devote more time to SPX FLOW business. We report the value of any personal use of the Company-leased aircraft by NEOs as ordinary taxable income and as compensation in the Summary Compensation Table. Retirement and Deferred Compensation Plans NEOs and other senior-level management are eligible to participate in the SPX FLOW Retirement Savings Plan (the “401(k) Plan”) and the SPX FLOW Supplemental Retirement Savings Plan (the “SRSP”), a non-qualified deferred compensation plan that permits voluntary deferrals of base salary and annual bonuses in excess of those permitted under the 401(k) Plan. See the Nonqualified Deferred Compensation in 2020 table and accompanying narrative and footnotes on pages 31 and 32 for more information regarding these plans.
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Termination and change-in-control agreements are further discussed and quantified in “Potential Payments Upon Termination or Change-in-Control.”
Termination and Change-in-Control Provisions We design termination and change-in-control contractual provisions to be competitive at the time we enter into an agreement. These arrangements are designed to protect stockholder interests by stabilizing management during periods of uncertainty. Generally, executives are more willing to accept risks and costs if they are protected in the event their employment is terminated due to unanticipated changes, including a change in control. Additionally, executives often assign significant value to severance agreements because they provide compensation for lost professional opportunities in the event of a change in control. These arrangements also can be a powerful tool to discourage entrenchment of management, in that severance agreements can offset the risk of financial and professional loss that management may face when recommending a sale to or merger with another company. In the case of certain terminations following a change in control, the NEOs become immediately vested in all previously granted unvested SPX FLOW equity, including shares and units subject to performance vesting at the target level of vesting. This feature is designed to be equitable in the event of dismissal without cause or resignation for good reason, and we believe it is appropriate in the event of termination following a change in control. Additionally, other benefits may be paid in the event the executive is terminated following a change in control (sometimes called a “double trigger”). Termination and change-in-control agreements are further discussed and quantified in “Potential Payments Upon Termination or Change-in-Control” on pages 33-35. Stock Ownership Guidelines We maintain stock ownership guidelines to emphasize the importance of substantive, long-term share ownership by senior executives to align their financial interests with those of stockholders. The guidelines are: Chief Executive Officer | | | 500% of salary | Other Executive Officers | | | 300% of salary | Other executives designated by the Compensation Committee | | | 100% - 200% of salary |
Shares held in family trusts and shares held in retirement plan accounts are deemed to be owned shares for purposes of these guidelines. Executive leaders are asked to attain the desired level of share ownership within five years of the later of appointment to an executive position or the date the relevant stock ownership guidelines were increased, whether through promotion or by revision to the guidelines. Once an executive leader attains the desired level of share ownership, he or she shall continue to be considered in compliance with these guidelines if the cause of the non-compliance was a decrease in the price of the Company stock, so long as the executive leader retains at least 50% of the net shares acquired upon exercise of stock options and at least 50% of the net shares acquired pursuant to vested restricted stock grants and vested restricted stock unit grants until the executive leader’s holdings of Company stock equals or exceeds the applicable target value. For these purposes, “net shares” means the shares remaining after disposition of shares necessary to pay the related tax liability and, if applicable, the stock option exercise price. In addition to existing Company trading policy requirements, executive leaders shall obtain the approval of the Company General Counsel prior to selling Company stock where their stock ownership is below the Target Value or where the sale would reduce their ownership below the target value. This rule does not apply to dispositions of shares for tax withholding purposes. The Nominating & Governance Committee periodically reviews these guidelines and recommends revisions to the guidelines to the Board as it deems appropriate. Each NEO was in compliance with these requirements as of February 24, 2021. Impact on Compensation from Misconduct—Clawbacks If the Board of Directors were to determine that an NEO had engaged in fraudulent or intentional misconduct, it would take action to remedy the misconduct and impose appropriate discipline. Discipline would vary based on the facts and circumstances but may include termination of employment or other appropriate actions. We retroactively adjust compensation in the event of a restatement of financial or other performance results to the extent required by the Sarbanes-Oxley Act of 2002. The EIP provides for repayment or forfeiture of awards under specified circumstances if the Company, as a result of misconduct, is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. Any awards earned or accrued during the twelve-month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document that failed to materially comply with a financial reporting requirement must be paid back to the Company. To the extent that the affected award was TABLE OF CONTENTS Executive Compensation
| | | Chief Executive Officer | 500% of salary | Other Executive Officers | 300% of salary | Other executives designated by the Compensation Committee | 100% - 200% of salary | deferred under a nonqualified deferred compensation plan maintained by the Company rather than paid to the executive officer, the deferred amount (and any earnings from it) must be forfeited. Our equity award agreements provide that awards are subject to any compensation recovery policy adopted by us, as amended from time to time.Notes The discussion of performance targets in this Compensation Discussion and Analysis section is exclusively in the context of executive compensation, and you should not use these targets for any other purpose or regard them as an indication of management’s expectations of future results. References to “bonuses” are to performance-based payments as reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. Shares held in family trusts and shares held in retirement plan accounts are deemed to be owned shares for purposes of these guidelines. Officers are asked to attain the desired level of stock ownership within five years of becoming an officer.
Once an NEO attains the desired level of share ownership, he or she will continue to be compliant with these guidelines even if the NEO later falls below the guidelines, provided that the NEO retains at least 50% of the net shares acquired upon exercise of stock options and at least 50% of the net shares acquired pursuant to vested restricted equity awards and vested restricted stock unit grants until he or she again meets or exceeds the guidelines.
Each NEO was in compliance with these requirements as of March 1, 2018.
Tax Matters
For 2017, we sought to structure executive compensation in a tax efficient manner, and implement compensation plans in light of applicable tax provisions, including Section 162(m) of the Internal Revenue Code. To maintain flexibility in structuring executive compensation to achieve its goals and compensation philosophy, the Compensation Committee has not adopted a policy requiring all compensation to be tax-deductible. For 2017, we sought to structure our executive officer bonuses to be tax-deductible, and therefore a separate plan, the Executive Annual Bonus Plan (the “162(m) Plan”) was employed to determine whether each NEO qualified for the payment of bonuses described above, and sets a cap on the amount of bonus that may be awarded and treated as tax-deductible. The Compensation Committee set the amounts payable under the 162(m) Plan (subject to the maximum amount permitted under the 162(m) Plan and applicable performance metrics being met). While the Compensation Committee exercised its discretion to reduce any bonus payable under the 162(m) Plan, the Compensation Committee does not have discretion to increase the bonus payable under the 162(m) Plan.
Internal Metric Awards made in 2017 vest based on the same trigger as under the 162(m) Plan. In 2017, the 162(m) Plan performance goals were met.
As a result of the U.S. Tax Cuts and Jobs Act passed at the end of 2017, the exception for performance-based compensation under Section 162(m) has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. Historically, the Compensation Committee structured the annual cash incentives and restricted stock awards for our executive officers in a manner intended to be exempt from Section 162(m), and therefore deductible. However, because of uncertainties as to the application and interpretation of Section 162(m) and its related regulations going forward, no assurance can be given that compensation paid to our executives and intended to be tax deductible, in fact will be tax deductible. In response to this change, the Compensation Committee is carefully considering the structure of the Company’s executive compensation plans.
Impact on Compensation from Misconduct—Clawbacks
If the Board of Directors were to determine that an NEO had engaged in fraudulent or intentional misconduct, it would take action to remedy the misconduct and impose appropriate discipline. Discipline would vary based on the facts and circumstances, but may include termination of employment or other appropriate actions.
We retroactively adjust compensation in the event of a restatement of financial or other performance results to the extent required by the Sarbanes-Oxley Act of 2002. The 162(m) Plan provides for repayment or forfeiture of awards under specified circumstances if the Company, as a result of misconduct, is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. Any awards earned or accrued during the twelve-month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document that failed to materially comply with a financial reporting requirement must be paid back to the Company. To the extent that the affected award was deferred under a nonqualified deferred compensation plan maintained by the Company rather than paid to the executive officer, the deferred amount (and any earnings from it) must be forfeited. Our equity award agreements provide that awards are subject to any compensation recovery policy adopted by us, as amended from time to time.
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Notes
The discussion of performance targets in this Compensation Discussion and Analysis section is exclusively in the context of executive compensation, and you should not use these targets for any other purpose, or regard them as an indication of management’s expectations of future results.
References to “bonuses” are to performance-based payments as reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
COMPENSATION COMMITTEE REPORT 2018 Proxy Statement
30
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the SPX FLOW Board of Directors comprises sixThe Compensation Committee of the SPX FLOW Board of Directors comprises nine directors. Each of the Compensation Committee members is independent, as defined under SEC rules and the listing standards of the NYSE. Additionally, each member of the Compensation Committee is an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code. The Compensation Committee reviews SPX FLOW’s “Compensation Discussion and Analysis” on behalf of the Board of Directors.
The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” with management, and based on the review and discussions, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement and SPX FLOW’s Annual Report on Form 10-K for the year ended December 31, 2020. Compensation Committee
Emerson U. Fullwood, Chairman
Majdi B. Abulaban
Anne K. Altman
Patrick D. Campbell
Robert F. Hull, Jr.
Jonathan M. Pratt
Sonya M. Roberts
Suzanne B. Rowland
David V. Singer TABLE OF CONTENTS Executive Compensation
SUMMARY COMPENSATION TABLE FOR 2020 This table summarizes the compensation for the named executive officers in 2020. The “named executive officers” are our Chief Executive Officer, our Chief Financial Officer, our next three most highly compensated officers who were serving as officers as of December 31, 2020. | Marcus G. Michael
President and Chief Executive Officer | | | 2020 | | | 944,877 | | | 3,336,836 | | | 897,633 | | | 255,286 | | | 5,434,632 | | | 2019 | | | 914,589 | | | 3,444,317 | | | 342,971 | | | 148,936 | | | 4,850,813 | | | 2018 | | | 868,221 | | | 3,503,314 | | | 393,750 | | | 105,763 | | | 4,871,048 | | | Jaime M. Easley
Vice President and Chief Financial Officer | | | 2020 | | | 435,137 | | | 686,975 | | | 289,366 | | | 47,096 | | | 1,458,574 | | | 2019 | | | 425,000 | | | 686,092 | | | 111,563 | | | 37,731 | | | 1,260,386 | | | 2018 | | | 295,134 | | | 205,967 | | | 60,743 | | | 51,164 | | | 613,008 | | | Dwight A.K. Gibson
Chief Commercial Officer | | | 2020 | | | 485,664 | | | 588,796 | | | 322,967 | | | 51,909 | | | 1,449,336 | | | 2019 | | | 482,719 | | | 1,176,129 | | | 126,714 | | | 39,603 | | | 1,825,165 | | | 2018 | | | 471,518 | | | 618,176 | | | 148,528 | | | 46,385 | | | 1,284,607 | | | Alvin T. Jeffers
Vice President, Global Manufacturing and Supply Chain | | | 2020 | | | 421,827 | | | 490,654 | | | 280,515 | | | 41,232 | | | 1,234,228 | | | Kevin Eamigh
Chief Information Officer and Vice President, Global Business Services | | | 2020 | | | 420,114 | | | 490,654 | | | 279,376 | | | 63,120 | | | 1,253,264 | |
(1)
| Named executive officers are eligible to defer up to 50% of their salaries into the 401(k) Plan (up to applicable tax limits), and up to 50% of their salaries into the SPX FLOW Supplemental Retirement Savings Plan, a nonqualified deferred compensation plan (the “SRSP”). In addition, named executive officers are eligible to defer up to 50% of their non-equity incentive compensation into the 401(k) Plan (up to applicable tax limits), and up to 100% of their non-equity incentive compensation into the SRSP. In 2020, the named executive officers deferred the following portions of their salaries and 2020 non-equity incentive compensation payout (received in 2021) into the 401(k) Plan and the SRSP: |
| Mr. Michael | | | 20,731 | | | 383,173 | | | 4,885 | | | 790,325 | | | Mr. Easley | | | 10,625 | | | 33,978 | | | 8,556 | | | 10,861 | | | Mr. Gibson | | | 10,630 | | | — | | | 12,962 | | | 12,636 | | | Mr. Jeffers | | | 10,650 | | | 7,320 | | | 12,504 | | | — | | | Mr. Eamigh | | | 13,351 | | | 14,724 | | | 13,989 | | | 4,210 | |
(2)
| Some of these grants are subject to performance vesting conditions. The amounts reported in the above table were calculated in accordance with applicable accounting guidance to reflect their grant date fair value at the target level of performance. See note 15 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017.2020 for additional information regarding the calculation of these numbers for awards made in 2020. See the Grants of Plan-Based Awards in 2020 table on page 29 for more information on these grants. The grant date fair value of all equity awards made in 2020 assuming that performance-vesting conditions are satisfied for 2020 performance-based restricted stock units at the highest level for Mr. Michael is $5,005,195, for Mr. Easley is $1,030,441, for Mr. Gibson is $883,187, for Mr. Jeffers is $735,970, and for Mr. Eamigh is $735,970. | | | | Compensation Committee
Emerson U. Fullwood, Chairman
Anne K. Altman
Patrick D. Campbell
Robert F. Hull, Jr.
Terry S. Lisenby
David V. Singer
|
SUMMARY COMPENSATION TABLE FOR 2017
This table summarizes the compensation for the named executive officers in 2017. The “named executive officers” are our Chief Executive Officer, our Chief Financial Officer, and our next three most highly compensated officers who were serving as officers as of December 31, 2017. Compensation in this and the following tables includes amounts received from SPX Corporation prior to our spin-off in 2015. References to benefit plan amounts in this and the following tables include amounts under the corresponding SPX Corporation plans prior to our spin-off.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | Year | Salary ($)(1) |
| Bonus ($) |
| Stock Awards ($)(2) |
| Option Awards ($) |
| Non-Equity Incentive Plan Compensation ($)(3) |
| Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) |
| All Other Compensation ($) | Total ($) |
| Marcus G. Michael | 2017 | $ | 841,262 |
| $ | — |
| $ | 3,477,165 |
| $ | — |
| $ | 1,133,138 |
| $ | — |
| $ | 129,399 |
| (5) | $ | 5,580,964 |
| President and CEO | 2016 | $ | 825,000 |
| $ | — |
| $ | 2,999,954 |
| $ | — |
| $ | — |
| $ | — |
| $ | 181,322 |
| | $ | 4,006,276 |
| Jeremy W. Smeltser | 2017 | $ | 614,894 |
| $ | — |
| $ | 1,317,087 |
| $ | — |
| $ | 662,586 |
| $ | 484,612 |
| $ | 95,697 |
| (6) | $ | 3,174,876 |
| Vice President and CFO | 2016 | $ | 599,785 |
| $ | — |
| $ | 1,249,976 |
| $ | — |
| $ | — |
| $ | 173,876 |
| $ | 86,112 |
| | $ | 2,109,749 |
| | 2015 | $ | 584,505 |
| $ | — |
| $ | 1,536,304 |
| $ | 786,347 |
| $ | 400,044 |
| $ | 668,484 |
| $ | 81,709 |
| | $ | 4,057,393 |
| David A. Kowalski | 2017 | $ | 641,181 |
| $ | — |
| $ | 1,317,087 |
| $ | — |
| $ | 690,911 |
| $ | 839,284 |
| $ | 129,447 |
| (7) | $ | 3,617,910 |
| President, GMO | 2016 | $ | 625,428 |
| $ | — |
| $ | 1,249,976 |
| $ | — |
| $ | — |
| $ | 566,674 |
| $ | 111,294 |
| | $ | 2,553,372 |
| | 2015 | $ | 613,450 |
| $ | — |
| $ | 1,286,289 |
| $ | 786,347 |
| $ | 417,146 |
| $ | 1,034,501 |
| $ | 58,261 |
| | $ | 4,195,994 |
| Dwight A. K. Gibson | 2017 | $ | 469,086 |
| $ | — |
| $ | 632,174 |
| $ | — |
| $ | 442,284 |
| $ | — |
| $ | 27,188 |
| (8) | $ | 1,570,732 |
| President, Food and Beverage | 2016 | $ | 263,408 |
| $ | 372,013 |
| $ | 699,976 |
| $ | — |
| $ | — |
| $ | — |
| $ | 167,529 |
| | $ | 1,502,926 |
| Jose Larios | 2017 | $ | 405,000 |
| $ | — |
| $ | 632,174 |
| $ | — |
| $ | 393,960 |
| $ | — |
| $ | 25,795 |
| (9) | $ | 1,456,929 |
| President, Industrial and Power & Energy | | | | | | | | | | |
(3)
| All Other Compensation included the following: | (1) | Named executive officers are eligible to defer up to 50% of their salaries into the SPX FLOW Retirement Savings Plan, a tax-qualified retirement savings plan (the “401(k) Plan”) (up to applicable IRS limits), and up to 50% of their salaries into the SPX FLOW Supplemental Retirement Savings Plan, a nonqualified deferred compensation plan (the “SRSP”). In 2017, the named executive officers deferred the following portions of their salaries into the 401(k) Plan and the SRSP: |
| | | | | | | | Name | Deferred into 401(k) Plan |
| Deferred into SRSP |
| Mr. Michael | $ | 18,000 |
| $ | 142,716 |
| Mr. Smeltser | $ | 18,000 |
| $ | 51,691 |
| Mr. Kowalski | $ | 18,000 |
| $ | 25,962 |
| Mr. Gibson | $ | 10,800 |
| $ | — |
| Mr. Larios | $ | 18,000 |
| $ | — |
|
| | (2) | These grants are generally subject to performance vesting conditions. The amounts reported in the above table were calculated in accordance with Topic 718 to reflect their grant date fair value at the target level of performance. See note 12 to the consolidated and combined financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 for additional information regarding the calculation of these numbers for awards made in 2017. See the Grants of Plan Based Awards in 2017 table for more information on these grants. The following table sets forth the grant date fair value of all equity awards made in 2017 assuming that performance-vesting conditions are satisfied at the highest level. |
| | | | | Name | 2017 |
| Mr. Michael | $ | 4,346,410 |
| Mr. Smeltser | $ | 1,646,345 |
| Mr. Kowalski | $ | 1,646,345 |
| Mr. Gibson | $ | 790,198 |
| Mr. Larios | $ | 790,198 |
|
|
| Mr. Michael | | | 13,671 | | | 50,110 | | | 142,596 | | | 48,909 | | | — | | | — | | | Mr. Easley | | | 9,665 | | | 13,069 | | | 24,363 | | | — | | | — | | | — | | | Mr. Gibson | | | 13,940 | | | — | | | 21,783 | | | 16,186 | | | — | | | — | | | Mr. Jeffers | | | 14,250 | | | 7,320 | | | 18,918 | | | — | | | — | | | 744 | | | Mr. Eamigh | | | 9,554 | | | 12,270 | | | 40,197 | | | — | | | 1,100 | | | — | |
(a)
| | (3) | Named executive officers are eligible to defer up to 100% of their non-equity incentive compensation into the SPX FLOW Retirement Savings Plan, a tax-qualified retirement savings plan (the “401(k) Plan”) (up to applicable IRS limits), and up to 100% of their non-equity incentive compensation into the SPX FLOW Supplemental Retirement Savings Plan, a nonqualified deferred compensation plan (the “SRSP”). In 2018, the year in which they received the 2017 non-equity incentive compensation payout, the named executive officers deferred the following portions of their non-equity incentive compensation into the 401(k) Plan and the SRSP: |
| | | | | | | | Name | Deferred into 401(k) Plan |
| Deferred into SRSP |
| Mr. Michael | $ | 5,490 |
| $ | 765,568 |
| Mr. Smeltser | $ | 671 |
| $ | 126,612 |
| Mr. Kowalski | $ | 9,824 |
| $ | 269,927 |
| Mr. Gibson | $ | 12,153 |
| $ | 25,796 |
| Mr. Larios | $ | 11,231 |
| $ | — |
|
| | (4) | The change in pension value is based on assumed discount rates of 3.82% at December 31, 2016, and 3.49% at December 31, 2017. There were no above market earnings on nonqualified deferred compensation to report for any of the named executive officers in 2017. |
| | (5) | Mr. Michael received $129,399 in All Other Compensation, including: |
| Represents the change in value between December 31, 20162019 and December 31, 20172020 of the post-retirement key manager life insurance benefit, based on an assumed discount ratesrate of 4.32% and 3.79% on those dates, respectively;3.09%. |
The above benefits are provided pursuant to the terms of an employment agreement with Mr. Michael. The term of the employment agreement for Mr. Michael extended through December 31, 2020 with extensions from year to year unless proper advance notice is provided in accordance with the terms of the agreement. Under Mr. Michael’s agreement, any annual base salary rate reductions require his consent and it provides for participation in any annual performance bonus plans, long-term incentive plans, and equity based compensation plans that we establish or maintain for our officers as well as continuation of all other senior executive benefit plans offered by us, subject to our right to modify, suspend or discontinue the plans. Business expense reimbursement, perquisites and vacation entitlements also are provided pursuant to the agreement. See “Compensation Discussion and Analysis” for further discussion and explanation of each element of compensation. $28,543 in matching contributions to the SRSP; and2021 Proxy Statement | $13,500 in matching contributions to the 401(k) plan.
| The remaining $6,025 consisted of an adjustment of his relocation and expatriation costs from 2015 that were reported in 2017, executive health care and incremental aircraft expense.28
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GRANTS OF PLAN-BASED AWARDS IN 2020 The following table provides information regarding equity and non-equity awards granted to the named executive officers in 2020. | Marcus G. Michael | | | 2/27/2020 | | | 260,314 | | | 897,633 | | | 897,633 | | | | | | | | | | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 25,667 | | | 51,333 | | | 102,666 | | | | | | 1,668,358 | | | | | | 2/27/2020 | | | | | | | | | | | | | | | | | | | | | 45,021 | | | 1,668,478 | | | Jaime M. Easley | | | 2/27/2020 | | | 83,916 | | | 289,366 | | | 289,366 | | | | | | | | | | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 5,284 | | | 10,568 | | | 21,136 | | | | | | 343,466 | | | | | | 2/27/2020 | | | | | | | | | | | | | | | | | | | | | 9,269 | | | 343,509 | | | Dwight A.K. Gibson | | | 2/27/2020 | | | 93,660 | | | 322,967 | | | 322,967 | | | | | | | | | | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 4,529 | | | 9,058 | | | 18,116 | | | | | | 294,391 | | | | | | 2/27/2020 | | | | | | | | | | | | | | | | | | | | | 7,944 | | | 294,405 | | | Alvin T. Jeffers | | | 2/27/2020 | | | 81,349 | | | 280,515 | | | 280,515 | | | | | | | | | | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 3,774 | | | 7,548 | | | 15,096 | | | | | | 245,317 | | | | | | 2/27/2020 | | | | | | | | | | | | | | | | | | | | | 6,620 | | | 245,337 | | | Kevin Eamigh | | | 2/27/2020 | | | 81,019 | | | 279,376 | | | 279,376 | | | | | | | | | | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 3,774 | | | 7,548 | | | 15,096 | | | | | | 245,317 | | | | | | 2/27/2020 | | | | | | | | | | | | | | | | | | | | | 6,620 | | | 245,337 | |
(1)
| Mr. Smeltser received $95,697 in All Other Compensation, including: |
$31,169 representing the change in value between December 31, 2016 and December 31, 2017In light of the post-retirement key manager life insurance benefit, based on assumed discount ratesCOVID-19 pandemic, the Compensation Committee limited the amount of 4.32% and 3.79% on those dates, respectively;
$17,230 in matching contributions to the SRSP;
$13,500 in matching contributions to the 401(k) plan; and
$10,947 in financial planning benefits.
The remaining $22,851 consisted of post-retirement medical insurance benefit and coveragepayout under the executive long-term disability plan.
| | (7) | Mr. Kowalski received $129,447 in All Other Compensation, including: |
$92,126 representing the change in value between December 31, 2016 and December 31, 2017EIP to 95% of the post-retirement key manager life insurance benefit, based on assumed discount rates of 4.32% and 3.79% on those dates, respectively;
$18,544 in matching contributions to the SRSP; and
$13,500 in matching contributions to the 401(k) plan.
The remaining $5,277 consisted of post-retirement medical insurance benefit and coverage under the executive long-term disability plan.
| | (8) | Mr. Gibson received $27,188 in All Other Compensation, including: |
$10,138 representing the change in value between December 31, 2016 and December 31, 2017 of the post-retirement key manager life insurance benefit, based on assumed discount rates of 4.32% and 3.79% on those dates, respectively; and
$10,800 in matching contributions to the 401(k) plan.
The remaining $6,250 consisted of financial planning benefits.
| | (9) | Mr. Larios received $25,795 in All Other Compensation, including: |
$11,829 representing the change in value between December 31, 2016 and December 31, 2017 of the post-retirement key manager life insurance benefit, based on assumed discount rates of 4.32% and 3.79% on those dates, respectively; and
$13,500 in matching contributions to the 401(k) plan.
The remaining $466 consisted of executive health care benefits.
The above benefits are provided pursuant to the terms of employment agreements with each named executive officer other than Messrs. Gibson and Larios. The term of the employment agreements for Messrs. Michael and Smeltser extended through December 31, 2017 with extensions from year to year unless proper advance notice is provided in accordance with the terms of the agreement. The expiration date for the rolling term agreement of Mr. Kowalski is automatically extended by one day for each day of the term that elapses.
Under the agreements, any annual base salary rate reductions require the named executive officer’s consent. The agreements provide for participation in any annual performance bonus plans, long-term incentive plans, and equity based compensation plans that we establish or maintain for our officers. The agreements further provide for continuation of all other senior executive benefit plans offered by us, subject to our right to modify, suspend or discontinue the plans. Business expense reimbursement, perquisites and vacation entitlements also are provided pursuant to the agreements.
target. See “Compensation Discussion and Analysis”Analysis—2020 Compensation—Bonuses” beginning on page 21, for further discussiona description of the modification of the EIP. |
(2)
| Assumes all stock will vest. See “Compensation Discussion and explanationAnalysis—2020 Compensation—Equity-Based Awards” beginning on page 22, for a description of each elementthe performance vesting requirements. |
(3)
| Represents the grant date fair value, based on the closing price of compensation.
| | | | | | our stock on the day prior to the grant, under applicable accounting guidance. See note 15 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2020 for the assumptions made in the valuation of these awards. |
TABLE OF CONTENTS
GRANTS OF PLAN-BASED AWARDS IN 2017
The following table provides information regarding equity and non-equity awards granted to the named executive officers in 2017.
| | | | | | | | | | | | | | | | Name | Grant Date (1) | Award Date (1) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards Maximum ($) (2) |
| Estimated Future Payouts Under Equity Incentive Plan Awards (3) | | Grant Date Fair Value of Stock and Option Awards ($) (4) |
| Threshold (#) |
| Target (#) |
| Maximum (#) |
| Marcus G. Michael | 1/13/2017 | 12/14/2016 | $ | 1,691,250 |
| | | | | | 1/13/2017 | 12/14/2016 | | 74,421 |
| 99,292 |
| 124,164 |
| $ | 3,477,165 |
| Jeremy W. Smeltser | 1/13/2017 | 12/14/2016 | $ | 988,934 |
| | | | | | 1/13/2017 | 12/14/2016 | | 28,189 |
| 37,610 |
| 47,031 |
| $ | 1,317,087 |
| David A. Kowalski | 1/13/2017 | 12/14/2016 | $ | 1,031,210 |
| | | | | | 1/13/2017 | 12/14/2016 | | 28,189 |
| 37,610 |
| 47,031 |
| $ | 1,317,087 |
| Dwight A. K. Gibson | 1/13/2017 | 12/14/2016 | $ | 660,126 |
| | | | | | 1/13/2017 | 12/14/2016 | | 13,531 |
| 18,052 |
| 22,574 |
| $ | 632,174 |
| Jose Larios | 1/13/2017 | 12/14/2016 | $ | 588,000 |
| | | | | | 1/13/2017 | 12/14/2016 | | 13,531 |
| 18,052 |
| 22,574 |
| $ | 632,174 |
|
| | (1) | The Compensation Committee approved annual equity awards and participation in the 162(m) Plan at the December 2016 Compensation Committee meeting. The effective date of equity awards is determined without regard to current or anticipated stock price levels or the release of material non-public information. |
| | (2) | Represents the maximum amount payable under the Executive Annual Bonus Plan, also called the 162(m) Plan. Under the 162(m) Plan, a maximum amount is payable if the performance target is reached, subject to the Compensation Committee’s ability, in its sole discretion, to reduce the amount actually paid. For 2017, the Compensation Committee determined the amount payable under the 162(m) Plan by reference to the EIP performance metrics. The following table shows the threshold, target and maximum payouts under the EIP. |
| | | | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Name | Threshold ($) | Target ($) |
| Maximum ($) |
| Marcus G. Michael | N/A | $ | 845,625 |
| $ | 1,691,250 |
| Jeremy W. Smeltser | N/A | $ | 494,467 |
| $ | 988,934 |
| David A. Kowalski | N/A | $ | 515,605 |
| $ | 1,031,210 |
| Dwight A. K. Gibson | N/A | $ | 330,063 |
| $ | 660,126 |
| Jose Larios | N/A | $ | 294,000 |
| $ | 588,000 |
|
| | (3) | Assumes all stock will vest. See “Compensation Discussion and Analysis—2017 Compensation—Equity-Based Awards” beginning on p. 25, for a description of the performance vesting requirements. All shares are subject to performance requirements. |
| | (4) | Represents the Topic 718 grant date fair value, based on the closing price of our stock on the day prior to the grant. See note 12 to the consolidated and combined financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 for the assumptions made in the valuation of these awards. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2017OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2020The following table details the outstanding equity awards held by each of the named executive officers at December 31, 2020. | Marcus G. Michael | | | 1/2/2015 | | | 15,801 | | | $61.29 | | | 1/2/2025 | | | | | | | | | | | | | | | | | | 3/9/2018 | | | | | | | | | | | | | | | | | | 11,897 (3) | | | 689,550 | | | | | | 3/9/2018 | | | | | | | | | | | | | | | | | | 26,289 (4) | | | 1,523,710 | | | | | | 2/28/2019 | | | | | | | | | | | | 33,562 (3) | | | 1,945,254 | | | | | | | | | | | | 2/28/2019 | | | | | | | | | | | | 51,781 (5) | | | 3,001,227 | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 45,021 (3) | | | 2,609,417 | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 80,156 (6) | | | 4,645,842 | | | | | | | | | Jaime M. Easley | | | 3/9/2018 | | | | | | | | | | | | 788 (3) | | | 45,672 | | | | | | | | | | | | 3/9/2018 | | | | | | | | | | | | 1,352 (4) | | | 78,362 | | | | | | | | | | | | 2/28/2019 | | | | | | | | | | | | 6,686 (3) | | | 387,521 | | | | | | | | | | | | 2/28/2019 | | | | | | | | | | | | 10,315 (5) | | | 597,857 | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 9,269 (3) | | | 537,231 | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 16,502 (6) | | | 956,456 | | | | | | | | | Dwight A.K. Gibson | | | 3/9/2018 | | | | | | | | | | | | | | | | | | 2,100 (3) | | | 121,716 | | | | | | 3/9/2018 | | | | | | | | | | | | | | | | | | 4,639 (4) | | | 268,876 | | | | | | 2/28/2019 | | | | | | | | | | | | 5,730 (3) | | | 332,111 | | | | | | | | | | | | 2/28/2019 | | | | | | | | | | | | 8,840 (5) | | | 512,366 | | | | | | | | | | | | 2/28/2019 | | | | | | | | | | | | 17,191 (7) | | | 996,390 | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 7,944 (3) | | | 460,434 | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 14,144 (6) | | | 819,786 | | | | | | | | | Alvin T. Jeffers | | | 4/30/2018 | | | | | | | | | | | | | | | | | | 1,852 (8) | | | 107,342 | | | | | | 4/30/2018 | | | | | | | | | | | | | | | | | | 4,092 (4) | | | 237,172 | | | | | | 2/28/2019 | | | | | | | | | | | | 4,776 (3) | | | 276,817 | | | | | | | | | | | | 2/28/2019 | | | | | | | | | | | | 7,368 (5) | | | 427,049 | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 6,620 (3) | | | 383,695 | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 11,786 (6) | | | 683,117 | | | | | | | | | Kevin Eamigh | | | 3/9/2018 | | | | | | | | | | | | | | | | | | 1,750 (3) | | | 101,430 | | | | | | 3/9/2018 | | | | | | | | | | | | | | | | | | 3,865 (4) | | | 224,015 | | | | | | 2/28/2019 | | | | | | | | | | | | 4,776 (3) | | | 276,817 | | | | | | | | | | | | 2/28/2019 | | | | | | | | | | | | 7,368 (5) | | | 427,049 | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 6,620 (3) | | | 383,695 | | | | | | | | | | | | 2/27/2020 | | | | | | | | | | | | 11,786 (6) | | | 683,117 | | | | | | | |
(1)
| Stock options awarded on January 2, 2015 vest at the rate of one-third per year. |
(2)
| Based on the closing price of our named executive officers atcommon stock of $57.96 on December 31, 2017. | | | | | | | | | | | | | | | | | | | | | | | Option Awards | Stock Awards | Name | Number of Securities Underlying Unexercised Options Exercisable (1)(#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested (2)($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (2)($) | Marcus G. Michael | 10,532 |
| 5,269 |
| $ | 61.29 |
| 1/2/2025 | | | | 35,186 |
| (3a) | $ | 1,673,094 |
| | | | | | | | | 56,011 |
| (3b) | $ | 2,663,323 |
| | | | | | | | | 49,549 |
| (4a) | $ | 2,356,055 |
| | | | | | | | | 49,743 |
| (4b) | $ | 2,365,280 |
| | | | | | 1,685 |
| (6) | $ | 80,122 |
| | | | Jeremy W. Smeltser | 27,144 |
| 13,574 |
| $ | 61.29 |
| 1/2/2025 | | | | 14,661 |
| (3a) | $ | 697,131 |
| | | | | | | | | 23,338 |
| (3b) | $ | 1,109,722 |
| | | | | | | | | 18,768 |
| (4a) | $ | 892,418 |
| | | | | | | | | 18,842 |
| (4b) | $ | 895,937 |
| | | | | | 4,342 |
| (6) | $ | 206,462 |
| | | | David A. Kowalski | 27,144 |
| 13,574 |
| $ | 61.29 |
| 1/2/2025 | | | | — |
| (3a) | $ | — |
| | | | | | | | | 23,338 |
| (3b) | $ | 1,109,722 |
| | | | | | | | | 18,768 |
| (4a) | $ | 892,418 |
| | | | | | | | | 18,842 |
| (4b) | $ | 895,937 |
| Dwight A.K. Gibson | | | | | | | | 7,586 |
| (10a) | $ | 360,714 |
| | | | | | | | | 10,944 |
| (10b) | $ | 520,387 |
| | | | | | | | | 9,009 |
| (4a) | $ | 428,378 |
| | | | | | | | | 9,043 |
| (4b) | $ | 429,995 |
| Jose Larios | | | | | | | | 2,807 |
| (9a) | $ | 133,473 |
| | | | | | | | | 4,451 |
| (9b) | $ | 211,645 |
| | | | | | | | | 9,009 |
| (4a) | $ | 428,378 |
| | | | | | | | | 9,043 |
| (4b) | $ | 429,995 |
| | | | | | 561 |
| (5) | $ | 26,676 |
| | | | | | | | | 2,006 |
| (7) | $ | 95,385 |
| | | | | | | | | 1,064 |
| (8) | $ | 50,593 |
| | | |
| | (1) | Stock options awarded on January 2, 2015 vest at the rate of 33 1/3% per year. |
| | (2) | Based on the closing price of our common stock of $47.55 on December 29, 2017, the last trading day in 2017. |
| | (3a) | Internal Metric Grant awarded on January 4, 2016 vests at the rate of 33 1/3% per year, subject to satisfaction of internal performance criteria for the initial year, with vesting dates of March 2, 2017, January 4, 2018, and January 4, 2019. Mr. Kowalski became retirement eligible under the terms of this grant during 2017 and vested in the second and third tranches of his award in order to address the associated tax withholding obligations. These shares are subject to a holding period until the 2018 and 2019 vesting dates.
|
| | (3b) | External Metric Grant awarded on January 4, 2016 becomes eligible to vest January 4, 2019 subject to satisfaction of external performance criteria for the three-year performance period. |
| | (4a) | Internal Metric Grant awarded on January 13, 2017 vests at the rate of 33 1/3% per year, subject to satisfaction of internal performance criteria for the initial year, with vesting dates of March 2, 2018, January 14, 2019 and January 13, 2020. |
| | (4b) | External Metric Grant awarded on January 13, 2017 becomes eligible to vest January 13, 2020, subject to satisfaction of external performance criteria for the three-year performance period. |
| | (5) | Restricted units awarded upon commencement of employment on July 27, 2015 vest at the rate of 33 1/3% per year with vesting dates of January 2, 2016, January 2, 2017 and January 2, 2018. |
| | (6) | Restricted shares awarded on January 2, 2015 vest at the rate of 33 1/3% per year, subject to satisfaction of internal performance criteria for the initial period, which was satisfied, with vesting dates of January 2, 2016, January 2, 2017 and January 2, 2018. |
| | (7) | Restricted units awarded on January 4, 2016 vest at the rate of 33 1/3% per year, with vesting dates of January 4, 2017, January 4, 2018 and January 4, 2019. |
| | (8) | Restricted units awarded on January 4, 2016 are eligible to vest on January 4, 2019 subject to satisfaction of external performance criteria for the three-year performance period. |
| | (9a) | Internal Metric Grant awarded on August 29, 2016 in connection with his appointment as an officer vests at the rate of 33 1/3% per year, subject to satisfaction of internal performance criteria for the initial year, with vesting dates of March 2, 2017, January 4, 2018 and January 4, 2019. |
| | (9b) | External Metric Grant awarded on August 29, 2016 in connection with his appointment as an officer becomes eligible to vest January 4, 2019 subject to satisfaction of external performance criteria for the three-year performance period.
|
| | (10a) | Internal Metric Grant awarded on June 6, 2016 vests at the rate of 33 1/3% per year, subject to satisfaction of internal performance criteria for fiscal year 2016, with vesting dates of March 2, 2017, January 4, 2018 and January 4, 2019. |
| | (10b) | External Metric Grant awarded on June 6, 2016 becomes eligible to vest January 4, 2019 subject to satisfaction of external performance criteria for the three-year performance period. |
OPTIONS EXERCISED AND STOCK VESTED IN 2017
The following table sets forth stock vested for each of our named executive officers in 2017. Our named executive officers did not exercise any options in 2017.
| | | | | | | | Stock Awards | Name | Number of Shares Acquired on Vesting (#) |
| Value Realized on Vesting ($)(1) |
| Marcus G. Michael | 22,397 |
| $ | 790,003 |
| Jeremy W. Smeltser | 28,818 |
| $ | 1,178,307 |
| David A. Kowalski | 34,304 |
| $ | 1,342,946 |
| Dwight A.K. Gibson | 3,792 |
| $ | 137,081 |
| Jose Larios | 2,965 |
| $ | 102,039 |
|
| | (1) | Based on the market value at time of vesting. |
PENSION BENEFITS
The following table sets forth the net present value of accumulated benefits payable to each of the named executive officers, including the number of years of credited service.
| | | | | | | | | | | Name | Plan Name (1) | Number of Years Credited Service (#) |
| Present Value of Accumulated Benefit (2)($) |
| Payments during the last fiscal year ($) |
| Marcus G. Michael | N/A | N/A |
| $ | — |
| $ | — |
| Jeremy W. Smeltser | TMP | 8.67 |
| $ | 1,994,807 |
| $ | — |
| David A. Kowalski | TMP | 12.36 |
| $ | 4,750,576 |
| $ | — |
| Dwight A.K. Gibson | N/A | N/A |
| $ | — |
| $ | — |
| Jose Larios | N/A | N/A |
| $ | — |
| $ | — |
|
| | (1) | The name of the pension plan is the SPX FLOW Supplemental Retirement Plan for Top Management (the “TMP”). Prior to our spin-off in 2015, this benefit was provided under the SPX Corporation Supplemental Retirement Plan for Top Management. |
Upon designation by the Compensation Committee, named executive officers participate in the TMP. For Messrs. Smeltser and Kowalski, the benefit formula is 50% of final average pensionable earnings (highest 3 of last 10 calendar years of employment). For Mr. Smeltser, this target benefit accrues ratably over a 25-year period with Mr. Smeltser receiving the maximum benefit after 25 years. For Mr. Kowalski, this target benefit accrues ratably over a 20-year period with Mr. Kowalski receiving the maximum benefit after 20 years. A participant’s benefits may commence as early as age 55, but benefits payable at early retirement are reduced 4% per year from age 62.
Messrs. Michael, Gibson and Larios do not participate in the TMP.
For Mr. Kowalski, the benefit vests after 5 years of service. For Mr. Smeltser, the benefit vests after 5 years of service as an officer. Participants in the TMP may elect to receive their benefits in a lump sum or annuity form of payment.
In general, “pensionable earnings” for purposes of the TMP is the amount reported as wages on a participant’s Form W 2 and paid prior to termination of employment, increased by (i) amounts contributed by the participant to the 401(k) Plan, SRSP and the SPX FLOW Flexible Spending Account Plans, and (ii) vacation and holiday pay (but not severance pay) paid after termination of employment. “Pensionable earnings” does not include the following amounts: (i) reimbursements or other expense allowances, (ii) fringe benefits (cash and non-cash), (iii) moving expenses, (iv) welfare benefits, (v) deferred compensation, (vi) the value of restricted shares and other equity awards, (vii) severance pay paid after termination of employment, and (viii) employer-provided automobiles, mileage reimbursements and car allowances for which no documentation is required, hiring bonuses or other special payments, taxable and non-taxable tuition reimbursements, the taxable value of physical examinations and group term life insurance coverage in excess of $50,000, and other similar amounts not paid in cash that are required to be included in taxable income under the Internal Revenue Code.
Prior to our spin-off in 2015, Mr. Kowalski also participated in pension plans sponsored by SPX Corporation - the SPX US Pension Plan (the “USPP”) and the SPX Corporation Supplemental Individual Account Retirement Plan (“SIARP”). Accruals under both of these plans were frozen prior to the spin-off, and SPX Corporation remained the sponsor of both plans after the spin-off. The USPP is a tax qualified cash balance defined benefit pension plan. The SIARP is a nonqualified defined benefit plan that provides benefits in excess of the limitation on benefits imposed by the Internal Revenue Code for certain USPP participants. Mr. Kowalski was paid a lump sum of his USPP qualified plan benefit in 2016. Mr. Kowalski was paid his pre-2005 SIARP benefit in 2017. His remaining SIARP benefit cannot be paid until he has terminated employment with SPX FLOW. The following table sets forth the net present value of accumulated benefits payable to Mr. Kowalski.
| | | | | | | | | | Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit (2)($) |
| Payments during the last fiscal year ($) |
| David A. Kowalski | SIARP | N/A | $ | 357,394 |
| $ | 67,003 |
| | USPP | N/A | $ | — |
| $ | — |
|
| | (2) | The change in pension value in the TMP from 2016 to 2017 is based on assumed discount rates of 3.82% at December 31, 2016, and 3.49% at December 31, 2017. The change in pension value in the SIARP is based on assumed discount rates of 3.83% at December 31, 2016, and 3.47% at December 31, 2017. |
NONQUALIFIED DEFERRED COMPENSATION IN 2017
The following table sets forth information relating to the SRSP. Named executive officers and other senior-level management are eligible to participate in the SRSP, a nonqualified deferred compensation plan that allows them to make pre-tax deferrals in excess of those permitted by the 401(k) Plan. Named executive officers may defer up to 50% of their base compensation (excluding bonuses) and up to 100% of their annual bonuses into the SRSP. Both base compensation and bonus deferral elections are made prior to the beginning of the year to which they relate.
A company match is made to the SRSP after the maximum company match has been made under the 401(k) Plan. The deferrals and match are allocated to the fund(s) under the SRSP as selected by the participant.
In general, “eligible compensation” for purposes of the SRSP is the amount reported as wages on a participant’s Form W-2, (A) increased by (i) amounts contributed by the participant to the 401(k) Plan and the SPX FLOW Flexible Spending Account Plans, and (ii) vacation and holiday pay paid after termination of employment; and (B) decreased by (i) reimbursements or other expense allowances, (ii) fringe benefits (cash and non-cash), (iii) moving expenses, (iv) welfare benefits (provided that short-term disability payments are included and long-term disability payments are excluded), (v) employer-provided automobiles, mileage reimbursements and car allowances for which no documentation is required, taxable and non-taxable tuition reimbursements and the taxable value of physical examinations and group term life insurance coverage in excess of $50,000, (vi) pay in lieu of notice, (vii) deferred compensation, (viii) the value of restricted shares and other equity awards, and (ix) severance pay paid after termination of employment.
All matching contributions into the 401(k) Plan are invested initially in the SPX FLOW Common Stock Fund and are allocated in the form of units. The units consist primarily of SPX FLOW common stock, with a portion of the fund in cash, for purposes of administrative convenience. All matching contributions into the SRSP are made in cash and invested according to the participant’s elections. All participant and matching contributions vest immediately. There is no minimum holding period. The SRSP is unfunded and earnings are credited on account balances based on participant direction within the same investment choices available in the 401(k) Plan, except that the SPX FLOW Company Stock Fund and a stable value fund are not available under the SRSP. All returns in the SRSP and the 401(k) Plan are at market rates. In-service distributions are not allowed under the SRSP. In accordance with the rules set forth under the SRSP participants generally elect the form and timing of payment of their SRSP deferral account prior to the years in which such amounts are deferred. All amounts deferred under the SRSP after 2009 and before 2016 will be paid in a lump sum payment six months following termination of employment. Participants may elect to receive their pre-2009 accounts in a lump sum, annual installments (two to ten years) or monthly installments (up to 120 months) upon separation from service, on a date that is a specified number of months after retirement or separation from service, or on a specified date following separation from service (no later than attainment of age 70 1/2). Beginning with 2016, participants may elect to receive their amounts deferred in 2016 and later in either a lump sum or five annual installments, six months following employment termination.
| | | | | | | | | | | | | | | | | Name | Executive Contributions in Last FY (1) |
| Registrant Contributions in Last FY (2) |
| Aggregate Earnings in Last FY (3) |
| Aggregate Withdrawals/Distributions |
| Aggregate Balance at Last FYE (4) |
| Marcus G. Michael | $ | 142,716 |
| $ | 28,543 |
| $ | 55,085 |
| $ | — |
| $ | 432,702 |
| Jeremy W. Smeltser | $ | 51,691 |
| $ | 17,230 |
| $ | 148,824 |
| $ | — |
| $ | 1,167,572 |
| David A. Kowalski | $ | 25,962 |
| $ | 18,544 |
| $ | 233,955 |
| $ | — |
| $ | 1,311,757 |
| Dwight A.K. Gibson | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| Jose Larios | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
| | (1) | Contributions to the SRSP consisted of the following amounts reported in the Summary Compensation Table: |
| | | | | | | | Name | 2017 Salary Contributions |
| 2016 Non-Equity Incentive Plan Compensation Contributions |
| Mr. Michael | $ | 142,716 |
| $ | — |
| Mr. Smeltser | $ | 51,691 |
| $ | — |
| Mr. Kowalski | $ | 25,962 |
| $ | — |
| Mr. Gibson | $ | — |
| $ | — |
| Mr. Larios | $ | — |
| $ | — |
|
| | (2) | Represents matching amounts contributed by us to the SRSP. These amounts have been included in the All Other Compensation column of the Summary Compensation Table. |
| | (3) | Aggregate earnings under the SRSP are not above-market and, accordingly, are not included in the Summary Compensation Table. |
| | (4) | In addition to the amounts in footnote (1), includes the following amounts of contributions to the SRSP reported as compensation in the Summary Compensation Table for the: |
Year ended December 31, 2016: Mr. Michael, $166,586; Mr. Smeltser, $72,972; and Mr. Kowalski, $35,509.
Year ended December 31, 2015: Mr. Smeltser, $204,227; and Mr. Kowalski, $75,429.
Year ended December 31, 2014: Mr. Smeltser, $68,624; and Mr. Kowalski, $34,591.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
We have entered into agreements, including an employment agreement for certain of our named executive officers, and a change-in-control agreement and stock plan award agreements with each of our named executive officers, governing compensation in the event of a termination of employment or a change in control of our company. The following tables set forth the expected benefit to be received by each named executive officer in the event of his termination resulting from various scenarios, assuming a termination date of December 31, 2017 and a stock price of $47.55, our closing stock price on the New York Stock Exchange on December 29, 2017, the last trading day in 2020.
|
(3)
| This award will vest at the rate of 2017. The following tables should be read in connection withone-third per year on the Pension Benefits table on p. 38. Assumptionsfirst, second and explanationsthird anniversaries of the numbersgrant date subject to continued employment. |
(4)
| This award becomes eligible to vest in January 2021, subject to satisfaction of performance criteria for the three-year performance period. Half of the award is presented at the Threshold performance level and half of the award is presented at the Target performance level. |
(5)
| This award becomes eligible to vest in January 2022 subject to satisfaction of performance criteria for the three-year performance period. Half of the award is presented at the Threshold performance level and half of the award is presented at the Maximum performance level. |
(6)
| This award becomes eligible to vest in January 2023 subject to satisfaction of performance criteria for the three-year performance period. Half of this award is presented at the Target performance level and half of the award is presented at the Maximum performance level. |
(7)
| This award will vest on the third anniversary of the award date subject to continued employment. |
(8)
| This award will vest at the rate of one-third per year on March 9, 2019, March 9, 2020 and March 9, 2021. |
TABLE OF CONTENTS Executive Compensation
OPTIONS EXERCISED AND STOCK VESTED IN 2020 The following table sets forth stock vested for each of the named executive officers in 2020. Our named executive officers did not exercise any options in 2020. | Marcus G. Michael | | | 98,009 | | | 4,221,318 | | | Jaime M. Easley | | | 7,279 | | | 292,467 | | | Dwight A.K. Gibson | | | 17,569 | | | 758,626 | | | Alvin T. Jeffers | | | 4,239 | | | 149,039 | | | Kevin Eamigh | | | 14,641 | | | 632,205 | |
(1)
| Based on the market value at time of vesting. |
None of our NEOs participate in a pension plan. NONQUALIFIED DEFERRED COMPENSATION IN 2020 The following table sets forth information relating to the SRSP. Named executive officers and other senior-level management are eligible to participate in the SRSP, a nonqualified deferred compensation plan that allows them to make pre-tax deferrals in excess of those permitted by the 401(k) Plan. Named executive officers may defer up to 50% of their base compensation (excluding bonuses) and up to 100% of their annual bonuses into the SRSP. A company match is made to the SRSP after the maximum company match has been made under the 401(k) Plan. The deferrals and match are allocated to the fund(s) under the SRSP as selected by the participant. In general, “eligible compensation” for purposes of the SRSP is the amount reported as wages on a participant’s Form W-2, (A) increased by (i) amounts contributed by the participant to the 401(k) Plan and the SPX FLOW Flexible Spending Account Plans, and (ii) vacation and holiday pay paid after termination of employment; and (B) decreased by (i) reimbursements or other expense allowances, (ii) fringe benefits (cash and non-cash), (iii) moving expenses, (iv) welfare benefits (provided that short-term disability payments are included and long-term disability payments are excluded), (v) employer-provided mileage reimbursements for which no documentation is required, taxable and non-taxable tuition reimbursements and the taxable value of physical examinations and group term life insurance coverage in excess of $50,000, (vi) pay in lieu of notice, (vii) deferred compensation, (viii) the value of restricted shares and other equity awards, and (ix) severance pay received after termination of employment. All matching contributions into the 401(k) Plan and SRSP are made in cash and invested according to the participant’s elections. All participant and matching contributions vest immediately. The SRSP is unfunded and earnings are credited on account balances based on participant direction within the same investment choices available in the 401(k) Plan. All returns in the SRSP and the 401(k) Plan are at market rates. In-service distributions are not allowed under the SRSP. In accordance with the rules set forth under the SRSP participants generally elect the form and timing of payment of their SRSP deferral account prior to the years in which such amounts are deferred. All amounts deferred under the SRSP after 2009 and before 2016 will be paid in a lump sum payment six months following termination of employment. Beginning with 2016, participants may elect to receive their amounts deferred in 2016 and later in either a lump sum or five annual installments, six months following employment termination. TABLE OF CONTENTS Executive Compensation
| Marcus G. Michael | | | 619,029 | | | 50,110 | | | 774,261 | | | — | | | 3,410,439 | | | Jaime M. Easley | | | 33,978 | | | 13,069 | | | 64,910 | | | — | | | 342,067 | | | Dwight A.K. Gibson | | | — | | | — | | | 15,884 | | | — | | | 108,276 | | | Alvin T. Jeffers | | | 7,320 | | | 7,320 | | | 8,867 | | | — | | | 37,338 | | | Kevin Eamigh | | | 14,724 | | | 12,270 | | | 38,864 | | | — | | | 324,445 | |
(1)
| Contributions to the SRSP consisted of the following amounts reported in the tables below are set forthSummary Compensation Table: |
| Mr. Michael | | | 383,173 | | | 235,855 | | | Mr. Easley | | | 33,978 | | | — | | | Mr. Gibson | | | — | | | — | | | Mr. Jeffers | | | 7,320 | | | — | | | Mr. Eamigh | | | 14,724 | | | — | |
| Represents matching amounts contributed by us to the SRSP. These amounts have been included in the footnotes to,All Other Compensation column of the Summary Compensation Table. |
(3)
| Aggregate earnings under the SRSP are not above-market and, accordingly, are not included in the additional textSummary Compensation Table. |
(4)
| In addition to the amounts in footnote (1), includes the following amounts of contributions to the tables.SRSP reported as compensation in the Summary Compensation Table for the: |
Year ended December 31, 2019: Mr. Michael: $141,010; Mr. Easley: $26,435; and Mr. Gibson $10,528. Year ended December 31, 2018: Mr. Michael, $977,248; Mr. Easley: $28,258; and Mr. Gibson $37,221. Year ended December 31, 2017: Mr. Michael, $142,716. | | | | | | | | | | | | | | | | | | | | | Marcus G. Michael | | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability | Death Pre-retirement | Involuntary Termination Without Cause/Voluntary Resignation for Good Reason | Termination Following Change in Control | Salary | $ | — |
| $ | — |
| | $ | — |
| | $ | 1,691,250 |
| (1) | $ | 2,536,875 |
| (2) | Bonus | $ | — |
| $ | 845,625 |
| (3) | $ | 845,625 |
| (3) | $ | 1,691,250 |
| (4) | $ | 2,536,875 |
| (5) | Value of Accelerated Equity | $ | — |
| $ | 9,137,874 |
| (6) | $ | 9,137,874 |
| (6) | $ | 5,987,242 |
| (7) | $ | 9,137,874 |
| (6) | Retirement Plans | $ | — |
| $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | All Other Compensation (8) | $ | 81,310 |
| $ | 716,159 |
| | $ | 3,269,462 |
| | $ | 180,056 |
| | $ | 744,861 |
| | TOTAL | $ | 81,310 |
| $ | 10,699,658 |
| | $ | 13,252,961 |
| | $ | 9,549,798 |
| | $ | 14,956,485 |
| |
2021 Proxy Statement TABLE OF CONTENTS Executive Compensation
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL We have entered into agreements, including an employment agreement for our President and Chief Executive Officer, and a change-in-control agreement and stock plan award agreements with each of our named executive officers, governing compensation in the event of a termination of employment or a change in control of our company. The following tables set forth the expected benefit to be received by each named executive officer employed at December 31, 2020 in the event of his termination resulting from various scenarios, assuming a termination date of December 31, 2020 and a stock price of $57.96, our closing stock price on the NYSE on December 31, 2020. Assumptions and explanations of the numbers set forth in the table below are set forth in the footnotes to, and in the additional text following, the table. | Marcus G. Michael | | | Salary | | | — | | | — | | | — | | | 1,900,000 (1) | | | 2,850,000 (2) | | | | | | Bonus (3) | | | — | | | 950,000 | | | 950,000 | | | 1,900,000 | | | 2,850,000 | | | | | | Accelerated Equity | | | — | | | 13,233,717 (5) | | | 13,233,717 (5) | | | 9,388,651 (6) | | | 13,233,717 (5) | | | | | | Vacation (7) | | | 91,346 | | | 91,346 | | | 91,346 | | | 91,346 | | | 91,346 | | | | | | Life Insurance | | | 719,872 (8.a) | | | 845,016 (8.c) | | | 2,624,546 (8.d) | | | 17,878 (8.e) | | | 738,180 (8.f) | | | | | | | | | — (8.b) | | | | | | | | | | | | | | | | | | Outplacement Assistance | | | — | | | — | | | — | | | 50,000 | | | 50,000 | | | | | | Health & Welfare Premiums | | | — | | | — | | | — | | | 39,346 | | | 83,960 | | | | | | TOTAL | | | 811,218 (8.a) | | | 15,120,079 | | | 16,899,609 | | | 13,387,220 | | | 19,897,203 | | | | | | | | | 91,346 (8.b) | | | | | | | | | | | | | | | Jaime M. Easley | | | Salary | | | — | | | — | | | — | | | — | | | 875,500 (2) | | | | | | Bonus (4) | | | — | | | 289,366 | | | 306,425 | | | — | | | 612,850 | | | | | | Accelerated Equity (5) | | | — | | | 2,280,204 | | | 2,280,204 | | | — | | | 2,280,204 | | | | | | Vacation (7) | | | 42,091 | | | 42,091 | | | 42,091 | | | 42,091 | | | 42,091 | | | | | | Life Insurance | | | — | | | — | | | 1,051,705 (8.d) | | | — | | | 216,307 (8.f) | | | | | | Outplacement Assistance | | | — | | | — | | | — | | | — | | | 35,000 | | | | | | Health & Welfare Premiums | | | — | | | — | | | — | | | — | | | 55,974 | | | | | | TOTAL | | | 42,091 | | | 2,611,662 | | | 3,680,426 | | | 42,091 | | | 4,117,927 | | | Dwight A.K. Gibson | | | Salary | | | — | | | — | | | — | | | — | | | 971,328 (2) | | | | | | Bonus (4) | | | — | | | 322,967 | | | 339,965 | | | — | | | 884,569 | | | | | | Accelerated Equity (5) | | | — | | | 3,303,372 | | | 3,303,372 | | | — | | | 3,303,372 | | | | | | Vacation (7) | | | 46,698 | | | 46,698 | | | 46,698 | | | 46,698 | | | 46,698 | | | | | | Life Insurance | | | — | | | — | | | 1,166,820 (8.d) | | | — | | | 264,898 (8.f) | | | | | | Outplacement Assistance | | | — | | | — | | | — | | | — | | | 35,000 | | | | | | Health & Welfare Premiums | | | — | | | — | | | — | | | — | | | 52,760 | | | | | | TOTAL | | | 46,698 | | | 3,673,037 | | | 4,856,856 | | | 46,698 | | | 5,558,626 | | | Alvin T. Jeffers | | | Salary | | | — | | | — | | | — | | | — | | | 848,720 (2) | | | | | | Bonus (4) | | | — | | | 280,515 | | | 297,052 | | | — | | | 594,104 | | | | | | Accelerated Equity (5) | | | — | | | 1,946,007 | | | 1,946,007 | | | — | | | 1,946,007 | | | | | | Vacation (7) | | | 40,804 | | | 40,804 | | | 40,804 | | | 40,804 | | | 40,804 | | | | | | Life Insurance | | | — | | | — | | | 1,019,536 (8.d) | | | — | | | 244,722 (8.f) | | | | | | Outplacement Assistance | | | — | | | — | | | — | | | — | | | 35,000 | | | | | | Health & Welfare Premiums | | | — | | | — | | | — | | | — | | | 52,182 | | | | | | TOTAL | | | 40,804 | | | 2,267,326 | | | 3,303,399 | | | 40,804 | | | 3,761,539 | | | Kevin Eamigh | | | Salary | | | — | | | — | | | — | | | — | | | 840,228 (2) | | | | | | Bonus (4) | | | — | | | 279,376 | | | 294,080 | | | — | | | 750,604 | | | | | | Accelerated Equity (5) | | | — | | | 1,922,533 | | | 1,922,533 | | | — | | | 1,922,533 | | | | | | Vacation (7) | | | 40,396 | | | 40,396 | | | 40,396 | | | 40,396 | | | 40,396 | | | | | | Life Insurance | | | — | | | — | | | 1,009,335 (8.d) | | | — | | | 261,403 (8.f) | | | | | | Outplacement Assistance | | | — | | | — | | | — | | | — | | | 35,000 | | | | | | Health & Welfare Premiums | | | — | | | — | | | — | | | — | | | 51,950 | | | | | | TOTAL | | | 40,396 | | | 2,242,305 | | | 3,266,344 | | | 40,396 | | | 3,902,115 | |
(1)
| Two times annual salary at time of termination. |
| 2021 Proxy Statement | | 33 | (2) | Three times the |
TABLE OF CONTENTS Executive Compensation
(2)
| The greater of annual salary immediately prior to change in control or at time of termination multiplied by (i) three for Mr. Michael and (ii) two for Messrs. Easley, Gibson, Jeffers and Eamigh. |
(3)
| Bonus in an amount equal to, in the case of: |
Disability or Death: The greater of the prorated amount of actual bonus paid for the prior year or the target bonus (calculated based on year-end annual salary) for the termination year. Involuntary termination without cause or voluntary resignation for good reason: Two times the greater of actual bonus paid for the prior year or the target bonus (calculated based on year-end annual salary) for the termination year. Termination following a change in control: Three times the greater of actual bonus paid for the prior year or the target bonus (calculated based on year-end annual salary) for the termination year. (4)
| Bonus in an amount equal to, in the case of: |
Disability: The prorated amount of actual bonus for the termination year. Death: The target bonus (calculated based on year-end annual salary) for the termination year. Termination following a change in control: Two times the greatest of the highest earned bonus amount for three years prior to termination year, the target bonus for the termination year (calculated based on year-end annual salary) or the earned bonus for the termination year. (5)
| Value of vesting in all unvested restricted stock, restricted stock units and stock options at target. There are no in-the-money stock options. |
(6)
| Value of vesting in unvested restricted stock, unvested restricted stock units and stock options that would have vested in the two years following termination. The value assumes that all applicable performance vesting requirements will be met. There are no in-the-money stock options. |
(7)
| Accrued vacation time of termination. |
| | (3) | The greater of the prorated amount of actual bonus paid for the prior year or the target bonus for the termination year. |
| | (4) | Two times the greater of actual bonus paid for the prior year or the target bonus for the termination year. |
| | (5) | Three times the greater of actual bonus paid for the prior year or the target bonus for the termination year. |
| | (6) | Value of vesting in all unvested restricted stock, unvested restricted stock units and stock options at target. There are no in-the-money stock options. |
| | (7) | Value of vesting in the unvested restricted stock, unvested restricted stock units and stock options that would have vested in the two years following termination. The value assumes that all applicable performance vesting requirements will be met. There are no in-the-money stock options. |
Accrued vacation time: Salary for five weeks of accrued vacation time, for each termination scenario, in the amount of $81,310.
|
(8)
| Life insurance: Values for life insurance in an amount equal to, in the case of: Disability: $634,849;
Death:
|
8.a
| Voluntary resignation: Mr. Michael is retirement eligible. Estimated present value of life insurance proceeds of $3,188,152, which isone times annual salary for the remainder of his life. |
8.b
| Involuntary termination for cause: No benefit. |
8.d
| Death: Life insurance proceeds equal to the sum of two times annual salary (less $50,000 in insurance fromany benefit under the Company’s group life insurance plan maintained for other SPX FLOW employees) in the amount of $1,641,250 and gross ups for federal and other tax liabilities in the amount of $1,546,902;liabilities. |
8.e
| Involuntary termination without cause or voluntary resignation for good reason: Value of reimbursement of premiums paid over benefit continuation period for two years, in the amount of $15,953 which represents his imputed income for group life insurance benefits in the year prior to termination; andtermination. |
8.f
| Termination following a change in control: Estimated present value of life insurance coverage equal to two times annual salary at the time of termination for two years and thereafter an amount equal to one times annual salary for the remainder of his life, with an estimated present value of $544,077.Outplacement assistance: involuntary termination without cause, voluntary resignation for good reason, or termination following a change in control: $50,000.
Additional benefits:
Health and welfare insurance premiums:
Involuntary termination without cause or voluntary resignation for good reason: $30,243; and
Termination following a change in control: $66,924.
Executive physical: involuntary termination without cause, voluntary resignation for good reason, or termination following a change in control: $2,550.
| | | | | | | | | | | | | | | | | | | | | | Jeremy W. Smeltser | | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability | Death Pre-retirement | Involuntary Termination Without Cause/Voluntary Resignation for Good Reason | Termination Following Change in Control | Salary | $ | — |
| | $ | — |
| | $ | — |
| | $ | 618,083 |
| (1) | $ | 1,236,167 |
| (2) | Bonus | $ | — |
| | $ | 494,467 |
| (3) | $ | 494,467 |
| (3) | $ | 662,586 |
| (4) | $ | 1,773,004 |
| (5) | Value of Accelerated Equity | $ | — |
| | $ | 3,801,670 |
| (6) | $ | 3,801,670 |
| (6) | $ | 852,500 |
| (7) | $ | 3,801,670 |
| (6) | Retirement Plans (8) | $ | 153,734 |
| (8.a) | $ | — |
| | $ | 288,769 |
| (8.b) | $ | 478,524 |
| (8.c) | $ | 1,825,036 |
| (8.d) | All Other Compensation (9) | $ | 59,431 |
| | $ | 6,521,028 |
| | $ | 2,377,441 |
| | $ | 122,260 |
| | $ | 414,554 |
| | TOTAL | $ | 213,165 |
| | $ | 10,817,165 |
| | $ | 6,962,347 |
| | $ | 2,733,953 |
| | $ | 9,050,431 |
| |
| | (1) | One times annual salary at time of termination. |
| | (2) | Two times the greater of annual salary immediately prior to change in control or at time of termination. |
| | (3) | The greater of the prorated amount of actual bonus paid for the prior year or the target bonus for the termination year. |
| | (4) | One times the greater of actual bonus for prior year or average for the three prior years, plus the amount, if any, by which the bonus that would have been paid for the bonus plan year in which such termination occurs, based on the performance level actually attained, exceeds actual bonus for the prior year or the average for the three prior years. |
| | (5) | Two times the greatest of the highest earned bonus amount for three years prior to termination year, the target for the termination year or the earned bonus for the termination year. |
| | (6) | Value of vesting in all unvested restricted stock and stock options at target. There are no in-the-money stock options. |
| | (7) | Value of vesting in the unvested restricted stock and stock options that would have vested in the one year following termination. The value assumes that all applicable performance vesting requirements will be met. There are no in-the-money stock options. |
| | (8) | Estimated increase in pension value from the total amount set forth in the Pension Benefits table, on p. 38, resulting from: |
8.a—the benefit becoming payable at age 55.
8.b—the benefit being paid in a lump sum immediately, rather than being paid in the form elected at age 62.
8.c—credit for one additional year of age and service, and the benefit becoming payable at age 55, rather than at age 62.
8.d—credit for two additional years of age and service, and the benefit being immediately payable as a lump sum, rather than being paid in the form elected at age 62, and the application of an alternative definition of final average pay.
Accrued vacation time: Salary for five weeks of accrued vacation time, for each termination scenario, in the amount of $59,431.
Life insurance: Values for life insurance in an amount equal to, in the case of:
Disability: $322,377;
Death: life insurance proceeds of $2,318,010, which is equal to the sum of two times annual salary (less $50,000 in insurance from the Company’s group life insurance plan maintained for other SPX FLOW employees) in the amount of $1,186,166 and gross-ups for federal and other tax liabilities in the amount of $1,131,844;
Involuntary termination without cause or voluntary resignation for good reason: two times annual salary at the time of termination for one year with an estimated present value in the amount of $1,761; and
Termination following a change in control: two times annual salary at the time of termination for two years and thereafter an amount equal to one times annual salary for the remainder of his life, with an estimated present value of $264,560.
Disability payments: $6,139,220, in disability payments, representing the present value of an annual payment of $427,530 from the Executive Long Term Disability Plan until age 65. This value does not reflect estimated annual payments of $147,000 from the Company’s Group LTD Plan or exclude other income offsets. The estimated present value of the retirement plan benefit is correspondingly reduced by $235,458 due to the benefit being payable at age 65 rather than age 62.
Outplacement assistance: involuntary termination without cause, voluntary resignation for good reason, or termination following a change in control: $35,000.
Additional benefits:
Financial planning services: involuntary termination without cause, voluntary resignation for good reason or termination following a change in control: $10,947.
Health and welfare insurance premiums:
Involuntary termination without cause or voluntary resignation for good reason: $15,121; and
Termination following a change in control: $44,616.
| | | | | | | | | | | | | | | | | | | | | | David A. Kowalski | | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability | Death Pre-retirement | Involuntary Termination Without Cause/Voluntary Resignation for Good Reason | Termination Following Change in Control | Salary | $ | — |
| | $ | — |
| | $ | — |
| | $ | 644,506 |
| (1) | $ | 1,289,012 |
| (2) | Bonus | $ | — |
| | $ | 515,605 |
| (3) | $ | 515,605 |
| (3) | $ | 690,911 |
| (4) | $ | 1,381,822 |
| (5) | Value of Accelerated Equity (6) | $ | 2,898,077 |
| (6.a) | $ | 2,898,077 |
| (6.c) | $ | 2,898,077 |
| (6.c) | $ | 2,898,077 |
| (6.d) | $ | 2,898,077 |
| (6.c) | | $ | — |
| (6.b) | | | | | | | | | Retirement Plans (7) | $ | 300,544 |
| (7.a) | $ | — |
| | $ | 300,544 |
| (7.c) | $ | 1,310,127 |
| (7.d) | $ | 2,484,941 |
| (7.e) | | $ | 300,544 |
| (7.b) | | | | | | | | | All Other Compensation (8) | $ | 686,789 |
| (a) | $ | 2,517,403 |
| | $ | 2,481,025 |
| | $ | 723,165 |
| | $ | 738,195 |
| | | $ | 61,972 |
| (b) | | | | | | | | | TOTAL | $ | 3,885,410 |
| (a) | $ | 5,931,085 |
| | $ | 6,195,251 |
| | $ | 6,266,786 |
| | $ | 8,792,047 |
| | | $ | 362,516 |
| (b) | | | | | | | | |
| | (1) | One times annual salary at time of termination. |
| | (2) | Two times the greater of annual salary immediately prior to change in control or at time of termination. |
| | (3) | The greater of the prorated amount of actual bonus paid for the prior year or the target bonus for the termination year. |
| | (4) | One times the greater of actual bonus for prior year or average for the three prior years, plus the amount, if any, by which the bonus that would have been paid for the bonus plan year in which such termination occurs, based on the performance level actually attained, exceeds actual bonus for the prior year or the average for the three prior years. |
| | (5) | Two times the greatest of the highest earned bonus amount for three years prior to termination year, the target for the termination year or the earned bonus for the termination year. |
| | (6) | Mr. Kowalski is retirement eligible. |
6.a—voluntary resignation: value of vesting in all unvested restricted stock and stock options which include retirement eligibility at target. There are no in-the-money stock options.
6.b—involuntary termination for cause: unvested restricted stock and stock options forfeited.
6.c—disability, death or termination following a change in control: value of vesting in all unvested restricted stock and stock options at target. There are no in-the-money stock options.
6.d—involuntary termination without cause or voluntary resignation for good reason: value of vesting in all unvested restricted stock and stock options at target. The value assumes that all applicable performance vesting requirements will be met. There are no in-the-money stock options.
| | (7) | Estimated increase in pension value from the total amount set forth in the Pension Benefits table, on p. 38, resulting from: |
7.a—the benefit becoming payable immediately, rather than at age 62.
7.b—the benefit becoming payable immediately, rather than at age 62.
7.c—the benefit being paid in a lump sum immediately, rather than being paid in the form elected at age 62.
7.d—credit for one additional year of age and service, and the benefit becoming payable immediately, rather than at age 62.
7.e—credit for two additional years of age and service, and the benefit being immediately payable as a lump sum, rather than being paid in the form elected at age 62, and the application of an alternative definition of final average pay.
Accrued vacation time: Salary for five weeks of accrued vacation time, for each termination scenario, in the amount of $61,972.
Life insurance: Values for life insurance in an amount equal to, in the case of:
Voluntary resignation (retirement): an amount equal to one times annual salary for the remainder of his life with an estimated present value of $487,026;
Disability: $532,854;
Death: life insurance proceeds of $2,419,053, which is equal to the sum of two times annual salary (less $50,000 in insurance from the Company’s group life insurance plan maintained for other SPX FLOW employees) in the amount of $1,239,012 and gross-ups for federal and other tax liabilities in the amount of $1,180,041;
Involuntary termination without cause or voluntary resignation for good reason: two times annual salary at the time of termination for one year, and thereafter an amount equal to the annual salary for the remainder of his life with an estimated present value in the amount of $496,325; and
Termination following a change in control: two times annual salary at the time of termination for two years, and thereafter an amount equal to one times annual salary for the remainder of his life, with an estimated present value in the amount of $505,802.
Disability payments: $1,922,577 in disability payments, representing the present value of an annual payment of $456,066 from the Executive Long Term Disability Plan until age 65. This value does not reflect estimated annual payments of $147,000 from the Company’s Group LTD Plan or exclude other income offsets. The value of the retirement plan benefits is correspondingly reduced by $712,269 due to the benefit being payable at age 65 rather than age 62.
Outplacement assistance: involuntary termination without cause, voluntary resignation for good reason, or termination following a change in control: $35,000.
Post-retirement health:
Voluntary resignation (retirement): $137,791;
Involuntary termination without cause or voluntary resignation for good reason: $114,747; and
Termination following a change in control: $90,805.
Additional benefits:
Health and welfare insurance premiums:
Involuntary termination without cause or voluntary resignation for good reason: $15,121; and
Termination following a change in control: $44,616.
| | | | | | | | | | | | | | | | | | | Dwight A.K. Gibson | | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability | Death Pre-retirement | Involuntary Termination Without Cause/Voluntary Resignation for Good Reason | Termination Following Change in Control | Salary | $ | — |
| $ | — |
| $ | — |
| | $ | — |
| $ | 943,037 |
| (1) | Bonus | $ | — |
| $ | — |
| $ | 330,063 |
| (2) | $ | — |
| $ | 884,568 |
| (3) | Value of Accelerated Equity (4) | $ | — |
| $ | 1,739,474 |
| $ | 1,739,474 |
| | $ | — |
| $ | 1,739,474 |
| | Retirement Plans | $ | — |
| $ | — |
| $ | — |
| | $ | — |
| $ | — |
| | All Other Compensation (5) | $ | 45,338 |
| $ | 45,338 |
| $ | 1,802,869 |
| | $ | 45,338 |
| $ | 324,279 |
| | TOTAL | $ | 45,338 |
| $ | 1,784,812 |
| $ | 3,872,406 |
| | $ | 45,338 |
| $ | 3,891,358 |
| |
| | (1) | Two times the greater of annual salary immediately prior to change in control or at time of termination. |
| | (2) | The prorated amount of the target bonus for the termination year. |
| | (3) | Two times the greatest of the highest earned bonus amount for three years prior to termination year, the target for the termination year or the earned bonus for the termination year. |
| | (4) | Value of vesting in all unvested restricted stock at target. |
Accrued vacation time: Salary for five weeks of accrued vacation time, for each termination scenario, in the amount of $45,338.
Life insurance: Values for life insurance in an amount equal to, in the case of:
Death: life insurance proceeds of $1,757,531, which is equal to the sum of two times annual salary (less $50,000 in insurance from the Company’s group life insurance plan maintained for other SPX FLOW employees) in the amount of $893,037 and gross ups for federal and other tax liabilities in the amount of $864,494; and
Termination following a change in control: two times annual salary at the time of termination for two years and thereafter an amount equal to one times annual salary for the remainder of his life, with an estimated present value of $199,325.
Outplacement assistance: termination following a change in control: $35,000.
Additional benefits: health and welfare insurance premiums: termination following a change in control: $44,616.
| | | | | | | | | | | | | | | | | | | Jose Larios | | (a) Voluntary Resignation or (b) Involuntary Termination For Cause | Disability | Death Pre-retirement | Involuntary Termination Without Cause/Voluntary Resignation for Good Reason | Termination Following Change in Control | Salary | $ | — |
| $ | — |
| $ | — |
| | $ | — |
| $ | 840,000 |
| (1) | Bonus | $ | — |
| $ | — |
| $ | 294,000 |
| (2) | $ | — |
| $ | 787,920 |
| (3) | Value of Accelerated Equity (4) | $ | — |
| $ | 1,376,145 |
| $ | 1,376,145 |
| | $ | — |
| $ | 1,376,145 |
| | Retirement Plans | $ | — |
| $ | — |
| $ | — |
| | $ | — |
| $ | — |
| | All Other Compensation (5) | $ | 40,385 |
| $ | 40,385 |
| $ | 1,600,905 |
| | $ | 40,385 |
| $ | 303,325 |
| | TOTAL | $ | 40,385 |
| $ | 1,416,530 |
| $ | 3,271,050 |
| | $ | 40,385 |
| $ | 3,307,390 |
| |
| | (1) | Two times the greater of annual salary immediately prior to change in control or at time of termination. |
| | (2) | The prorated amount of the target bonus for the termination year. |
| | (3) | Two times the greatest of the highest earned bonus amount for three years prior to termination year, the target for the termination year or the earned bonus for the termination year. |
Accrued vacation time: Salary for five weeks of accrued vacation time, for each termination scenario, in the amount of $40,385.
Life insurance: Values for life insurance in an amount equal to, in the case of:
Death: life insurance proceeds of $1,560,520, which is equal to the sum of two times annual salary (less $50,000 in insurance from the Company’s group life insurance plan maintained for other SPX FLOW employees) in the amount of $790,000 and gross ups for federal and other tax liabilities in the amount of $770,520; and
Termination following a change in control: two times annual salary at the time of termination for two years and thereafter an amount equal to one times annual salary for the remainder of his life, with an estimated present value of $183,324.
Outplacement assistance: termination following a change in control: $35,000.
Additional benefits: health and welfare insurance premiums: termination following a change in control: $44,616.
ASSUMPTIONS AND EXPLANATIONS OF NUMBERS IN TABLES The Compensation Committee retains discretion to provide, and in the past has provided, additional benefits to executive officers upon termination or resignation if it determines the circumstances so warrant. Confidentiality, Non-Competition and Non-Solicitation Agreements As a condition to each executive officer’s entitlement to receive the base salary amounts and equity award acceleration referenced in the applicable tables, the executive is required to execute a waiver of claims against us and shall be bound by the terms of a non-competition and non-solicitation agreement, which prohibits the executive from soliciting or diverting any customer, potential customer, employee or potential employee or competing with any of our businesses in which the executive has been employed for a period of two yearsone year from the date of termination. Incremental Pension AmountsKey Manager Life Insurance Benefits
We report theBecause portions of these benefits are self-insured, we calculate and maintain liabilities and associated expense for the pension plansthese programs under FASB Accounting Standards Codification Topic 715, “Compensation/Retirement Benefits” (“Topic 715”).appropriate accounting standards. Generally, the assumptions and methods used for financial reporting were also used in determining the values in this disclosure (discount rates, mortality, forms of payment, etc.).
Post-Retirement Health Care and Key Manager Life Insurance Benefits
Because these benefits are self-insured, we calculate and maintain liabilities for these programs under appropriate accounting standards. We report the liabilities and associated expense for the post-retirement plans under Topic 715. Generally, the assumptions and methods used for financial reporting were also used in determining the values in this disclosure (discount rates, mortality, healthcare inflation, etc.).
Payments upon a Termination in Connection with a Change in Control NEOs will be entitled to certain benefits as described in the applicable tables if they are terminated within, for Messrs.Mr. Michael, and Kowalski, 36 months, and for Messrs. Smeltser,Easley, Gibson, Jeffers and Larios,Eamigh, 24 months, following a change in control for a reason other than death, disability, retirement or termination for cause or if employment is terminated by the named executive officer other than for good reason.
For purposes of the change-in-control severance agreements, a change in control included the acquisition by any person (or group of related persons) of 25% or more of the voting power of our securities (including in an exchange or tender offer), or (1) liquidation TABLE OF CONTENTS Executive Compensation
of SPX FLOW, (2) the sale of all or substantially all of our assets, (3) a merger or consolidation (except where our stockholders prior to the time of merger or consolidation continue to hold at least 75% of the voting power of the new or surviving entity), or (4) a change in the majority of our Board of Directors within a two-year period without the approval of the incumbent Board. The column setting forth payments upon a change in control assumes that the named executive officer’s employment was terminated following the change in control. RISK ANALYSIS The Compensation Committee regularly monitors and reviews our compensation programs and risk management as an integral part of its program design and review. The primary incentive compensation arrangements, one or both of which apply to the majority of personnel worldwide, are the Stock Compensation Plan and the SPX FLOW bonus plans.EIP. These plans cover the employees we believe would be most likely to be in a position to create a material risk to our company. The Compensation Committee does not believe our compensation policies and practices give rise to risks that are reasonably likely to have a material adverse effect on our company. In reaching this conclusion, we considered the following factors: Our compensation program is designed to provide a mix of both fixed and variable incentive compensation. The variable (cash incentive and performance-based equity awards) portions of compensation are designed to reward both annual performance (under both programs) and longer-term performance (under performance-based equity awards). We believe this design mitigates incentives for short-term risk-taking that could be detrimental to our company’s long-term best interests. A significant percentage of our senior executives’ incentive compensation is based on the performance of our total company. This is designed to mitigate incentives to pursue strategies that might maximize the performance of a single operating division to the detriment of our company as a whole. Our senior executives are subject to stock ownership guidelines, which we believe incentivize our executives to consider the long-term interests of our company and our stockholders and discourage excessive risk-taking that could negatively impact our stock price. Our incentive compensation program is designed with payout curves that are relatively smooth and seek to minimize steep payout “cliffs” that might encourage short-term business decisions in order to meet a payout threshold. A qualitative risk assessment concluded that our plans do not have an unreasonable ratio between fixed and variable compensation. The bonus plans are capped at specified maximum percentages, which limit incentives to undertake excessive risk. The executive and management bonus plans also have forfeiture provisions relating to any fraud, manipulation or negligence in connection with computation of performance measures or payments under the plans. All of the incentive plans are determined primarily by a formula, rather than manager discretion. In addition to the structure of our plans, we mitigate any risk that may be generated by compensation plans through management oversight, compliance training and enforcement, and audits. No single SPX FLOW business unit carries a significant portion of the Company’s risk profile, or has compensation structured significantly differently than other units within the Company, regardless of relative business unit profitability or compensation expense as a percentage of revenues. The Compensation Committee does not believe that any of the design features of our compensation arrangements pose a significant concern. CEO PAY RATIO Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has adopted a rule requiring annual disclosure of the ratio (the “CEO Pay Ratio”) of the total annual compensation of our Chief Executive Officer, Mr. Michael, to the total annual compensation of the employee of our company and its subsidiaries who is determined to have the median compensation of, generally, all such employees (excluding our Chief Executive Officer). The rule also requires annual disclosure of this median employee’s total compensation for the year and our Chief Executive Officer’s total compensation for the year. This rule first became applicable with respect to this proxy statement for the Annual Meeting. Our CEO Pay Ratio has been calculated in compliance with the requirements set forth in Item 402(u) of Regulation S-K of the SEC.
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WeFor the 2020 calculation, we identified the medianmedian-compensated employee using our global employee population as of October 31, 2017.2020. This included all global full-time, part-time, temporary and seasonal employees who were active on that date. Although we havehad approximately 7,2814,800 employees in 3635 countries around the world, we did not exclude any employees from our calculation (other than, as required by the rule, our Chief Executive Officer).
As permitted by the rule, weWe used a consistently applied compensation measure (“CACM”) across our global employee population to determine the median employee for the purpose of calculating the CEO Pay Ratio.median-compensated employee. The CACM that we used was base pay plus bonus. For our employees who are paid a salary, base pay was equal to their annual salary and allowances paid in 2016.from November 1, 2019 to October 31, 2020 (the “Calculation Period”). For our employees who are paid an hourly rate, base pay was equal to total annual hourly wages, including overtime and allowances, paid in 2016.during the Calculation Period. We did not perform any full-time equivalency adjustments for part-time workers and we did not apply a cost-of-living adjustment. We did, however, annualize pay for full-time employees who were hired after JanuaryNovember 1, 20162019 and remained actively employed on DecemberOctober 31, 2016.2020. For both salaried and hourly workers, bonus referred to bonus payments received in 2016during the Calculation Period in connection with applicable annual cash incentive plans. The majority of our employees received a bonus payment in 2016.during the Calculation Period.
SinceUsing the median-compensated employee that we chose to apply a CACM of base pay plus bonus for 2016 to our employee population as of October 31, 2017, we then had to consider those employees who joined the Company during 2017. For each of these employees, we selected another employee from the same working location, with the same or similar job description, who was employed by the Company as of December 31, 2016, and mapped the compensation of the existing similar employee to the new employee. The Company hired 416 new workers in 2017 for whom this calculation was applied. We believe that this methodology provides an accurate depiction of the earnings of our global employee population for the purposes of identifying the median employee.
Once the median employee was identified, we calculated the medianmedian-compensated employee’s total compensation for 20172020 in the same manner as reported for the CEO in the Summary Compensation Table in this proxy statement.Proxy Statement. The total compensation for the medianmedian-compensated employee was $61,851$56,246 using the Summary Compensation Table methodology. Our Chief Executive Officer’s total compensation was $5,580,964$5,434,632 using the same methodology during the same period. Accordingly, our CEO Pay Ratio for 20172020 is 90:96.6:1.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. Because the SEC rules for identifying the median-compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the amount of compensation of the median-compensated employee and the pay ratio reported by other companies may not be comparable to our estimates reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. TABLE OF CONTENTS Section 16(a) of the Securities Exchange Act of 1934 requires that SPX FLOW’s officers, directors and 10% stockholders file reports of ownership and changes of ownership of SPX FLOW common stock with the SEC and the NYSE. Based on a review of copies of these reports filed with the SEC, we believe that all filing requirements in 2020 were met. TABLE OF CONTENTS Equity Compensation Plan Information The following table provides information as of December 31, 20172020 about SPX FLOW common stock that may be issued upon the exercise of options and rights under our Stock Compensation Plan. | | | | | | | | | | | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) (2) |
| Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | Equity compensation plans approved by stockholders | 1,270,109 |
| (1) |
| $61.29 |
| 1,355,003 |
| (3) | Equity compensation plans not approved by stockholders | — |
| | N/A |
| — |
| | Total | 1,270,109 |
| (1) |
| $61.29 |
| 1,355,003 |
| (3) |
| Equity compensation plans approved by stockholders | | | 1,392,053 (1) | | | $61.29 | | | 2,289,997 (3) | | | Equity compensation plans not approved by stockholders | | | — | | | N/A | | | — | | | Total | | | 1,392,053 (1) | | | $61.29 | | | 2,289,997 (3) | |
(1)
| Comprises 342,208301,490 shares issuable upon the exercise of outstanding options, 787,0621,055,462 shares issuable pursuant to restricted stock units, based on the maximum number of shares issuable under restricted stock units that are subject to performance conditions, and 140,83935,101 shares of restricted stock that would be issued if all unvested External Metricperformance-based awards achieved maximum performance against targets. |
| | (2)
| Excludes restricted stock units. |
| | (3)
| All these shares were available for issuance under the Stock Compensation Plan. Unvested outstanding share awards totaling 596,380120,481 would be available for future issuance were they not to vest, pursuant to the terms of the plan. Shares and optionsOptions issued in connection with the spin-off from SPX Corporation would not be available for future issuance were they not to vest, pursuant to the terms of the plan. |
TABLE OF CONTENTS Ownership of Common Stock DIRECTORS AND OFFICERS The following table shows how much of our common stock our directors and executive officers listed in the Summary Compensation Table, and all directors and executive officers as a group beneficially owned as of March 15, 2021. Beneficial ownership is a technical term broadly defined by the SEC to mean more than ownership in the usual sense. In general, beneficial ownership includes any shares a director or executive officer can vote or transfer and stock options or other rights to receive common stock, such as restricted stock units, that are exercisable currently or become exercisable or vest within 60 days. The number of our shares beneficially owned by each of the named executive officers and by all directors and executive officers as a group includes shares held in the SPX FLOW Retirement Savings Plan. Except as otherwise noted, the stockholders named in this table have sole voting and investment power for all shares shown as beneficially owned by them. The percent of SPX FLOW common stock owned is based on 42,542,498 shares outstanding as of March 15, 2021. | Majdi B. Abulaban | | | 10,815 | | | — | | | * | | | Anne K. Altman | | | 20,073 | | | — | | | * | | | Patrick D. Campbell | | | 21,330 | | | — | | | * | | | Kevin Eamigh | | | 37,171 | | | — | | | * | | | Jaime M. Easley | | | 15,726 | | | — | | | * | | | Emerson U. Fullwood | | | 36,305 | | | — | | | * | | | Dwight A.K. Gibson | | | 30,945 | | | — | | | * | | | Robert F. Hull, Jr. | | | 30,694 | | | — | | | * | | | Alvin T. Jeffers | | | 8,322 | | | — | | | * | | | Marcus G. Michael | | | 193,834 | | | 15,801 | | | * | | | Jonathan M. Pratt | | | 2,076 | | | — | | | * | | | Sonya M. Roberts | | | 684 | | | — | | | * | | | Suzanne B. Rowland | | | 9,245 | | | — | | | * | | | David V. Singer | | | 21,909 | | | — | | | * | | | All directors and executive officers as a group (16 persons) | | | 451,523 | | | 15,801 | | | 1.1 | |
TABLE OF CONTENTS Ownership of Common Stock
OTHER PRINCIPAL SPX FLOW STOCKHOLDERS Set forth in the table below is information about beneficial owners of more than five percent of the issued and outstanding shares of our common stock. The percent of class held is based on 42,542,498 shares of our common stock outstanding on March 15, 2021. | BlackRock, Inc (1)
55 East 52nd Street
New York, NY 10055 | | | 6,433,117 | | | 15.1 | | | Vanguard Group, Inc. et al. (2)
100 Vanguard Blvd.
Malvern, PA 19355 | | | 4,250,662 | | | 10.0 | | | Wellington Management Group LLP et al. (3)
c/o Wellington Management Company LLP
280 Congress Street
Boston, MA 02210 | | | 4,667,691 | | | 11.0 | | | APG Asset Management US Inc. et al. (4) | | | 4,861,480 | | | 11.4 | |
(1)
| Based on information provided in a Schedule 13G/A filed with the SEC on January 26, 2021 by BlackRock, Inc. on behalf of itself and its subsidiaries, BlackRock Life 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 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, and BlackRock Fund Managers Ltd (collectively, “BlackRock”), reporting beneficial ownership as of December 31, 2020. BlackRock reports having sole voting power with respect to 6,353,431 of the shares and sole dispositive power with respect to all of the shares and that BlackRock Fund Advisors beneficially owns five percent or greater of our outstanding shares of common stock. |
(2)
| Based on information provided in a Schedule 13G/A filed with the SEC on February 10, 2021 by Vanguard Group, Inc. on behalf of itself and its subsidiaries, Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Australia Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited and Vanguard Investments UK, Limited (collectively, “Vanguard”), reporting information as of December 31, 2020. Vanguard reports having shared voting power with respect to 43,784 shares, sole dispositive power with respect to 4,173,937 shares, and shared dispositive power with respect to 76,725 shares. |
(3)
| Based on information provided in a Schedule 13G/A filed with the SEC on February 4, 2021 by Wellington Management Group LLP (“Wellington Management”), Wellington Group Holdings LLP (“Wellington Holdings”), Wellington Investment Advisors Holdings LLP (“Wellington Advisors”), and Wellington Management Company LLP (“Wellington”) reporting beneficial ownership as of December 31, 2020. Such Schedule 13G/A reports that, as of December 31, 2020, each of Wellington Management, Wellington Holdings and Wellington Advisors shared the power to vote 4,407,794 shares and shared the power to dispose of 4,667,691 shares and Wellington shared the power to vote 4,194,511 shares and the power to dispose of 4,370,713 shares. Such Schedule 13G/A further reports that such shares are owned of record by clients of specified investment advisors that are directly or indirectly owned by Wellington Management, that such clients have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, shares of our common stock and that no such client is known to have such right or power with respect to more than five percent of the outstanding shares of our common stock. |
(4)
| Based on information provided in a Schedule 13G/A filed with the SEC on March 3, 2021 by APG Asset Management US Inc., APG Asset Management, N.V. (“APG NL”), APG Groep, N.V. (“APG Groep”), and Stichting Pensioenfonds ABP reporting beneficial ownership as of February 26, 2021. Such Schedule 13G reports that, as of February 26, 2021, each such person had shared voting power with respect to, and shared power to dispose of, all such shares. Such Schedule 13G/A also reported that APG NL is wholly-owned by APG Groep and is the investment manager with respect to the shares our our common stock reported as being beneficially owned, that pursuant to an investment management agreement, APG NL has delegated its investment and voting power with respect to such securities to APG Asset Management US, Inc., which is its wholly-owned subsidiary, and that Stichting Pensioenfonds ABP is the majority owner of APG Groep. Based on such Schedule 13G/A, the address of PG Asset Management US Inc. is 666 3rd Ave., 2nd Floor, New York, NY 10017, the address of APG NL is Gustav Mahlerplein 3, 1082 MS Amsterdam, Netherlands, the address of APG Groep is Oude Lindestraat 70, Postbus 6401, Heerlen, Netherlands, and the address of Stichting Pensioenfonds ABP is PO Box 4806, 6401 JL Heerlen, Netherlands. |
TABLE OF CONTENTS
Proposal No. 2 — Advisory Vote to Approve the Compensation of our Named Executive Officers We are asking our stockholders to cast an advisory vote at our Annual Meeting to approve the compensation of our named executive officers, as disclosed in this proxy statement.Proxy Statement. Though the vote is non-binding, the Compensation Committee and the Board of Directors value your opinions and will consider the outcome of the vote in establishing our compensation philosophy and making future compensation decisions. WHY YOU SHOULD APPROVE OUR EXECUTIVE COMPENSATION PROGRAM Our compensation programs are metric-driven and designed to align the interests of our NEOs with the interests of our long-term stockholders. Our Compensation Committee rewards performance that meets or exceeds their goals, builds stockholder value and compares favorably to the Company’s peers. In line with our pay-for-performance philosophy, the total compensation received by our NEOs will vary based on corporate performance measured against annual and long-term targets. Our annual incentive plan focuses on Orders,Revenue, Adjusted Free Cash FlowEBITDA Percentage, Adjusted Working Capital Percentage and Adjusted EBITDA,Strategic Objectives, while our long-term incentive plan equally measures two criteriaROIC and rTSR over a three-year period; (i) three-year average Return On Invested Capital on a pre-tax, adjusted basis (“ROIC”) and (ii) relative Total Shareholder Return measured against the S&P MidCap 400 Capital Goods Industry Group (“rTSR”).period. The total compensation of our NEOs is therefore comprised of base salary, annual incentive compensation, long-term incentive compensation and reasonable perquisites. In 2017,2020, our CEO was reasonably compensated in comparison to our peer companies and considering the Company’s strong financial and operational performance. His base salary increased modestly year-over-year and is aligned with the peer group median. The Company exceeded the annual incentive plan targets and the resulting bonus reflected the benefit of performance in driving returns for our stockholders. The majority of our CEO'sCEO’s pay for 20172020 was in the form of long-term incentive plan awards that are subject to multi-year vesting criteria aligned with creating stockholder value. We remained true to our pay-for-performance philosophy in 20172020 and will continue to do so in the future with your support.
| | | | Proposal No. 2 — Advisory Vote to Approve the Compensation of Our Named Executive Officers |
We are requesting your non-binding vote on the following resolution: “Resolved, that the compensation of SPX FLOW’s named executive officers as described in “Compensation Discussion and Analysis” beginning on p. 20,page 16, and in the Summary Compensation Table for 20172020 and subsequent tables and accompanying text beginning on p. 32page 27 of the proxy statement,Proxy Statement, is approved.” | | YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE ADVISORY VOTE TO APPROVE THE COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS |
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Proposal No. 3 — ApprovalThe Audit Committee of the Amendment to Our CertificateSPX FLOW Board of Incorporation to Provide forDirectors (the “Committee”) comprises nine directors. Each of the Annual ElectionCommittee members is independent, as defined under SEC rules and the listing standards of the NYSE. The Committee reviews SPX FLOW’s financial reporting process on behalf of the Board of Directors and is responsible for ensuring the integrity of the financial information reported by SPX FLOW.
Management is responsible for SPX FLOW’s financial reporting process, including its systems of internal and disclosure controls, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States (“US GAAP”). SPX FLOW’s independent registered public accountants, who are appointed by the Committee, are responsible for auditing those financial statements. Our responsibility is to monitor and review these processes. We have relied, without independent verification, on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with US GAAP and on the representations of the independent registered public accountants included in their report on SPX FLOW’s financial statements. In this context, we have met and held discussions with management and Deloitte & Touche LLP, SPX FLOW’s independent registered public accountants. Management represented to us that SPX FLOW’s consolidated financial statements were prepared in accordance with US GAAP, and we have reviewed and discussed the consolidated financial statements with management and the independent registered public accountants. We discussed with the independent registered public accountants, the matters required to be discussed by the Standards of the Public Company Accounting Oversight Board (“PCAOB”) for communication with audit committees, under which Deloitte & Touche LLP must provide us with additional information regarding the scope and results of Directors has voted unanimouslyits audit of SPX FLOW’s consolidated financial statements. In addition, we have discussed with Deloitte & Touche LLP its independence from SPX FLOW and SPX FLOW management, including matters in the written disclosures required by PCAOB Rule 3526, Communication with Audit Committees Concerning Independence. We discussed with SPX FLOW’s internal auditors and independent registered public accountants the overall scope and plans for their respective audits. We met with the independent registered public accountants, with and without management present, to approve,discuss the results of their audits, and hasthe overall quality of SPX FLOW’s financial reporting. In reliance on the reviews and discussions referred to above, we recommended that our stockholders approve, an amendment to our Certificate of Incorporation to eliminate the classification of the Board of Directors into classes serving staggered, three-year terms and to providethat the audited consolidated financial statements be included in SPX FLOW’s Annual Report on Form 10-K for the annual election of the Board of Directors. Article SEVENTH of our Certificate of Incorporation currently requires that the directors are classified, with respect to the time they hold office, into three classes of approximately equal number, and serving a term of three years. The election of each class is staggered so that only one of the classes stands for re-election at each annual meeting of stockholders. After careful consideration of the issue, the Board of Directors has determined that it would be in the best interests of the Company and our stockholders to amend Article SEVENTH of our Certificate of Incorporation to eliminate classification of the Board and to provide for the annual election of the Board of Directors. Providing for the annual election of the entire Board of Directors enhances accountability of the Board to our stockholders by providing stockholders with a means of evaluating each director each year.
Given the recency of our Company becoming an independent, public company following the spin-off transaction completed in 2015, the proposed amendment provides for a phased transition from the current classified Board of Directors. If the proposed amendment is approved, then each director will complete the term for which he or she has already been elected by the stockholders and the class of directors up for election at the Annual Meeting will be the last class of directors elected for three-year terms. At the 2019 annual meeting of stockholders, the successors of the class of directors whose terms expire at that meeting would be elected to hold office for a term expiring at the 2021 annual meeting of stockholders. Commencingyear ended December 31, 2020 as filed with the 2020 annual meeting of stockholders, directors then up for election at an annual meeting would be elected for one-year terms expiring at the next succeeding annual meeting. Accordingly, commencing with the 2021 annual meeting of stockholders, directors would no longer be divided into classes, with the terms of all directors, including directors elected at the Annual Meeting and at the 2019 and the 2020 annual meetings of stockholders, expiring at the 2021 annual meeting.SEC.
Article SEVENTH of our Certificate of Incorporation currently provides that directors may be removed by the stockholders only for cause. Under Delaware law, such a provision is effective only if the Board of Directors is classified. Accordingly, the proposed amendment includes a conforming change to this provision to provide that the limitation that directors may be removed by the stockholders “only for cause” shall apply only for so long as the Board of Directors is divided into classes. Accordingly, if the amendment is approved by the stockholders this limitation would cease to apply commencing with the 2021 annual meeting of stockholders. As discussed below in “Proposal No. 4 - Approval of the Amendment to Our Certificate of Incorporation to Eliminate Supermajority Stockholder Voting Requirements,” the Board of Directors is also seeking approval of an amendment to this provision of our Certificate of Incorporation that would eliminate the supermajority stockholder voting requirement for the removal of directors.Audit Committee:
The proposed amendment also corrects a typographical error in the first paragraph of Article SEVENTH in the spelling of the word “initial.”Patrick D. Campbell, Chairman
Our Certificate of Incorporation requires that the affirmative vote of the holders of at least 80% of the voting power of all outstanding shares entitled to vote generally in the election of directors is required to approve this amendment to our Certificate of Incorporation.Majdi B. Abulaban
The text of this proposed amendment to our Certificate of Incorporation is attached as Appendix A to this proxy statement and is marked to show the proposed deletions and insertions necessary to effectuate this change. If this amendment is approved by the stockholders, the Company intends to effect this amendment even if the stockholders fail to approve the proposed amendment to our Certificate of Incorporation described below (see “Proposal No. 4 - Approval of the Amendment to Our Certificate of Incorporation to Eliminate Supermajority Stockholder Voting Requirements”). If it is approved by the stockholders, this amendment would become effective after the Company files a certificate of amendment with the Secretary of State of Delaware, which would occur promptly after the Annual Meeting.Anne K. Altman
Emerson U. Fullwood
Robert F. Hull, Jr.
Jonathan M. Pratt
Sonya M. Roberts
Suzanne B. Rowland
David V. Singer | 2021 Proxy Statement | YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR AMENDMENT OF OUR
CERTIFICATE OF INCORPORATION TO PROVIDE FOR THE ANNUAL ELECTION OF THE BOARD OF DIRECTORS
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Proposal No. 4 — Approval of the Amendment to Our Certificate of Incorporation to Eliminate Supermajority Stockholder Voting RequirementsOur Board of Directors has voted unanimously to approve, and has recommended that our stockholders approve, an amendment to our Certificate of Incorporation to eliminate supermajority stockholder voting requirements. Our Certificate of Incorporation currently requires an affirmative vote of the holders of 80% of the voting power of the then outstanding shares of stock entitled to vote in the election of directors for certain matters. Under our Certificate of Incorporation, this supermajority voting requirement standard applies to the following stockholder actions:
Stockholder removal of a director;
Stockholder amendment to Sections 3 and 7 of Article II and Sections 1, 2 and 3 of Article III of the Company’s By-Laws, which provide, among other things:
| | ◦ | that stockholders may take action only at an annual or special meeting and not by written consent in lieu of a meeting (Article II, Section 3); |
| | ◦ | that holders of not less than one-third of the outstanding shares entitled to vote constitutes a quorum for meeting of the stockholders under the By-Laws and that, unless a statute or a provision of our Certificate of Incorporation of the Company’s By-Laws otherwise requires a different vote, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy and entitled to vote is required to approve a matter (Article II, Section 7); |
| | ◦ | for the number of directors to be fixed by the Board of Directors, for the Board of Directors to be classified into classes serving staggered three-year terms, for directors to be elected by a majority of the votes cast by stockholders with respect to the election of the director (other than in a contested election), procedures for stockholder nomination of directors for election at an annual meeting (other than nominations qualifying for inclusion in the Company’s proxy materials (Article III, Section 1)); |
| | ◦ | that vacancies on the Board of Directors may be filled solely by a majority vote of the remaining directors then in office, that any director elected to fill a vacancy is to be submitted to a stockholder vote at the next annual meeting and that any decrease in the number of directors constituting the Board of Directors will not shorten the term of any incumbent director (Article III, Section 2); |
| | ◦ | for stockholder removal of a director only by a supermajority vote (Article III, Section 3); |
Stockholder approval of any amendment to our Certificate of Incorporation that alters, amends, adopts any provision inconsistent with or repeals Article SEVENTH of our Certificate of Incorporation, which provides, among other things:
| | ◦ | for the number of directors to be fixed by the Board of Directors, for the Board of Directors to be classified into classes serving staggered three-year terms, for directors to be elected by a majority of the votes cast by stockholders with respect to the election of the director (other than in a contested election); |
| | ◦ | that vacancies on the Board of Directors may be filled solely by a majority vote of the remaining directors then in office, that any director elected to fill a vacancy is to be submitted to a stockholder vote at the next annual meeting and that any decrease in the number of directors constituting the Board of Directors will not shorten the term of any incumbent director; |
| | ◦ | for stockholder removal of a director only for cause and only by a supermajority vote; |
| | ◦ | for the authority of the Board of Directors, including the authority to amend the Company’s By-Laws; |
| | ◦ | for the payment of reasonable fees, salaries and other compensation of the directors; |
Stockholder approval of any amendment to our Certificate of Incorporation that alters, amends, adopts any provision inconsistent with or repeals Article EIGHTH of our Certificate of Incorporation, which provides, among other things, that stockholders may take action only at an annual or special meeting and not by written consent in lieu of a meeting and that special meetings of the stockholders may be called only by the Chairman on his or her own initiative, by the President on his or her own initiative or by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors.
These supermajority voting provisions are also replicated in related provisions of the Company’s By-Laws. If this proposed amendment to our Certificate of Incorporation is approved by the stockholders, then the Board of Directors intends to effect corresponding amendments to the By-Laws.
Our By-Laws provide that unless a statute or a provision of our Certificate of Incorporation of the Company’s By-Laws otherwise requires a different vote, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy and entitled to
| | | | Proposal No. 4 — Approval of the Amendment to Our Certificate of Incorporation to Eliminate Supermajority Stockholder Voting Requirements |
vote is required to approve a matter. Accordingly, if this proposed amendment is approved, once the amendment is effective and conforming changes are made to our By-Laws, in any subsequent vote to approve any of the matters described above the stockholders will be deemed to have approved the matter if the holders of a majority of the stock having voting power present in person or represented by proxy and entitled to vote cast votes to approve a matter.
The Board of Directors has carefully considered the proposed amendment to eliminate the supermajority stockholder voting requirements in our Certificate of Incorporation. These provisions were included in our Certificate of Incorporation in connection with of the Company’s separation from our former parent company, SPX Corporation. As the Company has now successfully navigated this initial period as an independent, publicly-traded company and consistent with the feedback the Company has received from institutional stockholders, the Board of Directors believes it is now appropriate to modify these supermajority stockholder voting requirements.
Our Certificate of Incorporation requires that the affirmative vote of the holders of at least 80% of the voting power of all outstanding shares entitled to vote generally in the election of directors is required to approve this amendment to our Certificate of Incorporation.
The text of this proposed amendment to our Certificate of Incorporation is attached as Appendix B to this proxy statement and is marked to show the proposed deletions and insertions necessary to effectuate this change. If this amendment is approved by the stockholders, the Company intends to effect this amendment even if the stockholders fail to approve the proposed amendment to our Certificate of Incorporation described above (see “Proposal No. 3 - Approval of the Amendment to Our Certificate of Incorporation to Provide for the Annual Election of the Board of Directors”). If it is approved by the stockholders, this amendment would become effective after the Company files a certificate of amendment with the Secretary of State of Delaware, which would occur promptly after the Annual Meeting.
| | YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO ELIMINATE SUPERMAJORITY STOCKHOLDER VOTING REQUIREMENTS |
Proposal No. 5 — Ratification of the Appointment of Independent Public Accountants
Deloitte & Touche LLP (“Deloitte & Touche”) has been our independent public accountants since our spin-off from SPX Corporation in September 2015. The Audit Committee has approved the engagement of Deloitte & Touche to perform the audits of the financial statements and internal control over financial reporting included in SPX FLOW’s Annual Report on Form 10-K for the fiscal year ending December 31, 2018.2021. Representatives of Deloitte & Touche will be present at the Annual Meeting and will have the opportunity to make a statement if they so desire and to respond to appropriate questions. During fiscal years 20172020 and 2016,2019, we engaged Deloitte & Touche to perform services in the following categories and amounts: | | | | | | | | | 2017 |
| 2016 |
| Audit Fees (1) | $ | 4,235,000 |
| $ | 4,895,000 |
| Audit-Related Fees (2) | $ | 10,000 |
| $ | 17,000 |
| Tax Fees (3) | $ | 1,324,000 |
| $ | 1,385,000 |
| All Other Fees | N/A |
| N/A |
|
| Audit Fees(1) | | | 2,772,000 | | | 4,249,000 | | | Audit-Related Fees(2) | | | 25,000 | | | — | | | Tax Fees(3) | | | 982,000 | | | 1,165,000 | | | All Other Fees | | | N/A | | | N/A | |
| | (1)
| Fees for audit services billed or expected to be billed relate to (i) audit of our annual financial statements, (ii) review of our quarterly financial statements, (iii) statutory and regulatory audits and (iv) consents and other services related to SEC matters. |
| | (2)
| Fees for audit-related services include attest or audit services that are not required. |
| | (3)
| Fees for tax services principally relate to tax compliance and preparation, including the preparation of original and amended tax returns, claims for refunds, and tax payment planning. We also incurred fees for tax consulting and advisory services and services related to transfer pricing. |
Our Audit Committee has adopted a policy that requires all audit and non-audit services performed by Deloitte & Touche be pre-approved. The Audit Committee annually approves the fees and expenses for audit services performed by Deloitte & Touche, as well as for any regularly recurring non-audit services of the type covered by our annual engagement of Deloitte & Touche. In addition, our pre-approval policy requires pre-approval by the chairman of the Audit Committee of fees and expenses for other non-audit services that may arise during the year. The policy requires the chairman to report any non-audit services that he has pre-approved to the Audit Committee at each regularly scheduled meeting of the Committee. In no event may Deloitte & Touche perform any of the following services for us: (1) bookkeeping or other services related to our accounting records or financial statements; (2) financial information systems design and implementation; (3) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (4) actuarial services; (5) internal audit outsourcing services; (6) management functions or human resources services; (7) broker-dealer, investment advisor or investment banking services; (8) legal services; or (9) expert services. The Audit Committee regularly considers whether specific projects or expenditures could potentially affect Deloitte & Touche’s independence. Although we are not required to do so, we believe that it is appropriate for us to request stockholder ratification of the appointment of Deloitte & Touche as our independent public accountants. If stockholders do not ratify the appointment, the Audit Committee will investigate the reasons for the stockholders’ rejection and reconsider the appointment. | | YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP
AS THE COMPANY'SCOMPANY’S INDEPENDENT PUBLIC ACCOUNTANTS FOR 20182021 |
TABLE OF CONTENTS Questions and Answers Why am I receiving these materials? We are mailing or making available these materials to you because we are soliciting your proxy to vote your shares in connection with the SPX FLOW, Inc. Annual Meeting of Stockholders, scheduled to take place on May 12, 2021, or at any adjournments or postponements of this meeting. We are first mailing or making available to stockholders this Proxy Statement, our 2020 Annual Report to Stockholders and related materials on or about April 1, 2021. Are the Proxy Materials available electronically? Our Proxy Statement and our fiscal 2020 Annual Report to Stockholders are also available on our website at www.spxflow.com. Additionally, and in accordance with SEC rules, you may access our Proxy Statement at https://materials.proxyvote.com/78469X, which does not have “cookies” that identify visitors to the site. Why did I receive a one-page Notice of Internet Availability of Proxy Materials rather than a full set of Proxy Materials? SEC rules allow companies to provide stockholders with access to Proxy Materials over the internet rather than mailing the materials to stockholders. Accordingly, to conserve natural resources and reduce costs, we are sending many of our stockholders a Notice of Internet Availability of Proxy Materials. The Notice provides instructions for accessing our Proxy Materials on the website referred to in the Notice or for requesting printed copies of the Proxy Materials. The Notice also provides instructions for requesting the delivery of the Proxy Materials for future Annual Meetings in printed form. How can I attend the Annual Meeting? You may attend the Annual Meeting if you were an SPX FLOW stockholder of record as of the close of business on March 15, 2021 or you hold a valid proxy for the Annual Meeting. You should be prepared to present photo identification for admittance. If you are a stockholder of record or hold your shares through the SPX FLOW 401(k) Plan, your name will be verified against the list of stockholders of record or plan participants on the record date prior to your being admitted to the Annual Meeting. If you are not a stockholder of record but hold shares through a broker, trustee or nominee, you should provide proof of beneficial ownership on the record date, such as a recent account statement showing your ownership, a copy of the voting instruction card provided by your broker, trustee or nominee, or other similar evidence of ownership. What protocols will be in place to protect the safety of those who attend the Annual Meeting? In response to the COVID-19 pandemic, health and safety protocols will be followed at the Annual Meeting. All seating will be appropriately spaced to ensure proper social distancing and attendees will be required to wear a mask or other acceptable face covering during the Annual Meeting. What am I voting on? We are soliciting your vote on: 1.
| Election of the nine directors named in this Proxy Statement for a one-year term; |
2.
| An advisory resolution approving the compensation of our named executive officers (sometimes referred to as “Say on Pay”); and |
3.
| Ratifying the appointment of Deloitte & Touche LLP as our independent public accountants for 2021. |
Who is entitled to vote? Stockholders at the close of business on March 15, 2021 (the record date) are entitled to vote. On that date, there were 42,542,498 shares of SPX FLOW common stock outstanding. How many votes do I have? Each share of SPX FLOW common stock that you own on the record date entitles you to one vote. TABLE OF CONTENTS Questions and Answers
Can I vote in person at the Annual Meeting? Yes. If you were a stockholder on the record date, you can vote your shares of common stock in person at the Annual Meeting. If your shares are held through a broker, trustee or nominee, you may vote your shares in person only if you have a legal proxy from the entity that holds your shares giving you the right to vote the shares. A legal proxy is a written document from your brokerage firm, trustee or bank authorizing you to vote the shares it holds for you in its name. If you attend the meeting and vote your shares by ballot, your vote at the meeting will revoke any vote you submitted previously. Even if you currently plan to attend the Annual Meeting, we recommend that you also vote by proxy as described below so that your vote will be counted if you later decide not to attend the meeting. How do I vote if I don’t attend the Annual Meeting? If your shares are held through a broker, trustee or nominee, you may vote your shares before the meeting over the internet by following the instructions on the Notice of Internet Availability of Proxy Materials or proxy card you received or, if you received a voting instruction form from your brokerage firm, trustee, bank, or other similar entity by mail, by completing, signing, and returning the form you received. You should check your voting instruction form to see if telephone or internet voting is available to you. If your shares are held in your name, you may vote your shares before the meeting over the internet by following the instructions on the Notice of Internet Availability of Proxy Materials or proxy card you received for that account. If you received more than one Notice of Internet Availability of Proxy Materials or proxy card, this means you hold shares of our common stock in more than one account. You should complete, sign, date, and return each proxy card or vote all shares over the internet or by telephone for each of your accounts. If you vote over the internet or by telephone, you should not mail back the related proxy card. How does discretionary voting authority apply? If you sign, date and return your proxy card, your vote will be cast as you direct. If your proxy card does not indicate how you want to vote, you give authority to Marcus G. Michael and Jaime M. Easley to vote on the items discussed in these Proxy Materials and on any other matter properly brought at the Annual Meeting. In such a case, your vote will be cast: FOR the election of the director nominees listed on the proxy card; FOR the approval of the compensation of our named executive officers; FOR the ratification of the appointment of Deloitte & Touche LLP as our independent public accountants for 2021; and FOR or AGAINST any other properly raised matters at the discretion of Messrs. Michael and Easley. May I revoke my proxy? You may revoke your proxy in one of four ways at any time before it is exercised: 1.
| Notify our Corporate Secretary in writing before the Annual Meeting that you are revoking your proxy. |
2.
| Submit another proxy with a later date. |
3.
| Vote by telephone or internet after you have given your proxy. |
4.
| Vote in person at the Annual Meeting. |
What constitutes a quorum? The presence, in person or by proxy, of the holders of at least one-third of the total number of shares of SPX FLOW stock issued and outstanding and entitled to vote at the Annual Meeting constitutes a quorum. You will be considered part of the quorum if you return a signed and dated proxy card, if you vote by telephone or internet, or if you attend the Annual Meeting. Abstentions are counted as “shares present” at the Annual Meeting for purposes of determining whether a quorum exists. Proxies submitted by banks, brokers or other holders of record holding shares for you as a beneficial owner that do not indicate a vote for some or all of the proposals because that holder does not have voting authority and has not received voting instructions from you (so-called “broker non-votes”) are also considered “shares present” for purposes of determining whether a quorum exists. If you are a beneficial owner, these holders are permitted to vote your shares on the ratification of the appointment of our independent public accountants, even if they do not receive voting instructions from you. TABLE OF CONTENTS Questions and Answers
What vote is required to approve each proposal? | Election of Directors | | | Majority of Votes Cast | | | No | | | Say on Pay | | | No | | | Ratification of Deloitte & Touche LLP as our independent public accountants for 2021 | | | Majority of Shares Present or Represented by Proxy and Entitled to Vote | | | Yes | | | Other Proposals | | | No | |
A majority of votes cast means that the number of shares voted for a director or proposal must exceed the number of shares voted against that director or proposal. Impact of Abstentions or Broker Non-Votes An abstention is not considered as a share voted and will not impact the election of directors or the Say on Pay vote. Since an abstention is considered a share present or represented by proxy and entitled to vote, as one less vote for approval it will have the effect of a vote against the ratification of our independent public accountants and other proposals that may be brought before the Annual Meeting. The NYSE does not consider the election of directors, the Say on Pay vote or other matters relating to compensation to be routine. Unless the broker has received instructions from you, any broker holding shares for you will not have the ability to cast votes with respect to those proposals. It is important, therefore, that you provide instructions to your broker if your shares are held by a broker so that your vote with respect to these matters is counted. How do I recommend a director nominee? Our By-Laws establish procedures for nominations by eligible stockholders of candidates for election as directors at an annual meeting and to have those nominees included in our proxy materials. A stockholder’s notice of intention to make such a proxy access nomination for the 2022 annual meeting of stockholders must be delivered to our Corporate Secretary at our address on the cover of this Proxy Statement between November 2, 2021 and December 2, 2021. For a candidate nominated for election as a director by stockholders to be included in our proxy materials, the nominating stockholders and the stockholder nominee must comply with, and otherwise satisfy the requirements of, our By-Laws, including the provisions of Section 1A of Article III. If you wish to otherwise nominate a candidate for election as a director at the 2022 annual meeting of stockholders, our Corporate Secretary must receive your written nomination between December 13, 2021 and January 12, 2022. You should submit your proposal to our Corporate Secretary at our address on the cover of this Proxy Statement. For a nomination to be properly brought before the 2022 annual meeting, your notice of nomination must comply with, and otherwise satisfy the requirements of, our By-Laws, including the provisions of Section 8 of Article II and Section 1 of Article III. How do I submit a stockholder proposal? For a proposal to be included in our Proxy Statement for the 2022 annual meeting pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, you must submit it no later than December 2, 2021. Your proposal must be in writing and otherwise comply with the requirements of that rule. You should send your proposal to our Corporate Secretary at our address on the cover of this Proxy Statement. You also may submit a proposal that you want to present at the 2022 annual meeting of stockholders but that you do not want included in our proxy materials (or that would not satisfy the requirements of Rule 14a-8). In order to present such a proposal at the 2022 annual meeting we must receive notice of the proposal in writing on or after December 13, 2021, but no later than January 12, 2022. For such a proposal to be properly brought before the 2022 annual meeting, your notice must comply with, and otherwise satisfy the requirements of, our By-Laws, including the provisions of Sections 1 and 8 of Article II. Who pays to prepare, mail, and solicit the proxies? We will pay all the costs of preparing, mailing and soliciting the proxies. We will ask brokers, banks, voting trustees and other nominees and fiduciaries to forward the Proxy Materials to the beneficial owners of SPX FLOW common stock and to obtain the authority to execute proxies. We will reimburse them for their reasonable expenses upon request. In addition to mailing the Proxy Materials, our directors, officers and employees may solicit proxies in person, by telephone or otherwise. These individuals will not be specially compensated. We also have retained D.F. King to assist us in soliciting your proxy and will pay them an estimated fee of $12,500 plus reasonable out-of-pocket expenses. D.F. King will ask brokerage houses and other custodians and nominees TABLE OF CONTENTS Questions and Answers
whether other persons are beneficial owners of SPX FLOW common stock. If so, we will supply them with additional copies of the Proxy Materials for distribution to the beneficial owners. We will also reimburse banks, nominees, fiduciaries, brokers and other custodians for their costs of sending the Proxy Materials to the beneficial owners of SPX FLOW common stock. TABLE OF CONTENTS Annual Report on Form 10-K A copy of our 2020 Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the year ended December 31, 2017,2020, without exhibits, is enclosed withaccompanies this Proxy Statement. You may obtain a copy of the exhibits described in the Form 10-K for a fee upon request. Please contact Ryan Taylor,Scott Gaffner, Vice President, CommunicationsInvestor Relations and Investor Relations,Strategic Insights, SPX FLOW, 13320 Ballantyne Corporate Place, Charlotte, North Carolina 28277.
2018 Proxy Statement
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2018 Proxy Statement A-1
Appendix A
Amendment to the Certificate of Incorporation to
Provide for the Annual Election of the Board of Directors
The first paragraph of Article SEVENTH through the fourth paragraph of Article SEVENTH of the Company’s Certificate of Incorporation is amended and restated to read as follows (with deletions marked as stricken text and additions as underlined text):
SEVENTH. Except as otherwise fixed by resolution of the Board of Directors pursuant to the provisions of Article FOURTH hereof relating to the rights of the holders of Preferred Stock to elect directors as a class, the number of the directors of the Corporation shall be fixed from time to time by resolution of the Board of Directors. The directors, other than those who may be elected by the holders of Preferred Stock, shall be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, designated Class I, Class II and Class III. The directors in Class I shall serve for an initial term expiring at the Corporation’s 2016 annual meeting of stockholders, the directors in Class II shall serve for an intialinitial term expiring at the Corporation’s 2017 annual meeting of stockholders, and the directors in Class III shall serve for an intialinitial term expiring at the Corporation’s 2018 annual meeting of stockholders, with each director in a class to hold office until his successor is elected and qualified. At the 2016 annual meeting of the stockholders of the Corporation and at each subsequent annual meeting of the stockholders of the Corporation, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Notwithstanding the foregoing provisions of this paragraph, (i) at the 2019 annual meeting of stockholders, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the 2021 annual meeting of stockholders, (ii) commencing with the 2020 annual meeting of stockholders, directors shall be elected for one-year terms expiring at the next succeeding annual meeting of stockholders, and (iii) commencing with the 2021 annual meeting of stockholders, directors shall no longer be divided into classes. Advance notice of stockholder nominations for the election of directors shall be given in the manner provided in the By-Laws of the Corporation.
Except as otherwise fixed by resolution of the Board of Directors pursuant to the provisions of Article FOURTH hereof relating to the rights of the holders of Preferred Stock to elect directors as a class, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall be a member of the class of directors in which the new directorship was created (subject to the requirements of this Article SEVENTH thatrequirement that, for so long as directors are divided into classes, all classes be as nearly equal in number as possible) or in which the vacancy occurred and shall be submitted to a stockholder vote at the next annual meeting of stockholders.
No decrease in the number of directors constituting the Board of Directors shall shorten the term of an incumbent director.TABLE OF CONTENTS Subject to the rights of the holders of Preferred Stock to elect directors as a class, for so long as the Board of Directors is divided into classes, a director may be removed by the stockholders only for cause and only by the affirmative vote of the holders of 80% of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class.*
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| | | * The language in italics would also be deleted if the proposed amendment to the Certificate of Incorporation to eliminate supermajority stockholder voting requirements is approved.
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2018 Proxy Statement B-1
Appendix B
Amendment to the Certificate of Incorporation to
Eliminate Supermajority Stockholder Voting Requirements
The fourth paragraph of Article SEVENTH through the end of Article SEVENTH of the Company’s Certificate of Incorporation is amended and restated to read as follows (with deletions marked as stricken text and additions as underlined text):
Subject to the rights of the holders of Preferred Stock to elect directors as a class, a director may be removed only for cause and only by the affirmative vote of the holders of 80% of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class.*
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized:
1. To adopt, amend and repeal the By-Laws of the Corporation. Any by-laws adopted by the directors under the powers conferred hereby may be amended or repealed by the directors or by the stockholders. Notwithstanding any provision in this Amended and Restated Certificate of Incorporation or the By-Laws of the Corporation to the contrary, Article II, Sections 3 and 7 and Article III, Sections 1, 2 and 3 of the By-Laws of the Corporation shall not be amended or repealed by the stockholders and no provision inconsistent therewith shall be adopted by the stockholders, in each case without the affirmative vote of the holders of at least 80% of the voting power of all the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
2. To fix and determine, and to vary the amount of, the working capital of the Corporation, and to determine the use or investment of any assets of the Corporation, to set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve or reserves.
3. To authorize the purchase or other acquisition of shares of stock of the Corporation or any of its bonds, debentures, notes, scrip, warrants or other securities or evidences of indebtedness.
4. Except as otherwise provided by law, to determine the places, within or without the State of Delaware, where any or all of the books of the Corporation shall be kept.
5. To authorize the sale, lease or other disposition of any part or parts of the properties of the Corporation and to cease to conduct the business connected therewith or again to resume the same, as it may deem best.
6. To authorize the borrowing of money, the issuance of bonds, debentures and other obligations or evidences of indebtedness of the Corporation, secured or unsecured, and the inclusion of provisions as to redeemability and convertibility into shares of stock of the Corporation or otherwise; and the mortgaging or pledging, as security for money borrowed or bonds, notes, debentures or other obligations issued by the Corporation, of any property of the Corporation, real or personal, then owned or thereafter acquired by the Corporation.
In addition to the powers and authorities herein or by statute expressly conferred upon it, the Board of Directors may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the laws of the State of Delaware, of this Amended and Restated Certificate of Incorporation and of the By-Laws of the Corporation.
Subject to any limitation in the By-Laws of the Corporation, the members of the Board of Directors shall be entitled to reasonable fees, salaries or other compensation for their services, as determined from time to time by the Board of Directors, and to reimbursement for their expenses as such members. Nothing herein contained shall preclude any director from serving the Corporation or its subsidiaries or affiliates in any other capacity and receiving compensation therefor.
Notwithstanding anything contained in this Amended and Restated Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend, adopt any provision inconsistent with or repeal this Article SEVENTH.
| | | *In the event that the proposed amendments to the Certificate of Incorporation to provide for the annual election of the Board of Directors is also approved, such sentence would be amended and restated to read as follows:
|
Subject to the rights of the holders of Preferred Stock to elect directors as a class, for so long as the Board of Directors is divided into classes, a director may be removed by the stockholders only for cause and only by the affirmative vote of the holders of 80% of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class.
In addition, Article EIGHTH of the Company’s Certificate of Incorporation is amended and restated to read as follows (with deletions marked as stricken text and additions as underlined text):
EIGHTH. Both stockholders and directors shall have power, if the By-Laws of the Corporation so provide, to hold their meetings and to have one or more offices within or without the State of Delaware.
Except as otherwise fixed by resolution of the Board of Directors pursuant to the provisions of Article FOURTH hereof relating to the rights of the holders of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders. Except as otherwise required by law and subject to the rights of the holders of Preferred Stock, special meetings of stockholders may be called only by the Chairman on his own initiative, the President on his own initiative or by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors. Notwithstanding anything contained in this Amended and Restated Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend, adopt any provision inconsistent with or repeal this Article EIGHTH.
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