UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
| Preliminary Proxy Statement | |||||
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||||
| X | Definitive Proxy Statement | ||||
| Definitive Additional Materials | |||||
| Soliciting Material Pursuant to § 240.14a-12 | |||||
CIRCOR INTERNATIONAL, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)all boxes that apply):
| X | No fee required | |||||||
| Fee paid previously with preliminary materials. | ||||||||
30 Corporate Drive, Suite 200
Burlington, MA 01803
+1 (781) 270-1200
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 12, 2020October 4, 2022
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of Stockholders (the “Annual Meeting”) of CIRCOR International, Inc. (the "Company,"“Company,” “we,” “us” or “our”) will be held on June 12, 2020,October 4, 2022, at 12:3:00 PM local time.Eastern Daylight Savings Time (“EDT”). The Annual Meeting will be held as a virtual meeting conducted exclusively via live webcast at [ ].www.virtualshareholdermeeting.com/CIR2022. The Annual Meeting is being called for the purpose of considering and voting upon the following proposals:
1.To elect six directors, Samuel R. Chapin, Tina M. Donikowski, Bruce Lisman, Helmuth Ludwig, John (Andy) O'Donnell and Jill D. Smith, for one-year terms, such terms to continue until the Annual Meeting of Stockholders in 2023 and until each such director’s successor is duly elected and qualified or until such director’s earlier death, resignation or removal;
2.To ratify the selection by the Audit Committee of the Company's Board of Directors of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2022;
3.To consider an advisory vote approving the compensation of the Company’s Named Executive Officers; and
4.To act upon such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof.
The Board of Directors of the Company (the “Board”) has fixed the close of business on April 15, 2020August 22, 2022 as the record date for determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof. Only holders of record of the Company's common stock, par value $0.01 per share, at the close of business on that date will be entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof.
Our Board recommends you vote "FOR" the amendment to the Certificate of Incorporation to implement a majority voting standard for uncontested director elections to first take effect at the Annual Meeting of Stockholders in 2021 (Proposal 1), “FOR” the amendment to the Certificate of Incorporation to declassify the Board (Proposal 2), “FOR”
each of the nominees proposed by our Board for Class III directorelection as directors (Proposal 3)1), “FOR” the ratification of the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2022 (Proposal 2), and "FOR"“FOR” the advisory vote approving the compensation of our Named Executive Officers (Proposal 4)3).
To participate in the virtual meeting, you will need the 16-digit control number included on your proxy card or voting instruction form. The meeting webcast will begin promptly at 12:00PM (Eastern Time)3:00 PM (EDT). We encourage you to access the meeting prior to the start time. Online check- incheck-in will begin at 11:30AM (Eastern Time)2:45 PM (EDT), and you should allow ample time for check-in procedures. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual ShareholderStockholder Meeting log-in page.
If your shares are held in “street name” throughby a broker, bank or other nominee, in ordercustodian (commonly referred to participate inas shares held "in street name"), the virtual Annual Meetingholder of your shares will provide you must first obtainwith a legal proxy fromcopy of this Proxy Statement, a voting instruction form and directions on how to provide voting instructions. These directions may allow you to vote over the internet or by telephone. Unless you provide voting instructions, your broker, bank or other nominee reflectingshares will not be voted on any matter except for the number of sharesratification of the Company’s common stock you held asselection of our independent auditors (Proposal 2). To ensure your shares are voted in each of the record date,other matters, we encourage you to provide instructions on how to vote your name and email address. You then must submit a request for registration to American Stock Transfer & Trust Company, LLC: (1) by email to proxy@astfinancial.com; (2) by facsimile to 718-765-8730 or (3) by email to American Stock Transfer & Trust Company, LLC, Attn: Proxy Tabulation Department, 6201 15th Avenue, Brooklyn, NY 11219. Requests for registration must be labeled as “Legal Proxy” and be received by American Stock Transfer & Trust Company, LLCshares no later than 5:00 p.m. (Eastern Time)PM (EDT) on May 29, 2020.October 3, 2022. A list of our registered holders will be available to stockholders of record electronically during the Annual Meeting at [Meeting. If you would like to review the list, please email ]officeofthegeneralcounsel@CIRCOR.com.
Having your shares represented and voted at the Annual Meeting is extremely important. All stockholders are cordially invited to attend the Annual Meeting online. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, ONLINE, AND TO FACILITATE TIMELY RECEIPT OF YOUR VOTE, GIVEN THE POTENTIAL IMPACT OF COVID-19, PLEASE VOTE AS SOON AS POSSIBLE. YOU ARE URGED TO DATE, SIGN AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED TO YOU, OR TO VOTE BY INTERNET OR BY TELEPHONE AS DESCRIBED IN THIS PROXY STATEMENT, EVEN IF YOU PLAN TO VIRTUALLY ATTEND THE ANNUAL MEETING, SO THAT YOUR SHARES CAN BE VOTED REGARDLESS OF WHETHER YOU ATTEND THE ANNUAL MEETING.ATTEND. VOTING NOW WILL NOT LIMIT YOUR RIGHT TO CHANGE YOUR VOTE OR TO ATTEND THE ANNUAL MEETING ONLINE;MEETING; IF YOU SHOULD BE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE DURING THE MEETING, YOU MAY WITHDRAW YOUR PROXY AT SUCH TIME. ONLY THE LATEST VALIDLY EXECUTED PROXY THAT YOU TIMELY SUBMIT WILL BE COUNTED. IF YOUR SHARES ARE HELD IN THE NAME OF A BROKER, BANK OR OTHER HOLDER OF RECORD, FOLLOW THE VOTING INSTRUCTIONS YOU RECEIVED FROM THE HOLDER OF RECORD IN ORDER TO VOTE YOUR SHARES.
Helmuth Ludwig
Chair, CIRCOR Board of Directors
September 8, 2022
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, ONLINE, YOU ARE REQUESTED TO COMPLETE YOUR PROXY CARD AS INDICATED ABOVE. YOUR PROXY CARD IS REVOCABLE UNTIL THE TIME SET FORTH IN THE COMPANY'SCOMPANY’S PROXY STATEMENT, AND, IF YOU ATTEND THE ANNUAL MEETING, ONLINE, YOU MAY VOTE DURING THE MEETING EVEN IF YOU HAVE PREVIOUSLY COMPLETED YOUR PROXY CARD.
PROXY STATEMENT
TABLE OF CONTENTS
| Page | |||||
| PROXY STATEMENT | |||||
| PROPOSAL 1 - ELECTION OF DIRECTORS | |||||
| Director Nominations | |||||
| Composition of Director Nominees and Continuing Directors | |||||
| Director Biographies and Qualifications | |||||
| CORPORATE GOVERNANCE | |||||
| Principles of Corporate Governance | |||||
| Director Independence | |||||
| Board Meetings and Committees | |||||
| Corporate Governance Framework | |||||
| Directors Candidates | |||||
| Communication with Independent Directors | |||||
| Stockholder Engagement | |||||
| Board Evaluation Process | |||||
| Director Compensation | |||||
| Reimbursement for Training and Reasonable Related Travel | |||||
| Stock Ownership Guidelines | |||||
| Code of Conduct & Business Ethics/Compliance Training/Reporting of Concerns | |||||
| Environmental & Social Commitments | |||||
| Corporate Political Contributions | |||||
| Related Person Transactions | |||||
| Compensation Committee Interlocks and Insider Participation | |||||
| SECURITY OWNERSHIP OF | |||||
| MANAGEMENT | |||||
| COMPENSATION DISCUSSION AND ANALYSIS | |||||
| Overview | |||||
| Executive Summary | |||||
| What Guides Our Program | |||||
| 2021 Executive Compensation In Detail | |||||
| Other Executive Compensation Practices & Policies | |||||
| SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION AND OTHER PAYMENTS TO THE NAMED EXECUTIVE OFFICERS | |||||
| Summary Compensation Table | |||||
| | |||||
| | |||||
| Outstanding Equity Awards at | |||||
| | |||||
| | |||||
| SEVERANCE AND OTHER BENEFITS UPON TERMINATION OF EMPLOYMENT OR CHANGE OF CONTROL | |||||
| CEO PAY RATIO | |||||
| COMMITTEE REPORTS | |||||
| PROPOSAL | |||||
| EXPENSES OF SOLICITATION | |||||
| SUBMISSION OF STOCKHOLDER PROPOSALS FOR ANNUAL MEETING IN 2020 | |||||
| DELINQUENT SECTION 16(a) REPORTS | |||||
| OTHER MATTERS | |||||
Forward-Looking Statements
This Proxy Statement contains certain statements that are "forward-looking statements"“forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 (the "Act"“Act”). The words "may," "hope," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "continue,"“may,” “hope,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue” and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward-looking statements. We believe that it is important to communicate our future expectations to our stockholders, and we, therefore, make forward-looking statements in reliance upon the safe harbor provisions of the Act. However, there may be events in the future that we are not able to accurately predict or control, and our actual results may differ materially from the expectations we describe in our forward-looking statements. Forward-looking statements, including statements about our future performance, the outcome, if any, of the Board of Director's review of strategic alternatives, the Company's exit from the Pipeline Engineering business, the expected and potential direct and indirect impacts of the COVID-19 pandemic on our business, our ability to remediate the material weaknesses in our internal control over financial reporting, the number of new product launches and future cash flows from operating activities involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, changes in the price ofduration and demand for oil and gas in both domestic and international markets, impactsscope of the current COVID-19 pandemic, our ability to successfully implement our divestiture, restructuring or simplification strategies, our ability to successfully integrate acquired businesses, as contemplated, the possibility that expected benefits related to our acquisition of the fluid handling business of Colfax Corporation ("Fluid Handling") may not materialize as expected,pandemic; any adverse changes in governmental policies,policies; variability of raw material and component pricing,pricing; changes in our suppliers' performance,suppliers’ performance; fluctuations in foreign currency exchange rates,rates; changes in tariffs or other taxes related to doing business internationally,internationally; our ability to hire and retain key personnel,personnel; our ability to operate our manufacturing facilities at efficient levels, including our ability to prevent cost overruns and reduce costs,costs; our ability to generate increased cash by reducing our working capital,capital; our prevention of the accumulation of excess inventory,inventory; fluctuations in interest rates,rates; our ability to continue to successfully defend product liability actions, any actions by activist stockholdersactions; the inability to identify or execute a strategic transaction; the impact on the Company of the situation in Russia and the costs and disruption of responding to those actions,Ukraine; as well as the uncertainty associated with the current worldwide economic conditions and the continuing impact on economic and financial conditions in the United States and around the world, including as a result of health pandemics,the COVID-19 pandemic, natural disasters, terrorist attacks current Middle Eastern conflicts and relatedsimilar matters. For a discussion of these risks, uncertainties and other factors, see Part I, Item 1A, "Risk“Risk Factors,"” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.2021. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
30 Corporate Drive, Suite 200
Burlington, MA 01803
+ (781) 270-1200
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 12, 2020October 4, 2022
This Proxy Statement (the "Proxy Statement"“Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board"“Board”) of CIRCOR International, Inc. (the "Company," "CIRCOR," "we," "us"“Company,” “CIRCOR,” “we,” “us” or "our"“our”) for use at the Annual Meeting of Stockholders of the Company to be held on June 12, 2020,October 4, 2022, at 12:3:00 PM local time,Eastern Daylight Savings Time ("EDT"), and any adjournments or postponements thereof (the "Annual Meeting"“Annual Meeting”). The Annual Meeting will be held as a virtual meeting conducted exclusively via live webcast at [ ]. www.virtualshareholdermeeting.com/CIR2022. Our annual report to stockholders and our proxy materials (including this proxy statementProxy Statement and a form of proxy) were first sent or given to stockholders on or about [ ], 2020.
September 8, 2022.
At the Annual Meeting, the stockholders of the Company will be asked to consider and vote upon the following matters:
1.To elect six directors, Samuel R. Chapin, Tina M. Donikowski, Bruce Lisman, Helmuth Ludwig, John (Andy) O'Donnell and Jill D. Smith, for one-year terms, such terms to continue until the Annual Meeting of Stockholders in 2023 and until each such director’s successor is duly elected and qualified or until such director's earlier death, resignation or removal;
2.To ratify the selection by the Audit Committee of the Board of Directors of the Company of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2022;
3.To consider an advisory vote approving the compensation of the Company’s Named Executive Officers;
4.To act upon such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof.
Record Date
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Voting Requirements
The presence, in person or by proxy, of holders of at least a majority of the total number of outstanding shares of Common Stockcommon stock entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Shares present virtually during the Annual Meeting will be considered shares of common stock represented in person at the meeting. Each ofFor Proposal 1, the amendment toelection of six directors, each nominee shall be elected as a director of the Certificate of Incorporation to implementCompany if such nominee receives a majority voting standard for uncontested director elections to first take effectof the votes cast at the Annual Meeting with respect to such nominee (i.e., the number of Stockholders in 2021, and Proposal 2,shares voted “for” a director nominee must exceed the amendment to the Certificatenumber of Incorporation to declassify the Board, requires the affirmative vote of not less than two-thirds of the outstanding shares entitled to vote. For Proposal 3, the election of two Class III directors, nominees shall be elected as directors of the Company based on a plurality voting standard, meaning the two nominees receiving the most affirmative votes shall be elected.voted “against” such nominee). The approval of a majority of the votes cast is also necessary to approve Proposal 4,2, the ratification of the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2022; and Proposal 3, the consideration of an advisory vote approving the compensation of the Company'sCompany’s Named Executive Officers.
Abstentions and“Broker Non-Votes”
Abstentions and "Broker Non-Votes"
How to Vote Your Shares
www.virtualshareholdermeeting.com.
To participate in the virtual meeting, you will need the 16-digit control number included on your proxy card or voting instruction form. The meeting webcast will begin promptly at 12:00PM (Eastern Time)3:00 PM (EDT). We encourage you to access the meeting prior to the start time. Online check- in will begin at 11:30AM (Eastern Time)2:45 PM (EDT), and you should allow ample time for check-in procedures. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting log-invirtual meeting login page.
We are committed to ensuring that stockholders will be afforded the same rights and opportunities to participate in the virtual Annual Meeting as they would at an in-person meeting. You will be able to attend the meeting online, vote your shares electronically and submit questions during the meeting by visiting [ ].www.virtualshareholdermeeting.com/CIR2022. We will try to answer as many stockholder-submitted questions as time permits that comply with the meeting rules of conduct. However, we reserve the right to edit inappropriate language or to exclude questions that are not pertinent to meeting matters or that are otherwise inappropriate. If we receive substantially similar questions, we will group such questions together and provide a single response to avoid repetition.
If we are unable to respond to a stockholder’s properly submitted question due to time constraints, we will either post the response on the investor relations section of our website following the Annual Meeting, or respond directly to that stockholder using the contact information provided.
If your shares are held in “street name” throughby a broker, bank or other nominee, in ordercustodian (commonly referred to participate inas shares held "in street name"), the virtual Annual Meetingholder of your shares will provide you must first obtainwith a legal proxy fromcopy of this Proxy Statement, a voting instruction form and directions on how to provide voting instructions. These directions may allow you to vote over the internet or by telephone. Unless you provide voting instructions, your broker, bank or other nominee reflectingshares will not be voted on any matter except for the number of sharesratification of the Company’s common stock you held asselection of our independent auditors (Proposal 2). To ensure your shares are counted in each of the record date,other matters, we encourage you to provide instructions on how to vote your name and email address. You then must submit a request for registration to American Stock Transfer & Trust Company, LLC: (1) by email to proxy@astfinancial.com; (2) by facsimile to 718-765-8730 or (3) by email to American Stock Transfer & Trust Company, LLC, Attn: Proxy Tabulation Department, 6201 15th Avenue, Brooklyn, NY 11219. Requests for registration must be labeled as “Legal Proxy” and be received by American Stock Transfer & Trust Company, LLCshares no later than 5:00 p.m. (Eastern Time)PM (EDT) on May 29, 2020.October 3, 2022. A list of our registered holders will be available to stockholders of record electronically during the Annual Meeting. If you would like to review the list, please email officeofthegeneralcounsel@CIRCOR.com.
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Having your shares represented and voted at the Annual Meeting is extremely important. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, ONLINE, AND TO FACILITATE TIMELY RECEIPT OF YOUR VOTE, GIVEN THE POTENTIAL IMPACT OF COVID-19, PLEASE VOTE AS SOON AS POSSIBLE. YOU ARE URGED TO DATE, SIGN AND RETURN YOUR PROXY CARD IN THE ENVELOPE PROVIDED TO YOU, OR TO VOTE BY INTERNET OR BY TELEPHONE AS DESCRIBED IN THIS PROXY STATEMENT, EVEN IF YOU PLAN TO VIRTUALLY ATTEND THE ANNUAL MEETING, SO THAT YOUR SHARES CAN BE VOTED REGARDLESS OF WHETHER YOU ATTEND THE ANNUAL MEETING. VOTING NOW WILL NOT LIMIT YOUR RIGHT TO CHANGE YOUR VOTE OR TO ATTEND THE ANNUAL MEETING ONLINE.MEETING. IF YOU SHOULD BE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE DURING THE MEETING, YOU MAY WITHDRAW YOUR PROXY CARD AT SUCH TIME. ONLY THE LATEST VALIDLY EXECUTED PROXY CARD THAT YOU TIMELY SUBMIT WILL BE COUNTED. IF YOUR SHARES ARE HELD IN THE NAME OF A BROKER, BANK OR OTHER HOLDER OF RECORD, FOLLOW THE VOTING INSTRUCTIONS YOU RECEIVED FROM THE HOLDER OF RECORD IN ORDER TO VOTE YOUR SHARES.
If you are a stockholder whose shares are registered in your name, you may vote your shares by one of the following methods:
| 1. |
2.Vote by Internet by going to the web address www.proxyvote.com in advance of the Annual Meeting. The voting system is available 24 hours a day until 11:59 p.m. EDT on Monday, October 3, 2022. Once you enter the internet voting system, you can record and confirm (or change) your voting instructions. You must have the 16-digit control number that is on your proxy card when voting. 3.Vote by telephone by dialing 1-800-690-6903 or use the telephone number shown on your proxy card. The telephone voting systems is available 24 hours a day in the United States until 11:59 Eastern Time on Monday, October 3, 2022. Once you enter the telephone voting system, a series of prompts will tell you how to record and confirm (or change) your voting instructions. 4.Vote by mail. If you received a proxy card, mark your voting instructions on the card, sign, date and return it in the postage-paid envelope provided. For your mailed proxy card to be counted, we must receive it before 8:00 a.m. EDT on Monday, October 3, 2022. If you vote by Internet or telephone, please do not mail your proxy card. |
Common Stockstock represented by properly executed proxy cards received by the Company and not revoked will be voted at the Annual Meeting in accordance with the instructions contained therein. If instructions are not given in your proxy card, properly executed proxy cards will be voted "FOR" the amendment to the Certificate of Incorporation to implement a majority voting standard for uncontested director elections to first take effect at the Annual Meeting of Stockholders in 2021, "FOR" the amendment to the Certificate of Incorporation to declassify the Board, "FOR"“FOR” the election of the Board'sBoard’s nominees for director, “FOR” ratification of the selection of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending December 31, 2022, and "FOR"“FOR” approval of the resolution regarding compensation of the Company'sCompany’s Named Executive Officers.
How to Revoke a Previously-SubmittedPreviously Submitted Proxy Card
Any properly completed proxy card given by stockholders whose shares are registered in their name pursuant to this solicitation may be revoked by one of the following methods:
1.You may revoke your proxy and change your vote by attending the Annual Meeting online and voting electronically during the meeting. However, your attendance online at the Annual Meeting will not automatically revoke your proxy unless you properly vote electronically during the Annual Meeting or specifically request that your prior proxy be revoked by delivering a written notice revocation prior to the Annual Meeting to the Corporate Secretary at the Company's Corporate headquarters at 30 Corporate Drive, Suite 200, Burlington, MA 01803;
2.Properly casting a new vote via the Internet or by telephone at any time before the closure of the Internet or telephone voting facilities; or
3.Duly completing a later-dated proxy card relating to the same shares and delivering it to the Corporate Secretary before the taking of the vote at the Annual Meeting.
3
To be effective, any written notice of revocation or subsequent proxy cards must be sent so as to be delivered to the Company'sCorporate Secretary at the Company'sCompany’s corporate headquarters before the taking of the vote at the Annual Meeting. If you hold your shares in "street“street name,"” you must follow the instructions on your voting instructions form to revoke or amend any prior voting instructions.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on June 12, 2020:October 4, 2022: This Proxy Statement, a form of the Company'sCompany’s proxy card, a letter to stockholders from the ChairpersonChair of our Board, a letter to stockholders from our President and Chief Executive Officer, together with our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 ("2021 (“Fiscal Year 2019"2021”), are available for viewing, printing and downloading at www.proxy.CIRCOR.com.www.proxy.CIRCOR.com.
Except where otherwise incorporated by reference, none of the Annual Report, the letter from the ChairpersonChair of our Board to our stockholders, or the letter from our President and Chief Executive Officer to our stockholders is a part of the proxy solicitation material. Except for the availability of this Proxy Statement and the Company’s form of proxy card for the Annual Meeting, which are available for viewing, printing and downloading at www.proxy.CIRCOR.com, the information on the Company’s website is not part of this Proxy Statement.
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PROPOSAL 1
ELECTION OF DIRECTORS
Under our Articles of Organization and By-Laws, our board has completed its transition from a classified board to the annual election of all directors. At the Annual Meeting (and at each annual meeting of stockholders thereafter), all directors will stand for election for one-year terms expiring at the next succeeding annual meeting of stockholders.
Our board has nominated Samuel R. Chapin, Tina M. Donikowski, Bruce Lisman, Helmuth Ludwig, John (Andy) O'Donnell, and Jill D. Smith for re-election as directors, each to hold office until the 2023 annual meeting of stockholders and until their respective successors have been duly elected and qualified or until their earlier death, resignation or removal.
Our Board recommends a vote FOR each of our nominees.
Vote Required For Approval; Effect of Abstentions and Broker Non-Votes
A quorum being present, each nominee shall be elected as a director of the Company if such nominee receives a majority of the votes cast at the meeting with respect to such nominee. Abstentions and broker non-votes will have no effect on this Proposal 1.
Information Regarding Director Nominees and Other Continuing Directors
The following table provides information about each nominee for director and the other continuing directors. Detailed information about each individual’s qualifications, experience, skills and expertise along with select professional and community contributions can be found below.
| Name | Position | Age | Director Since | Audit | Compensation | N&CG* | Independent | ||||||||||||||||
| Samuel R. Chapin | Director | 65 | 2019 | t | l | X | |||||||||||||||||
| Tina M. Donikowski | Director | 63 | 2017 | l | l | t | X | ||||||||||||||||
| Bruce Lisman | Director | 75 | 2020 | l | l | X | |||||||||||||||||
Helmuth Ludwig t | Chair | 60 | 2016 | X | |||||||||||||||||||
| John (Andy) O'Donnell | Director | 74 | 2011 | t | l | X | |||||||||||||||||
| Jill D. Smith | Director | 64 | 2020 | l | l | X | |||||||||||||||||
t Chair l Member
*N&CG: Nominating & Corporate Governance Committee
*N&CG: Nominating & Corporate Governance Committee
Director Nominations
The Nominating and Corporate Governance Committee recognizes that the challenges and needs of the Company will vary over time and, accordingly, considers that the selection of director nominees should be based on skill sets most pertinent to the issues facing or likely to face the Company at the time of nomination as well as the diversity the nominee would add to the Board. When assessing nominees to serve as director, the Nominating and Corporate Governance Committee believes that the Company will benefit from a diversity of background and experience, as well as gender and racial/ethnic diversity, on the Board. In addition, there are certain general attributes that the Nominating and Corporate Governance Committee seeks from all director candidates, including:
•A commitment to ethics and integrity;
•A commitment to personal and organizational accountability;
•A history of achievement that reflects superior standards for themselves and others; and
•A willingness to express alternate points of view while, at the same time, being respectful of the opinions of others and working collaboratively with colleagues.
Our Principles of Corporate Governance require that a majority of directors must be independent. The Nominating and Corporate Governance Committee’s position is that, absent special circumstances, all directors other than the Chief Executive Officer, if he or she is serving on the Board, should be independent. The Nominating and Corporate Governance Committee annually assesses the adequacy of the foregoing criteria for Board membership and have concluded that, based on the
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background and experience as described below of each director, the Board reflects diversity in business and professional experience and skills.
As a matter of good corporate governance, we generally limit the number of public company directorships any questions or need assistance voting your shares, please contact MacKenzie Partners,director of the Company may hold to three, including that of the Company. This policy assists the Board in continuing to focus on and carry out the Board activities of the Company efficiently. Previously, Ms. Donikowski was granted an exception to this policy so that she could serve on one additional public company board; such additional board membership ceased in 2022.
Composition of Director Nominees and Continuing Directors
Our Board members have a varied set of skills and experience, creating a diversity of skills and viewpoints. Among our six nominees:
•6 of 6 are independent
•33% are women
•33% of our directors are born outside the United States
•The average age is 66.8 years of age.
•The average tenure on the Board is 4.7 years.
Director Biographies and Qualifications
Our nominees and other continuing directors have extensive experience and qualifications:
| Chapin | Donikowski | Lisman | Ludwig | O’Donnell | Smith | |||||||||||||||
| Geography | ||||||||||||||||||||
| Asia | X | X | X | |||||||||||||||||
| Europe | X | X | X | X | X | X | ||||||||||||||
| S America | X | X | X | X | X | |||||||||||||||
| Industry/End Market | ||||||||||||||||||||
| Industrial | X | X | X | X | ||||||||||||||||
| Defense Aerospace | X | X | ||||||||||||||||||
| Food & Bev | X | |||||||||||||||||||
Function | ||||||||||||||||||||
| CEO – Public, Private | X | X | X | |||||||||||||||||
| CEO – Div. Pres. | X | X | X | X | X | |||||||||||||||
| Commercial – Sales / Channel | X | X | X | X | X | X | ||||||||||||||
| Commercial - Marketing | X | X | X | X | X | |||||||||||||||
| R&D / NPD | X | X | X | X | ||||||||||||||||
| Finance - CFO | X | X | X | |||||||||||||||||
| Finance - Cap markets | X | X | X | |||||||||||||||||
| HR – Talent Management | X | X | X | X | X | |||||||||||||||
| Tech – IT/cyber | X | X | X | X | ||||||||||||||||
| Tech – Digitization | X | X | X | X | ||||||||||||||||
| Ops – Manufacturing | X | X | X | X | ||||||||||||||||
| Ops – Supply Chain | X | X | X | X | X | |||||||||||||||
| M&A - Transactions | X | X | X | X | X | X | ||||||||||||||
| M&A - Integration | X | X | X | X | X | |||||||||||||||
| Actively Employed (Y/N) | N | N | N | Y | N | N | ||||||||||||||
Director Nominees
Samuel R. Chapin. Mr. Chapin has served as a member of the Board since January 2019. Mr. Chapin served as Executive Vice Chairman at the Bank of America Merrill Lynch, a multinational investment bank, from 2010 to his retirement in June 2016.
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Mr. Chapin joined Merrill Lynch in 1984 as a member of the Mergers and Acquisitions group and he was named a Managing Director in Investment Banking in 1993. Mr. Chapin was named Senior Vice President and head of Merrill Lynch’s Global Investment Banking Division in 2001 and was named Vice Chairman in 2003. While at Merrill Lynch and Bank of America Merrill Lynch, Mr. Chapin was responsible for managing relationships with a number of the firm’s largest corporate clients. He currently serves on the Board of Directors of PerkinElmer, Inc., and O-I Glass, Inc. and the Company's proxy solicitor,Board of Trustees at (800) 322-2885Lafayette College. Mr. Chapin’s qualifications to sit on our Board include his experience and significant knowledge of the industrials market with a mastery of strategic M&A accrued over more than 35 years in investment banking.
Tina M. Donikowski. Ms. Donikowski has served as a member of the Board since March 2017. Ms. Donikowski retired from General Electric Company, a diversified industrial company, in October 2015 after 38 years with the company. She served in a number of senior positions during her career at General Electric Company, including most recently as Vice President, Global Locomotive Business, GE Transportation, from January 2013 until her retirement. She currently also serves on the Board of Directors TopBuild Corp., a leading installer and distributor of insulation and building material products to the U.S. construction industry based in Daytona Beach, Florida; Advanced Energy Industries, Inc., a designer and manufacturer of highly engineered precision power, measurement, and control solutions for mission-critical applications and processes; and Eriez Magnetics, a privately held manufacturer and designer of magnetic, vibratory, and metal detection applications based in Erie, Pennsylvania. Previously she served on the board of Atlas Copco AB, a world-leading provider of sustainable productivity solutions based in Stockholm, Sweden. Ms. Donikowski’s qualifications to sit on our Board include her extensive experience in leading technology businesses and her strong operations background.
Bruce Lisman. Mr. Lisman has served as a member of the Board since June 2020. Mr. Lisman retired in 2009 from JP Morgan Chase & Co., a multinational investment firm, where he had served as Chairman of the Global Equities Division. From 1987 to 2008, he was Head or (212) 929-5500 orCo-Head of the Global Equity Division at circor@mackenziepartners.com.Bear Stearns Companies. Mr. Lisman serves as a director of Myers Industries, Inc., a material handling and distribution company, Associated Capital., a financial services company that was spun-off from GAMCO Investors, Inc., and National Life Group, a mutual life insurance company. Prior board service includes PC Construction, an engineering and construction company as Chairman from 2013 to 2019, and as a member until 2021, and The Pep Boys, a nationwide auto parts retailer. Mr. Lisman’s qualifications to sit on our Board include his financial global business and leadership expertise.
Helmuth Ludwig. Dr. Ludwig has served as a member of the Board since January 2016. From October 2016 until his retirement in December 2019, he served as Global CIO for Siemens, a leading technology company. He previously served among other roles as CEO of the Siemens Industry Sector in North America from October 2011 to September 2014 and as President of Siemens PLM Software from August 2007 to September 2010 where he is credited for having successfully led the integration of the organization’s 50 legal entities and multiple facilities across 26 countries. Earlier in his career, Dr. Ludwig held a number of international assignments at Siemens in Europe, Latin America, and Asia. Dr. Ludwig serves as a member of the board of Hitachi Ltd., Tokyo since July 2020. He teaches as a Professor of Practice for Strategy and Entrepreneurship at Southern Methodist University Cox School of Business in Dallas and is a Board Leadership Fellow with the National Association of Corporate Directors (NACD). Dr. Ludwig is a known expert and regular speaker at industry conferences on the Internet of Things and “Industry 4.0.” Dr. Ludwig’s qualifications to sit on our Board include his proven manufacturing leadership skills, extensive international experience, and his success in leading the integration and simplification of a complex global enterprise.
John (Andy) O'Donnell. Mr. O'Donnell has served as a member of the Board since November 2011. Until his retirement in January 2014, Mr. O'Donnell had worked at Baker Hughes, an oilfield services company, since 1975. He served as Vice President of Baker Hughes since 1998 and was appointed to Vice President, Office of the Chief Executive Officer in 2012, a role in which he served until his retirement. From 2009 to 2011, Mr. O'Donnell was President, Western Hemisphere Operations of Baker Hughes. He was President of Baker Petrolite Corporation from 2005 to 2009 and President of Baker Hughes Drilling Fluids from 2004 to 2005. He served as Vice President, Business Process Development at Baker Hughes from 1998 to 2002 and as Vice President of Manufacturing at Baker Oil Tools from 1990 to 1998. Mr. O'Donnell also serves on the Board of Directors of Cactus, Inc., where he is a member of its Audit, Compensation, and Nominating and Corporate Governance Committees. Mr. O'Donnell’s qualifications to sit on our Board include his experience in international energy markets and leading multinational sales, marketing, service and manufacturing operations.
Jill D. Smith. Ms. Smith has served as a member of the Board since January 2020. Ms. Smith most recently served as President, Chief Executive Officer and Director of Allied Minds plc, an intellectual property commercialization company focused on technology and life sciences from March 2017 until her retirement in June 2019. She previously had served as Chairman, Chief Executive Officer and President of DigitalGlobe, Inc., a global provider of satellite imagery products and services, from 2005 to 2011. Ms. Smith started her career as a consultant at Bain & Company where she rose to Partner. She then joined Sara Lee as
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Vice President and subsequently went on to serve as President and Chief Executive Officer of SRDS, a business-to-business publishing firm and later as President and Chief Executive Officer of eDial, a VoIP collaboration company. Furthermore, she served as Chief Operating Officer of Micron Electronics, and co-founded and led Treacy & Company, a consulting and boutique investment firm. Ms. Smith currently serves on the Board of Directors of R1 RCM Inc., where she is a member of the Audit and Human Capital Committee, AspenTech, where she is Chair of the Board and Chair of the Nominating and Corporate Governance Committee, and MDA, where she is Chair of the Nominating and Governance Committee and a member of the Human Resource Development and Compensation Committee. Ms. Smith’s qualifications to sit on our Board includes her extensive experience as a technology executive, including as a CEO focused on growing innovative companies.
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CORPORATE GOVERNANCE
Role of the Board
Key Areas of Board Oversight
| Strategy | Risk | Succession Planning | Environmental, Social & Governance (ESG) Matters | ||||||||
•The Board oversees the Company’s annual business plan and monitors strategic planning •Business strategy is a key focus at the Board level and embedded in the work of Board committees •Company management is charged with developing and executing business strategy and provides regular performance updates to the Board | •The Board oversees risk management, including the enterprise risk management process •Board committees, which meet regularly and report back to the full Board, play significant roles in carrying out the risk oversight function •Company management is charged with managing risk, through robust internal processes and effective internal controls •The Audit Committee oversees financial risk, related party transactions, and cybersecurity •The Compensation Committee oversees the balance of risk and incentives •The Nominating & Corporate Governance Committee oversees employee health and safety | •The Board oversees succession planning and talent development for the Chief Executive Officer (“CEO”) and the executive leadership team •The Compensation Committee has primary responsibility for developing succession plans for the CEO •The Nominating and Corporate Governance Committee manages the emergency CEO succession planning process •The CEO is charged with preparing, and reviewing with the Compensation Committee, talent development plans for senior executives and their potential successors | •The Board oversees execution of the Company’s ESG strategies •The Nominating and Corporate Governance Committee oversees ESG elements, with a particular focus on the Company’s Diversity & Inclusion initiatives, human capital management and employee health and safety | ||||||||
Risk. The Board and its committees oversee key Company risks. The Board regularly reviews the Company’s top enterprise risks from management, assessing, among other concerns, risks associated with the Company’s products, customers, supply chain, management, staff, efficiency, and cybersecurity. The Board receives regular reports on management’s risk mitigation measures. Committees have responsibility for assisting the Board in its oversight of risk, including focus on certain risk areas,
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such as cybersecurity, related party transactions, and environmental, health and safety (including employee health and safety), and the committee calendars include periodic reviews and discussions on those topics.
Succession Planning. The Nominating and Corporate Governance Committee reviews the emergency CEO succession process on an annual basis, while the full Board reviews overall succession planning. Such planning includes a review with the CEO of the succession planning for key executives of the Company.
ESG Matters. Primary responsibility for assisting the Board with ESG matter oversight belongs to the Nominating and Corporate Governance Committee. With this responsibility, the committee reviews sustainability matters, governance items, progress on increasing diversity and inclusion and the Company's human capital strategy, plans and associated activities.
Board Leadership Structure
The Board has established a leadership structure that separates the roles of Chair of the Board and CEO. In doing so, the Board considered that separating the roles of Chair and CEO would most effectively provide the Company access to the judgments and experience of the Chair of the Board and the CEO, while providing a mechanism for the Board’s independent oversight of management. The Company's President and Chief Executive Officer is currently not a member of the Board. As Chair of the Board, Mr. Helmuth Ludwig presides over the meetings of the Board and the stockholders, utilizing his experience in corporate governance, familiarity with the Company and leadership. In addition to presiding over Board meetings, Mr. Ludwig approves Board agendas and schedules, monitors activity of the Board’s committees, communicates regularly with the CEO and other management on behalf of the Board, monitors and participates in communication with major stockholders, leads the annual performance evaluations of the CEO and leads the CEO succession planning process.
Principles of Corporate Governance
The Nominating and Corporate Governance Committee has developed, and the full Board has adopted, a set of Principles of Corporate Governance. The Principles of Corporate Governance are available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link, and a hard copy will be provided by the Company free of charge to any stockholder who requests it by writing to the Corporate Secretary at the Company’s corporate headquarters. An annual review is conducted by the Nominating and Corporate Governance Committee to assess compliance with the Principles of Corporate Governance.
In addition, to align the interests of the directors and executive officers of the Company with the interests of the stockholders, the Principles of Corporate Governance include Stock Ownership Guidelines for directors and executive officers.
Director Independence
The Board, upon consideration of all relevant facts and circumstances and upon recommendation of the Nominating and Corporate Governance Committee, has affirmatively determined that each director, other than our Chief Executive Officer Scott Buckhout,of Mr. Chapin, Ms. Donikowski, Mr. Lisman, Mr. Ludwig, Mr. O’Donnell and Ms. Smith is independent of the Company. The Board also previously determined that David Dietz and Peter Wilver, each a former director who served during part of Fiscal Year 2021, were independent of the Company prior to their respective retirements from the Board in Fiscal Year 2021 and that and Arthur George, Jr., a former director who served during part of Fiscal Year 2022, was independent of the Company prior to his resignation from the Board in Fiscal Year 2022. In evaluating the independence of each director, the Board applied the standards and guidelines set forth in the applicable SECSecurities and Exchange Commission (“SEC”) and New York Stock Exchange ("NYSE"(“NYSE”) regulations in determining that each director has no material relationship with the Company, directly or as a partner, stockholder or affiliate of an organization that has a relationship with the Company. The bases for the Board'sBoard’s determination include, but are not limited to, the following:
•No director other than Mr. Buckhout is an employee of the Company, or its subsidiaries or affiliates.
•No director has an immediate family member who is an officer of the Company or its subsidiaries or has any other current or past material relationship with the Company.
•No director other than Mr. Buckhout receives, or in the past three years, has received, any compensation from the Company other than compensation for services as a director.
•No director has a family member who has received any compensation during the past three years from the Company.
•No director, during the past three years, has been affiliated with, or had an immediate family member who has been affiliated with, a present or former internal or external auditor of the Company.
•No executive officer of the Company serves on the compensation committee or the board of directors of any corporation that employs a director or a member of any director'sdirector’s immediate family.
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•No director is an officer or employee (or has an immediate family member who is an officer or employee) of an organization that sells products and services to, or receives products and services from, the Company in excess of the greater of $1 million or 2% of such organization'sorganization’s consolidated gross revenues in any fiscal year.
Board Leadership Structure
Meetings and Committees
Our Board maintains three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The following table sets forth the number of meetings held during Fiscal Year 2021 by each committee of the Board,Mr. Dietz presides overBoard. Each of our directors attended at least 75% of the total number of meetings of the Board and of the stockholders, utilizing his extensive experiencecommittees of which such director then served.
| BOARD COMMITTEE OVERVIEW | ||||||||
| Committee | Oversight Responsibilities | 2021 Meetings | ||||||
| Audit | •Oversees integrity of financial statements •Responsible for appointment, compensation, retention and oversight of work of the independent auditor •Reviews scope and results of annual audit with independent auditor •Reviews annual/quarterly operating results with independent auditor •Considers the adequacy of internal accounting procedures/controls; considers the effect of these on auditor independence •Oversees internal audit function •Oversees financial and cybersecurity risks •Reviews and approves related party transactions •Meets in executive session separately with each of the Chief Financial Officer, Internal Audit lead and our independent auditor engagement partner | 7 | ||||||
| Compensation | •Determines and oversees pay for performance compensation philosophy •Oversees compensation arrangements for executive officers and other senior level employees •Reviews general compensation levels for other employees •Determines incentive compensation awards to be granted to eligible persons | 5 | ||||||
| Nominating & Corporate Governance | •Establishes criteria for selection of new directors •Identifies individuals qualified to become directors •Recommends director candidates to the Board for nomination as directors •Makes recommendations regarding director compensation •Reviews ESG matters, including diversity & inclusion initiatives, human capital and governance •Provides oversight of the Company’s corporate governance •Manages CEO emergency succession planning process •Drives evaluation process for Board and its committees | 5 | ||||||
Audit Committee. The Audit Committee, which consists of Mr. Chapin, Ms. Donikowski, Mr. Lisman, and legal mattersMs. Smith (each of whom has been affirmatively determined by the full Board to be an independent director, as well as meeting the stricter independence standards applicable to audit committee members under NYSE listing standards and familiaritythe rules of the SEC), oversees the integrity of the Company’s financial statements and is directly responsible for the appointment, compensation, retention and oversight of the work of the firm of independent auditors (the “Auditors”) that audits the Company’s financial statements and performs services related to the audit. Among other responsibilities, the Audit Committee reviews the scope and results of the audit with the Auditors, reviews with management and the Auditors the Company’s annual and quarterly operating results, considers the adequacy of the Company’s internal accounting procedures and controls and considers the effect of such procedures on the Auditors’ independence. The Audit Committee also is responsible for overseeing the Company’s internal audit function, the Company’s compliance with legal and regulatory requirements and cybersecurity issues, and the
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review and approval of related party transactions. To satisfy these oversight responsibilities, the Audit Committee separately meets regularly with the Company’s Chief Financial Officer, Vice President of Internal Audit, and the Auditors. Pursuant to the requirements of the NYSE, the Audit Committee operates in accordance with a charter (the “Audit Committee Charter”), which is available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link. The Company including his service aswill provide a hard copy of the Audit Committee Charter to stockholders free of charge upon written request to the Corporate Secretary at the Company’s corporate headquarters. Each member of the Board sinceAudit Committee meets the Company's inception and as the lead independent director from 2004 until he was appointed Chairpersonfinancial literacy requirements of the BoardNYSE and, in December 2012. Among his responsibilities as Chairperson, in addition, to presiding over Board meetings, Mr. Dietz approves Board agendas and schedules, monitors activity of the Board's committees, communicates regularly with the Chief Executive Officer and other management on behalf of the Board, monitors and participates in communication with major stockholders, leads the annual performance evaluations of the Board and the Chief Executive Officer, and leads the Chief Executive Officer succession planning process.
Compensation Committee. The Compensation Committee, which consists of Mr. O’Donnell, Ms. Donikowski, and Mr. Lisman (each of whom has been affirmatively determined by the full Board to assumebe an independent director, as well as meeting the rolestricter independence standards applicable to compensation committee members under NYSE listing standards and the rules of Chairperson, effective immediately following the 2020 Annual Meeting.SEC), sets and oversees the Company’s compensation philosophy and policy, reviews and determines the compensation arrangements for the Company’s CEO; reviews the recommendations of the CEO and approves the compensation arrangements for all other officers and senior level employees; reviews general compensation levels for other employees as a group; determines the awards to be granted to eligible persons under the Company's 2019 Stock Option and Incentive Plan (the "2019 Pan:); and takes such other action as may be required in connection with the Company’s compensation and incentive plans, including with respect to compensation and risk-management issues. The Compensation Committee has the sole authority from the Board for the appointment, compensation and oversight of the Company’s outside compensation consultant.
The Compensation Committee engaged Semler Brossy (“Semler”) in the last quarter of the year ended December 31, 2021 ("Fiscal Year 2021") as its compensation consultant. In so doing, the Compensation Committee affirmatively determined that Semler is independent and has no conflict of interest as contemplated under rules adopted by the SEC and the NYSE, and has conducted annual reviews to confirm that Semler remains free of conflict per these rules. Semler reports directly to the Compensation Committee and does not provide any additional services to the Company. The executive compensation services provided by Semler include assisting in defining the Company’s executive compensation strategy, providing market benchmark information, recommending the composition of the compensation peer group used as a benchmark by the Compensation Committee, advising with respect to the design of both short-term and long-term incentive compensation plans, and summarizing regulatory and governance guidelines. In making its compensation decisions, the Compensation Committee relies significantly on the information provided by Semler.
Nominating and Corporate Governance
Committee. The Nominating and Corporate Governance Committee, which consists of the BoardMs. Donikowski, Mr. Chapin, Mr. O'Donnell, and Ms. Smith (each of whom has developed, andbeen affirmatively determined by the full Board has adopted, a setto be an independent director), is responsible for establishing criteria for selection of Principles of Corporate Governance. The Principles of Corporate Governance are available on the Company's website at www.CIRCOR.com under the "Investors" sub-linknew directors, identifying individuals qualified to become directors and a hardcopy will be provided by the Company free of charge to any stockholder who requests it by writingrecommending candidates to the Company's Secretary at the Company's corporate headquarters. An annual review is conducted byBoard for nomination as directors. In addition, the Nominating and Corporate Governance Committee is responsible for recommending to assessthe Board a set of corporate governance principles applicable to the Company, overseeing the evaluation process of the Board and the evaluation of its committees, recommending to the Board appropriate levels of director compensation and, together with the Audit Committee, monitoring compliance with the guidelines.
Company’s Code of Conduct & Business Ethics / Compliance Training / Reporting of Concerns
Ethics. The Company has implementedcommittee also oversees ESG, including human capital, employee safety and regularly monitors compliancediversity & inclusion initiatives. The Nominating and Corporate Governance Committee operates in accordance with a comprehensive Code of Conduct & Business Ethicscharter (the "Code of Conduct"“Nominating and Corporate Governance Committee Charter”), which applies uniformly to all directors, executive officers, and employees. Among other things, the Code of Conduct addresses conflicts of interest, confidentiality, fair dealing, protection and proper use of Company assets, compliance with applicable laws (including insider trading and anti-bribery laws), and reporting of illegal or unethical behavior. The Code of Conduct is available on the Company'sCompany’s website at www.CIRCOR.com under the "Investors" sub-link and a hardcopy will be provided by the Company free of charge to any stockholder who requests it by writing to the Company's Secretary at the Company's corporate headquarters.
“Investors” sub-link. The Company has undertakenalso will provide a numberhard copy of additional steps to further the tenets of the Code of Conduct. Through a third-party provider, the Company maintains an on-line training program pursuant to which all officers and all employees with company-issued email accounts must take a series of courses designed to demonstrate the ways in which certain activities might run afoul of the Code of Conduct. In addition, although all employees are encouraged to personally report any ethical concerns without fear of retribution, the Company, through a third-party provider, maintains the Company's HelpLine (the "HelpLine"), a toll-free telephone and web-based system through which employees may report concerns confidentially and anonymously. The HelpLine facilitates the communication of ethical concerns and serves as the vehicle through which employees may communicate confidentially and anonymously with (i) the Audit Committee regarding any concerns relating to accounting or auditing issues and (ii) the Nominating and Corporate Governance Committee regardingCharter to stockholders free of charge upon written request to the Corporate Secretary at the Company’s corporate headquarters.
Ad Hoc Committees. From time to time, the Board may establish ad hoc committees and delegate certain of its authority for the purpose of addressing particular matters (including, for example, the approval of financing or credit agreements or other matters that the Board thinks would be appropriate for review by an ad hoc committee). There were no ad hoc committees in 2021. The Board established a a special ad hoc committee on February 4, 2022, to assist with its strategic alternatives review. Mr. Ludwig, Mr. Chapin, and Mr. Lisman serve on the committee.
Executive Session. Independent directors meet at least twice a year in executive session without management, and at such other times as may be requested by any other concerns.independent director. During Fiscal Year 2021, the Chair of the Board presided at meetings
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| CORPORATE GOVERNANCE HIGHLIGHTS | |||||
| We seek to implement corporate governance practices that ensure the Company is managed for the long-term benefit of our stockholders. To that end, we review and refine our corporate governance policies, procedures and practices on an ongoing basis. | |||||
| Board and Board Committees | |||||
| Number of Independent Directors / Total Number of Directors | 6/6 | ||||
| All Board Committees Consist of Independent Directors | ü | ||||
| Risk Oversight by Full Board and Committees | ü | ||||
| Separate Chair and CEO | ü | ||||
| Regular Executive Sessions of Independent Directors | ü | ||||
| Periodic Board and Committee Self-Evaluations | ü | ||||
| Director Education and Orientation | ü | ||||
| Periodic Equity Grants to Directors | ü | ||||
| Majority voting standard for uncontested director elections | ü | ||||
| Declassified Board of Directors | ü | ||||
| Stockholder Rights, Accountability and Other Governance Practices | |||||
| Annual Advisory Stockholder Vote on Executive Compensation (“Say on Pay”) | ü | ||||
| Stock Ownership Guidelines for Directors and Executives | ü | ||||
| Policies Prohibiting Hedging and Pledging | ü | ||||
| Absence of a Stockholder Rights Plan (also known as a “Poison Pill”) | ü | ||||
| Strong Commitment to Environmental and Sustainability Matters | ü | ||||
| No Related Party Transactions | ü | ||||
Director Candidates
In evaluating director candidates, the Nominating and Corporate Governance Committee applies the skills, experience, qualifications and demeanor of the individual against the general criteria described above in “Proposal 1 – Election of Directors for a Term of One Year” and a developed skills matrix, taking into consideration issues facing the Board and considering the diversity of the Board. From time to time the Nominating and Corporate Governance Committee uses a professional search firm to help identify, evaluate and conduct due diligence on potential new director candidates. Using a search firm allows the committee to extend its reach for potential candidates as well as further ensure a diverse pool. The Nominating and Corporate Governance Committee also evaluates director candidates recommended by stockholders in the same manner as candidates from any other sources as described below. The Nominating and Corporate Governance Committee develops a short list that is shared with the Board for consideration and then vetted. Final candidates are recommended to the Board to be nominated for election at the annual meeting of stockholders.
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders, provided that such recommendations are submitted to the Company not less than 120 calendar days prior to the first anniversary date on which the Company's proxy statementCompany’s Proxy Statement was released to stockholders in connection with the previous year'syear’s annual meeting.
meeting of stockholders.
To be considered by the Nominating and Corporate Governance Committee for nomination and inclusion in the Company's proxy statementCompany’s Proxy Statement for its annual meeting to be held in 2021,2023, stockholder recommendations for directors must be received by the Company'sCorporate Secretary at the Company’s corporate headquarters prior to February 6, 2021.May 11, 2023. Any such notice also must include (i) the
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name and address of record of the stockholder; (ii) a representation that the stockholder is a record holder of Common Stockcommon stock or, if the stockholder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”); (iii) the name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the preceding five full fiscal years of the proposed director candidate; (iv) a description of the qualifications of the proposed director candidate which address the general criteria for directors as expressed in the Company'sCompany’s most recent proxy statement;Proxy Statement; (v) a description of all arrangements or understandings between the stockholder and the proposed director candidate; and (vi) the consent of the proposed director candidate to be named in the proxy statementProxy Statement and to serve as a director if elected at such meeting. Stockholders must also submit any other information regarding the proposed candidate that is required to be included in a proxy statementProxy Statement filed pursuant to the rules of the Securities and Exchange Commission (the "SEC").SEC. Recommendations of director candidates that meet the criteria described above will be forwarded to the ChairpersonChair of the Nominating and Corporate Governance Committee for further review and consideration by such committee. Stockholders also have the right to directly nominate director candidates, without any action or recommendation on the part of the Nominating and Corporate Governance Committee or the Board, by following the procedures set forth in the Third Amended and Restated By-Laws of the Company (the "By-Laws"“By-Laws”) and described in "Submission of Stockholder Proposals for Annual Meeting in 2021" below in this Proxy Statement..
directors. At the Annual Meeting we are asking(and at each annual meeting of stockholders to approve an amendment to the Certificate of Incorporation to implement a majority voting standardthereafter), all directors will stand for uncontested director elections, which amendment has been approved by the Board. The Board has also approved an amendment to the By-Laws to implement a majority voting standard for the election of directors in uncontested elections, which amendment is conditioned upon the stockholders approving the amendment to the Certificate of Incorporation and the filing of such amendment with the Delaware Secretary of State.
Our board has nominated Samuel R. Chapin, Tina M. Donikowski, Bruce Lisman, Helmuth Ludwig, John (Andy) O'Donnell, and Jill D. Smith for electionre-election as directors, in an uncontested electioneach to receive a majorityhold office until the 2023 annual meeting of the votes cast in favor of such nominee. If approved, this majority voting standard will first take effect at the 2021 Annual Meeting of Stockholders. The amendment is included in Exhibit A to this Proxy Statement.
Our Board recommends stockholders approve this amendment to the Certificatea vote FOR each of Incorporation. Under the amended standard, contested director elections-those in which the number of nominees exceeds the number of open seats-would continue to be decided by plurality voting.our nominees.
Vote Required For Approval; Effect of Abstentions and Broker Non-Votes
A quorum being present, the affirmative vote of two-thirdseach nominee shall be elected as a director of the outstanding shares entitled to voteCompany if such nominee receives a majority of the votes cast at the Annual Meeting is necessarymeeting with respect to approve this proposal.such nominee. Abstentions and broker non-votes will have the sameno effect as a vote againston this
Proposal 1.
Information Regarding Director Nominees and Other Continuing Directors
The following table provides information about each nominee for director and the other continuing directors. Detailed information about each individual’s qualifications, experience, skills and expertise along with select professional and community contributions can be found below.
| Name | Position | Age | Director Since | Audit | Compensation | N&CG* | Independent | ||||||||||||||||
| Samuel R. Chapin | Director | 65 | 2019 | t | l | X | |||||||||||||||||
| Tina M. Donikowski | Director | 63 | 2017 | l | l | t | X | ||||||||||||||||
| Bruce Lisman | Director | 75 | 2020 | l | l | X | |||||||||||||||||
Helmuth Ludwig t | Chair | 60 | 2016 | X | |||||||||||||||||||
| John (Andy) O'Donnell | Director | 74 | 2011 | t | l | X | |||||||||||||||||
| Jill D. Smith | Director | 64 | 2020 | l | l | X | |||||||||||||||||
t Chair l Member
*N&CG: Nominating & Corporate Governance Committee
*N&CG: Nominating & Corporate Governance Committee
Director Nominations
The Nominating and Corporate Governance Committee recognizes that the challenges and needs of the Company will vary over time and, accordingly, considers that the selection of director nominees should be based on skill sets most pertinent to the issues facing or likely to face the Company at the time of nomination as well as the diversity the nominee would add to the Board. When assessing nominees to serve as director, the Nominating and Corporate Governance Committee believes that the Company will benefit from a diversity of background and experience, as well as gender and racial/ethnic diversity, on the Board. In addition, there are certain general attributes that the Nominating and Corporate Governance Committee seeks from all director candidates, including:
•A commitment to ethics and integrity;
•A commitment to personal and organizational accountability;
•A history of achievement that reflects superior standards for themselves and others; and
•A willingness to express alternate points of view while, at the same time, being respectful of the opinions of others and working collaboratively with colleagues.
Our Principles of Corporate Governance require that a majority of directors must be independent. The Nominating and Corporate Governance Committee’s position is that, absent special circumstances, all directors other than the Chief Executive Officer, if he or she is serving on the Board, should be independent. The Nominating and Corporate Governance Committee annually assesses the adequacy of the foregoing criteria for Board membership and have concluded that, based on the
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background and experience as described below of each director, the Board reflects diversity in business and professional experience and skills.
As a matter of good corporate governance, we generally limit the number of public company directorships any director of the Company may hold to three, including that of the Company. This policy assists the Board in continuing to focus on and carry out the Board activities of the Company efficiently. Previously, Ms. Donikowski was granted an exception to this policy so that she could serve on one additional public company board; such additional board membership ceased in 2022.
Composition of Director Nominees and Continuing Directors
Our Board members have a varied set of skills and experience, creating a diversity of skills and viewpoints. Among our six nominees:
•6 of 6 are independent
•33% are women
•33% of our directors are born outside the United States
•The average age is 66.8 years of age.
•The average tenure on the Board is 4.7 years.
Director Biographies and Qualifications
Our nominees and other continuing directors have extensive experience and qualifications:
| Chapin | Donikowski | Lisman | Ludwig | O’Donnell | Smith | |||||||||||||||
| Geography | ||||||||||||||||||||
| Asia | X | X | X | |||||||||||||||||
| Europe | X | X | X | X | X | X | ||||||||||||||
| S America | X | X | X | X | X | |||||||||||||||
| Industry/End Market | ||||||||||||||||||||
| Industrial | X | X | X | X | ||||||||||||||||
| Defense Aerospace | X | X | ||||||||||||||||||
| Food & Bev | X | |||||||||||||||||||
Function | ||||||||||||||||||||
| CEO – Public, Private | X | X | X | |||||||||||||||||
| CEO – Div. Pres. | X | X | X | X | X | |||||||||||||||
| Commercial – Sales / Channel | X | X | X | X | X | X | ||||||||||||||
| Commercial - Marketing | X | X | X | X | X | |||||||||||||||
| R&D / NPD | X | X | X | X | ||||||||||||||||
| Finance - CFO | X | X | X | |||||||||||||||||
| Finance - Cap markets | X | X | X | |||||||||||||||||
| HR – Talent Management | X | X | X | X | X | |||||||||||||||
| Tech – IT/cyber | X | X | X | X | ||||||||||||||||
| Tech – Digitization | X | X | X | X | ||||||||||||||||
| Ops – Manufacturing | X | X | X | X | ||||||||||||||||
| Ops – Supply Chain | X | X | X | X | X | |||||||||||||||
| M&A - Transactions | X | X | X | X | X | X | ||||||||||||||
| M&A - Integration | X | X | X | X | X | |||||||||||||||
| Actively Employed (Y/N) | N | N | N | Y | N | N | ||||||||||||||
Director Nominees
Samuel R. Chapin. Mr. Chapin has served as a member of the Board since January 2019. Mr. Chapin served as Executive Vice Chairman at the Bank of America Merrill Lynch, a multinational investment bank, from 2010 to his retirement in June 2016.
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Mr. Chapin joined Merrill Lynch in 1984 as a member of the Mergers and Acquisitions group and he was named a Managing Director in Investment Banking in 1993. Mr. Chapin was named Senior Vice President and head of Merrill Lynch’s Global Investment Banking Division in 2001 and was named Vice Chairman in 2003. While at Merrill Lynch and Bank of America Merrill Lynch, Mr. Chapin was responsible for managing relationships with a number of the firm’s largest corporate clients. He currently serves on the Board of Directors of PerkinElmer, Inc., and O-I Glass, Inc. and the Board of Trustees at Lafayette College. Mr. Chapin’s qualifications to sit on our Board include his experience and significant knowledge of the industrials market with a mastery of strategic M&A accrued over more than 35 years in investment banking.
Tina M. Donikowski. Ms. Donikowski has served as a member of the Board since March 2017. Ms. Donikowski retired from General Electric Company, a diversified industrial company, in October 2015 after 38 years with the company. She served in a number of senior positions during her career at General Electric Company, including most recently as Vice President, Global Locomotive Business, GE Transportation, from January 2013 until her retirement. She currently also serves on the Board of Directors TopBuild Corp., a leading installer and distributor of insulation and building material products to the U.S. construction industry based in Daytona Beach, Florida; Advanced Energy Industries, Inc., a designer and manufacturer of highly engineered precision power, measurement, and control solutions for mission-critical applications and processes; and Eriez Magnetics, a privately held manufacturer and designer of magnetic, vibratory, and metal detection applications based in Erie, Pennsylvania. Previously she served on the board of Atlas Copco AB, a world-leading provider of sustainable productivity solutions based in Stockholm, Sweden. Ms. Donikowski’s qualifications to sit on our Board include her extensive experience in leading technology businesses and her strong operations background.
Bruce Lisman. Mr. Lisman has served as a member of the Board since June 2020. Mr. Lisman retired in 2009 from JP Morgan Chase & Co., a multinational investment firm, where he had served as Chairman of the Global Equities Division. From 1987 to 2008, he was Head or Co-Head of the Global Equity Division at Bear Stearns Companies. Mr. Lisman serves as a director of Myers Industries, Inc., a material handling and distribution company, Associated Capital., a financial services company that was spun-off from GAMCO Investors, Inc., and National Life Group, a mutual life insurance company. Prior board service includes PC Construction, an engineering and construction company as Chairman from 2013 to 2019, and as a member until 2021, and The Pep Boys, a nationwide auto parts retailer. Mr. Lisman’s qualifications to sit on our Board include his financial global business and leadership expertise.
Helmuth Ludwig. Dr. Ludwig has served as a member of the Board since January 2016. From October 2016 until his retirement in December 2019, he served as Global CIO for Siemens, a leading technology company. He previously served among other roles as CEO of the Siemens Industry Sector in North America from October 2011 to September 2014 and as President of Siemens PLM Software from August 2007 to September 2010 where he is credited for having successfully led the integration of the organization’s 50 legal entities and multiple facilities across 26 countries. Earlier in his career, Dr. Ludwig held a number of international assignments at Siemens in Europe, Latin America, and Asia. Dr. Ludwig serves as a member of the board of Hitachi Ltd., Tokyo since July 2020. He teaches as a Professor of Practice for Strategy and Entrepreneurship at Southern Methodist University Cox School of Business in Dallas and is a Board Leadership Fellow with the National Association of Corporate Directors (NACD). Dr. Ludwig is a known expert and regular speaker at industry conferences on the Internet of Things and “Industry 4.0.” Dr. Ludwig’s qualifications to sit on our Board include his proven manufacturing leadership skills, extensive international experience, and his success in leading the integration and simplification of a complex global enterprise.
John (Andy) O'Donnell. Mr. O'Donnell has served as a member of the Board since November 2011. Until his retirement in January 2014, Mr. O'Donnell had worked at Baker Hughes, an oilfield services company, since 1975. He served as Vice President of Baker Hughes since 1998 and was appointed to Vice President, Office of the Chief Executive Officer in 2012, a role in which he served until his retirement. From 2009 to 2011, Mr. O'Donnell was President, Western Hemisphere Operations of Baker Hughes. He was President of Baker Petrolite Corporation from 2005 to 2009 and President of Baker Hughes Drilling Fluids from 2004 to 2005. He served as Vice President, Business Process Development at Baker Hughes from 1998 to 2002 and as Vice President of Manufacturing at Baker Oil Tools from 1990 to 1998. Mr. O'Donnell also serves on the Board of Directors of Cactus, Inc., where he is a member of its Audit, Compensation, and Nominating and Corporate Governance Committees. Mr. O'Donnell’s qualifications to sit on our Board include his experience in international energy markets and leading multinational sales, marketing, service and manufacturing operations.
Jill D. Smith. Ms. Smith has served as a member of the Board since January 2020. Ms. Smith most recently served as President, Chief Executive Officer and Director of Allied Minds plc, an intellectual property commercialization company focused on technology and life sciences from March 2017 until her retirement in June 2019. She previously had served as Chairman, Chief Executive Officer and President of DigitalGlobe, Inc., a global provider of satellite imagery products and services, from 2005 to 2011. Ms. Smith started her career as a consultant at Bain & Company where she rose to Partner. She then joined Sara Lee as
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Vice President and subsequently went on to serve as President and Chief Executive Officer of SRDS, a business-to-business publishing firm and later as President and Chief Executive Officer of eDial, a VoIP collaboration company. Furthermore, she served as Chief Operating Officer of Micron Electronics, and co-founded and led Treacy & Company, a consulting and boutique investment firm. Ms. Smith currently serves on the Board of Directors of R1 RCM Inc., where she is a member of the Audit and Human Capital Committee, AspenTech, where she is Chair of the Board and Chair of the Nominating and Corporate Governance Committee, and MDA, where she is Chair of the Nominating and Governance Committee and a member of the Human Resource Development and Compensation Committee. Ms. Smith’s qualifications to sit on our Board includes her extensive experience as a technology executive, including as a CEO focused on growing innovative companies.
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CORPORATE GOVERNANCE
Role of the Board
The Board is elected by the Company’s stockholders to oversee their interests in the value and health of the Company and drive long-term value creation. The Board oversees the implementation of and compliance with standards of accountability and monitors the effectiveness of management policies and decisions, including those related to financial and other internal controls, compliance with laws and regulations and corporate governance. It has retained oversight authority of the Company, except for those matters reserved to or shared with the stockholders.
Key Areas of Board Oversight
| Strategy | Risk | Succession Planning | Environmental, Social & Governance (ESG) Matters | ||||||||
•The Board oversees the Company’s annual business plan and monitors strategic planning •Business strategy is a key focus at the Board level and embedded in the work of Board committees •Company management is charged with developing and executing business strategy and provides regular performance updates to the Board | •The Board oversees risk management, including the enterprise risk management process •Board committees, which meet regularly and report back to the full Board, play significant roles in carrying out the risk oversight function •Company management is charged with managing risk, through robust internal processes and effective internal controls •The Audit Committee oversees financial risk, related party transactions, and cybersecurity •The Compensation Committee oversees the balance of risk and incentives •The Nominating & Corporate Governance Committee oversees employee health and safety | •The Board oversees succession planning and talent development for the Chief Executive Officer (“CEO”) and the executive leadership team •The Compensation Committee has primary responsibility for developing succession plans for the CEO •The Nominating and Corporate Governance Committee manages the emergency CEO succession planning process •The CEO is charged with preparing, and reviewing with the Compensation Committee, talent development plans for senior executives and their potential successors | •The Board oversees execution of the Company’s ESG strategies •The Nominating and Corporate Governance Committee oversees ESG elements, with a particular focus on the Company’s Diversity & Inclusion initiatives, human capital management and employee health and safety | ||||||||
Strategy. The Board has oversight responsibility for management’s establishment and execution of corporate strategy. Elements of strategy are discussed at every regularly scheduled Board meeting. Senior management presents a consolidated annual business plan, and the Board discusses the Company’s results relative to the plan periodically throughout the year. At least once a year, each of the business groups presents an in-depth review of their business to the Board, which includes a review of strategic goals and performance relative to strategy. In 2020, the Board reviewed the Company’s five-year strategic plan.
Risk. The Board and its committees oversee key Company risks. The Board regularly reviews the Company’s top enterprise risks from management, assessing, among other concerns, risks associated with the Company’s products, customers, supply chain, management, staff, efficiency, and cybersecurity. The Board receives regular reports on management’s risk mitigation measures. Committees have responsibility for assisting the Board in its oversight of risk, including focus on certain risk areas,
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such as cybersecurity, related party transactions, and environmental, health and safety (including employee health and safety), and the committee calendars include periodic reviews and discussions on those topics.
Succession Planning. The Nominating and Corporate Governance Committee reviews the emergency CEO succession process on an annual basis, while the full Board reviews overall succession planning. Such planning includes a review with the CEO of the succession planning for key executives of the Company.
ESG Matters. Primary responsibility for assisting the Board with ESG matter oversight belongs to the Nominating and Corporate Governance Committee. With this responsibility, the committee reviews sustainability matters, governance items, progress on increasing diversity and inclusion and the Company's human capital strategy, plans and associated activities.
Board Leadership Structure
The Board has established a leadership structure that separates the roles of Chair of the Board and CEO. In doing so, the Board considered that separating the roles of Chair and CEO would most effectively provide the Company access to the judgments and experience of the Chair of the Board and the CEO, while providing a mechanism for the Board’s independent oversight of management. The Company's President and Chief Executive Officer is currently not a member of the Board. As Chair of the Board, Mr. Helmuth Ludwig presides over the meetings of the Board and the stockholders, utilizing his experience in corporate governance, familiarity with the Company and leadership. In addition to presiding over Board meetings, Mr. Ludwig approves Board agendas and schedules, monitors activity of the Board’s committees, communicates regularly with the CEO and other management on behalf of the Board, monitors and participates in communication with major stockholders, leads the annual performance evaluations of the CEO and leads the CEO succession planning process.
Principles of Corporate Governance
The Nominating and Corporate Governance Committee has developed, and the full Board has adopted, a set of Principles of Corporate Governance. The Principles of Corporate Governance are available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link, and a hard copy will be provided by the Company free of charge to any stockholder who requests it by writing to the Corporate Secretary at the Company’s corporate headquarters. An annual review is conducted by the Nominating and Corporate Governance Committee to assess compliance with the Principles of Corporate Governance.
In addition, to align the interests of the directors and executive officers of the Company with the interests of the stockholders, the Principles of Corporate Governance include Stock Ownership Guidelines for directors and executive officers.
Director Independence
The Board, upon consideration of all relevant facts and circumstances and upon recommendation of the Nominating and Corporate Governance Committee, has affirmatively determined that each of Mr. Chapin, Ms. Donikowski, Mr. Lisman, Mr. Ludwig, Mr. O’Donnell and Ms. Smith is independent of the Company. The Board also previously determined that David Dietz and Peter Wilver, each a former director who served during part of Fiscal Year 2021, were independent of the Company prior to their respective retirements from the Board in Fiscal Year 2021 and that and Arthur George, Jr., a former director who served during part of Fiscal Year 2022, was independent of the Company prior to his resignation from the Board in Fiscal Year 2022. In evaluating the independence of each director, the Board applied the standards and guidelines set forth in the applicable Securities and Exchange Commission (“SEC”) and New York Stock Exchange (“NYSE”) regulations in determining that each director has no material relationship with the Company, directly or as a partner, stockholder or affiliate of an organization that has a classifiedrelationship with the Company. The bases for the Board’s determination include, but are not limited to, the following:
•No director is an employee of the Company, or its subsidiaries or affiliates.
•No director has an immediate family member who is an officer of the Company or its subsidiaries or has any other current or past material relationship with the Company.
•No director receives, or in the past three years, has received, any compensation from the Company other than compensation for services as a director.
•No director has a family member who has received any compensation during the past three years from the Company.
•No director, during the past three years, has been affiliated with, or had an immediate family member who has been affiliated with, a present or former internal or external auditor of the Company.
•No executive officer of the Company serves on the compensation committee or the board of directors of any corporation that employs a director or a member of any director’s immediate family.
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•No director is an officer or employee (or has an immediate family member who is an officer or employee) of an organization that sells products and services to, or receives products and services from, the Company in excess of the greater of $1 million or 2% of such organization’s consolidated gross revenues in any fiscal year.
Board Meetings and Committees
We believe that our current Board leadership structure fosters appropriate oversight for the Company for a number of reasons, the most significant of which are discussed below. The Board’s oversight is coordinated primarily through the committees of the Board, as disclosed in the descriptions of each of the committees below and in the charters of each of the committees (which are available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link). The full Board, however, retains responsibility for general oversight of the Company’s long-term health and stakeholder interests. The Board held 5 meetings during Fiscal Year 2021.
Our Board maintains three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The following table sets forth the number of meetings held during Fiscal Year 2021 by each committee of the Board. Each of our directors attended at least 75% of the total number of meetings of the Board and of the committees of which directors are divided into three classes,such director then served.
| BOARD COMMITTEE OVERVIEW | ||||||||
| Committee | Oversight Responsibilities | 2021 Meetings | ||||||
| Audit | •Oversees integrity of financial statements •Responsible for appointment, compensation, retention and oversight of work of the independent auditor •Reviews scope and results of annual audit with independent auditor •Reviews annual/quarterly operating results with independent auditor •Considers the adequacy of internal accounting procedures/controls; considers the effect of these on auditor independence •Oversees internal audit function •Oversees financial and cybersecurity risks •Reviews and approves related party transactions •Meets in executive session separately with each of the Chief Financial Officer, Internal Audit lead and our independent auditor engagement partner | 7 | ||||||
| Compensation | •Determines and oversees pay for performance compensation philosophy •Oversees compensation arrangements for executive officers and other senior level employees •Reviews general compensation levels for other employees •Determines incentive compensation awards to be granted to eligible persons | 5 | ||||||
| Nominating & Corporate Governance | •Establishes criteria for selection of new directors •Identifies individuals qualified to become directors •Recommends director candidates to the Board for nomination as directors •Makes recommendations regarding director compensation •Reviews ESG matters, including diversity & inclusion initiatives, human capital and governance •Provides oversight of the Company’s corporate governance •Manages CEO emergency succession planning process •Drives evaluation process for Board and its committees | 5 | ||||||
Audit Committee. The Audit Committee, which consists of Mr. Chapin, Ms. Donikowski, Mr. Lisman, and directorsMs. Smith (each of whom has been affirmatively determined by the full Board to be an independent director, as well as meeting the stricter independence standards applicable to audit committee members under NYSE listing standards and the rules of the SEC), oversees the integrity of the Company’s financial statements and is directly responsible for the appointment, compensation, retention and oversight of the work of the firm of independent auditors (the “Auditors”) that audits the Company’s financial statements and performs services related to the audit. Among other responsibilities, the Audit Committee reviews the scope and results of the audit with the Auditors, reviews with management and the Auditors the Company’s annual and quarterly operating results, considers the adequacy of the Company’s internal accounting procedures and controls and considers the effect of such procedures on the Auditors’ independence. The Audit Committee also is responsible for overseeing the Company’s internal audit function, the Company’s compliance with legal and regulatory requirements and cybersecurity issues, and the
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review and approval of related party transactions. To satisfy these oversight responsibilities, the Audit Committee separately meets regularly with the Company’s Chief Financial Officer, Vice President of Internal Audit, and the Auditors. Pursuant to the requirements of the NYSE, the Audit Committee operates in accordance with a class are elected each yearcharter (the “Audit Committee Charter”), which is available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link. The Company will provide a hard copy of the Audit Committee Charter to serve three-year terms.
Compensation Committee. The Compensation Committee, which consists of Mr. O’Donnell, Ms. Donikowski, and Mr. Lisman (each of whom has been affirmatively determined by the full Board to be an independent director, as well as meeting the stricter independence standards applicable to compensation committee members under NYSE listing standards and the rules of the SEC), sets and oversees the Company’s compensation philosophy and policy, reviews and determines the compensation arrangements for the Company’s CEO; reviews the recommendations of the CEO and approves the compensation arrangements for all other officers and senior level employees; reviews general compensation levels for other employees as a group; determines the awards to be granted to eligible persons under the Company's 2019 Stock Option and Incentive Plan (the "2019 Pan:); and takes such other action as may be required in connection with the Company’s compensation and incentive plans, including with respect to compensation and risk-management issues. The Compensation Committee has the sole authority from the Board for the appointment, compensation and oversight of the Company’s outside compensation consultant.
The Compensation Committee engaged Semler Brossy (“Semler”) in the best interestslast quarter of the year ended December 31, 2021 ("Fiscal Year 2021") as its compensation consultant. In so doing, the Compensation Committee affirmatively determined that Semler is independent and has no conflict of interest as contemplated under rules adopted by the SEC and the NYSE, and has conducted annual reviews to confirm that Semler remains free of conflict per these rules. Semler reports directly to the Compensation Committee and does not provide any additional services to the Company. The executive compensation services provided by Semler include assisting in defining the Company’s executive compensation strategy, providing market benchmark information, recommending the composition of the compensation peer group used as a benchmark by the Compensation Committee, advising with respect to the design of both short-term and long-term incentive compensation plans, and summarizing regulatory and governance guidelines. In making its compensation decisions, the Compensation Committee relies significantly on the information provided by Semler.
The Compensation Committee operates in accordance with a charter (the “Compensation Committee Charter”), which is available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link. The Company also will provide a hard copy of the Compensation Committee Charter to stockholders free of charge upon written request to the Corporate Secretary at the Company’s corporate headquarters.
Nominating and its stockholdersCorporate Governance Committee. The Nominating and Corporate Governance Committee, which consists of Ms. Donikowski, Mr. Chapin, Mr. O'Donnell, and Ms. Smith (each of whom has been affirmatively determined by the full Board to amend the Certificatebe an independent director), is responsible for establishing criteria for selection of Incorporationnew directors, identifying individuals qualified to declassifybecome directors and recommending candidates to the Board so that, following a two-year transition period,for nomination as directors. In addition, the Company's stockholders will vote on the election of the entire Board on an annual basis. The Board has approved an amendmentNominating and Corporate Governance Committee is responsible for recommending to the CertificateBoard a set of Incorporation to phase-out the Company’s classified Board. The amendment is included in Exhibit A to this Proxy Statement.
Ad Hoc Committees. From time to time, the Board may establish ad hoc committees and delegate certain of its authority for the purpose of addressing particular matters (including, for example, the approval of financing or credit agreements or other matters that the Board thinks would be appropriate for review by an ad hoc committee). There were no ad hoc committees in 2021. The Board established a a special ad hoc committee on February 4, 2022, to assist with its strategic alternatives review. Mr. Ludwig, Mr. Chapin, and Mr. Lisman serve on the committee.
Executive Session. Independent directors meet at least twice a year in executive session without management, and at such other times as may be requested by any independent director. During Fiscal Year 2021, the Chair of the Board to focus on creating long-term stockholder value. The Board is aware that the current trend in corporate governance is leading away from classified boards in favor of electing all directors annually and also recognizes that a classified board structure may reduce directors' accountability to stockholders because such a structure does not enable stockholders to express a view on each director's performance by means of an annual vote. Moreover, many institutional investors believe that the election of directors is the primary means for stockholders to influence corporate governance policies and to increase accountability for implementing those policies.presided at meetings
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Corporate Governance Framework
We have adopted Corporate Governance Principles that together with our Board the Board carefully considered the advantagescommittee charters and disadvantagesour Code of the current classified board structure and has determined that it is advisable and in the best interest of CIRCOR and its stockholders to declassify the Board.
Conduct provide our governance framework. The foregoingfollowing is a summary of our governance framework:
| CORPORATE GOVERNANCE HIGHLIGHTS | |||||
| We seek to implement corporate governance practices that ensure the Company is managed for the long-term benefit of our stockholders. To that end, we review and refine our corporate governance policies, procedures and practices on an ongoing basis. | |||||
| Board and Board Committees | |||||
| Number of Independent Directors / Total Number of Directors | 6/6 | ||||
| All Board Committees Consist of Independent Directors | ü | ||||
| Risk Oversight by Full Board and Committees | ü | ||||
| Separate Chair and CEO | ü | ||||
| Regular Executive Sessions of Independent Directors | ü | ||||
| Periodic Board and Committee Self-Evaluations | ü | ||||
| Director Education and Orientation | ü | ||||
| Periodic Equity Grants to Directors | ü | ||||
| Majority voting standard for uncontested director elections | ü | ||||
| Declassified Board of Directors | ü | ||||
| Stockholder Rights, Accountability and Other Governance Practices | |||||
| Annual Advisory Stockholder Vote on Executive Compensation (“Say on Pay”) | ü | ||||
| Stock Ownership Guidelines for Directors and Executives | ü | ||||
| Policies Prohibiting Hedging and Pledging | ü | ||||
| Absence of a Stockholder Rights Plan (also known as a “Poison Pill”) | ü | ||||
| Strong Commitment to Environmental and Sustainability Matters | ü | ||||
| No Related Party Transactions | ü | ||||
Director Candidates
In evaluating director candidates, the Nominating and Corporate Governance Committee applies the skills, experience, qualifications and demeanor of the individual against the general criteria described above in “Proposal 1 – Election of Directors for a Term of One Year” and a developed skills matrix, taking into consideration issues facing the Board and considering the diversity of the Board. From time to time the Nominating and Corporate Governance Committee uses a professional search firm to help identify, evaluate and conduct due diligence on potential new director candidates. Using a search firm allows the committee to extend its reach for potential candidates as well as further ensure a diverse pool. The Nominating and Corporate Governance Committee also evaluates director candidates recommended by stockholders in the same manner as candidates from any other sources as described below. The Nominating and Corporate Governance Committee develops a short list that is shared with the Board for consideration and then vetted. Final candidates are recommended to the Board to be nominated for election at the annual meeting of stockholders.
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders, provided that such recommendations are submitted to the Company not less than 120 calendar days prior to the first anniversary date on which the Company’s Proxy Statement was released to stockholders in connection with the previous year’s annual meeting of stockholders.
To be considered by the Nominating and Corporate Governance Committee for nomination and inclusion in the Company’s Proxy Statement for its annual meeting to be held in 2023, stockholder recommendations for directors must be received by the Corporate Secretary at the Company’s corporate headquarters prior to May 11, 2023. Any such notice also must include (i) the
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name and address of record of the stockholder; (ii) a representation that the stockholder is a record holder of common stock or, if the stockholder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); (iii) the name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the preceding five full fiscal years of the proposed amendmentdirector candidate; (iv) a description of the qualifications of the proposed director candidate which address the general criteria for directors as expressed in the Company’s most recent Proxy Statement; (v) a description of all arrangements or understandings between the stockholder and the proposed director candidate; and (vi) the consent of the proposed director candidate to be named in the Proxy Statement and to serve as a director if elected at such meeting. Stockholders must also submit any other information regarding the proposed candidate that is required to be included in a Proxy Statement filed pursuant to the Certificaterules of Incorporation and is qualified in its entirety by referencethe SEC. Recommendations of director candidates that meet the criteria described above will be forwarded to the full textChair of the amendmentNominating and Corporate Governance Committee for further review and consideration by such committee. Stockholders also have the right to directly nominate director candidates, without any action or recommendation on the Certificate of Incorporation included in Exhibit A.
ELECTION OF DIRECTORS
Under our Articles of Organization and By-Laws, our board has completed its transition from a classified board to the annual election of all directors. At the Annual Meeting two Class III(and at each annual meeting of stockholders thereafter), all directors will be electedstand for election for one-year terms expiring at the next succeeding annual meeting of stockholders.
Our board has nominated Samuel R. Chapin, Tina M. Donikowski, Bruce Lisman, Helmuth Ludwig, John (Andy) O'Donnell, and Jill D. Smith for re-election as directors, each to serve until the 2021 Annual Meeting of Stockholders if the declassification of the Board is approved by the stockholders orhold office until the 2023 Annual Meetingannual meeting of Stockholders if the declassification of the Board is not approved by the stockholders and in either case until each such director's successor istheir respective successors have been duly elected and qualified or until each such director'stheir earlier death, resignation or removal.
Vote Required For Approval; Effect of Abstentions and Broker Non-Votes
A quorum being present, each nominee shall be elected as a director of the Company if such nominee receives a pluralitymajority of the votes cast at the meeting.meeting with respect to such nominee. Abstentions and broker non-votes will have no effect on this Proposal 3.1.
Information Regarding Director Nominees and Other Continuing Directors
The following table provides information about each nominee for director and the other continuing directors. Detailed information about each individual’s qualifications, experience, skills and expertise along with select professional and community contributions can be found below.
| Name | Position | Age | Director Since | Audit | Compensation | N&CG* | Independent | ||||||||||||||||
| Samuel R. Chapin | Director | 65 | 2019 | t | l | X | |||||||||||||||||
| Tina M. Donikowski | Director | 63 | 2017 | l | l | t | X | ||||||||||||||||
| Bruce Lisman | Director | 75 | 2020 | l | l | X | |||||||||||||||||
Helmuth Ludwig t | Chair | 60 | 2016 | X | |||||||||||||||||||
| John (Andy) O'Donnell | Director | 74 | 2011 | t | l | X | |||||||||||||||||
| Jill D. Smith | Director | 64 | 2020 | l | l | X | |||||||||||||||||
t Chair l Member
*N&CG: Nominating & Corporate Governance Committee
*N&CG: Nominating & Corporate Governance Committee
Director Nominations
The Nominating and Key EmployeesCorporate Governance Committee recognizes that the challenges and needs of the Company will vary over time and, accordingly, considers that the selection of director nominees should be based on skill sets most pertinent to the issues facing or likely to face the Company at the time of nomination as well as the diversity the nominee would add to the Board. When assessing nominees to serve as director, the Nominating and Corporate Governance Committee believes that the Company will benefit from a diversity of background and experience, as well as gender and racial/ethnic diversity, on the Board. In addition, there are certain general attributes that the Nominating and Corporate Governance Committee seeks from all director candidates, including:
•A commitment to ethics and integrity;
•A commitment to personal and organizational accountability;
•A history of achievement that reflects superior standards for themselves and others; and
•A willingness to express alternate points of view while, at the same time, being respectful of the opinions of others and working collaboratively with colleagues.
Our executive officersPrinciples of Corporate Governance require that a majority of directors must be independent. The Nominating and key employees,Corporate Governance Committee’s position is that, absent special circumstances, all directors other than the Chief Executive Officer, if he or she is serving on the Board, should be independent. The Nominating and their respective agesCorporate Governance Committee annually assesses the adequacy of the foregoing criteria for Board membership and positionshave concluded that, based on the
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background and experience as described below of March 31, 2020,each director, the Board reflects diversity in business and professional experience and skills.
As a matter of good corporate governance, we generally limit the number of public company directorships any director of the Company may hold to three, including that of the Company. This policy assists the Board in continuing to focus on and carry out the Board activities of the Company efficiently. Previously, Ms. Donikowski was granted an exception to this policy so that she could serve on one additional public company board; such additional board membership ceased in 2022.
Composition of Director Nominees and Continuing Directors
Our Board members have a varied set of skills and experience, creating a diversity of skills and viewpoints. Among our six nominees:
•6 of 6 are as follows:independent
•33% are women
•33% of our directors are born outside the United States
•The average age is 66.8 years of age.
•The average tenure on the Board is 4.7 years.
Director Biographies and Qualifications
Our nominees and other continuing directors have extensive experience and qualifications:
| Lisman | Ludwig | O’Donnell | Smith | |||||||||||||||||||
| X | X | |||||||||||||||||||||
| X | X | X | X | |||||||||||||||||||
| X | X | X | ||||||||||||||||||||
| X | X | |||||||||||||||||||||
| X | X | |||||||||||||||||||||
Function | ||||||||||||||||||||||
| X | X | |||||||||||||||||||||
| X | X | X | ||||||||||||||||||||
| Commercial – Sales / Channel | X | X | X | X | X | X | ||||||||||||||||
| Commercial - Marketing | X | X | X | X | X | |||||||||||||||||
| R&D / NPD | X | X | X | X | ||||||||||||||||||
| Finance - CFO | X | X | X | |||||||||||||||||||
| Finance - Cap markets | X | X | X | |||||||||||||||||||
| HR – Talent Management | X | X | X | X | X | |||||||||||||||||
| Tech – IT/cyber | X | X | X | X | ||||||||||||||||||
| Tech – Digitization | X | X | X | X | ||||||||||||||||||
| Ops – Manufacturing | X | X | X | X | ||||||||||||||||||
| Ops – Supply Chain | X | X | X | X | X | |||||||||||||||||
| M&A - Transactions | X | X | X | X | X | X | ||||||||||||||||
| M&A - Integration | X | X | X | X | X | |||||||||||||||||
| Actively Employed (Y/N) | N | N | N | Y | N | N | ||||||||||||||||
Director Nominees
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Mr. Chapin joined Merrill Lynch in 1984 as a member of the Mergers and Acquisitions group and he was named a Managing Director in Investment Banking in 1993. Mr. Chapin was named Senior Vice President and head of Merrill Lynch’s Global Investment Banking Division in 2001 and was named Vice Chairman in 2003. While at Merrill Lynch and Bank of America Merrill Lynch, Mr. Chapin was responsible for managing relationships with a number of the firm’s largest corporate clients. He currently serves on the Board of Directors of PerkinElmer, Inc., and O-I Glass, Inc. and the Board of Trustees at Lafayette College. Mr. Chapin’s qualifications to sit on our Board include his experience and significant knowledge of the industrials market with a mastery of strategic M&A accrued over more than 35 years in investment banking.
Tina M. Donikowski. Ms. Donikowski has served as a member of the Board since March 2017. Ms. Donikowski retired from General Electric Company, a diversified industrial company, in October 2015 after 38 years with the company. She served in a number of senior positions during her career at General Electric Company, including most recently as Vice President, Global Locomotive Business, GE Transportation, from January 2013 until her retirement. She currently also serves on the Board of Directors TopBuild Corp., a leading installer and distributor of insulation and building material products to the U.S. construction industry based in Daytona Beach, Florida; Advanced Energy Industries, Inc., a designer and manufacturer of highly engineered precision power, measurement, and control solutions for mission-critical applications and processes; and Eriez Magnetics, a privately held manufacturer and designer of magnetic, vibratory, and metal detection applications based in Erie, Pennsylvania. Previously she served on the board of Atlas Copco AB, a world-leading provider of sustainable productivity solutions based in Stockholm, Sweden. Ms. Donikowski’s qualifications to sit on our Board include her extensive experience in leading technology businesses and her strong operations background.
Bruce Lisman. Mr. Lisman has served as a member of the Board since June 2020. Mr. Lisman retired in 2009 from JP Morgan Chase & Co., a multinational investment firm, where he had served as Chairman of the Global Equities Division. From 1987 to 2008, he was Head or Co-Head of the Global Equity Division at Bear Stearns Companies. Mr. Lisman serves as a director of Myers Industries, Inc., a material handling and distribution company, Associated Capital., a financial services company that was spun-off from GAMCO Investors, Inc., and National Life Group, a mutual life insurance company. Prior board service includes PC Construction, an engineering and construction company as Chairman from 2013 to 2019, and as a member until 2021, and The Pep Boys, a nationwide auto parts retailer. Mr. Lisman’s qualifications to sit on our Board include his financial global business and leadership expertise.
Helmuth Ludwig. Dr. Ludwig has served as a member of the Board since January 2016. From October 2016 until his retirement in December 2019, he served as Global CIO for Siemens, a leading technology company. He previously served among other roles as CEO of the Siemens Industry Sector in North America from October 2011 to September 2014 and as President of Siemens PLM Software from August 2007 to September 2010 where he is credited for having successfully led the integration of the organization’s 50 legal entities and multiple facilities across 26 countries. Earlier in his career, Dr. Ludwig held a number of international assignments at Siemens in Europe, Latin America, and Asia. Dr. Ludwig serves as a member of the board of Hitachi Ltd., Tokyo since July 2020. He teaches as a Professor of Practice for Strategy and Entrepreneurship at Southern Methodist University Cox School of Business in Dallas and is a Board Leadership Fellow with the National Association of Corporate Directors (NACD). Dr. Ludwig is a known expert and regular speaker at industry conferences on the Internet of Things and “Industry 4.0.” Dr. Ludwig’s qualifications to sit on our Board include his proven manufacturing leadership skills, extensive international experience, and his success in leading the integration and simplification of a complex global enterprise.
John (Andy) O'Donnell. Mr. BuckhoutO'Donnell has served as a member of the Board since November 2011. Until his retirement in January 2014, Mr. O'Donnell had worked at Baker Hughes, an oilfield services company, since 1975. He served as Vice President of Baker Hughes since 1998 and was appointed to Vice President, Office of the Chief Executive Officer in 2012, a role in which he served until his retirement. From 2009 to 2011, Mr. O'Donnell was President, Western Hemisphere Operations of Baker Hughes. He was President of Baker Petrolite Corporation from 2005 to 2009 and President of Baker Hughes Drilling Fluids from 2004 to 2005. He served as Vice President, Business Process Development at Baker Hughes from 1998 to 2002 and as Vice President of Manufacturing at Baker Oil Tools from 1990 to 1998. Mr. O'Donnell also serves on the Board of Directors of Cactus, Inc., where he is a member of its Audit, Compensation, and Nominating and Corporate Governance Committees. Mr. O'Donnell’s qualifications to sit on our Board include his experience in international energy markets and leading multinational sales, marketing, service and manufacturing operations.
Jill D. Smith. Ms. Smith has served as a member of the Board since January 2020. Ms. Smith most recently served as President, Chief Executive Officer and Director of Allied Minds plc, an intellectual property commercialization company focused on technology and life sciences from March 2017 until her retirement in June 2019. She previously had served as Chairman, Chief Executive Officer and President of DigitalGlobe, Inc., a global provider of satellite imagery products and services, from 2005 to 2011. Ms. Smith started her career as a consultant at Bain & Company where she rose to Partner. She then joined CIRCORSara Lee as
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Vice President and subsequently went on to serve as President and Chief Executive Officer of SRDS, a business-to-business publishing firm and was appointedlater as President and Chief Executive Officer of eDial, a VoIP collaboration company. Furthermore, she served as Chief Operating Officer of Micron Electronics, and co-founded and led Treacy & Company, a consulting and boutique investment firm. Ms. Smith currently serves on the Board of Directors of R1 RCM Inc., where she is a member of the Audit and Human Capital Committee, AspenTech, where she is Chair of the Board and Chair of the Nominating and Corporate Governance Committee, and MDA, where she is Chair of the Nominating and Governance Committee and a member of the Human Resource Development and Compensation Committee. Ms. Smith’s qualifications to sit on our Board includes her extensive experience as a technology executive, including as a CEO focused on growing innovative companies.
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CORPORATE GOVERNANCE
Role of the Board
The Board is elected by the Company’s stockholders to oversee their interests in the value and health of the Company and drive long-term value creation. The Board oversees the implementation of and compliance with standards of accountability and monitors the effectiveness of management policies and decisions, including those related to financial and other internal controls, compliance with laws and regulations and corporate governance. It has retained oversight authority of the Company, except for those matters reserved to or shared with the stockholders.
Key Areas of Board Oversight
| Strategy | Risk | Succession Planning | Environmental, Social & Governance (ESG) Matters | ||||||||
•The Board oversees the Company’s annual business plan and monitors strategic planning •Business strategy is a key focus at the Board level and embedded in the work of Board committees •Company management is charged with developing and executing business strategy and provides regular performance updates to the Board | •The Board oversees risk management, including the enterprise risk management process •Board committees, which meet regularly and report back to the full Board, play significant roles in carrying out the risk oversight function •Company management is charged with managing risk, through robust internal processes and effective internal controls •The Audit Committee oversees financial risk, related party transactions, and cybersecurity •The Compensation Committee oversees the balance of risk and incentives •The Nominating & Corporate Governance Committee oversees employee health and safety | •The Board oversees succession planning and talent development for the Chief Executive Officer (“CEO”) and the executive leadership team •The Compensation Committee has primary responsibility for developing succession plans for the CEO •The Nominating and Corporate Governance Committee manages the emergency CEO succession planning process •The CEO is charged with preparing, and reviewing with the Compensation Committee, talent development plans for senior executives and their potential successors | •The Board oversees execution of the Company’s ESG strategies •The Nominating and Corporate Governance Committee oversees ESG elements, with a particular focus on the Company’s Diversity & Inclusion initiatives, human capital management and employee health and safety | ||||||||
Strategy. The Board has oversight responsibility for management’s establishment and execution of corporate strategy. Elements of strategy are discussed at every regularly scheduled Board meeting. Senior management presents a consolidated annual business plan, and the Board discusses the Company’s results relative to the plan periodically throughout the year. At least once a year, each of the business groups presents an in-depth review of their business to the Board, in April 2013. Priorwhich includes a review of strategic goals and performance relative to joining CIRCOR, Mr. Buckhout served as President, Fire & Security at United Technologies Corporation (UTC), a diverse, multinational manufacturing company. He previously held a number of senior level positions at UTC, including President, Global Fire Products and President, Systems and Firefighting. Before joining UTC, Mr. Buckhout held a number of senior roles at Honeywell International Corporation instrategy. In 2020, the Consumer Products and Friction Materials divisions. He spent five years in Europe for UTC and Honeywell, including as Vice President and General Manager, Consumer Products Group, Honeywell EMEA and Vice President and General Manager, Honeywell Friction Materials - Europe. He also previously worked in general management and strategy consulting roles at Booz Allen & Hamilton and The Boeing Company. Mr. Buckhout earned a Master of Business Administration in Operations & Finance fromBoard reviewed the J.L. Kellogg Graduate School of Management at Northwestern University, and a Bachelor of Science in Aerospace Engineering from Texas A&M University.Company’s five-year strategic plan.
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such as Senior Vicecybersecurity, related party transactions, and environmental, health and safety (including employee health and safety), and the committee calendars include periodic reviews and discussions on those topics.
Succession Planning. The Nominating and Corporate Governance Committee reviews the emergency CEO succession process on an annual basis, while the full Board reviews overall succession planning. Such planning includes a review with the CEO of the succession planning for key executives of the Company.
ESG Matters. Primary responsibility for assisting the Board with ESG matter oversight belongs to the Nominating and Corporate Governance Committee. With this responsibility, the committee reviews sustainability matters, governance items, progress on increasing diversity and inclusion and the Company's human capital strategy, plans and associated activities.
Board Leadership Structure
The Board has established a leadership structure that separates the roles of Chair of the Board and CEO. In doing so, the Board considered that separating the roles of Chair and CEO would most effectively provide the Company access to the judgments and experience of the Chair of the Board and the CEO, while providing a mechanism for the Board’s independent oversight of management. The Company's President and Chief FinancialExecutive Officer is currently not a member of the Board. As Chair of the Board, Mr. Helmuth Ludwig presides over the meetings of the Board and the stockholders, utilizing his experience in corporate governance, familiarity with the Company and leadership. In addition to presiding over Board meetings, Mr. Ludwig approves Board agendas and schedules, monitors activity of the Board’s committees, communicates regularly with the CEO and other management on March 31, 2020. Priorbehalf of the Board, monitors and participates in communication with major stockholders, leads the annual performance evaluations of the CEO and leads the CEO succession planning process.
Principles of Corporate Governance
The Nominating and Corporate Governance Committee has developed, and the full Board has adopted, a set of Principles of Corporate Governance. The Principles of Corporate Governance are available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link, and a hard copy will be provided by the Company free of charge to joining CIRCOR,any stockholder who requests it by writing to the Corporate Secretary at the Company’s corporate headquarters. An annual review is conducted by the Nominating and Corporate Governance Committee to assess compliance with the Principles of Corporate Governance.
In addition, to align the interests of the directors and executive officers of the Company with the interests of the stockholders, the Principles of Corporate Governance include Stock Ownership Guidelines for directors and executive officers.
Director Independence
The Board, upon consideration of all relevant facts and circumstances and upon recommendation of the Nominating and Corporate Governance Committee, has affirmatively determined that each of Mr. KhandelwalChapin, Ms. Donikowski, Mr. Lisman, Mr. Ludwig, Mr. O’Donnell and Ms. Smith is independent of the Company. The Board also previously determined that David Dietz and Peter Wilver, each a former director who served as Vice President, Corporate Financeduring part of Fiscal Year 2021, were independent of the Company prior to their respective retirements from the Board in Fiscal Year 2021 and Operations Chief Financial Officer for IDEX Corporation,that and Arthur George, Jr., a diversified industrialformer director who served during part of Fiscal Year 2022, was independent of the Company prior to his resignation from the Board in Fiscal Year 2022. In evaluating the independence of each director, the Board applied the standards and technology leader specializing in highly engineered components from April 2017 until March 2020. He joined IDEX in 2010 and held a number of senior finance rolesguidelines set forth in the Optics, Industrial, Pumps & Valves organizations including Vice President/IT, Finance/IT, Pumps, Valves / Seals from October 2016 until April 2017, Vice President/IT, FMT Industrial from May 2015 until October 2016applicable Securities and Vice President/IT, OpticsExchange Commission (“SEC”) and Photonics from January 2013 until May 2015. PriorNew York Stock Exchange (“NYSE”) regulations in determining that each director has no material relationship with the Company, directly or as a partner, stockholder or affiliate of an organization that has a relationship with the Company. The bases for the Board’s determination include, but are not limited to, IDEX, Mr. Khandelwal held a rangethe following:
•No director is an employee of financial leadership positions at Stanley Black & Decker, Inc. and General Electricthe Company, or its subsidiaries or affiliates.
•No director has an immediate family member who is an officer of the Company or its subsidiaries or has any other current or past material relationship with the Company. Mr. Khandelwal
•No director receives, or in the past three years, has received, a Bachelor in Finance from Indiana University and an MBAany compensation from the Kellogg School of Management at Northwestern University.Company other than compensation for services as a director.
•No director, during the past three years, has been affiliated with, or had an immediate family member who has been affiliated with, a present or former internal or external auditor of Cincinnati, andthe Company.
•No executive officer of the Company serves on the compensation committee or the board of directors of any corporation that employs a Bachelordirector or a member of Aeronautical Engineering from Punjab Engineering College, India.any director’s immediate family.
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Board Meetings and Committees
We believe that our current Board leadership structure fosters appropriate oversight for the Company for a number of senior finance positionsreasons, the most significant of which are discussed below. The Board’s oversight is coordinated primarily through the committees of the Board, as disclosed in the descriptions of each of the committees below and in the charters of each of the committees (which are available on the Company’s website at Thermo Fisher Scientific Inc. He started his careerwww.CIRCOR.com under the “Investors” sub-link). The full Board, however, retains responsibility for general oversight of the Company’s long-term health and stakeholder interests. The Board held 5 meetings during Fiscal Year 2021.
Our Board maintains three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The following table sets forth the number of meetings held during Fiscal Year 2021 by each committee of the Board. Each of our directors attended at least 75% of the total number of meetings of the Board and of the committees of which such director then served.
| BOARD COMMITTEE OVERVIEW | ||||||||
| Committee | Oversight Responsibilities | 2021 Meetings | ||||||
| Audit | •Oversees integrity of financial statements •Responsible for appointment, compensation, retention and oversight of work of the independent auditor •Reviews scope and results of annual audit with independent auditor •Reviews annual/quarterly operating results with independent auditor •Considers the adequacy of internal accounting procedures/controls; considers the effect of these on auditor independence •Oversees internal audit function •Oversees financial and cybersecurity risks •Reviews and approves related party transactions •Meets in executive session separately with each of the Chief Financial Officer, Internal Audit lead and our independent auditor engagement partner | 7 | ||||||
| Compensation | •Determines and oversees pay for performance compensation philosophy •Oversees compensation arrangements for executive officers and other senior level employees •Reviews general compensation levels for other employees •Determines incentive compensation awards to be granted to eligible persons | 5 | ||||||
| Nominating & Corporate Governance | •Establishes criteria for selection of new directors •Identifies individuals qualified to become directors •Recommends director candidates to the Board for nomination as directors •Makes recommendations regarding director compensation •Reviews ESG matters, including diversity & inclusion initiatives, human capital and governance •Provides oversight of the Company’s corporate governance •Manages CEO emergency succession planning process •Drives evaluation process for Board and its committees | 5 | ||||||
Audit Committee. The Audit Committee, which consists of Mr. Chapin, Ms. Donikowski, Mr. Lisman, and Ms. Smith (each of whom has been affirmatively determined by the full Board to be an independent director, as an auditor with Deloitte & Touchewell as meeting the stricter independence standards applicable to audit committee members under NYSE listing standards and the rules of the SEC), oversees the integrity of the Company’s financial statements and is directly responsible for the appointment, compensation, retention and oversight of the work of the firm of independent auditors (the “Auditors”) that audits the Company’s financial statements and performs services related to the audit. Among other responsibilities, the Audit Committee reviews the scope and results of the audit with the Auditors, reviews with management and the Auditors the Company’s annual and quarterly operating results, considers the adequacy of the Company’s internal accounting procedures and controls and considers the effect of such procedures on the Auditors’ independence. The Audit Committee also is responsible for overseeing the Company’s internal audit function, the Company’s compliance with legal and regulatory requirements and cybersecurity issues, and the
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review and approval of related party transactions. To satisfy these oversight responsibilities, the Audit Committee separately meets regularly with the Company’s Chief Financial Officer, Vice President of Internal Audit, and the Auditors. Pursuant to the requirements of the NYSE, the Audit Committee operates in accordance with a Certified Public Accountantcharter (the “Audit Committee Charter”), which is available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link. The Company will provide a hard copy of the Audit Committee Charter to stockholders free of charge upon written request to the Corporate Secretary at the Company’s corporate headquarters. Each member of the Audit Committee meets the financial literacy requirements of the NYSE and, in addition, the Board has determined that at least one of the Committee’s members, Mr. Chapin, is an “audit committee financial expert” under the disclosure standards adopted by the SEC.
Compensation Committee. The Compensation Committee, which consists of Mr. O’Donnell, Ms. Donikowski, and Mr. Lisman (each of whom has been affirmatively determined by the full Board to be an independent director, as well as meeting the stricter independence standards applicable to compensation committee members under NYSE listing standards and the rules of the SEC), sets and oversees the Company’s compensation philosophy and policy, reviews and determines the compensation arrangements for the Company’s CEO; reviews the recommendations of the CEO and approves the compensation arrangements for all other officers and senior level employees; reviews general compensation levels for other employees as a group; determines the awards to be granted to eligible persons under the Company's 2019 Stock Option and Incentive Plan (the "2019 Pan:); and takes such other action as may be required in connection with the Company’s compensation and incentive plans, including with respect to compensation and risk-management issues. The Compensation Committee has the sole authority from the Board for the appointment, compensation and oversight of the Company’s outside compensation consultant.
The Compensation Committee engaged Semler Brossy (“Semler”) in the last quarter of the year ended December 31, 2021 ("Fiscal Year 2021") as its compensation consultant. In so doing, the Compensation Committee affirmatively determined that Semler is independent and has no conflict of interest as contemplated under rules adopted by the SEC and the NYSE, and has conducted annual reviews to confirm that Semler remains free of conflict per these rules. Semler reports directly to the Compensation Committee and does not provide any additional services to the Company. The executive compensation services provided by Semler include assisting in defining the Company’s executive compensation strategy, providing market benchmark information, recommending the composition of the compensation peer group used as a benchmark by the Compensation Committee, advising with respect to the design of both short-term and long-term incentive compensation plans, and summarizing regulatory and governance guidelines. In making its compensation decisions, the Compensation Committee relies significantly on the information provided by Semler.
The Compensation Committee operates in accordance with a charter (the “Compensation Committee Charter”), which is available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link. The Company also will provide a hard copy of the Compensation Committee Charter to stockholders free of charge upon written request to the Corporate Secretary at the Company’s corporate headquarters.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee, which consists of Ms. Donikowski, Mr. Chapin, Mr. O'Donnell, and Ms. Smith (each of whom has been affirmatively determined by the full Board to be an independent director), is responsible for establishing criteria for selection of new directors, identifying individuals qualified to become directors and recommending candidates to the Board for nomination as directors. In addition, the Nominating and Corporate Governance Committee is responsible for recommending to the Board a set of corporate governance principles applicable to the Company, overseeing the evaluation process of the Board and the evaluation of its committees, recommending to the Board appropriate levels of director compensation and, together with the Audit Committee, monitoring compliance with the Company’s Code of Conduct & Business Ethics. The committee also oversees ESG, including human capital, employee safety and diversity & inclusion initiatives. The Nominating and Corporate Governance Committee operates in accordance with a charter (the “Nominating and Corporate Governance Committee Charter”), which is available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link. The Company also will provide a hard copy of the Nominating and Corporate Governance Committee Charter to stockholders free of charge upon written request to the Corporate Secretary at the Company’s corporate headquarters.
Ad Hoc Committees. From time to time, the Board may establish ad hoc committees and delegate certain of its authority for the purpose of addressing particular matters (including, for example, the approval of financing or credit agreements or other matters that the Board thinks would be appropriate for review by an ad hoc committee). There were no ad hoc committees in 2021. The Board established a a special ad hoc committee on February 4, 2022, to assist with its strategic alternatives review. Mr. Ludwig, Mr. Chapin, and Mr. Lisman serve on the committee.
Executive Session. Independent directors meet at least twice a year in executive session without management, and at such other times as may be requested by any independent director. During Fiscal Year 2021, the Chair of the Board presided at meetings
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of the Company’s independent directors held in executive session without management. These sessions promote candor and discussion of matters in a setting that is independent of management.
Corporate Governance Framework
We have adopted Corporate Governance Principles that together with our Board committee charters and our Code of Conduct provide our governance framework. The following is a summary of our governance framework:
| CORPORATE GOVERNANCE HIGHLIGHTS | |||||
| We seek to implement corporate governance practices that ensure the Company is managed for the long-term benefit of our stockholders. To that end, we review and refine our corporate governance policies, procedures and practices on an ongoing basis. | |||||
| Board and Board Committees | |||||
| Number of Independent Directors / Total Number of Directors | 6/6 | ||||
| All Board Committees Consist of Independent Directors | ü | ||||
| Risk Oversight by Full Board and Committees | ü | ||||
| Separate Chair and CEO | ü | ||||
| Regular Executive Sessions of Independent Directors | ü | ||||
| Periodic Board and Committee Self-Evaluations | ü | ||||
| Director Education and Orientation | ü | ||||
| Periodic Equity Grants to Directors | ü | ||||
| Majority voting standard for uncontested director elections | ü | ||||
| Declassified Board of Directors | ü | ||||
| Stockholder Rights, Accountability and Other Governance Practices | |||||
| Annual Advisory Stockholder Vote on Executive Compensation (“Say on Pay”) | ü | ||||
| Stock Ownership Guidelines for Directors and Executives | ü | ||||
| Policies Prohibiting Hedging and Pledging | ü | ||||
| Absence of a Stockholder Rights Plan (also known as a “Poison Pill”) | ü | ||||
| Strong Commitment to Environmental and Sustainability Matters | ü | ||||
| No Related Party Transactions | ü | ||||
Director Candidates
In evaluating director candidates, the Nominating and Corporate Governance Committee applies the skills, experience, qualifications and demeanor of the individual against the general criteria described above in “Proposal 1 – Election of Directors for a Term of One Year” and a Chartered Global Management Accountant. He continuesdeveloped skills matrix, taking into consideration issues facing the Board and considering the diversity of the Board. From time to overseetime the company's Financial Planning & Analysis functionNominating and supports Investor RelationsCorporate Governance Committee uses a professional search firm to help identify, evaluate and strategy activities. Mr. Mullen brings over 20conduct due diligence on potential new director candidates. Using a search firm allows the committee to extend its reach for potential candidates as well as further ensure a diverse pool. The Nominating and Corporate Governance Committee also evaluates director candidates recommended by stockholders in the same manner as candidates from any other sources as described below. The Nominating and Corporate Governance Committee develops a short list that is shared with the Board for consideration and then vetted. Final candidates are recommended to the Board to be nominated for election at the annual meeting of stockholders.
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders, provided that such recommendations are submitted to the Company not less than 120 calendar days prior to the first anniversary date on which the Company’s Proxy Statement was released to stockholders in connection with the previous year’s annual meeting of stockholders.
To be considered by the Nominating and Corporate Governance Committee for nomination and inclusion in the Company’s Proxy Statement for its annual meeting to be held in 2023, stockholder recommendations for directors must be received by the Corporate Secretary at the Company’s corporate headquarters prior to May 11, 2023. Any such notice also must include (i) the
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name and address of record of the stockholder; (ii) a representation that the stockholder is a record holder of common stock or, if the stockholder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); (iii) the name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the preceding five full fiscal years of financial management experiencethe proposed director candidate; (iv) a description of the qualifications of the proposed director candidate which address the general criteria for directors as expressed in the Company’s most recent Proxy Statement; (v) a description of all arrangements or understandings between the stockholder and technical accounting expertisethe proposed director candidate; and (vi) the consent of the proposed director candidate to be named in the Proxy Statement and to serve as a director if elected at such meeting. Stockholders must also submit any other information regarding the proposed candidate that is required to be included in a Proxy Statement filed pursuant to the role. He holds a Bachelorrules of Science degreethe SEC. Recommendations of director candidates that meet the criteria described above will be forwarded to the Chair of the Nominating and Corporate Governance Committee for further review and consideration by such committee. Stockholders also have the right to directly nominate director candidates, without any action or recommendation on the part of the Nominating and Corporate Governance Committee or the Board, by following the procedures set forth in Accounting from Fairfield University. Mr. Mullen has informed the Company of his intent to resign as Senior Vice President, FP&A, FinanceThird Amended and Investor Relations effective April 24, 2020.
Communication with Independent Directors
The Board has established a process through which interested parties, including stockholders, may communicate with the independent directors. Specifically, communications may be addressed directly to joiningthe Chair of the Board, who, as discussed above, is an independent director, and sent to CIRCOR’s Corporate Secretary, by sending an email to bod@circor.com or by writing to the following address: Board of Directors, c/o Corporate Secretary, CIRCOR Mr. Bowen was a consultantInternational, Inc., 30 Corporate Drive, Suite 200, Burlington, MA 01803, who will forward your communication to the Chair.
Stockholder Engagement
We periodically conduct investor outreach throughout the year involving our directors, senior management and investor relations and legal departments. This helps management and the Board understand and focus on the issues that matter most to our stockholders. In 2021 and 2022, we met with Randstad Professionals from June 2019 until August 2019. Priorinvestors to that, Mr. Bowen served as Vice President, Corporate Controller of Dentsply Sirona, Inc., a dental equipmentprovide visibility and consumables company, from April 2018 until January 2019,transparency into our business, our performance and as Assistant Corporate Controller of TE Connectivity, a global manufacturerour governance practices, and designer of connectivity and sensor products, from August 2012 until March 2018. Mr. Bowen also held finance leadership positions with Apex Tool Group, LLC and Stanley Black and Decker. Mr. Bowen began his career at Ernst & Young LLP. Heto better understand their expectations.
Board Evaluation Process
Director Attendance at Annual Meeting
To date, our Board has not adopted a formal policy regarding director attendance at annual meetings of our stockholders. However, the Board typically schedules a meeting of the Board either on or the day before the date of Directors following the next annual meeting of stockholders, and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal.
our directors, therefore, are encouraged to (and typically do) attend the annual meeting. At our last annual meeting of stockholders, which was held on May 25, 2021, all of our then-serving directors were in attendance.
Director Compensation
The form and amount of director compensation are reviewed periodically by the Nominating and Corporate Governance Committee, most recently in December 2021. The Nominating and Corporate Governance Committee reviews our data from the Peer Group Companies, which are outlined in the Compensation Discussion and Analysis section of this document, as was prepared by ISS Corporate Solutions, Inc. ("ISS") and broad survey data concerning director compensation practices, levels, and trends for companies comparable to the Company in revenue, business, and complexity. It also considers the significant amount of time that our non-employee directors spend in fulfilling their duties to the Company as well as the required level of skill to serve on our Board. The Nominating and Corporate Governance Committee recommends changes, if any, to the Board for approval. Employee directors do not receive separate compensation for service as directors.
The Company uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve as non-employee directors on the Board. Cash compensation is paid quarterly, in arrears. Due to the impact of the COVID-19 pandemic on the Company’s operations, the Board reduced each category of fee and retainer our directors receives
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by 15% in 2020. These retainer and fee reductions taken during 2020 to non-employee, director cash compensation were commensurate with the reduction senior management took to their cash compensation in light of the COVID-19 pandemic and its impact on the Company. The cash compensation reductions were lifted at the February 2021 Board meeting effective April 1, 2021 after considering both internal and external factors. The cash compensation our non-employee directors earned in 2021 is as follows:
Annual Cash Compensation
| Annual Retainer (Board Member) | $72,188 | ||||
| Annual Retainer (Chair of the Board) | $182,875 | ||||
| Chair Fee (Audit Committee) | $19,250 | ||||
| Chair Fee (Compensation Committee) | $14,438 | ||||
| Chair Fee (Nominating and Corporate Governance Committee) | $9,625 | ||||
| Committee Membership Fee (per committee) | $4,813 | ||||
Annual Equity Grant
Our non-employee directors are also eligible to receive an annual equity grant under our 2019 Plan. If a director joins the Board during the middle of the year, the annual equity grant is pro-rated based on the quarter in which the director joins the Board. In 2021, the targeted value of such grant was $105,000 which was the same amount targeted for the annual equity grant in 2020. On March 17, 2021, each director, with the exception of Mr. Wilver, who retired from the Board in April 2021, received a grant of 2,827 time-based restricted stock units (“Time RSUs”) which becomes vested and settles in shares of common stock on a one-for-one basis thirteen months from the date of grant, provided the non-employee director is still providing services on the Board. The number of Time RSUs was determined by dividing $105,000 by the average closing price of our common stock on the New York Stock Exchange based on the last 20 trading days weighted for volume through March 16, 2021, rounded up to the nearest whole share. The average closing share price through March 16, 2021 was $37.15.
2021 Director Compensation
The following table shows the compensation our non-employee directors earned for their services in 2021:
| Name | Fees Earned in Cash (1) | Stock Awards (2) | Total | ||||||||
| Samuel Chapin | $98,063 | $112,571 | $210,634 | ||||||||
| David F. Dietz | $60,563 | $112,571 | $173,134 | ||||||||
| Tina M. Donikowski | $81,813 | $112,571 | $194,384 | ||||||||
| Bruce Lisman | $81,813 | $112,571 | $194,384 | ||||||||
| Helmuth Ludwig | $182,875 | $112,571 | $295,446 | ||||||||
| John (Andy) O'Donnell | $91,438 | $112,571 | $204,009 | ||||||||
| Jill D. Smith | $86,625 | $112,571 | $199,196 | ||||||||
| Peter M. Wilver | $28,333 | $0 | $28,333 | ||||||||
| (1) | The amounts shown in this column reflect the fees earned in Fiscal Year 2021 for Board and committee service. The 15% reduction in fees approved by the Board effective April 1, 2020 was lifted effective April 1, 2021. Mr. Wilver and Mr. Dietz both retired from the Board effective April 30, 2021 and September 30, 2021, respectively. Mr. Chapin became Chair of the Audit Committee effective January 1, 2021 taking over from Mr. Wilver. Director fees continue to be paid quarterly in arrears. | ||||
| (2) | Reflects the grant date fair value of the annual equity grant made in Time RSUs to each of the directors in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. For a discussion of the assumptions related to the calculation of the amounts in this column, refer to Note 13 (“Share-Based Compensation”) to our audited consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K filed with the SEC on July 26, 2022. The grant date fair value of the Time RSUs was based on the Company's previous day closing stock price prior to the grant date of March 17, 2021 of $39.82. Mr. Wilver did not receive an annual grant in 2021 due to his planned retirement. | ||||
The total number of Time RSUs held by each non-employee director as of December 31, 2021 was 2,827.
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Deferred Compensation
Prior to 2019, non-employee directors were eligible to participate in the Management Stock Purchase Plan (MSPP), which allowed them to purchase RSUs at a discount of 33% to the closing price of the Company’s common stock ("MSPP RSUs"), with RSU settlement deferred for a minimum period of three years. In 2021, the last of these MSPP RSUs were settled and distributed in shares. As of December 31, 2021, there were no outstanding balances for non-employee directors under the MSPP.
Reimbursement for Training and Reasonable Related Travel
Each of our directors has a budget of up to $5,000 USD (plus travel costs) per year for relevant educational training. When possible, directors are encouraged to share training opportunities with other boards that they serve on and to split the costs for such opportunities between those boards and the Company. Each of our non-employee directors are also reimbursed for reasonable travel and other expenses incurred in attending meetings.
Stock Ownership Guidelines
The Company has adopted Stock Ownership Guidelines for non-employee directors to further align their interests with the interests of the stockholders. These guidelines establish an expectation that, within a five-year period, each director shall achieve an equity interest in the Company at least equal to five times such director’s annual retainer fee. In calculating an individual’s equity interest, credit is given for (i) the value of actual shares of common stock owned beneficially, (ii) the before-tax value of all vested stock options, and (iii) the before-tax value of all outstanding RSU awards. An annual review is conducted by our Nominating and Corporate Governance Committee to assess compliance with the guidelines. As of February 11, 2022, our directors met their applicable ownership guidelines, or were on track to achieve their ownership guidelines by the applicable target compliance date.
Code of Conduct & Business Ethics/Compliance Training/Reporting of Concerns
The Company has implemented and regularly monitors compliance with a comprehensive Code of Conduct & Business Ethics (the “Code of Conduct”), which applies uniformly to all directors, executive officers and employees. Among other things, the Code of Conduct addresses conflicts of interest, confidentiality, fair dealing, protection and proper use of Company assets, compliance with applicable laws (including insider trading and anti-bribery laws) and reporting of illegal or unethical behavior. The Code of Conduct is available on the Company’s website at www.CIRCOR.com under the “Investors” sub-link, and a hard copy will be provided by the Company free of charge to any stockholder who requests it by writing to the Corporate Secretary at the Company’s corporate headquarters.
The Company has undertaken a number of additional steps to further the tenets of the Code of Conduct. Through a third-party provider, the Company maintains an online training program pursuant to which all officers and all employees with company-issued email accounts must take a series of courses designed to demonstrate the ways in which certain activities might run afoul of the Code of Conduct. In addition, although all employees are encouraged to personally report any ethical concerns without fear of retribution, the Company, through a third-party provider, maintains a HelpLine, a toll-free telephone and web-based system through which employees may report concerns confidentially and anonymously (the “HelpLine”). The HelpLine facilitates the communication of ethical concerns and serves as the vehicle through which employees may communicate confidentially and anonymously with (i) the Audit Committee regarding any concerns relating to accounting or auditing issues and (ii) the Nominating and Corporate Governance Committee regarding any other concerns.
Environmental & Social Commitments
Our purpose is Keeping Society Safe, Productive and Moving, which is built on our vision, mission, values and Absolutes of safety, ethics and controls. Our commitment to address the Environmental & Social needs is reflected in our culture, and how we build our products and conduct our business. We deliver on that commitment for our people and our communities by investing resources in ways that address ESG needs of our stakeholders. In addition, in 2020, we adopted a Human Rights policy to further codify our commitments in this area.
Products support environmental and safety measures. CIRCOR’s portfolio of flow and motion control products for the world’s most severe-service and mission-critical applications — from valves to instrumentation, actuation to pumps, motors to regulators — make our customers’ operations safer, and reduce waste, power consumption and emissions. Examples of the positive social and environmental benefits our products provide include:
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Safety:
•The bottom unheading and center feed devices from our Refinery Valves business have directly contributed to reduced fatalities at coking refineries, by automating processes and removing workers from danger zones.
•Our Aerospace & Defense team in the United Kingdom supplies the Royal Navy and all NATO allies with submarine escape systems, the key piece of which is a specialized calibrated valve. This valve adapts to ambient water pressure to deliver enough pressurized air to a submariner to allow him or her to escape from a submarine that may be grounded on the sea-floor.
•Our commercial aerospace teams develop and manufacture backup blowdown systems designed to ensure landing gear doors will open in the event that the primary hydraulic systems fail.
Health & Safety:
•Our Zenith-brand metering pump is used to extrude the sophisticated fibers and plastics that are used in Kevlar bulletproof vests, surgical tubing and surgical thread.
•During the early part of the COVID-19 pandemic, our Uxbridge site worked with ventilator manufacturers to design, manufacture and sell a regulator and non-return valve for ventilators needed to support those infected with COVID-19.
Reduced environmental waste:
A line of isolation valves from the Refinery Valves business provides an improved sealing capability as compared to legacy technologies. This reduces the amount of positive-pressure steam required in the process, which in turn drastically reduces both water usage and wastewater runoff for refiners.
Emissions:
•The Industrial group pumps team offers a smart engine cooling system, which senses engine temperatures on commercial ships and throttles back the cooling pumps when they are not needed. This allows shippers to save energy and reduce emissions.
•Pumps from the Industrial group in Germany enable a reduction in sulfur dioxide pollutants from marine vessels in support of IMO 2020 pollutant reduction standards.
Productivity:
Our engineers work every day to enhance the efficiency of our pumps to allow our customers to reduce their carbon footprint and drive productivity in their facilities.
People are at our core. We focus our energy and resources on training and development, and our talent management practices strive to attract, engage, develop and retain a diverse, inclusive and engaged employee base.
Employee investments and initiatives include:
•Expanded diversity & inclusion focus and investment, including training, policies and employee resource groups;
•Formal and informal mentorship programs across CIRCOR;
•Leadership and management development programs at all levels of our management structure;
•A formalized rotational management training program for recent MBA and engineering graduates to bring fresh management and technical talent into the organization; and
•Educational assistance programs encouraging the continuing training of our U.S. employees by providing financial assistance for educational courses related to their jobs and careers.
As a result of these and other initiatives, we successfully filled 50% of senior level roles in 2021 with internal promotions.
We continue to strive to ensure the health, safety and general well-being of our teams, including increasing onsite safety measures, providing work from home flexibility where possible and providing wellness seminars to employees. Actions we haven taken in response to the pandemic’s challenges include the following:
•Encouraging those who are sick to stay home and continuing to use work-from-home where necessary to minimize potential outbreaks;
•Encouraging vaccination and fully covering the cost of COVID-19 vaccines;
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•Increasing cleaning protocols across all locations;
•Establishing physical distancing procedures for employees who need to be onsite;
•Providing additional personal protective equipment and cleaning supplies;
•Implementing protocols to address actual and suspected COVID-19 cases and potential exposure;
•Utilizing of masks to be worn as recommended by local law; and
•Expanding our Employee Assistance Program to all of our employees worldwide.
Commitment to safety and environmental protection in our operations. CIRCOR is committed to protecting the environment and the health and safety of our employees, customers and the global communities where we operate, and safety is one of our Absolutes. Our culture of safety includes an ongoing training program, stand downs when injury events occur and encouraging our written policyemployees to speak up if they see a safety hazard. We empower our employees with measures including our Proactive Observation Program and Stop Work Authority. In 2021, we instituted a Safety Action Plan to reinforce the fundamentals of safety and focus on leading indicators. By incorporating Environmental, Health, and Safety (“EHS”) management into our business model, CIRCOR can offer high quality, cost-effective, reliable, safe and innovative products and services while conserving resources for future generations.
To fulfill this commitment, we endeavor to:
•Design, manage and operate our facilities in an environmentally responsible and safety-conscious manner in order to maximize safety, promote energy efficiency and manage our environmental impact throughout the product life cycle.
•Set objectives and targets that result in continuous improvement of our environmental, health and safety performance. In 2021 our Total Recordable Incident Rate was 0.83 and our Lost Time Incident Rate was 0.48. Improvement of these metrics is a key element of our safety initiatives in 2022.
•Train and inform employees of their responsibilities to protect the environment and the health and safety of themselves and their fellow employees.
•Ensure that leadership takes responsibility for taking immediate action to remove safety hazards when they are identified and reported.
•Through continued prioritization on the adoption of our CIRCOR Operating System (“COS”), drive improved safety metrics and develop a culture of sustainability and safety.
CIRCOR's COS creates a disciplined culture of continuous improvement for driving operational excellence in, among other things, sustainability and employee health and safety. Qualitative and quantitative performance metrics define site certification levels to help attain and sustain a high level of environmental, health and safety standards and culture. Through COS and our larger EHS program, employees are trained to proactively manage all types of risks, offer proactive suggestions and own decisions. COS certification in this area is measured by the development of a robust safety program and culture, management and audits, sustainable practices and employee engagement and risk surveys. As sites move from bronze to silver and then ultimately to a gold certification level, their rigor and performance must also improve.
CIRCOR derives all of its energy from the local electricity and natural gas grids. Some sites have gas-fueled electricity generators that are used only in the case of local power outage. We encourage the use of cleaner burning natural gas to diesel or gasoline for emergency and testing protocols. Furthermore, we do not maintain a significant number of fleet vehicles. As a result of the foregoing, our use of natural gas and other fossil fuels is limited and associated greenhouse gas emissions are limited.
Corporate Political Contributions
CIRCOR does not use corporate funds to make contributions to political parties or candidates, whether federal, state or local. Consistent with this approach, CIRCOR does not direct corporate funds to political organizations (that is, organizations organized under Section 527 of the Internal Revenue Code) or for communications to support or oppose specific political candidates (such as through electioneering communications or other corporate independent expenditures).
We do not have a company-sponsored Political Action Committee. We encourage employees to be engaged in their communities and value the right and responsibility of employees to participate as private citizens in political and governmental affairs. Any decisions about whether to be involved in such affairs is personal and voluntary.
CIRCOR is a member of various organizations, including industry groups and trade associations, which further our business, economic and community interests. These groups help keep the Company informed on developments and trends in the manufacturing industry and issues important to us as a global company and employer. These organizations may support their
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member companies through educational forums, political activities and advocacy to advance issues of common concern to the manufacturing industry or the business community at large.
Related Party Transactions
The Company’s Board of Directors has adopted a Related Party Transactions Policy that requires that any proposed transaction involving the Company or a subsidiary of the Company in which a director or executive officer has direct economic or beneficial interest shall be analyzedreviewed and reviewed firstapproved by the Nominating and Corporate GovernanceAudit Committee of the Board for potential conflicts, and then by all of the members of the Board.
Since the beginning of Fiscal Year 2019,2021, the Company was not a party to any transaction in which the amount involved exceeded $120,000 and in which an executive officer, director, director nominee or 5% stockholder (or their immediate family members) had a material direct or indirect interest, and no such person was indebted to the Company.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee in Fiscal Year 2021 were Mr. Dietz, Ms. Donikowski, Mr. Lisman, Mr. Wilver and Mr. O’Donnell, with Mr. Wilver and Mr. Dietz retiring from the Board effective April 30, 2021 and September 30, 2021, respectively. None of the Company'sCompany’s executive officers serves as a member of the Board or compensation committee of any entity that has one or more of its executive officers serving as a member of the Company'sCompany’s Compensation Committee. In addition, none of the Company'sCompany’s executive officers serves as a member of the compensation committee of any entity that has one or more of its executive officers serving as a member of the Board.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial ownership of our common stock as of September 1, 2022, by:
•all persons known by us to beneficially own more than 5% of our common stock;
•each of our current directors;
•our NEOs included in the Summary Compensation Table appearing in this Proxy Statement; and
•all current directors and executive officers as a group.
The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC and includes voting or investment power with respect to securities. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and includes any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days after September 1, 2022, through the exercise of any stock option, RSU or other right. The inclusion in this Proxy Statement of such shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner of such shares. As of the record date of August 22, 2022, a total of 20,361,631 shares of our common stock were outstanding.
Unless otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of common stock except, to the extent authority is shared by spouses under applicable law.
* Less than 1%.
Shares of Common Stock Beneficially Owned | |||||||||||
Name of Beneficial Owner(1) | Number(2) | Percent(2) | |||||||||
BlackRock, Inc.(3) | 3,154,113 | 15.5 | % | ||||||||
T. Rowe Price Associates, Inc.(4) | 2,836,534 | 13.9 | % | ||||||||
The Vanguard Group(5) | 1,797,708 | 8.8 | % | ||||||||
Gabelli Entities(6) | 1,592,907 | 7.8 | % | ||||||||
Royce & Associates, LP(7) | 1,220,740 | 6.0 | % | ||||||||
Segall Bryant & Hamill, LLCs(8) | 1,323,695 | 6.5 | % | ||||||||
Scott Buckhout(9) | 86,305 | * | |||||||||
| Samuel R. Chapin | 10,994 | * | |||||||||
| Tina Donikowski | 15,396 | * | |||||||||
Arthur L George, Jr.s(10) | — | * | |||||||||
Abhishek Khandelwal(11) | 10,489 | * | |||||||||
| Bruce Lisman | 8,797 | * | |||||||||
| Helmuth Ludwig | 27,120 | * | |||||||||
Sumit Mehrotra(12) | 19,832 | * | |||||||||
| Tony Najjar | 31,493 | * | |||||||||
| John (Andy) O'Donnell | 35,368 | * | |||||||||
| Arjun Sharma | 65,013 | * | |||||||||
| Jill D. Smith | 7,871 | * | |||||||||
| Jessica W. Wenzell | 1,138 | * | |||||||||
All current executive officers and directors as a group (ten)(13) | 203,190 | 1.0 | % | ||||||||
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| (1) | The address of each stockholder in the table is c/o CIRCOR International, Inc., 30 Corporate Drive, Suite 200, Burlington, MA 01803, except that the address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055; the address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202; the address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355; the address of the Gabelli Entities (as defined in Footnote 6) is One Corporate Center, Rye, NY 10580; ; the address of Royce & Associates is 745 Fifth Avenue, New York, NY 10151. | ||||
| (2) | The number of shares of Common Stock outstanding used in calculating the percentage for each listed person and the directors and executive officers as a group includes the number of shares of Common Stock underlying stock options held by such person or group that are exercisable, and RSUs that vest within 60 days after March 31, 2022, but excludes shares of Common Stock underlying stock options or RSUs held by any other person. Amounts in the table include: 10,107 options for Mr. Najjar and 22,389 options for Mr. Sharma. | ||||
| (3) | The information is based on a Schedule 13F-HR filed with the SEC on August 12, 2022 on behalf of BlackRock, Inc. (“BlackRock”). According to the filing, BlackRock has sole investment discretion over 3,154,113 shares and sole voting authority over 3,128,587 shares. The firm does not have the authority to vote 25,526 of the reported shares. | ||||
| (4) | This information is based on a Schedule 13G filed with the SEC on August 10, 2022, on behalf of T. Rowe Price Investment Management, Inc. (“Price Investment”) and T. Rowe Price Small-Cap Value Fund, Inc. (“T. Rowe Small Cap”) and a Form 13G/A filed with the SEC on August 10, 2022, on behalf of on behalf of T. Rowe Price Associates, Inc. (“Price Associates”). According to the filings, Price Investment has sole dispositive power over 2,831,271 shares and sole voting authority over 969,248 shares. T. Rowe Small Cap has sole voting authority over 1,839,666 shares. Price Associates has sole dispositive power and sole voting authority over 5,263 shares. Price Investment and Price Associates do not serve as custodians of the assets of any of their clients; in each instance, only the client or the client’s custodian or trustee bank has the right to receive dividends paid with respect to, and proceeds from the sale of, such securities. The ultimate power to direct the receipt of dividends paid with respect to, and the proceeds from the sale of, such securities, is vested in the individual and institutional clients which Price Investment and Price Associates serves as an investment adviser. Any and all discretionary authority which has been delegated to Price Investment and Price Associates may be revoked in whole or in part at any time. Not more than 5% of the class of such securities is owned by any one client subject to the investment advice of Price Investment and Price Associates. With respect to securities owned by any one of the registered investment companies sponsored by Price Investment or Price Associates which it also serves as investment adviser (the “T. Rowe Price Funds”), only the custodian for each of such T. Rowe Price Funds has the right to receive dividends paid with respect to, and proceeds from the sale of, such securities. No other person is known to have such right, except that the shareholders of each such T. Rowe Price Fund participate proportionately in any dividends and distributions so paid. | ||||
| (5) | The information is based on a Schedule 13F-HR/a filed with the SEC on August 12, 2022 on behalf of The Vanguard Group. According to the filing, The Vanguard Group has sole investment discretion over 1,797,708 shares, and shared voting authority over 34,607 shares. The firm does not have the authority to vote 1,763,101 of the reported shares. | ||||
| (6) | The information is based on an amended Schedule 13D filed with the SEC on August 11, 2022, on behalf of Mario J. Gabelli and various entities which Mr. Gabelli directly or indirectly controls or for which he acts as chief investment officer including, but not limited to, Gabelli Funds, LLC, GAMCO Asset Management Inc., Gabelli & Company Investment Advisors, Inc., Teton Advisors, Inc., GGCP, Inc., GAMCO Investors, Inc., and Associated Capital Group, Inc. (collectively, the “Gabelli Entities”). According to the amended Schedule 13D, the Gabelli Entities engage in various aspects of the securities business, primarily as investment advisors to institutional and individual clients, including registered investment companies and pension plans, and as general partners (or the equivalent of) in private investment partnerships or private funds and as a registered broker-dealer. Certain of the Gabelli Entities may also make investments for their own accounts. According to the amended Schedule 13D, Gabelli Funds, LLC, GAMCO Asset Management Inc. and Teton Advisors, Inc. beneficially owned 591,353, 1,269,884 and 74,266 shares, respectively. Gabelli & Company Investment Advisers, Inc. and the Gabelli Foundation, Inc. beneficially owned 58,953 and 26,000 shares, respectively. Mr. Gabelli, GAMCO Investors, Inc., GGCP, Inc. and Associated Capital Group, Inc. are deemed to beneficially own the shares owned beneficially by each of the Gabelli Entities. Subject to certain limitations, each of the Gabelli Entities has sole dispositive and voting power, either for its own benefit or for the benefit of its investment clients or partners, as the case may be, in the shares beneficially owned by such entity, except that (i) GAMCO Asset Management Inc. does not have the authority to vote 26,100 of the reported shares, (ii) Gabelli Funds, LLC has sole dispositive and voting power with respect to the shares of the Company held by the various funds so long as the aggregate voting interest of all joint filers does not exceed 25% of their total voting interest in the Company and, in that event, the proxy voting committee of each such fund shall respectively vote that fund's shares, (iii) at any time, the proxy voting committee of each such fund may exercise in its sole discretion the entire voting power with respect to the shares held by such fund under special circumstances such as regulatory considerations, and (iv) the power of Mr. Gabelli, Associated Capital Group, Inc., GAMCO Investors, Inc., and GGCP, Inc. is indirect with respect to shares beneficially owned directly by other Gabelli Entities. | ||||
| (7) | The information is based on the Schedule 13F-HR filed with the SEC on August 4, 2022 on behalf of Royce & Associates LP ("Royce Associates"). According to the filing, Royce Associates has sole investment discretion and and sole voting authority over 1,220,740 shares. | ||||
| (8) | The information is based on a Form 13F-HR filed with the SEC on August 15, 2022 on behalf of Segall Bryant & Hamill, LLC. According to the filing, Segall Bryant & Hamill has sole voting authority over 1,064,830 shares. The firm does not have the authority to vote 258,865 of the reported shares. | ||||
| (9) | Mr. Buckhout terminated his employment with the Company on January 19, 2022 and information provided is as of that date. | ||||
| (10) | Arthur L. George, Jr. joined the Board of Directors on January 26, 2022 and resigned on July 22, 2022, due to health reasons. | ||||
| (11) | Mr. Khandelwal terminated his employment with the Company on December 31, 2021, and information provided is as of that date. | ||||
| (12) | Mr. Mehrotra terminated his employment with the Company on July 5, 2021, and information provided is as of that date. | ||||
| (13) | Includes 33,984 shares of Common Stock issuable upon the exercise of outstanding stock options that will be exercisable within 60 days after March 31, 2022. | ||||
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MANAGEMENT
Our executive officers and key employees, and their respective ages and positions, as of August 31, 2022, are as follows:
| Name | Age | Position | ||||||
| Tony Najjar | 61 | President and Chief Executive Officer | ||||||
| Arjun ("AJ") Sharma | 45 | Chief Financial Officer and Senior Vice President, Business Development | ||||||
| Jessica Wenzell | 47 | Senior Vice President, General Counsel & Secretary and Chief People Officer | ||||||
| Amit Goel | 45 | Vice President, Finance, Corporate Controller and Chief Accounting Officer | ||||||
| Tanya Dawkins | 61 | Vice President, Corporate Treasurer | ||||||
Tony Najjar. Mr. Najjar was named Chief Operating Officer and Interim President and Chief Executive Officer effective January 19, 2022, and President and Chief Executive Officer on August 10, 2022. He previously served as the President, Aerospace and Defense Group from February 2018 through January 2022. He served as Vice President, Aerospace and Defense in the Advance Flow Solutions Group from October 2016 to February 2018 and Vice President, Sales & Marketing, Aerospace and Defense Group, from April 2015 to October 2016. Before joining CIRCOR, Mr. Najjar served as Programs Manager, Business Development and Mergers & Acquisitions at Rockwell Collins, a multinational manufacturing company, from October 2011 to April 2015. He has spent nearly 36 years in the aerospace and defense industry in engineering, sales, and general management roles, including leadership positions at Rockwell Collins and Kaiser Aerospace. Mr. Najjar holds both a bachelor's degree and a Master of Science degree in Mechanical Engineering from Oklahoma State University and an MBA from Pepperdine University.
Arjun ("AJ") Sharma. Mr. Sharma was appointed as our Interim Chief Financial Officer effective January 1, 2022, and continues to serve as our Senior Vice President, Business Development, a position he has held since 2009, overseeing the Company’s mergers and acquisitions and strategic planning functions. On August 10, 2022, he was appointed Chief Financial Officer, while retaining his oversight of the business development function. Prior to joining CIRCOR, Mr. Sharma served as managing director at Global Equity Partners, a venture capital and strategy consulting firm, from January 2009 to September 2009, where he was responsible for executing equity investments and leading client engagements on acquisitions, divestitures, and growth strategy. From 2007 to 2008, he was Director of Mergers and Acquisitions at Textron Inc., a multi-industry company with a global network of aircraft, defense, industrial and finance businesses, where he was responsible for developing the company’s M&A strategy and leading acquisition and divestiture transactions. From 2002 to 2007, Mr. Sharma held various positions of increasing responsibility at SPX Corporation, a Fortune 500 multi-industry company, culminating in his appointment as Director of Corporate Development. Mr. Sharma holds a Master of Science degree in Finance from Drexel University and a Bachelor of Commerce degree from Delhi University. Mr. Sharma is a graduate of the PLD program at Harvard Business School.
Jessica Wenzell. Ms. Wenzell was appointed as Chief People Officer effective November 15, 2021 and continues to serve as our Senior Vice President, General Counsel and Secretary, roles she has held since joining CIRCOR in September 2020. Prior to joining CIRCOR, Ms. Wenzell served in executive roles of increasing responsibility at General Electric Company for over 14 years. From January 2018 to August 2020, she was GE’s Executive Counsel – Strategic Transactions, leading cross-functional, legal entity carve-out activities for divestitures. Her previous roles at GE included Executive Counsel – Indirect Sourcing & Properties (August 2017 to March 2018); Executive Counsel, Chief Compliance Officer for GE Oil & Gas (August 2013 to July 2017); and General Counsel for GE Measurement & Control (2010 to 2013). Ms. Wenzell began her career at Luce, Forward, Hamilton & Scripps LLP in the Corporate & Securities Practice Group. She received her Bachelor’s degree in Political Science from the University of California, San Diego and her J.D. from the University of California, Hastings College of the Law, San Francisco.
Amit Goel. Mr. Goel joined CIRCOR as Vice President, Finance, Corporate Controller and Chief Accounting Officer in September 2020. Prior to joining CIRCOR, Mr. Goel served in roles of increasing responsibility at Ernst & Young, LLP for over 17 years. From July 2017 to September 2020, he was a Partner in the Firm's National Accounting Office. His previous roles at EY included Audit Partner (July 2013 to June 2017), Senior Manager of Audit Services (October 2010 to June 2013); Senior to Manager, Audit Services (September 2003 to September 2010), Mr. Goel is a Certified Public Accountant, a Chartered Financial Analyst and a Chartered Accountant. He received his Bachelor of Commerce from Sydenham College of Commerce & Economics from Mumbai University in India. On August 22, 2022, Mr. Goel notified the Company of his intention to resign effective September 9, 2022.
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Tanya Dawkins. Ms. Dawkins has served as Vice President, Corporate Treasurer since March 2018. She previously served as Senior Director, Corporate Treasurer from September 2015 to March 2018. From 2001 to September 2015, Ms. Dawkins held a variety of senior finance positions at CIRCOR, including Global Treasury Manager, External Reporting Manager, and Corporate Accounting Manager. Prior to joining CIRCOR, Ms. Dawkins served as Director of Finance for GenRad Corporation (now part of Teradyne). Ms. Dawkins previously had spent 10 years at Digital Equipment Corporation in a variety of senior finance positions. She is a Certified Treasury Professional and holds a Bachelor of Business Administration in Finance from the University of Texas at Austin, and an MBA from Simmons Graduate School of Management.
Under the By-Laws, each of the officers of the Company holds office until the regular annual meeting of the Board of Directors following the next annual meeting of stockholders and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal.
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COMPENSATION DISCUSSION AND ANALYSIS
Overview
In this section, we describe the executive compensation program for our Named Executive Officers (the "NEOs"“NEOs”). Our intent is to help stockholders understand the framework of our overall program, its objectives and the rationale for the Compensation Committee’s compensation decisions. Our NEOs for Fiscal Year 20192021 were as follows:
| Named Executive Officer | |||||
Scott Buckhout(1) | President and Chief Executive Officer | ||||
Abhishek Khandelwal (2) | Senior Vice President, Chief Financial Officer | ||||
Tony Najjar (3) | President, | ||||
Arjun Sharma(4) | Senior Vice President, Business Development | ||||
Jessica Wenzell (5) | Senior Vice President, General Counsel, Secretary & Chief People Officer | ||||
Sumit Mehrotra (6) | Former President, Industrial Group | ||||
| (1) | Mr. Buckhout terminated employment with CIRCOR on January 19, 2022. | ||||
| (2) | Mr. Khandelwal terminated employment with CIRCOR on December 31, 2021. | ||||
| (3) | Mr. Najjar was named Chief Operating Officer and Interim President and Chief Executive Officer effective January 19, 2022 in connection with Mr. Buckhout's departure and is no longer serving in the role of President, Aerospace and Defense Group. He was appointed President and Chief Executive Officer on August 10, 2022. | ||||
| (4) | Mr. Sharma was appointed as our interim Chief Financial Officer effective January 1, 2022 and continues to serve as our Senior Vice President, Business Development. Mr. Sharma was appointed Chief Financial Officer on August 10, 2022. | ||||
| (5) | Ms. Wenzell was appointed as our Chief People Officer effective November 15, 2021 and continues to serve as our Senior Vice President, General Counsel and Secretary | ||||
| (6) | Mr. Mehrotra terminated employment with CIRCOR on July 5, 2021. | ||||
In this Compensation Discussion and Analysis, in certain cases, we refer to Messrs. Buckhout, Khandelwal, and Sharma and Ms. Wenzell as “Corporate NEOs” and Messrs. Najjar and Mehrotra as “Group NEOs.”
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Executive Summary
Our Business: 20192021 Performance Overview
CIRCOR is a leading provider of severe service and mission critical flow and motion control solutions and other highly engineered products for the Industrial and Aerospace & Defense and Energy markets. We design, manufacture and market differentiated technology products and sub-systems. CIRCOR has a diversified flow and motion control product portfolio withmarkets that include recognized, market-leading brands that fulfill its customers’ mission critical needs.brands. We have a global presence with approximately 3,100 employees worldwide and customers in approximately 100 countries. We operate 2021 major manufacturing facilities that are located in North America, Western Europe, Morocco, China and India. We sell our products directly to end-user customers and original equipment manufacturers, as well as through distributors, representatives, Engineering, Procurement and Construction ("EPC") companies as well as directly to end-users and original equipment manufacturers (“OEMs”).
our channel partner network. The Company has the followingtwo reportable business segments: the Industrial ("segment (“Industrial Segment"), Energy ("Energy Segment" or "Energy"Group”) and the Aerospace & Defense segment (“Aerospace & Defense Group” or “A&D Group”).
In 2021 our business continued to feel the impact of the COVID-19 pandemic. Throughout this continued time of uncertainty, the Company’s top priority remains the health and safety of our employees, customers, and suppliers. As the COVID-19 pandemic evolves, we continue to implement appropriate measures to ensure our employees around the world have the necessary protection and our business continues to operate with as little disruption as possible. We believe that these actions along with the Company’s continued focus on new product innovation, cost productivity and the CIRCOR Operating System serve to best position the Company for potential end market recovery across our Industrial and Aerospace & Defense ("Aerospacesegments.
We continue to implement actions to mitigate the impact from lower demand and Defense Segment"). During 2019, we made the strategic decision to exit the Upstream Oil & Gas valve market served by our Energy Group.an increasingly competitive environment. In addition, we sold other non-core Energyare investing in products and Industrial businesses. As a result, in 2020 we combined the remaining Energy businesses into the Industrial Group, thus eliminating the Energy Group.
The following table highlights certain metricsmeasures that are usedserve as our compensation performance metrics.metrics for our performance-based compensation and the level of achievement of these metrics in 2021:
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| Business Segment | Net Sales | Free Cash Flow* | Adjusted Operating Margin** |
| CIRCOR (Overall including Corporate) | $964,313 | $11,725 | 11.4% |
| Energy | $240,982 | $(20,038) | 1.7% |
| Aerospace & Defense | $272,625 | $50,513 | 19.2% |
| Industrial | $450,706 | $54,483 | 11% |
| Short-Term Incentive Plan Metrics | Long-Term Incentive Plan Metrics | ||||||||||||||||||||||
| Net Sales | Adjusted Operating Income(1) | Adjusted Working Capital % of Sales(2) | Free Cash Flow(3) | Adjusted Operating Margin(4) | Adjusted Measurement Cash Flow(5) | Relative Total Shareholder Return(6) | |||||||||||||||||
CIRCOR (overall including Corporate expenses)(7) | N/A | $51.4 | N/A | $(3.9) | see note (6) | ||||||||||||||||||
| Aerospace & Defense Group | $250.1 | $55.3 | 37.8% | N/A | N/A | N/A | |||||||||||||||||
Industrial Group(8) | $415.0 | $23.2 | 19.0% | N/A | N/A | N/A | |||||||||||||||||
| (1) | Adjusted Operating Income (“AOI”), a non-GAAP measure, is defined as GAAP operating income excluding intangible amortization and amortization of fair value step-ups of inventory and fixed assets from acquisitions completed after December 31, 2011, the impact of restructuring-related inventory write-offs, impairment charges and special charges or gains. | ||||
| (2) | "Adjusted Working Capital % of Sales" or "(AWC % of Sales": a non-GAAP measure, is defined as the sum of Adjusted Working Capital balances at year-end divided by Net Sales. “Adjusted Working Capital” includes the following accounts: Trade Accounts Receivable, Unbilled Receivables (short and long term), Inventory, Trade Accounts Payable, Customer Advances (short and long term), and Deferred Revenue. | ||||
| (3) | Free Cash Flow, a non-GAAP financial measure calculated by subtracting GAAP capital expenditures, net of proceeds from asset sales, from GAAP operating cash flow. | ||||
| (4) | Adjusted Operating Margin (“AOM”), a non-GAAP measure, is defined as Adjusted Operating Income divided by Net Sales. Adjusted Operating Income is defined as GAAP operating income excluding intangible amortization and amortization of fair value step-ups of inventory and fixed assets from acquisitions completed after December 31, 2011, the impact of restructuring-related inventory write-offs, impairment charges and special charges or gains. | ||||
| (5) | “Adjusted Measurement Cash Flow” or “Adjusted MCF” with respect to a fiscal year is calculated by adding the Company’s cash provided by operating businesses less Corporate General and Administrative spend for that year. Specifically, Adjusted MCF excludes cash flows from income taxes, corporate special charges, and restructuring costs but includes interest expense. | ||||
| (6) | “Relative Total Shareholder Return” or “Relative TSR” is calculated by ranking the Company and a list of specified peer companies within the S&P 600 SmallCap Industrial Index from highest to lowest according to their respective TSR and expressing the Company's performance as its corresponding percentile within the group of companies. Results are not yet reportable as the applicable, three-year period ends in 2024. | ||||
| (7) | Corporate refers to the group of employees that provides services to the Aerospace & Defense Group and the Industrial Group or support management of Company-wide functions. | ||||
| (8) | For purposes of calculating incentive compensation in the Industrial Group, Refinery Valves is excluded. | ||||
The Company'sCompany’s financial results and the overall business environment were considered when determining compensation paid for 2019, as discussed below.2021. Please see Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations in the Company'sCompany’s Annual Report on Form 10-K for Fiscal Year 20192021 for a more detailed description of the Company’s financial results.
2021 was, in many respects, a step towards a more stable and predictable business environment following a difficult year in 2020 that was dominated by reaction to the impact of the COVID-19 pandemic to our business. Compensation actions taken by the Compensation Committee in 2021 reflected this return to forward-looking strategy, including the following:
•Return to Standard Compensation Programs and Process: Following the extraordinaryimpact of the COVID-19 pandemic to our business in 2020 and the corresponding actions the Compensation Committee took to adjust compensation practices and costs, in 2021 we returned to our typical cadence of determination of annual incentive awards based on pre-established business goals and metrics approved by the Compensation Committee.
•Revised Metric for Short-Term Incentives: The Compensation Committee determined that Adjusted Working Capital % of Sales would replace the free cash flow metric previously used as one of the Short-Term Incentive Plan measures for Group NEOs. This change was made to eliminate overlap with another of the Short-Term Incentive Plan measures, AOI.
•New Metric for Long-Term Incentives: The Compensation Committee determined that a change to the structure of performance-based stock awards would further align NEO compensation to stockholder interest. The Compensation Committee also considered the difficulty of setting multi-year financial goals in
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the current business environment. Effective with the 2021 annual Long-Term Incentive ("LTI") award, the performance metric for the performance-based portion of NEO awards is Relative TSR, which links the number of shares that our NEOs earn to the Company’s TSR performance relative to the TSR of peer industrial companies, as described more fully below under 2021 Long-Term Incentive.
•New Compensation Consultant: As part of its governance routine, the Compensation Committee conducted a comprehensive review of independent compensation consultants that could assist the Committee in fulfilling its responsibilities. As a result of its review, the Compensation Committee selected Semler Brossy as its independent consultant effective October 2021, replacing its former consultant, Pearl Meyer.
•Updated Peer Group: The Compensation Committee conducted its annual review of the group of peer companies that we compare our compensation practices to. As a result of its review and in order to ensure that the peer group continues to be comprised of similarly sized companies that align to our industry, changes were made to five of the seventeen companies in our peer group referenced for fiscal 2021. The updated peer group will be referenced for 2022 compensation decisions.
•Retention Incentives for Certain NEOs: In connection with Mr. Khandelwal's termination of employment in December 2021, the Compensation Committee approved retention awards to Mr. Sharma and Ms. Wenzell, each of whom are integral to our financial reporting, disclosure and corporate governance processes. These awards were made to retain experienced executives to provide leadership for these important functions through the end of 2022 while we searched for a new leader for the finance function.
Following the completion of 2021, our Compensation Committee made the following decisions with respect to incentive-based compensation based on 2021 performance results:
•Annual Short-Term Incentives: The 2021 Short-Term Incentive Plan (“2021 STI Plan”) payouts for NEOs were determined based on the Company's performance on the metrics approved by the Compensation Committee at the beginning of 2021. The Compensation Committee did not use its discretion to modify any of the performance results when determining payouts, however, the Committee determined it is in the best interest of the Company to exercise the Committee’s discretion to adjust the amounts earned by Mr. Buckhout and Mr. Mehrotra under the 2021 STI Plan to zero based on the significant accounting irregularities discovered by the Company with respect to the Pipeline Engineering business unit. As announced in the Form 8-K filed on March 14, 2022, the Pipeline Engineering accounting irregularities occurred over multiple years under the leadership of Messrs. Buckhout and Mehrotra and impacted the actual performance of the STI financial metrics, the inability to rely on the Company’s prior financial statements due to the misstatements, and led to the restatement of three years of the Company’s financial results. The 2021 STI Plan results for our NEOs are set forth below under 2021 Short-Term Incentive Plan Results.
•Outstanding Long-Term Incentives: While a certain portion of our LTI awards were significantly impacted by the impact of the COVID-19 pandemic on performance results, the Compensation Committee did not use its discretion to modify any of the performance results to reflect COVID-19 business impact when determining the number of earned shares under our performance-based stock awards. However, the Committee did consider the impact of the Pipeline Engineering matters on the three-year performance results of the 2019 performance award and used its discretion to reduce the number of shares vesting in the final tranche of our 2019 performance awards to zero. The second tranche of our 2020 performance awards earned 0% of target, as set forth below under Prior Year PSU Results. The vesting of our 2021 performances awards will be determined following the completion of the performance period in 2024.
•Pipeline Engineering: Based on the significant accounting irregularities discovered by the Company with respect to the its Pipeline Engineering business unit as announced via Form 8-K filed on March 14, 2022, which occurred over multiple years under the leadership of Messrs. Buckhout and Mehrotra, the impacts thereof on actual performance of the STI financial metrics, the inability to rely on the Company’s prior financial statements due to the misstatements, and the impending restatement of the Company’s financial results, the Committee determined it is in the best interest of the Company to exercise the Committee’s discretion to adjust the amounts earned by Mr. Buckhout and Mr. Mehrotra under the 2021 STI Plan to zero.
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2021 Stockholder Engagement, Say-on-Pay Results & Program Changes
The Company regularly evaluates its compensation programs and considers the results of its most recent stockholder advisory vote on executive compensation ("say-on-pay"(“say-on-pay”), as well as feedback received directly from stockholders through our ongoing engagement.
At the May 20192021 annual meeting of stockholders, we received say-on-pay support of approximately 96.6%97%. This result indicated continued strong support for the Company'sCompany’s executive compensation program. The Company's shareholders also overwhelmingly approved a new equity incentive plan. Highlights of our executive compensation program include:
•Equity vehicle mix for NEOs aligned with long term objectives. long-term objectivesLong-term incentives ("LTI") were granted during 2019 using 50% Performance Share Units ("PSUs"), 25% stock options and 25% Restricted Stock Units ("RSUs"). Mr. Buckhout’s2021 LTI awards continue to be granted aswere a mix of PSUs (50%50% performance-based restricted stock units (“PSUs”) and 50% restricted stock options (50%units (“RSUs”). Maintaining RSUs in the equityWe use an equal mix of our other NEOs allows usPSUs and RSUs to better manage our overall shareholder dilution levels relatingprovide both long-term performance and long-term retention incentives to our equity plans while also supportingNEOs in support of our leadership retentionbusiness strategy.
•Replenishment of equity plan share pool. At our 2021 annual meeting, stockholders approved the replenishment of our share reserve under our 2019 Stock Option and AOM accounted for 50% ofIncentive Plan, which is the weight over a three-year performance period. Performance is assessed at the end of each year and the NEOs will progressively vest their shares each year based on results.primary vehicle that we use to provide long-term incentive awards to our employees, including our NEOs.
Going forward, we plan to continue to engage with our stockholders and consider their perspectives regarding compensation and governance matters. The Compensation Committee's goal is to continue to win investor support for our compensation practices and policies.
CEO Pay At-A-Glance (Target v. Realized)
The chart below shows 2017-2019 target and realized compensation for Mr. Buckhout. Target Total Direct Compensationtotal direct compensation represents base salary, target annual bonus, and grant date fair value oftarget annual LTI awards or RSUs purchased under our Management Stock Purchase Plan ("MSP") during each year.awards. Realized Compensationcompensation represents base salary, annual bonus actually paid in cash, and the value realized onupon the exercise (in the case of stock options)options or vesting (in the case of PSUs or RSUs) of LTI awards or MSP RSUs, including RSUs granted under our Management Stock Purchase Plan during each year. Realized Compensationcompensation has substantially trailed Target Total Direct Compensation in each year,target total direct compensation over the prior three years, reflecting the rigor of our goal-setting process for annual bonus and PSU awards and the pay for performance nature of our overall executive compensation program.
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| Mr. Buckhout's 2021 compensation includes $1,137,758 related to the vesting of a special RSU award issued on March 4, 2020, for retention purposes. His 2021 STI amount earned was adjusted to zero, as further discussed herein. | ||
Good Compensation Governance
The Compensation Committee continually evaluates the Company's compensation policies and practices to ensure that they are consistent with good governance principles. Below are highlights of what we do and what we do not do:
| What We Do | What We Do Not Do | ||||||||||
| ü | We place the majority of weight on performance-based, at-risk, and long-term compensation. | X | We do not provide any compensation-related tax gross-ups (except in connection with relocation expenses). | ||||||||
| ü | We deliver rewards that are based on achieving long-term objectives and the creation of stockholder value. | X | We do not provide significant perquisites. | ||||||||
| ü | We target total direct compensation at approximately the market median for our peer group. | X | We do not allow officers or directors to hedge Company stock. | ||||||||
| ü | We maintain stock ownership guidelines for our directors and | X | We do not allow officers or directors to pledge Company stock. | ||||||||
| ü | We have | X | We do not reprice or replace out-of-the-money stock options without stockholder approval. | ||||||||
| ü | Our Compensation Committee seeks advice from an independent compensation consultant. | X | We do not have contracts that guarantee employment with any | ||||||||
| ü | We maintain a clawback policy with respect to incentive-based cash and equity compensation. | ||||||||||
| ü | We cap annual bonus payouts to eliminate potential windfalls for executives. | ||||||||||
| ü | We cap the vesting value of TSR-based PSUs to eliminate potential windfalls for executives. | ||||||||||
| ü | We encourage executives to invest their cash incentives in the Company through | ||||||||||
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What Guides Our Program
Our Compensation Guiding Principles
The philosophy underlying our executive compensation program is to attract, retain and motivate highly qualified and talented executives and reward the achievement of specific annual, long-term and strategic goals that promote the profitable growth of the Company and enhance stockholder value. To this end, the following principles guide the structure of our program:
•Link to business priorities and performance.performance. A significant portion of an executive’s total compensation should be "at“at risk,"” subject to the attainment of certain specific and measurable performance goals and objectives. We select performance metrics that are most directly tied to the creation of enterprise value and that our management team can meaningfully influence. As performance goals are met or exceeded, executives are rewarded commensurately; conversely,commensurately. Conversely, if goals are not met, actual earned compensation is lower.will be lower than target compensation.
•Alignment of executives with stockholders’ interests.stockholders' interests. Our compensation program should encourage our executives to hold a meaningful amount of equity. In addition, we believe compensation to our executives should be based on a balance of short- and long-term financial performance factors. This approach also supports our retention strategy and promotes our achievement-oriented culture.
•Competitiveness of Pay Position.Position Total. Target Direct Compensationtotal direct compensation should be competitive with that being offered to individuals holding comparable positions at other public companies with which we compete for executive talent. Still, long‑term compensation for our executives other than base salary is "at-risk." In general, we position Total Target Direct Compensationtarget total direct compensation for our NEOs, in the aggregate nearas well as each element of total target compensation, to be at or around the median oftarget compensation for executives with similar positions at our peer group. We place greater emphasis on at-risk, performance-based elements of compensation than is typical among our peers, and consequently tend to be positioned lower relative to market with respect to base salaries and higher relative to market with respect to target bonus and annual equity awards.group companies.
•Maintenance of Governance Standards. Standards. We believe that maintaining best-practice executive compensation governance standards is in the best interests of our stockholders and executives and critical to the ability to manage risk.
Elements of Compensation
Our compensation philosophy is supported by the following elements of compensation:
| Pay Element | How It’s Paid | What It Does | How It Links to Performance | ||||||||
| Base Salary | Cash (Fixed) | Provides a competitive, fixed rate of pay relative to similar positions in the market and enables the Company to attract and retain critical executive talent | |||||||||
Cash (At-Risk) | Focuses executives on achieving annual financial and strategic goals that enhance long-term stockholder value | ||||||||||
| Provides incentives for executives to execute on longer-term goals that | |||||||||||
| RSUs | Supports leadership retention strategy | •Paid in CIRCOR shares at vesting | |||||||||
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How We Further Foster Stock Ownership and Strengthen Alignment with Stockholders In order to more closely align the interests of our executives with those of our stockholders, our NEOs are also eligible to participate in the The Compensation Committee approves the participants in the | ||
Total Pay Mix at Target
A significant portion of our NEOs' compensation is designed to be "at“at risk,"” subject to the attainment of specific and measurable performance goals and objectives.objectives or subject to the valuation of the Company’s stock price. For example, as shown in the tablediagram below, 82% of the target total direct compensation of our CEO and 59%63% of the target total direct compensation of our other NEOs serving at year-end is allocated to a combination of PSUs, stock optionsRSUs and target bonus,bonus; and therefore, based on achieving financial and operating metrics or increasingbased on the valuation of the Company's stock price.
 |  | ||||
The above chart includes 2019 Target Total Direct Compensation,diagram reflects annualized target total direct compensation as of year-end 2021, which we define to include annualized base salaries, 2019 bonustarget short-term incentive amounts assuming target performance under our annual incentive plan, the grant date fair value of stock options and RSUs, and the grant date fair valuetarget LTI award amounts used to determine the number of PSUs granted in 2019 under our LTI plan to our NEOs assuming target performance.shares underlying PSU and RSU awards.
The Decision-Making Process
The Role of the Compensation Committee. The Compensation Committee oversees the executive compensation program for our NEOs. The Compensation Committee is comprised of independent, non-employee members of the Board. The Committee works very closely with its independent consultant and management to examine the effectiveness of the Company’sCompany's executive compensation program throughout the year. DetailsAttracting and retaining a team of outstanding executives with complementary skills is one of the Compensation Committee’s authority and responsibilities are specified in the Compensation Committee's charter, which may be accessed at our website, www.CIRCOR.com, by clicking "Investors," and then "Corporate Governance."Company’s priorities.
When making decisions regarding the compensation of the NEOs, the Compensation Committee considers information from a variety of sources. The Compensation Committee also regularly assesses our incentive plan measures in light of current business context, relevance to stockholders and alignment with peer company practices. The Compensation Committee analyzes both individual elements, and total compensation and pay mix for each of the NEOs. While actual compensation reflects the Company'sCompany’s performance, the Company'sCompany’s goal is for total target compensation, as well as each element of total target compensation, to be at or around the median target compensation for executives with similar positions at our peer group companies (described in further detail below). The Compensation Committee also incorporates flexibility into its compensation programs and into the assessment process to respond to changing business needs, and to take into consideration individual performance, including the relative complexity and strategic importance of specific roles.
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In setting meaningful performance goals for both our annual incentive plan and PSUs,STI Plan, the Compensation Committee carefully considers a number of factors, including the general economic and industry climate, anticipated customer spending, projected revenue from current contracts and renewals and deals in the pipeline. Based on these factors, a range of performance scenarios is developed. Goals are then set at the threshold, target and maximum performance levels with the target goals aligning with the Company’s operating plan. CIRCOR strives for alignment between our PSUSTI Plan performance targets and our operating plan and the financial guidance we provide externally. In setting performance goals for our LTI Plan, the Compensation Committee considers the same factors as for the STI Plan but over a multi-year timeframe, its long-term objectives and the degree of difficulty in setting extended multi-year financial goals based on the economic and industry climates. We believe achievement of the meaningful performance targets and shareholder return goals that result from this rigorous goal-setting process will drive long-term value creation for our investors.
The Compensation Committee makes all final compensation and equity award decisions regarding our NEOs, except for the CEO, whose compensation is determined by the independent members of the full Board, based upon recommendations of the Compensation Committee.
The Role of Management.Management. The CEO reviews his recommendations pertaining to other executives (non-NEO) pay with the Committee providing transparency and oversight. Decisions on non-NEO executive pay are made by the CEO. The CEO does not participate in the deliberations of the Committee regarding his own compensation.
The Role of the Independent Consultant. The Compensation Committee engages an independent compensation consultant to provide expertise on competitive pay practices, program design, and an objective assessment of any inherent risks of any programs. Pursuant to authority granted to it under its charter, the Committee has engagedchanged its independent consultant in October 2021 from Pearl Meyer to Semler Brossy. Semler Brossy, as its independent consultant. Pearl Meyer before it, reports directly to the Committee and does not provide any additional services to management. The Committee has conducted an independence assessment of Pearl Meyerits consultants in accordance with SEC rules.
The Role of Market References - Peer Group Companies. Our executive compensation program considers the compensation practices of companies with which the Company competes or could compete for executive talent. In its review of 20192021 executive compensation, the Compensation Committee compared the Company’s overall compensation structure (mix of pay) and levels for the NEOs (total annual compensation, as well as each component of their total compensation) with the peer group companies.
Peer group companies generally have similar business models (e.g., multiple product lines, significant concentration of international sales, manufacturing operations) and are within comparable size ranges (e.g., market capitalization, revenue). For the purposes of setting 20192021 compensation, and with the support of Pearl Meyer, the Compensation Committee maintainedconsidered the following list of peer group companies (listed below) (the "Peer“Peer Group Companies"Companies”) in recognition ofwhich was unchanged from the Company’s increased operating size and complexity following the Fluid Handling acquisition.
prior year:
| Peer Group Companies for Setting | ||||||||
| Albany International Corp. | ESCO Technologies, Inc. | SPX FLOW, Inc. | ||||||
Forum Energy Technologies, Inc.(1) | Standex International Corporation | |||||||
| Mueller Water Products, Inc. | Tennant Company | |||||||
Chart Industries, Inc.(1) | NN, Inc.(1) | TriMas Corporation | ||||||
Enerpac Tool Group Corp.(1) | Rexnord Corporation | Watts Water Technologies, Inc. | ||||||
EnPro Industries, Inc.(1) | SPX Corporation | |||||||
(1) This company is one of the five companies that the Compensation Committee subsequently removed from our peer group list in preparation for 2022 compensation planning. New companies added to the peer group for 2022 compensation planning are: Astrec Industries, Inc, Ducommun Incorporated, Helios Technologies, Inc., Kadant Inc. and Kaman Corporation. | ||||||||
The Committee also consideredreviewed supplemental industry market survey data as necessary to determine 2019part of its subjective determination of 2021 target compensation levels for our NEOs. When reviewing market survey data, to the extent available the Compensation Committee relies on size-appropriate industry survey data based on annual revenue.
As set forth above, the principal elements of the Company’s executive compensation program consist of base salary, annual short-term incentives, a Management Stock Purchase Programthe MSPP and long-term incentives. 2021 base salaries for our NEOs, in the aggregate, were slightly below the market median for our peer group, and target total cash (base salaries plus target short-term incentives) and target total direct compensation (target total cash plus target LTI) in the aggregate approximated the market median for our peer
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group, although in each case there were variations in market position by executive due to factors including tenure, experience in current role, individual performance, and consideration of past awards.
Base Salary
At the beginning of each fiscal year, the Compensation Committee generally reviews and adjusts the base salaries for each of the Company’s executives, with any adjustments to become effective on April 1st of that year. NEOs who were employed by the fiscal year. The NEOsCompany at that time received base salary increases for 2019 ranging between approximately 3.0% to 17.6%10.0%, to better align their pay with the market.
Base salaries for each NEO are shown below:
| NEO | 2020 Year-End Base Salary | 2021 Year-End Base Salary | % Change | ||||||||
| Scott Buckhout | $790,000 | $810,000 | 2.5% | ||||||||
| Abhishek Khandelwal | $400,000 | $440,000 | 10.0% | ||||||||
| Tony Najjar | $385,000 | $396,500 | 3.0% | ||||||||
| Arjun Sharma | $360,000 | $371,000 | 3.1% | ||||||||
Jessica Wenzell (1) | $340,000 | $390,000 | 14.7% | ||||||||
Sumit Mehrotra (2) | $412,000 | N/A | |||||||||
| NEO | 2018 Year-End Base Salary | 2019 Year-End Base Salary | % Change |
| Scott Buckhout | $745,000 | $767,000 | 3.0% |
Chadi Chahine (1) | N/A | $420,000 | N/A |
| Sumit Mehrotra | $340,000 | $400,000 | 17.6% |
| Lane Walker | $410,000 | $422,300 | 3.0% |
| Arjun Sharma | $278,100 | $310,000 | 11.5% |
| (1) | Ms. Wenzell received a 10.0% merit increase in April 2021 and a 4.3% increase in November 2021 in connection with her taking on the additional role of Chief People Officer. | ||||
| (2) | Mr. Mehrotra received a 3.0% merit increase in April 2021 prior to his termination of employment on July 5, 2021. | ||||
Target Award Opportunities. The 2019 annual incentive plan providedSTI Plan provides our NEOs the opportunity to earn a performance-based annual cash bonus. Actual bonus payouts depend on the achievement of pre-established performance objectives and can range from 0% to 300% of target award amounts, (but not more than 200% for Net Sales performance goals), depending on the financial measure. Target annual award opportunities for the NEOs are approved by the Compensation Committee and are intended to be competitive in the market in which the Company competes for talent and reflect the level of responsibility of the role. They are, therefore, set at or around the median for comparable positions in the market. For 2019,2021, target award amounts, which are stated as a percentage of base salary, were as follows:
| NEO | Target Award Opportunity (as % of base salary) | ||||
| Scott Buckhout | 110% | ||||
Abhishek Khandelwal(1) | |||||
| 60% | |||||
| Arjun Sharma | |||||
| Jessica Wenzell | 60% | ||||
Sumit Mehrotra(2) | 60% | ||||
| (1) | Mr. Khandelwal was not eligible to receive any payments under the 2021 STI Plan as a result of his termination of employment on December 31, 2021. | ||||
| (2) | Mr. Mehrotra was eligible to participate in the 2021 STI Plan on a pro-rated basis pursuant to the terms of his separation agreement in connection with his termination of employment on July 5, 2021 | ||||
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Performance Measures, Weightings and Goals. Our incentive plans pay out toSTI Plan pays participants based on levels of performance against rigorous metrics established by the Board.Compensation Committee. The performance measures vary depending upon the role and responsibility of the NEO.
For 2019, annual incentive2021, STI awards for Corporate NEOs (Messrs. Buckhout, Chahine,were based on achievements, as calculated based on the following performance measures and Sharma)weightings:
| Performance Measures | Weightings | ||||
Aerospace & Defense Group(1) | 30% | ||||
Industrial Group(1) | 30% | ||||
| CIRCOR AOI | 30% | ||||
| CIRCOR Free Cash Flow | 10% | ||||
| (1) | Reflects Group STI Plan results calculated pursuant to the table below but excluding the impact of CIRCOR AOI on such results | ||||
For purposes of calculating STI awards for Group NEOs, group-specific AOI, Adjusted Working Capital % of Sales, Net Sales and CIRCOR AOI are considered.
For 2021, STI awards for Group NEOs were based on the achievement of the following performance measures and weightings:
weightings for each group (which impact all NEOs):
| Performance Measures | Weightings | ||||
| Group Net Sales | |||
The table below summarizes the Threshold, Target, Stretch and Above Stretch performance levels and the actualcalculated results for each performance measure in effect for 2019.our NEOs in 2021. For actual performance between Threshold, Target, Stretch and Above Stretch, bonus pool funding areis determined by linear interpolation.
| Measure | Threshold | Target | Stretch | Above Stretch | Achievement Results |
| Adjusted EPS | $1.58 | $2.26 | $2.94 | $3.62 | $1.19 |
Energy Segment Net Sales(1) | $330.2M | $366.9M | $403.6M | N/A | $315.8M |
| Energy Segment Free Cash Flow | $19.0M | $27.2M | $35.3M | $43.4M | $(20.0)M |
| Energy Segment AOM | 6.4% | 9.2% | 12.0% | 14.7% | 1.7% |
A&D Segment Net Sales(1) | $220.1M | $244.5M | $269.0M | N/A | $275.1M |
| A&D Segment Free Cash Flow | $28.6M | $40.8M | $53.1M | $65.3M | $50.5M |
| A&D Segment AOM | 11.6% | 16.6% | 21.6% | 26.5% | 19.2% |
Industrial Segment Net Sales(1) | $434.0M | $482.2M | $530.4M | N/A | $461.4M |
| Industrial Segment Free Cash Flow | $43.6M | $62.3M | $80.9M | $99.62M | $54.5M |
| Industrial AOM | 9.0% | 12.9% | 16.8% | 20.7% | 11.0% |
| Free Cash Flow | $33.5M | $47.8M | $61.1M | $76.5M | $11.7M |
Measure(1) | Threshold | Target | Stretch | Above Stretch | Achievement Results(1) | ||||||||||||
| A&D Group AOI | $44.8M | $64.0M | $83.1M | $102.3M | $55.3M | ||||||||||||
| A&D Group AWC % of Sales | 29.9% | 23.0% | 16.1% | 9.2% | 37.8% | ||||||||||||
| A&D Group Net Sales | $225.6M | $282.0M | $338.4M | $394.8M | $250.1M | ||||||||||||
| Industrial Group AOI | $28.8M | $41.2M | $53.5M | $65.9M | $23.2M | ||||||||||||
| Industrial Group AWC % of Sales | 30.4% | 23.4% | 16.3% | 9.3% | 19.0% | ||||||||||||
| Industrial Group Net Sales | $331.9M | $414.8M | $497.8M | $580.8M | $415.0M | ||||||||||||
| CIRCOR AOI | $66.7M | $83.4M | $100.1M | $116.8M | $51.4M | ||||||||||||
| CIRCOR Free Cash Flow | $32.9M | $47.0M | $61.1M | $75.2M | ($3.9M) | ||||||||||||
Plan Funding as % of Target Bonus (2) | 50.0% | 100.0% | 200% | 300.0% | See table below | ||||||||||||
| (1) | Threshold, Target, Stretch and Above Stretch are calculated using a set foreign exchange rate. That same rate is used to calculate Achievement Results. The Compensation Committee believes that it is important to use a set exchange rate for metric and result calculations to reduce the impact on the level of achievement of metrics caused by fluctuations in exchange rates, which are beyond the control of our NEOs. | ||||
| (2) | To achieve funding above Target level with respect to Group AWC% of Sales, Group AOI achievement must be at or above Threshold; to achieve funding above Target level with respect to Group Net Sales, Group AOI achievement must be at or above Target; to achieve funding above Target level with respect to CIRCOR Free Cash Flow, CIRCOR AOI achievement must be at or above Threshold. | ||||
The above performance measures include non-GAAP financial measures and will differ from amounts shown in the Company’s financial statements. Formeasures; for reconciliation to the most comparable GAAP measure, see Exhibit B.[Exhibit A].
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Based on the outlook at the time the goals were set and with input from Pearl Meyer, the Compensation Committee concluded that these performance goals struck an appropriate balance in providing both a reasonable probability of attainment and sufficient rigor and motivation of superior performance. The Compensation Committee considered the probability of achievement of different levels of performance as well as the uncertainty concerning the Company’s performance in 2019.2021.
2021 Short-Term Incentive Plan Results
The calculated results of our 2021 STI Plan, as reflected in the table above, fell short of our targets, in part due to the slow pace of recovery from the waning impact of the COVID-19 pandemic on our business and also due to the impact of the [PE accounting corrections on our financial results]. Our NEOs shared in the STI payments based on the STI Plan funding results of their respective business Group as set forth in the table below:
| NEO | STI Plan Group Alignment | STI Plan Funding Result | Target STI Plan Amount | Actual Award (as a % of Target) | Actual Award (in Dollars) | ||||||||||||
Scott Buckhout(1) | Corporate | 31.2% | $891,000 | —% | $— | ||||||||||||
Abhishek Khandelwal(2) | Corporate | 31.2% | $308,000 | —% | $— | ||||||||||||
| Tony Najjar | Aerospace & Defense Group | 37.9% | $237,900 | 37.9% | $90,057 | ||||||||||||
| Arjun Sharma | Corporate | 31.2% | $222,600 | 31.2% | $69,505 | ||||||||||||
| Jessica Wenzell | Corporate | 31.2% | $234,000 | 31.2% | $73,064 | ||||||||||||
Sumit Mehrotra(1)(3) | Industrial Group | 35.0% | $129,793 | —% | $— | ||||||||||||
| (1) | Based on the significant accounting irregularities discovered by the Company with respect to the Pipeline Engineering business unit as announced in the Form 8-K filed on March 14, 2022, which occurred over multiple years under the leadership of Messrs. Buckhout and Mehrotra, the impacts thereof on actual performance of the STI financial metrics, the inability to rely on the Company’s prior financial statements due to the misstatements, and the impending restatement of the Company’s financial results, the Committee determined it is in the best interest of the Company to exercise the Committee’s discretion to adjust the amounts earned by Mr. Buckhout and Mr. Mehrotra under the 2021 STI Plan to zero. | ||||
| (2) | Mr. Khandelwal did not receive any payments under the 2021 STI Plan as a result of his termination of employment on December 31, 2021. | ||||
| (3) | Mr. Mehrotra was eligible to participate in the 2021 STI Plan on a pro-rated basis pursuant to the terms of his separation agreement in connection with this termination of employment on July 5, 2021. The Company agreed to Mr. Mehrotra's eligibility for a 2021 bonus payout in exchange for his mutually agreed date of termination and the orderly transition of his responsibilities to other employees. Due to the Pipeline Engineering accounting irregularities, Mr. Mehrotra's 2021 STI payment was adjusted to zero. | ||||
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Historical Alignment of Performance and STI Plan Results
The chart below depicts our track record of past payouts demonstrates thatfor Corporate NEOs, under our STI Plan, over the metrics established for executives are meaningful targets that in many instances have not been met.last five years:
*2020 Result: reflects adjustment approved by the Compensation Committee from the actual 28.3% of target achieved. | ||
Management Stock Purchase Plan (MSP)(“MSPP”)
2021.
| NEO | 2021 Cash Bonus Deferral - Election | ||||
Scott Buckhout(1) | |||||
| Arjun Sharma | 100% | ||||
| Jessica Wenzell | —% | ||||
Sumit Mehrotra (1) | 100% | ||||
| (1) | Although Messrs. Buckhout and Mehrotra each elected to participate in the MSPP with respect to the 2021 STI payout, no MSPP awards were granted since they did not receive a 2021 STI payment. | ||||
Long-Term Incentive Awards
The Compensation Committee evaluates the LTI programLong Term Incentive Plan (the “LTI Plan”) annually relative to its objectives as well as practices within the Peer Group Companies. For our 2021 LTI grants, we introduced a new performance measure for our PSUs of Relative TSR, which compares our performance against a peer group of companies within the S&P 600 SmallCap Industrial Index, as described in more detail below. In addition to eliminating the difficulty of setting multi-year financial targets during an uncertain business environment, the change to using Relative TSR award structure for our LTI program eliminates redundancy of financial metrics between our STI and LTI Plans, further aligns our NEO compensation with stockholder interests by rewarding for TSR performance above peers and also aligns the three-year cliff performance and vesting periods with peer market practice.
The 2019 program2021 LTI Plan included a combinationan equal mix of PSUs stock optionsbased on the Relative TSR measure and time-based RSUs. The Committee believes that using different typesa mix of performance and time-based awards provides balance to the Company’s LTI programPlan with substantial alignment to shareholder interests with the TSR measure and mitigates risk.retention risk for our NEOs in periods when performance may lag our
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peers. Vesting of LTI awards is subject to continued employment with the Company on the date of vesting, creating a retention incentive for our NEOs.
Target LTI awarded toawards for each of our NEOs in 20192021 was expressed in dollar amounts based on grant date fair value and varied based on consideration of factors such as role, level of responsibility, performance and past award history:
| NEO | PSUs(1) | RSUs(1) | Total Value | ||||||||
Scott Buckhout(2) | $1,425,000 | $1,425,000 | $2,850,000 | ||||||||
Abhishek Khandelwal(2) | $225,000 | $225,000 | $450,000 | ||||||||
Tony Najjar(3) | $200,000 | $200,000 | $400,000 | ||||||||
| Arjun Sharma | $200,000 | $200,000 | $400,000 | ||||||||
Jessica Wenzell(4) | $125,000 | $125,000 | $250,000 | ||||||||
Sumit Mehrotra(2) | $200,000 | $200,000 | $400,000 | ||||||||
| (1) | The number of share units underlying the PSUs and RSUs was determined based on the average per share price of the Company’s common stock for the 20 consecutive trading days ending on March 16, 2021, rounding up for any fractional shares. The corresponding grant date fair value of these awards as reported in the Summary Compensation Table and Grants of Plan Based Awards Table differs from the values listed above since we generally account for these types of awards using the closing price of the Company’s common stock on the trading day preceding the grant date and, with regard to PSUs, the grant date fair value is determined based on a Monte Carlo simulation that takes into account the probability of all possible stock price outcomes and Relative TSR performance between the start of the performance period (February 26, 2021) and the grant date (March 17, 2021). | ||||
| (2) | Awards for Messrs. Buckhout, Khandelwal and Mehrotra were subsequently forfeited in connection with their termination of employment, with the exception of the first vesting tranche (one-third) of Mr. Buckhout's RSU award which vested pursuant to his termination agreement. | ||||
| (3) | Mr. Najjar's target award was increased to $500,000, to be effective with the 2022 award cycle, in connection with his appointment as Chief Operating Officer and Interim President and Chief Executive Officer effective January 19, 2022. He was appointed President and Chief Executive Officer on August 10, 2022, with no change to his LTI award. | ||||
| (4) | Ms. Wenzell's target award was increased to $350,000, to be effective with the 2022 award cycle, in connection with her appointment as Chief People Officer effective November 15, 2021. | ||||
2021 Long-Term Incentive Plan
| NEO | PSUs(2) | Stock Options(3) | RSUs(2) | Total Value | ||||||||
| Scott Buckhout | $ | 1,259,320 | $ | 1,375,000 | $0 | $ | 2,634,320 | |||||
Chadi Chahine(1) | $ | 190,000 | $ | 95,000 | $ | 245,000 | $ | 530,000 | ||||
| Sumit Mehtrotra | $ | 160,000 | $ | 80,000 | $ | 80,000 | $ | 320,000 | ||||
| Lane Walker | $ | 150,000 | $ | 75,000 | $ | 75,000 | $ | 300,000 | ||||
| Arjun Sharma | $ | 125,000 | $ | 62,500 | $ | 62,500 | $ | 250,000 | ||||
(1) Mr. Chahine received $190,000 in PSUs, $95,000 in stock options, and $95,000 in RSUs as part of his regular LTI plus an additional new-hire grant of RSUs with a grant date fair market value of $150,000 as new hire arrangement. The number of units for this award was determined based on the closing price of our Common Stock on the previous trading day before the grant date of January 2, 2019. This award will vest pro-rata over three years. (2) Award amounts for PSUs and RSUs were determined based on the closing price of our Common Stock on the previous trading day before the grant date of March 4, 2019 other than Mr. Chahine's new-hire grant and Mr. Buckhout's PSU grant. Mr. Buckhout's PSU grant was awarded on May 14, 2019 even though the number of units awarded was determined as if the grant had been made on March 4, 2019. (3) Individual share award amounts were calculated based on a Black-Scholes value of $11.84 per share. | ||||||||||||
For purposes of above, "S&P 600 SmallCap Industrial Index" means each company that was in the S&P 600 SmallCap Industrial Index as of February 26, 2021 and continues to be a member of such index through February 29, 2024 (and including any companies that become bankrupt or insolvent prior to such date) but excluding the following companies that the Compensation Committee determined were inappropriate comparisons: Exponent, Inc., Forrester Research, Inc., Heidrick and Struggles International, Inc, Interface, Inc., Kelly Services, Inc., Korn Ferry, Matthews International Corporation, Pitney Bowes, Inc., Resources Connection Inc., True Blue Inc., Unifirst Corporation, US Ecology Inc., and Viad Corp. The companies excluded from the TSR Peer Group were removed due to the higher concentration of services in their business mix relative to the Company.
Final award value is determined after completion of the three-year performance period based on the following schedule, subject in each case to (1) a vesting limit of no more than the number of target shares awarded if absolute TSR over the three year performance period is negative (the "Negative Return Cap") and (2) a limit on the value of shares than can vest, determined as of the last day of the performance period, equal to a maximum of six hundred percent (600%) of the product of (i) the number of target shares awarded, times (ii) the fair market value of a share of Common Stock on the grant date (the “600% Cap”). If the 600% Cap is exceeded, the number of PSUs that would otherwise become earned PSUs will be reduced to the extent necessary to avoid the 600% Cap being exceeded.
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| Equity Vehicle | Weight | Payout | Metric | Performance Period | Vesting |
| PSUs | 50% | Below Threshold: 0% of Target Threshold: 0.01% of Target Target: 100% of Target Stretch: 200% of Target | Free Cash Flow: 50% Average AOM: 50% | 2019-2021 | Vests 1/3 annually over three-year performance period |
| Stock Options | 25% | 100% | N/A | N/A | Vests 1/3 annually; seven-year term |
| RSUs | 25% | 100% | N/A | N/A | Vests 1/3 annually |
| Company TSR Relative to the TSRs of the S&P 600 SmallCap Industrial Companies for the Performance Period | Earned Vesting Percentage (% of target shares awarded that will vest)(1) | ||||
| Below 25th Percentile | 0% | ||||
| 25th Percentile | 50% | ||||
| 50th Percentile | 100% | ||||
| 75th Percentile or Higher | 200% (Maximum) | ||||
| (1) Subject to the Negative Return Cap and/or the 600% Cap, as applicable, as defined in the preceding paragraph. | |||||
As of December 31, 2021, the Company's Relative TSR from the beginning of the performance period of February 26, 2021 was below 25th percentile.
LTI awards made to our NEOs in 2020 and 2019 were also delivered in a 50/50 mix of RSUs and PSUs. The actual realizable value of these PSUs granted in 2019 is determined based on cumulative performance over three years. For each performance year in the three-year performance period, cumulative goals arewere set for eachadjusted cash flow and adjusted operating margin and performance metric (50% based on Free Cash Flow and 50% based on AOM). Performance is assessed at the end of each year andto determine the number of shares vest based on performance against the respective cumulative goal.to vest.
The PSUs will vest only if the pre-established cumulative goals are met. A look-back clause was introducedPSUs that do not vest in years one or two of the PSU Programperformance period due to performance results may vest in 2019 which enables retroactive payouts ofa subsequent year up to 100% if the cumulative performance in Years 2 and 3years two and/or three, as applicable, is 100% of target or above. Maximum units are cappedPerformance at threshold achievement level results in .01% of target shares vesting; performance at target achievement level results in 100% of target shares vesting; and performance at maximum achievement level or better results in a maximum of 200% of target.target shares vesting.
For the firstsecond vesting tranche of the 2019 PSUs (covering 2019)granted in 2020 (reflecting cumulative results for 2020 and 2021), the Company'sCompany’s performance fell below the threshold for Free Cash Flow (0% payout)Adjusted MCF and cameAverage AOM resulting in above threshold for AOM (19.6% payout). Given that each metric weighs 50% in the calculation, only 9.8% ofzero shares vested.vesting, as detailed below:
| Performance Measures | Performance Range | Actual Performance | % Payout | Shares Earned and Vested | ||
| Threshold | Target | Maximum | ||||
| Fiscal Year 2019 Free Cash Flow ($M) | 39.8 | 56.8 | 73.8 | 6.0 | 0% | 0 |
| Fiscal Year 2019 Average Operating Margin (AOM) | 6.5% | 9.3% | 12.1% | 7.1% | 19.6% | 2,141 |
| Performance Measures (50/50 weighting) | Performance Range | Actual Performance | % Payout | Shares Earned and Vested | ||||||||||||||||
| Threshold | Target | Maximum | ||||||||||||||||||
| Fiscal Years 2020-2021 Adjusted MCF | $83.2M | $104.0M | $124.8M | $23.7M | —% | 0 | ||||||||||||||
| Fiscal Years 2020-2021 AOM | 10.8% | 13.5% | 16.1% | 7.2% | —% | 0 | ||||||||||||||
With regard to the secondthird and last vesting tranche of the 20182019 PSUs granted in 2019 (reflecting cumulative results for 2019, 2020 and 2021), the Company overachievedunderachieved its cumulative targettargets for Average ROIC (covering 2018Free Cash Flow and 2019) but fell below its cumulative AOM target for this period. These targets were 5.4% for Average ROIC and 9.1% for AOM. 90.3% of the second tranche of shares was earned by the Company's NEOs in 2019.
| Performance Measures (50/50 weighting) | Performance Range | Actual Performance | % Payout (2) | Shares Earned and Vested (2) | ||||||||||||||||
| Threshold | Target | Maximum | ||||||||||||||||||
Fiscal Years 2019-2021 Adjusted FCF(1) | $12.9M | $185.4M | $154.1M | ($33.6M) | —% | 0 | ||||||||||||||
| Fiscal Years 2019-2021 AOM | 6.72% | 9.60% | 12.48% | 6.88% | —% | 0 | ||||||||||||||
| (1) "Adjusted Free Cash Flow" for this award is is calculated by adding the Company’s cash provided by operating activities less capital expenditures for that year. | ||||||||||||||||||||
| (2) Based on the significant accounting irregularities discovered by the Company with respect to the Pipeline Engineering business unit as announced via Form 8-K filed on March 14, 2022, the impacts thereof on actual performance of the PSU financial metrics, the inability to rely on the Company’s prior financial statements due to the misstatements, and the impending restatement of the Company’s financial results, the Committee determined it is in the best interest of the Company to exercise the Committee’s discretion to adjust the amounts earned under the last tranche of the 2019 PSU award to zero. | ||||||||||||||||||||
Retention Incentive Compensation
In connection with the ROICMr. Khandelwal's termination of employment in December 2021 and AOM metrics are equally weighed at 50%, an average of 13.0% ofour search for a new chief financial officer, the PSUs granted in 2017 vested in February 2020.
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reporting, disclosure and corporate governance processes. These awards were made to retain experienced executives to provide continuity of leadership for these important functions through the end of 2022. See also 2022 Compensation Actions Update below for discussion on March 24, 2020.additional retention issued in 2022.
•Ms. Wenzell, in connection with her General Counsel role, received a retention bonus installment in the amount of $100,000 following the filing of our 2021 Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and will receive a Special RSU grantsecond retention bonus installment in the amount of $50,000 following December 31, 2022.
Payment of each bonus installment is subject to (1) continued employment, (2) absence of a notice from the executive or from the Company of intent to terminate employment and (3) satisfactory performance through the applicable scheduled installment payment dates and, additionally, payment of the first bonus installment is subject to repayment to the Company in the event of termination of employment for cause prior to December 31, 2022. Mr. Sharma's retention installments, to the extent not already paid, are subject to full payment in the event the Company terminates his employment without cause. Ms. Wenzell's retention installments, to the extent not already paid, are subject to payment on a pro-rata basis in the event the Company provides notice of its intent to terminate her employment without cause. Effective with amendments made in August of 2022 for both Mr. Sharma and Ms. Wenzell, any unpaid retention installments will become payable upon a qualifying termination as a consequence.defined in CIRCOR’s NEO Change in Control Agreements.
Long-Term Incentive Granting Practices
Most LTI awards are granted at the time of the annual grant in the first quarter of the year, although awards may be granted as part of the hiring process or in connection with a change in responsibility. Annual LTI grants are approved at a specified, regularly scheduled meeting of the Compensation Committee. The Compensation Committee approves the type and number of awards to be granted and the performance criteria for PSUs.
LTI awards granted during the year have a grant date no earlier than the date of approval. Grants that require the approval of the Compensation Committeefor our executive officers are typically reviewed and approved at a regularly scheduled Compensation Committee meeting or by written consent in advance of the individual’s employment commencement or promotion date. For these awards, the grant date is the date of the meeting if the individual receiving the grant has already commenced employment. If the individual has not yet commenced employment, the date of grant is the business day following the individual’s first day of employment.
For our 2021 annual LTI awards, the number of share units underlying each award was determined by dividing the award value by the average per share price of the Company’s common stock for the 20 consecutive trading days ending on March 16, 2021, rounding up for any fractional shares. This method was introduced in the first quarter of 2020, in lieu of using the closing price on the grant date, during a highly volatile period in the trading price of our stock. Using this approach ensures that the number of share units awarded is not inflated due the closing price on the grant date.
Other Executive Compensation Practices & Policies
Stock Ownership Guidelines
To further align the interests of the executive officers of the Company with the interests of the stockholders, the Company has adopted Stock Ownership Guidelines for executive officers. These guidelines establish an expectation that, within a five-year period, each NEO shall achieve and maintain an equity interest in the Company at least equal to a specified multiple of such individual'sindividual’s annual base salary. The applicable multiples are as follows:
| Position | Target | ||||
| Chief Executive Officer | 5x annual base salary | ||||
| Chief Financial Officer | 3x annual base salary | ||||
| Other NEOs | 2x annual base salary | ||||
In calculating an individual'sindividual’s equity interest, credit is given for (i) the value of actual shares of Common Stock owned beneficially, (ii) the before-tax value of all vested stock options and (iii) the before-tax value of all outstanding RSU awards (including those which the individual has received in lieu of bonus compensation). The calculation of an individual'sindividual’s equity
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interest, however, does not include the value of any outstanding equity awards subject to risk of forfeiture by virtue of performance.
An annual review is conducted by our Nominating and Corporate Governance Committee to assess compliance with the guidelines. As of February 13, 2020,December 31, 2021, each of our NEOs met their applicable ownership guidelines, or, for NEOs who have been with the Company for less than five years, were on track to achieve their ownership guidelines by the applicable target compliance date. No adjustments to stock ownership guidelines were made due to the COVID-19 pandemic.
Clawback Policy
Under our clawback policy, if our Boardin the event of Directors determines that an officer engaged in fraud or willful misconduct that resulted in a restatement of the Company’s financial results, the Board may recover or require reimbursement of incentive compensation received by a NEO during the three completed fiscal years immediately preceding the date on which we are required to prepare a restatement. In addition, if the Board determines that a NEO engaged in misconduct, then the Board may review all performance-based compensation awarded to or earned by that officer on the basis of performance during the fiscal periods materially affected by the restatement. If, in the view of our Board of Directors, the performance-based compensation would have been lower if it had been based on the restated financial results, the Board of Directors may, to the extent permitted by applicable law, seek recoupment from that officer of any portion ofshall take such performance-based compensationaction as it deems appropriate after a reviewto be in the Company’s best interest and necessary to remedy the misconduct or acts/omissions of all relevant factsthe NEO and circumstances.prevent their recurrence, including recovery or required reimbursement of incentive compensation. Misconduct for this purpose includes, but is not limited to, fraudulent, criminal or other willful misconduct, any action or inaction that causes harm, willful and material breach of Company policies, breach of confidentiality obligations or withholding of material information from or misstatement to the Board. Any recoupment under this policy may be in addition to, and shall not otherwise limit, any other remedies that may be available to the Company under applicable law, including disciplinary actions up to and including termination of employment.
Insider Trading, Anti-Hedging & Anti-Pledging Policies
We maintain an insider trading policy that prohibits hedging the economic risk of ownership of our stock by all directors, executive officers and certain designated employees. No person who is considered an "insider"“insider” of the Company, which includes each of our NEOs and directors, may directly or indirectly sell any securities of the Company that are not owned by the person at the time of the sale (short sale). Such persons also may not purchase or sell puts, calls, options or other derivative instruments in respect of our securities at any time without the approval of the Company’s Clearance Officer. We also do not allow officers or directors to pledge Company stock.
Risk Assessment and Mitigation of Compensation Policies and Practices
The Compensation Committee has reviewed our incentive compensation programs, discussed the concept of risk as it relates to our compensation program, considered various mitigating factors and reviewed these items with its independent consultant, Pearl Meyer. In addition, our Compensation Committee asked Pearl Meyer to conduct an independent risk assessment of our executive compensation program. Based on these reviews and discussions, the Compensation Committee does not believe our compensation program creates risks that are reasonably likely to have a material adverse effect on our business.
Other Benefits
The Company maintains a defined contribution 401(k) plan in which substantially all of our U.S. employees, including our NEOs, are eligible to participate. We also maintain a nonqualified deferred compensation plan to provide benefits, at the Company’s discretion, that would otherwise be provided under the qualified 401(k) plan to certain participants but for the imposition of certain maximum statutory limits imposed on qualified plan benefits (for example, annual limits on eligible pay and contributions).
We also provide our NEOs with a limited number of perquisites as part of their compensation arrangements, which we consider to be reasonable and consistent with competitive practice. These perquisites include annual car allowances and financial counseling/tax preparation services, which, in total, comprise a de minimis part of the NEO'sNEO’s target total direct compensation.
Severance and Change in Control Agreements
In order to attract and retain key executives, the Company has entered into severance and change of control agreements with our executive officers.NEOs, including special severance agreements entered into with Messrs. Buckhout and Mehrotra in connection with their termination of employment, as discussed in “Severance and Other Benefits upon Termination of Employment or Change of Control.”
The agreements are intended to support management continuity and align with market practice. The change of control agreements are intended to maintain focus on stockholder value creation in the event of an actual or threatened change of control. Pursuant to Company policy, the Company does not provide tax gross-ups in connection with any compensatory
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arrangements. As a result, we do not have any change of control agreements that provide for tax gross-ups. More detail is provided below in "“Severance and Other Benefits upon Termination of Employment or Change of Control."”
As the Company remained in a period of Executive Compensation
•For Mr. Najjar, in connection with his appointment to Chief Operating Officer and Interim President and Chief Executive Officer effective January 19, 2022, the Board approved (1) an increase in base salary from $396,500 to $425,000, (2) an increase in STI target for 2022 from 60% to 65% of base salary, (3) a 2022 LTI grant in the amount of $500,000, and (4) for his interim role, additional compensation of $20,000 per month during the term of his interim role and a $250,000 RSU grant schedule to vest one year following grant (with vesting accelerated if Mr. Najjar’s employment with the Company is terminated for a reason other than for cause) to be granted to our NEOs onupon the earlier of the conclusion of his interim role or immediately prior to a change of control event. In connection with Mr. Najjar’s appointment as President and Chief Executive Officer on August 10, 2022, (1) his annual base salary was increased to $665,000, (2) the stipend was eliminated, (3) his STI target for 2022 was increased from 65% to 75% of his salary and (4) the RSU grant described above was made.
•In connection with his appointment as Chief Financial Officer on August 10, 2022, (1) Mr. Sharma’s base salary was increased to $499,000, (2) the stipend was eliminated, and (3) his STI target for 2022 was increased from 60% to 65%.
•On July 20, 2022, the Compensation Committee approved a retention award for Mr. Najjar in the amount of $40,000, scheduled to vest in two equal installments on August 31, 2022 and November 2, 2017 be deductible as "performance-based compensation"30, 2022.
•For Mr. Sharma, on July 20, 2022 the Compensation Committee approved an additional retention award of $74,000, scheduled to vest in two equal installments on August 31, 2022 and has assessedNovember 30, 2022.
•For Ms. Wenzell, on July 20, 2022 the possibility that certain awards will be grandfathered fromCompensation Committee approved an additional retention award of $78,000, scheduled to vest in two equal installments on August 31, 2022 and November 30, 2022.
Additionally, in connection with the changes made by the Tax Cuts and Jobs Act, it cannot guarantee that result. The Committee has taken the potential impactfiling delay of the Tax Cuts and Jobs Act into consideration when approving payout amountsCompany's Annual Report on Form 10-K for performance periodsthe fiscal year ending on December 31, 2019. The Committee expects2021 and the corresponding delay in the future to authorize compensation in excessgrant of $1 million to NEOs that will not be deductible under Section 162(m) when it believes doing so isour 2022 LTI awards, the Compensation Committee conditionally approved the cash settlement of these LTI awards in the best interestsevent that a change in control transaction is consummated prior to the grant date. This action was taken to provide our executives with a measure of certainty regarding their compensation during a period of significant uncertainty about the future ownership and leadership structure of the Company and its stockholders.
Company. Pending LTI awards were made on August 15, 2022.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION AND
OTHER PAYMENTS TO THE NAMED EXECUTIVE OFFICERS
The following sections provide a summary of cash and certain other amounts earned by the NEOs in Fiscal Year 20192021 (and the preceding two fiscal years). Except where noted, the information in the Summary Compensation Table generally pertains to compensation to the NEOs for Fiscal Year 2019.2021. We encourage you to read the following tables closely. The narratives preceding the tables and the footnotes accompanying each table are important parts of each table. Also, we encourage you to read this section in conjunction with the Compensation Discussion and Analysis above.
2021 Summary Compensation Table
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Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) (3) | Option Awards ($) (4) | Non-Equity Incentive Plan Compensation ($) (5) | All Other Compensation($) (6) | Total ($) | |||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | |||||||
Scott Buckhout President and Chief Executive Officer | 2019 | 761,077 | — | 1,259,320 | 1,375,000 | — | 13,449 | 3,408,846 | |||||||
| 2018 | 732,885 | — | 1,416,261 | 1,450,000 | 878,152 | 15,361 | 4,492,659 | ||||||||
| 2017 | 676,539 | — | 1,182,692 | 1,080,000 | 297,850 | 14,267 | 3,251,348 | ||||||||
Chadi Chahine (7) Senior Vice President, Chief Financial Officer | 2019 | 402,231 | — | 285,000 | 95,000 | — | 25,117 | 807,348 | |||||||
Sumit Mehrotra President, Industrial Group | 2019 | 383,846 | — | 240,000 | 80,000 | — | 371,533 | 1,075,379 | |||||||
| 2018 | 323,846 | — | 228,681 | 50,000 | 167,290 | 517,725 | 1,287,542 | ||||||||
| 2017 | 270,000 | — | 115,678 | 74,500 | 93,110 | 136,818 | 690,106 | ||||||||
Arjun Sharma Senior Vice President, Business Development | 2019 | 301,412 | — | 187,500 | 62,500 | — | 25,762 | 577,174 | |||||||
| 2018 | 275,919 | — | 294,889 | 40,500 | 149,002 | 20,847 | 781,157 | ||||||||
| 2017 | 270,000 | 50,000 | 167,919 | 65,000 | 107,443 | 14,746 | 675,108 | ||||||||
Lane Walker President, Energy Group | 2019 | 418,989 | — | 225,000 | 75,000 | — | 28,204 | 747,193 | |||||||
| 2018 | 220,769 | 170,000 | 467,510 | — | 142,206 | 60,533 | 1,061,018 | ||||||||
| Name and Principal Position | Year | Salary | Bonus | Stock Awards (1) | Option Awards(2) | Non-Equity Incentive Plan Compensation(3) | All Other Compensation(4) | Total | ||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||
Scott Buckhout President and Chief Executive Officer (5) | 2021 | $805,385 | $— | $3,410,115 | $— | $— | $14,001 | $4,229,501 | ||||||||||||||||||
| 2020 | $754,017 | $405,586 | $2,193,689 | $— | $246,164 | $3,582 | $3,603,038 | |||||||||||||||||||
| 2019 | $761,077 | $— | $1,259,320 | $1,375,000 | $— | $13,449 | $3,408,846 | |||||||||||||||||||
Abhishek Khandelwal Chief Financial Officer (6) | 2021 | $430,769 | $— | $502,973 | $— | $— | $26,001 | $959,743 | ||||||||||||||||||
| 2020 | $273,077 | $234,470 | $428,641 | $— | $51,268 | $11,032 | $998,488 | |||||||||||||||||||
Tony Najjar President, Aerospace and Defense Group | 2021 | $393,846 | $— | $477,828 | $— | $90,057 | $14,031 | $975,762 | ||||||||||||||||||
| 2020 | $345,962 | $79,356 | $368,095 | $— | $128,544 | $2,835 | $924,792 | |||||||||||||||||||
Arjun Sharma Senior Vice President, Business Development | 2021 | $368,462 | $— | $526,926 | $— | $69,505 | $22,401 | $987,294 | ||||||||||||||||||
| 2020 | $315,712 | $100,813 | $395,605 | $— | $61,187 | $14,342 | $887,659 | |||||||||||||||||||
| 2019 | $301,412 | $— | $187,500 | $62,500 | $— | $25,762 | $577,174 | |||||||||||||||||||
| Jessica Wenzell Senior Vice President, General Counsel & Chief People Officer | 2021 | $368,000 | $— | $279,469 | $— | $73,064 | $13,890 | $734,423 | ||||||||||||||||||
Sumit Mehrotra Former President, Industrial Group (7) | 2021 | $219,162 | $— | $480,616 | $— | $— | $48,671 | $748,449 | ||||||||||||||||||
| 2020 | $407,077 | $110,127 | $304,632 | $— | $25,833 | $213,927 | $1,061,596 | |||||||||||||||||||
| 2019 | $383,846 | $— | $240,000 | $80,000 | $— | $371,533 | $1,075,379 | |||||||||||||||||||
| (1) | |||||
Reflects the grant date fair value of | |||||
| (2) | Reflects the aggregate grant date fair value of stock options awards. For a discussion of the assumptions related to the calculation of the amounts in this column, refer to Note 14 (“Share-Based Compensation”) to our audited consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K filed with the SEC on July 26, 2022. | ||||
| (3) | Reflects the amounts earned under our STI Plan by each NEO, whether received in cash or RSUs. Some of our NEOs elected to use all or a portion of their short-term incentive to purchase RSUs under our MSPP in 2021 and 2020. There were no annual bonus payments made to NEOs for 2019. The number of RSUs purchased by each NEO is as follows: | ||||
| NEO | Year | Percentage of Bonus Used to Purchase RSUs | Amount of Bonus Excluding Sign-On Bonus | Amount of Non-Equity Incentive Plan Compensation | Amount of Bonus Plus Non-Equity Incentive Plan Compensation | Amount of Bonus Used to Purchase RSUs | Number of Purchased RSUs | |||||||||||||||||||
| Scott Buckhout | 2021 | 70% | — | — | $0 | — | — | |||||||||||||||||||
| 2020 | 70% | $405,586 | $246,164 | $651,750 | $456,225 | 17,100 | ||||||||||||||||||||
| 2019 | 65% | — | — | $0 | — | — | ||||||||||||||||||||
| Abhishek Khandelwal | 2021 | —% | $— | $— | $— | $— | — | |||||||||||||||||||
| 2020 | —% | $84,470 | $51,268 | $135,738 | — | — | ||||||||||||||||||||
| Tony Najjar | 2021 | 30% | — | $90,057 | $90,057 | 27,017 | 2,040 | |||||||||||||||||||
| 2020 | 30% | 79,356 | 128,544 | $207,900 | 62,370 | 2,337 | ||||||||||||||||||||
| Arjun Sharma | 2021 | 100% | $— | $69,505 | $69,505 | $69,505 | 5,249 | |||||||||||||||||||
| 2020 | 100% | $100,813 | $61,187 | $162,000 | $162,000 | 6,072 | ||||||||||||||||||||
| 2019 | 100% | $— | $— | $— | $— | — | ||||||||||||||||||||
| Jessica Wenzell | 2021 | —% | — | $73,064 | $73,064 | — | — | |||||||||||||||||||
| Sumit Mehrotra | 2021 | 100% | $— | $— | $— | — | — | |||||||||||||||||||
| 2020 | 50% | $110,127 | $25,833 | $135,960 | $67,980 | 2,548 | ||||||||||||||||||||
| 2019 | 100% | $— | $— | $— | $— | — | ||||||||||||||||||||
42
| Under our MSPP, the purchase price for RSUs is 67% of the closing price of our Common Stock on the date of grant. The grant date fair value of the 33% discount is referred to as MSPP RSUs, and the MSPP RSUs have been included under the Stock Awards column as additional compensation to NEOs. The total number of RSUs purchased in connection with the 2021 STI Plan was determined by dividing the dollar amount of the bonus indicated in the above table by $13.24, which was 67% of the closing price of our Common Stock on August 15, 2022. For the 2020 STI Plan, the total number of RSUs purchased was determined by dividing the dollar amount of the bonus indicated in the above table by $26.68, which is 67% of the closing price of our Common Stock on March 16, 2021. The actual number of RSUs purchased under the MSPP may be reduced to pay for tax withholding. Although Messrs. Buckhout and Mehrotra each elected to participate in the MSPP with respect to the 2021 STI payout, no MSPP awards were granted since they did not receive a 2021 STI payment. | |||||
| (4) | See “2021 All Other Compensation Table” for specific items in this category. | ||||
| (5) | Mr. Buckhout terminated employment with CIRCOR on January 19, 2022. The equity awards granted to Mr. Buckhout in 2021 and disclosed in the Summary Compensation Table were forfeited except for 12,787 RSUs that vested pursuant to his separation agreement. | ||||
| (6) | Mr. Khandelwal terminated employment with CIRCOR on December 31, | ||||
| (7) | Mr. Mehrotra terminated employment with CIRCOR on July 5, 2021. The equity awards granted to Mr. Mehrotra in 2021 and disclosed in the Summary Compensation Table were forfeited. | ||||
43
2021 All Other Compensation Table
| Name | Perquisites and Other Personal Benefits (1) | Tax Preparation and Financial Planning | Life Insurance Premiums (2) | Payments Relating to Employee Savings Plan (3) | Other (4) | Total | |||||||||||||||||
| Scott Buckhout | $1,201 | $— | $1,200 | $11,600 | $— | $14,001 | |||||||||||||||||
| Abhishek Khandelwal | $13,201 | $— | $1,200 | $11,600 | $— | $26,001 | |||||||||||||||||
| Tony Najjar | $1,201 | $— | $1,200 | $11,600 | $30 | $14,031 | |||||||||||||||||
| Arjun Sharma | $9,601 | $— | $1,200 | $11,600 | $— | $22,401 | |||||||||||||||||
| Jessica Wenzell | $1,186 | $— | $1,104 | $11,600 | $— | $13,890 | |||||||||||||||||
| Sumit Mehrotra | $5,128 | $5,887 | $626 | $7,175 | $48,671 | $67,487 | |||||||||||||||||
| (1) | The amounts shown in this column reflect each NEO’s annual car allowance and the cost of group accident and disability insurance that provides for higher coverage levels than generally available to other employees. | ||||
| (2) | The amounts shown in this column reflect group term life insurance premiums paid on behalf of each NEO. | ||||
| (3) | The amounts shown in this column reflect Company matching contributions to each NEO’s 401(k) savings account of up to 4.0% of eligible compensation subject to the limits imposed by IRS regulations. | ||||
| (4) | For Mr. Mehrotra, the amount shown in this column reflects payment for accrued vacation. | ||||
44
2021 Grants of Plan-Based Awards
The following table summarizes the grant of plan-based awards made to our NEOs in 2021.
| Name | Type of Award (1) | Grant Date | Approval Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) (4) (5) | ||||||||||||||||||||||||||||
Thresh-hold ($) | Target ($) | Maxi-mum ($) | Thresh-hold (#) | Target (#) | Maxi-mum (#) | ||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (l) | ||||||||||||||||||||||||||
| Scott Buckhout | STI | 445,500 | 891,000 | 2,673,000 | — | — | — | — | — | ||||||||||||||||||||||||||
| PSU | 3/17/2021 | 3/3/2021 | — | — | — | 19,180 | 38,359 | 76,718 | — | 1,657,876 | |||||||||||||||||||||||||
| Time RSU | 3/17/2021 | 3/3/2021 | — | — | — | — | — | — | 38,361 | 1,527,535 | |||||||||||||||||||||||||
| MSPP RSU | 3/17/2021 | 3/1/2021 | — | — | — | — | — | — | 5,643 | 224,704.26 | |||||||||||||||||||||||||
| Abhishek Khandelwal | STI | 154,000 | 308,000 | 924,000 | — | — | — | — | — | ||||||||||||||||||||||||||
| PSU | 3/17/2021 | 3/3/2021 | — | — | — | 3,029 | 6,057 | 12,114 | 261,784 | ||||||||||||||||||||||||||
| Time RSU | 3/17/2021 | 3/3/2021 | — | — | — | — | — | — | 6,057 | 241,190 | |||||||||||||||||||||||||
| Tony Najjar | STI | 118,950 | 237,900 | 713,700 | — | — | — | — | — | ||||||||||||||||||||||||||
| PSU | 3/17/2021 | 3/3/2021 | — | — | — | 2,692 | 5,384 | 10,768 | — | 232,696 | |||||||||||||||||||||||||
| Time RSU | 3/17/2021 | 3/3/2021 | — | — | — | — | — | — | 5,385 | 214,431 | |||||||||||||||||||||||||
| MSPP RSU | 3/17/2021 | 3/1/2021 | — | — | — | — | — | — | 771 | 30,701 | |||||||||||||||||||||||||
| Arjun Sharma | STI | 111,300 | 222,600 | 667,800 | — | — | — | — | — | ||||||||||||||||||||||||||
| PSU | 3/17/2021 | 3/3/2021 | — | — | — | 2,692 | 5,384 | 10,768 | — | 232,696 | |||||||||||||||||||||||||
| Time RSU | 3/17/2021 | 3/3/2021 | — | — | — | — | — | — | 5,385 | 214,431 | |||||||||||||||||||||||||
| MSPP RSU | 3/17/2021 | 3/1/2021 | — | — | — | — | — | — | 2,004 | 79,799 | |||||||||||||||||||||||||
| Jessica Wenzell | STI | 117,000 | 234,000 | 702,000 | — | — | — | — | — | ||||||||||||||||||||||||||
| PSU | 3/17/2021 | 3/3/2021 | — | — | — | 1,683 | 3,365 | 6,730 | — | 145,435 | |||||||||||||||||||||||||
| Time RSU | 3/17/2021 | 3/3/2021 | — | — | — | — | — | — | 3,366 | 134,034 | |||||||||||||||||||||||||
| Sumit Mehrotra | STI | 127,350 | 254,700 | 764,100 | — | — | — | — | — | ||||||||||||||||||||||||||
| PSU | 3/17/2021 | 3/3/2021 | — | — | — | 2,692 | 5,384 | 10,768 | — | 232,696 | |||||||||||||||||||||||||
| Time RSU | 3/17/2021 | 3/3/2021 | — | — | — | — | — | — | 5,385 | 214,431 | |||||||||||||||||||||||||
| MSPP RSU | 3/17/2021 | 3/1/2021 | — | — | — | — | — | — | 841 | 33,489 | |||||||||||||||||||||||||
| (1) | Type of Award: | ||||
| "STI" refers to cash awards that are subject to performance conditions under the STI Plan | |||||
| "PSU" refers to RSU awards that are subject to performance conditions | |||||
| "Time RSU" refers to RSU awards that are subject to time-based vesting only | |||||
| "MSPP RSU" refers to the portion of Time RSU awards granted under our Management Stock Purchase Plan (MSPP) that are attributable to the 33% discounted purchase price. Each of our NEOs, other than Mr. Khandelwal and Ms. Wenzell, elected to use a portion of his or her short-term incentive bonus awarded under our 2020 STI Plan to purchase Time RSUs at a price equal to 67% of the closing price of our Common Stock on the business day prior to the date of grant. See footnote (3) to the “Summary Compensation Table” for a description of the actual amount of annual bonus earned by each of the NEOs, the corresponding amount of each NEO’s bonus that was used to purchase RSUs and the total number of RSUs purchased. | |||||
| The Time RSU, PSU, and MSPP RSU awards were granted under our LTI Plan. See Summary Compensation Table and the footnotes thereto for additional information on these types of awards. | |||||
| (2) | The amounts in these columns indicate the threshold, target and maximum performance bonus amounts payable under our STI Plan prior to deducting any amounts the NEO elected to use to purchase RSUs under the MSPP. The potential bonus amounts payable under the STI Plan are based on the achievement of specific financial performance metrics. The NEOs would receive a bonus payout equal to 50% of their target bonus at the threshold level of performance and 300% of their target bonus at the maximum level of performance. If none of the threshold performance metrics are met, no bonus would be payable to the NEOs under the STI Plan unless otherwise determined by the Compensation Committee. | ||||
| (3) | The amounts in these columns indicate the threshold, target and maximum number of shares that the NEO could receive if an award payout is achieved under the PSUs. These potential share amounts are based on achievement of relative total shareholder return goals compared to a specified index of small-sized industrial companies during the performance period beginning on February 26, 2021 and ending on February 29, 2024. The NEO would receive 50% of the target number of shares at the threshold level of performance and 200% of the target number of shares at the maximum level of performance. If the threshold performance target is not met, then our NEOs will not receive any shares. | ||||
45
| (4) | The amounts in this column reflect the aggregate grant date fair values of the PSUs reflected in column (g) and Time RSUs | ||||
| NEO | Grant Date Fair Value of PSUs | Grant Date Fair Value of Time RSUs | Total |
| Scott Buckhout....................................................... | $1,259,320 | $— | $1,259,320 |
| Chadi Chahine....................................................... | $190,000 | $95,000 | $285,000 |
| Sumit Mehrotra...................................................... | $160,000 | $80,000 | $240,000 |
| Arjun Sharma......................................................... | $125,000 | $62,500 | $187,500 |
| Lane Walker........................................................... | $150,000 | $75,000 | $225,000 |
| accordance with accounting guidance. | |||
| Included in this column is the grant date fair value of the target number of PSUs granted to each NEO, which we consider to be the probable outcome of the performance conditions as of the grant date. The following table shows for each NEO the grant date fair value of the target number of PSUs granted to each such officer that is included in the Summary Compensation Table and the grant date fair value of the maximum number of PSUs. | |||
| NEO | Target Number of PSUs | Grant Date Fair Value of Target Number of PSUs | Maximum Number of PSUs | Grant Date Fair Value of Maximum Number of PSUs |
| Scott Buckhout.......................... | 40,887 | $1,259,320 | 81,774 | $2,518,640 |
| Chadi Chahine........................... | 5,652 | $190,000 | 11,304 | $380,000 |
| Sumit Mehrotra......................... | 4,758 | $160,000 | 9,516 | $320,000 |
| Arjun Sharma............................ | 3,717 | $125,000 | 7,434 | $250,000 |
| Lane Walker............................... | 4,461 | $150,000 | 8,922 | $300,000 |
| NEO | Target Number of PSUs | Grant Date Fair Value of Target Number of PSUs | Maximum Number of PSUs | Grant Date Fair Value of Maximum Number of PSUs | ||||||||||
| Scott Buckhout | 38,359 | $1,657,876 | $76,718 | $3,315,752 | ||||||||||
| Abhishek Khandelwal | 6,057 | $261,784 | $12,114 | $523,567 | ||||||||||
| Tony Najjar | 5,384 | $232,696 | $10,768 | $465,393 | ||||||||||
| Arjun Sharma | 5,384 | $232,696 | $10,768 | $465,393 | ||||||||||
| Jessica Wenzell | 3,365 | $145,435 | $6,730 | $290,871 | ||||||||||
| Sumit Mehrotra | 5,384 | $232,696 | $10,768 | $465,393 | ||||||||||
| The target | |||||
46
Outstanding Equity Awards at 2021 Fiscal Year-End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||
| Name | Type of Award (1) | Number of Securities Underlying Unexercised Options Exercisable (#)(2) | Number of Securities Underlying Unexercised Options Unexercisable (#) (2) | Equity Incentive Plan Awards: Number of Securities Underlying unexercised unearned options (#) | Option Exercise Price ($) | Option Expiration Date | Award Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (3) | Equity Incentive Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (3) | |||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | ||||||||||||||||||||||||||||
| Scott Buckhout | Perf Option | 150,000 (4) | — | — | $41.17 | 4/09/2023 | 4/09/2013 | — | — | — | — | |||||||||||||||||||||||||||
| Option | 39,141 | — | — | $51.84 | 2/23/2022 | 2/23/2015 | — | — | — | — | ||||||||||||||||||||||||||||
| Option | 79,977 | — | — | $38.89 | 2/23/2023 | 2/23/2016 | — | — | — | — | ||||||||||||||||||||||||||||
| Option | 55,788 | — | — | $60.99 | 2/27/2024 | 2/27/2017 | — | — | — | — | ||||||||||||||||||||||||||||
| Option | 98,775 | — | — | $42.62 | 3/05/2025 | 3/05/2018 | — | — | — | — | ||||||||||||||||||||||||||||
| Option | 38,711 | 77,422 | — | $33.63 | 3/04/2026 | 3/04/2019 | — | — | — | — | ||||||||||||||||||||||||||||
| MSPP RSU | — | — | — | — | — | 3/04/2019 | 19,486 | $529,629 (5) | — | — | ||||||||||||||||||||||||||||
| PSU | — | — | — | — | — | 3/27/2020 | — | — | 68,445 | $1,860,335 (6) | ||||||||||||||||||||||||||||
| Time RSU | — | — | — | — | — | 3/27/2020 | 45,630 | $1,240,223 (7) | — | — | ||||||||||||||||||||||||||||
| MSPP RSU | — | — | — | — | — | 3/17/2021 | 17,100 | $464,778 (5) | — | — | ||||||||||||||||||||||||||||
| PSU | — | — | — | — | — | 3/17/2021 | — | — | 38,359 | $1,042,598 (8) | ||||||||||||||||||||||||||||
| Time RSU | — | — | — | — | — | 3/17/2021 | 38,361 | $1,042,652 (7) | — | — | ||||||||||||||||||||||||||||
| Abhishek Khandelwal (9) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Tony Najjar | Option | 2,730 | — | — | $38.89 | 2/23/2023 | 2/23/2016 | — | — | — | — | |||||||||||||||||||||||||||
| Option | 1,449 | — | — | $60.99 | 2/27/2024 | 2/27/2017 | — | — | — | — | ||||||||||||||||||||||||||||
| Option | 1,704 | — | — | $42.62 | 3/05/2025 | 3/05/2018 | — | — | — | — | ||||||||||||||||||||||||||||
| Option | 2,816 | 1,408 | — | $33.63 | 3/04/2026 | 3/04/2019 | — | — | — | — | ||||||||||||||||||||||||||||
| MSPP RSU | — | — | — | — | — | 3/04/2019 | 5,183 | $140,874 (5) | — | — | ||||||||||||||||||||||||||||
| Time RSU | — | — | — | — | — | 3/04/2019 | 496 | $13,481 (7) | — | — | ||||||||||||||||||||||||||||
| PSU | — | — | — | — | — | 3/27/2020 | — | — | 8,406 | $228,475 (6) | ||||||||||||||||||||||||||||
| Time RSU | — | — | — | — | — | 3/27/2020 | 5,604 | $152,317 (7) | — | — | ||||||||||||||||||||||||||||
| MSPP RSU | — | — | — | — | — | 3/17/2021 | 2,337 | $63,520 (5) | — | — | ||||||||||||||||||||||||||||
| PSU | — | — | — | — | — | 3/17/2021 | — | — | 5,384 | $146,337 (8) | ||||||||||||||||||||||||||||
| Time RSU | — | — | — | — | — | 3/17/2021 | 5,385 | $146,364 (7) | — | — | ||||||||||||||||||||||||||||
| Arjun Sharma | Option | 2,799 | — | — | $32.76 | 3/05/2022 | 3/05/2012 | — | — | — | — | |||||||||||||||||||||||||||
| Option | 3,663 | — | — | $51.84 | 2/23/2022 | 2/23/2015 | — | — | — | — | ||||||||||||||||||||||||||||
| Option | 8,406 | — | — | $38.89 | 2/23/2023 | 2/23/2016 | — | — | — | — | ||||||||||||||||||||||||||||
| Option | 5,943 | — | — | $60.99 | 2/27/2024 | 2/27/2017 | — | — | — | — | ||||||||||||||||||||||||||||
| Option | 2,760 | — | — | $42.62 | 3/05/2025 | 3/05/2018 | — | — | — | — | ||||||||||||||||||||||||||||
| Option | 3,520 | 1760 | — | $33.63 | 3/04/2026 | 3/04/2019 | — | — | — | — | ||||||||||||||||||||||||||||
| MSPP RSU | — | — | — | — | — | 3/04/2019 | 6,612 | $179,714 (5) | — | — | ||||||||||||||||||||||||||||
| Time RSU | — | — | — | — | — | 3/04/2019 | 620 | $16,852 (7) | — | — | ||||||||||||||||||||||||||||
| PSU | — | — | — | — | — | 3/27/2020 | — | — | 9,609 | $261,173 (6) | ||||||||||||||||||||||||||||
| Time RSU | — | — | — | — | — | 3/27/2020 | 6,406 | $174,115 (7) | — | — | ||||||||||||||||||||||||||||
| MSPP RSU | — | — | — | — | — | 3/17/2021 | 6,072 | $165,037 (5) | — | — | ||||||||||||||||||||||||||||
| PSU | — | — | — | — | — | 3/17/2021 | — | — | 5,384 | $146,337 (8) | ||||||||||||||||||||||||||||
| Time RSU | — | — | — | — | — | 3/17/2021 | 5,385 | $146,364 (7) | — | — | ||||||||||||||||||||||||||||
| Jessica Wenzell | Time RSU | — | — | — | — | — | 11/9/2020 | 1,158 | $31,474 (7) | — | — | |||||||||||||||||||||||||||
| PSU | — | — | — | — | — | 3/17/2021 | — | — | 3,365 | $91,461 (8) | ||||||||||||||||||||||||||||
| Time RSU | — | — | — | — | — | 3/17/2021 | 3,366 | $91,488 (7) | — | — | ||||||||||||||||||||||||||||
| Sumit Mehrotra (10) | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| NEO | Year | Percentage of Annual Incentive Used to Purchase RSUs | Amount of Bonus for Year | Amount of Bonus Used to Purchase RSUs | Number of Purchased RSUs | ||
| Scott Buckhout | 2019 | 65% | — | — | — | ||
| 2018 | 50% | $878,152 | $439,076 | 19,486 | |||
| 2017 | 70% | $297,850 | $208,495 | 7,301 | |||
| Chadi Chahine | 2019 | 50% | — | — | — | ||
| Sumit Mehrotra | 2019 | 100% | — | — | — | ||
| 2018 | 100% | $167,290 | $167,290 | 7,089 | |||
| 2017 | 100% | $93,110 | $93,110 | 3,209 | |||
| Arjun Sharma | 2019 | 100% | — | — | — | ||
| 2018 | 100% | $149,002 | $149,002 | 6,612 | |||
| 2017 | 100% | $107,443 | $107,443 | 3,762 | |||
| Lane Walker | 2019 | 25% | — | — | — | ||
| 2018 | —% | — | — | — | |||
| Name | Perquisites and Other Personal Benefits ($) (1) | Tax Preparation and Financial Planning ($) | Insurance Premiums ($) (2) | Relocation Payments ($) (3) | Payments Relating to Employee Savings Plan ($) (4) | Other ($) (5) | Total ($) |
| Scott Buckhout...................... | — | — | 2,174 | — | 11,200 | 75 | 13,449 |
| Chadi Chahine........................ | 11,539 | 980 | 1,398 | — | 11,200 | — | 25,117 |
| Sumit Mehrotra...................... | 8,400 | 2,351 | 1,004 | 351,275 | 8,271 | 231 | 371,532 |
| Arjun Sharma........................ | 8,400 | 6,567 | 1,004 | — | 9,672 | 119 | 25,762 |
| Lane Walker............................ | 12,000 | 4,000 | 1,004 | — | 11,200 | — | 28,204 |
| Name | Type of Award (1) | Grant Date | Approval Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Prices of Option Awards ($ / Sh) (4) | Grant Date Fair Value of Stock and Option Awards ($) (5) | ||||
Thresh-hold ($) | Target ($) | Maxi-mum ($) | Thresh-hold (#) | Target (#) | Maxi-mum (#) | ||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | ||
| Scott Buckhout | Option | 03/04/19 | 02/06/19 | — | — | — | — | — | — | — | 116,133 | 33.63 | 1,375,000 |
| PSU | 05/14/19 | 02/06/19 | — | — | — | 12,593.2 | 40,887 | 81,774 | — | — | — | 1,259,320 | |
| AIP | 4,098 | 409,750 | 1,229,250 | — | — | — | — | — | — | — | |||
| Chadi Chahine | Option | 03/04/19 | 02/06/19 | — | — | — | — | — | — | — | 8,025 | 33.63 | 95,000 |
| PSU | 03/04/19 | 02/06/19 | — | — | — | 1,900 | 5,652 | 11,304 | — | — | — | 190,000 | |
| Time RSU | 01/02/19 | 11/19/18 | — | — | — | — | — | — | 7,044 | — | — | 150,000 | |
| Time RSU | 03/04/19 | 02/06/19 | — | — | — | — | — | — | 2,826 | — | — | 95,000 | |
| Sumit Mehrotra | Option | 03/04/19 | 02/06/19 | — | — | — | — | — | — | — | 6,759 | 33.63 | 80,000 |
| PSU | 03/04/19 | 02/06/19 | — | — | — | 1,600 | 4,758 | 9,516 | — | — | — | 160,000 | |
| AIP | 1,870 | 187,000 | 495,550 | — | — | — | — | — | — | — | |||
| Time RSU | 03/04/19 | 02/06/19 | — | — | — | — | — | — | 2,379 | — | — | 80,000 | |
| Arjun Sharma | Option | 03/04/19 | 02/06/19 | — | — | — | — | — | — | — | 5,280 | 33.63 | 62,500 |
| PSU | 03/04/19 | 02/06/19 | — | — | — | 1,250 | 3,717 | 7,434 | — | — | — | 125,000 | |
| AIP | 1,391 | 139,050 | 417,150 | — | — | — | — | — | — | — | |||
| Time RSU | 03/04/19 | 02/06/19 | — | — | — | — | — | — | 1,860 | — | — | 62,500 | |
| Lane Walker | Option | 03/04/19 | 02/06/19 | — | — | — | — | — | — | — | 6,336 | 33.63 | 75,000 |
| PSU | 03/04/19 | 02/06/19 | — | — | — | 1,500 | 4,461 | 8,922 | — | — | — | 150,000 | |
| AIP | 1,422 | 142,208 | 426,624 | — | — | — | — | — | — | — | |||
| Time RSU | 03/04/19 | 02/06/19 | — | — | — | — | — | — | 2,232 | — | — | 75,000 | |
| (1) | Type of Award: | ||||
| Option Awards | Stock Awards | |||||||||||
| Name | Type of Award (1) | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) (2) | Equity Incentive Plan Awards: Number of Securities Underlying unexercised unearned options (#) | Option Exercise Price ($) | Option Expiration Date | Award Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (3) | Equity Incentive 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 ($) (3) | |
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | ||
| Scott Buckhout | Perf Option | 150,000 (4) | — | — | 41.17 | 4/09/2023 | 4/09/2013 | — | — | — | — | |
| Option | 39,141 | — | — | 51.84 | 2/23/2022 | 2/23/2015 | — | — | — | — | ||
| Option | 79,977 | — | — | 38.89 | 2/23/2023 | 2/23/2016 | — | — | — | — | ||
| Option | 37,192 | 18,596 | — | 60.99 | 2/27/2024 | 2/27/2017 | — | — | — | — | ||
| Option | 32,925 | 65,850 | — | 42.62 | 3/05/2025 | 3/05/2018 | — | — | — | — | ||
| Option | — | 116,133 | — | 33.63 | 3/04/2026 | 3/04/2019 | — | — | — | — | ||
| MSP RSU | — | — | — | — | — | 2/27/2017 | 6,989 | 323,171 (5) | — | — | ||
| PSU | — | — | — | — | — | 3/05/2018 | — | — | 28,156 | 1,301,933 (6) | ||
| MSP RSU | — | — | — | — | — | 3/05/2018 | 7,301 | 337,598 (5) | — | — | ||
| MSP RSU | — | — | — | — | — | 3/04/2019 | 19,486 | 901,033 (5) | — | — | ||
| PSU | — | — | — | — | — | 5/14/2019 | — | — | 27,258 | 1,260,410 (7) | ||
| Chadi Chahine | Time RSU | — | — | — | — | — | 1/02/2019 | 7,044 | 325,715 (8) | — | — | |
| Option | — | 8,025 | — | 33.63 | 3/04/2026 | 3/04/2019 | — | — | — | — | ||
| PSU | — | — | — | — | — | 3/04/2019 | — | — | 3,768 | 174,232 (7) | ||
| Time RSU | — | — | — | — | — | 3/04/2019 | 2,826 | 130,674 (8) | — | — | ||
| Sumit Mehrotra | Option | 984 | — | — | 71.56 | 3/03/2021 | 3/03/2014 | — | — | — | — | |
| Option | 1,959 | — | — | 51.84 | 2/23/2022 | 2/23/2015 | — | — | — | — | ||
| Option | 4,200 | — | — | 38.89 | 2/23/2023 | 2/23/2016 | — | — | — | — | ||
| Option | 2,566 | 1,283 | — | 60.99 | 2/27/2024 | 2/27/2017 | — | — | — | — | ||
| Option | 1136 | 2,272 | — | 42.62 | 3/05/2025 | 3/05/2018 | — | — | — | — | ||
| Option | — | 6,759 | — | 33.63 | 3/04/2026 | 3/04/2019 | — | — | — | — | ||
| MSP RSU | — | — | — | — | — | 2/27/2017 | 1,266 | 58,540 (5) | — | — | ||
| PSU | — | — | — | — | — | 3/05/2018 | — | — | 2,347 | 108,525 (6) | ||
| MSP RSU | — | — | — | — | — | 3/05/2018 | 3,209 | 148,384 (5) | — | — | ||
| Time RSU | — | — | — | — | — | 3/05/2018 | 784 | 36,252 (8) | — | — | ||
| PSU | — | — | — | — | — | 3/04/2019 | — | — | 3,172 | 146,673 (7) | ||
| MSP RSU | — | — | — | — | — | 3/04/2019 | 7,089 | 327,795 (5) | — | — | ||
| Time RSU | — | — | — | — | — | 3/04/2019 | 2,379 | 110,005 (8) | — | — | ||
| Arjun Sharma | Option | 3,212 | — | — | 39.00 | 2/28/2021 | 2/28/2011 | — | — | — | — | |
| Option | 2,799 | — | — | 32.76 | 3/05/2022 | 3/05/2012 | — | — | — | — | ||
| Option | 3,168 | — | — | 71.56 | 3/03/2021 | 3/03/2014 | — | — | — | — | ||
| Option | 3,663 | — | — | 51.84 | 2/23/2022 | 2/23/2015 | — | — | — | — | ||
| Option | 8,406 | — | — | 38.89 | 2/23/2023 | 2/23/2016 | — | — | — | — | ||
| Option | 3,962 | 1,981 | — | 60.99 | 2/27/2024 | 2/27/2017 | — | — | — | — | ||
| Option | 920 | 1,840 | — | 42.62 | 3/05/2025 | 3/05/2018 | — | — | — | — | ||
| Option | — | 5,280 | — | 33.63 | 3/04/2026 | 3/04/2019 | — | — | — | — | ||
| MSP RSU | — | — | — | — | 2/27/2017 | 1,607 | 74,308 (5) | — | — | |||
| PSU | — | — | — | — | 3/05/2018 | — | — | 1,901 | 87,902 (6) | |||
| MSP RSU | — | — | — | — | 3/05/2018 | 3,762 | 173,955 (5) | — | — | |||
| Time RSU | — | — | — | — | 3/05/2018 | 2,200 | 101,728 (8) | — | — | |||
| PSU | — | — | — | — | 3/04/2019 | — | — | 2,478 | 114,583 (7) | |||
| MSP RSU | — | — | — | — | 3/04/2019 | 6,612 | 305,739 (5) | — | — | |||
| Time RSU | — | — | — | — | 3/04/2019 | 1,860 | 86,006 (8) | — | — | |||
| Lane Walker | Option | — | 6,336 | — | 33.63 | 3/04/2026 | 3/04/2019 | — | — | — | — | |
| PSU | — | — | — | — | 3/04/2019 | — | — | 2,974 | 137,518 (7) | |||
| MSP RSU | — | — | — | — | 3/04/2019 | 1,577 | 72,920 (5) | — | — | |||
| Time RSU | — | — | — | — | 6/04/2018 | 6,148 | 284,284 (8) | — | — | |||
| Time RSU | — | — | — | — | 3/04/2019 | 2,232 | 103,208 (8) | — | — | |||
| "Perf | |||||
47
| "MSPP RSU" refers to RSU awards subject to | |||||
| With the exception of the Perf Option | |||||
| (2) | The | ||||
| (3) | The amounts shown in these columns reflect the market value of unvested RSUs calculated by multiplying the number of such unvested RSUs by | ||||
| (4) | On April 9, 2013, | ||||
| (5) | The amounts reflect the unvested portion of | ||||
| (6) | The amounts reflect the unvested portion of long-term incentive grants in the form of PSUs pursuant to our Equity Incentive Plan in effect at the time of | ||||
| (7) | |||||
| The amounts reflect the unvested portion of long-term incentive grants in the form of Time RSUs pursuant to our Equity Incentive | |||||
| (8) | The amounts reflect the unvested portion of long-term incentive grants in the form of PSUs pursuant to our Equity Incentive Plan in effect at the time of grant. Such grants are subject to relative total shareholder return conditions during the performance period beginning on February 26, 2021 and ending on February 29, 2024 and reflect the target amount of the award. | ||||
| (9) | Mr. Khandelwal terminated employment on December 31, 2021 and his outstanding awards were forfeited immediately there following. | ||||
| (10) | Mr. Mehrotra terminated employment July 5, 2021 and had no outstanding awards as of December 31, 2021. | ||||
48
| Option Awards | Stock Awards | |||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) (1) | Value Realized on Vesting ($) (2) |
| (a) | (b) | (c) | (d) | (e) |
| Scott Buckhout (3) | — | — | 249 | 8,058 |
| Chadi Chahine (4) | — | — | 0 | 0 |
| Sumit Mehrotra (5) | — | — | 1,163 | 38,564 |
| Arjun Sharma (6) | — | — | 1,497 | 51,050 |
| Lane Walker (7) | — | — | 3,047 | 141,773 |
| Option Awards | Stock Awards | |||||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | ||||||||||
| (a) | (b) | (c) | (d) | (e) | ||||||||||
Scott Buckhout(3) | — | — | 89,193 | 3,200,542 | ||||||||||
Abhishek Khandelwal(4) | — | — | 14,837 | $524,785 | ||||||||||
Tony Najjar(5) | — | — | 19,173 | 710,587 | ||||||||||
Arjun Sharma(6) | — | — | 23,616 | 864,945 | ||||||||||
Jessica Wenzell(7) | — | — | 579 | $16,461 | ||||||||||
Sumit Mehrotra(8) | 4,506 | $25,372 | 16,824 | $611,143 | ||||||||||
| (1) | With respect to shares acquired upon vesting of RSUs, NEOs have shares withheld to pay associated income taxes. The number of shares reported represents the gross number prior to withholding of such shares. In certain cases, the actual receipt of shares underlying vested RSUs may have been deferred pursuant to a previous election made by the NEO. This table reports the number of shares vested regardless of whether distribution actually was made. | ||||
| (2) | The amounts shown in this column reflect the value realized upon vesting of Time RSUs, PSUs, and | ||||
| (3) | Mr. Buckhout had | ||||
| (4) | Mr. | ||||
| (5) | Mr. | ||||
| (6) | Mr. Sharma had | ||||
| (7) | |||||
| (8) | Mr. Mehrotra exercised 4,506 stock options on March 10, 2021 with an exercise price of $33.63 and a market price of $39.26. Additionally, he had 7,998 RSUs vest on March 4, 2021 with a price of $37.90, 3,209 MSPP RSUs and 392 RSUs and 2,423 PSUs vest on March 5, 2021 with a price of $35.08, and 2,802 RSUs vest on April 27, 2021 with a price of $34.51. | ||||
49
2021 Nonqualified Deferred Compensation
The same mutual funds that we make available under our 401(k) plan are also available under the nonqualified 401(k) excess plan and there are no minimum or guaranteed rates of return to the participants on such investments. Distributions from the nonqualified deferred compensation plan are made in lump sum in connection with a participant’s separation from service.
As discussed above, our MSPMSPP allows our NEOs to defer the payment of their annualshort-term incentive compensation in the form of RSUs. We also permit the grantees of our MSPP RSUs to defer the settlement of MSPP RSUs beyond the vesting date. The deferral period is a stated period of years selected in advance by the grantee. In general, if the grantee'sgrantee’s employment terminates before the end of the deferral period for reasons other than retirement, the MSPP RSUs will be settled in shares of our Common Stockcommon stock upon termination of employment. If the grantee retires before the end of the deferral period, the MSPP RSUs will be settled in shares of our Common Stockcommon stock at the end of the deferral period. During the deferral period, any dividends that would otherwise be paid on the deferred MSPP RSUs accumulate in cash and will be paid out at the same time that the deferred MSPP RSUs are settled. Information regarding short-term incentive compensation that was used to purchase MSPP RSUs is set forth in the Outstanding Equity Awards at 2021 Fiscal Year-End Table.
Under either deferred compensation arrangement, if a distribution is made on account of separation from service, the distribution will be delayed by six months if the participant is considered a specified employee within the meaning of Section 409A of the Internal Revenue Code.
The following table outlines employee and employer contributions to each deferred compensation arrangement for Fiscal Year 2019.2021. The table also includes earnings or losses during Fiscal Year 2019,2021, and the aggregate balances as of December 31, 2019.2021.
| Name (a) | Item | Executive Contributions in Last FY ($) (b) | Registrant Contributions in Last FY ($) (c) | Aggregate Earnings/(Loss) in Last FY ($) (d) | Aggregate Withdrawals/ Distributions (e) | Aggregate Balance at Last FYE ($) (f) (1) |
| Scott Buckhout | Excess 401K | — | — | 7,684 | — | 42,951 |
| Chadi Chahine | Excess 401K | — | — | — | — | — |
| Sumit Mehrotra | Excess 401K | — | — | 287 | — | 1,428 |
| Arjun Sharma | Excess 401K | 45,212 | — | 6,739 | — | 62,551 |
| Lane Walker | Excess 401K | 16,129 | — | 1,356 | — | 17,485 |
| Name (a) | Item | Executive Contributions in Last FY (b)(1) | Registrant Contributions in Last FY (c) | Aggregate Earnings/(Loss) in Last FY (d) (2) | Aggregate Withdrawals/ Distributions (e) | Aggregate Balance at Last FYE (f) (3) | ||||||||||||||
| Scott Buckhout | Excess 401K | $120,808 | $— | $21,188 | $— | $250,047 | ||||||||||||||
| Abhishek Khandelwal | Excess 401K | $— | $— | $— | $— | $— | ||||||||||||||
| Tony Najjar | Excess 401K | $— | $— | $— | $— | $— | ||||||||||||||
| Arjun Sharma | Excess 401K | $— | $— | $13,440 | $— | $96,040 | ||||||||||||||
| Jessica Wenzell | Excess 401K | $— | $— | $— | $— | $— | ||||||||||||||
| Sumit Mehrotra | Excess 401K | $— | $— | $230 | $— | $1,913 | ||||||||||||||
| (1) | These amounts | ||||
| (2) | These amounts are excluded from the Summary Compensation Table. | ||||
| (3) | These figures include the following amounts that have been reported in the Summary Compensation Tables of prior | ||||
50
SEVERANCE AND OTHER BENEFITS UPON
TERMINATION OF EMPLOYMENT OR CHANGE
To achieve our compensation objective of attracting, retaining and motivating qualified executives, we believe that we need to provide our executive officers with severance and change ofin control protections that are competitive with the protections offered by our Peer Group Companies. Offering our executive officers these payments and benefits facilitates the operation of our business, allows them to better focus their time, attention and capabilities on our business, assists us in recruiting and motivating executive officers, provides for a clear and consistent approach to managing involuntary departures with mutually understood separation benefits and aligns with market practice. The following section describes our severance and change ofin control agreements for our NEOs employed with us at year end along with estimated payments if their employment had terminated with us as of December 31, 2019.2021. Information regarding NEOs who departed during 2021 is set forth in the Summary Compensation Table above. Other benefits that our NEOs would be entitled to irrespective of termination of employment or change in control, such as previously vested equity awards and non-qualified deferred compensation, are described above.
Severance Agreements
Each of Messrs. Buckhout, Chahine, Mehrotra, Walker, and Sharmaour NEOs has entered into an agreement providing severance benefits if he resigns from the Company for good reason or if the Company terminates him other than for cause (the "Severance Agreements"“Severance Agreements”). In such circumstances, Mr. Buckhout'sBuckhout’s Severance Agreement entitles him to a lump sum payment equal to (i) his then-current base salary and (ii) his target annualshort-term incentive compensation in effect during the fiscal year in which the termination occurs. In the same circumstances, each of Messrs. Chahine's, Mehrotra's, Walker's,Khandelwal’s, Najjar’s and Sharma'sSharma’s and Ms. Wenzell's Severance Agreement entitles him or her to a lump sum payment equal to his or her then-current base salary and annualshort-term incentive compensation for the fiscal year in which the termination occurs, to the extent that performance goals are met for that year, prorated based on the date of resignation or termination.
termination of employment. In addition, the severance benefit for Mr. Buckhouteach of the NEOs includes the Company continuing to pay for medical coverage (if COBRA coverage is elected) in the same proportion it did on the date of termination for up to 1812 months following termination. The severance benefit for Messrs. Chahine, Mehrotra, Walker, and Sharma includes the Company continuing to pay for medical coverage (if COBRA coverage is elected) in the same proportion it did on the date of termination for up to one year following termination.
To receive the benefits described above, each such NEO must execute a general release of claims in a manner satisfactory to the Company within 21 days of the termination of employment. Each of the NEOs listed above also has agreed to comply with non-competition and non-solicitation obligations lasting for the term of employment and one year following termination as consideration for the severance benefits.
The Severance Agreements continue to apply after a change in control. No benefits, however, are payable under the Severance Agreements if severance benefits become payable under the Change in Control Agreements, as described below.
In addition to the Severance Agreements, the company also entered into special agreements with Messrs. Buckhout and Mehrotra in connection with their termination of employment ("Special Termination Agreements"). Mr. Mehrotra's Special Termination Agreement, entered into between the parties on June 7, 2021 in connection with Mr, Mehrotra's resignation tendered on or about May 11, 2021, provided, in exchange for his agreement to continue leading the Industrial business through his employment termination date of July 5, 2021 and his release of future claims against the Company, the lump sum payment of his bonus earned under the 2021 STI Plan, pro-rated based on his termination date ($0, as disclosed in the Summary Compensation Table). All outstanding equity awards, deferred compensation benefits and earned but unused vacation balances were settled in accordance with the underlying terms of the applicable award agreements and plan documents. Mr. Buckhout's Special Termination Agreement, entered into between the parties on January 28, 2022 in connection with his termination of employment on January 19, 2022, is substantially the same as Mr. Buckhout's Severance Agreement described above except that it provides for acceleration of vesting (but not the timing of payment) of his two RSU vesting tranches that were otherwise scheduled to vest in March and April of 2022 (a combined total of 35,602 RSUs). Mr. Buckhout's Special Termination Agreement also confirmed his eligibility to participate in the 2021 STI Plan ($0, as disclosed in the Summary Compensation Table) and the PSU vesting on December 31, 2021 pursuant to his 2019 PSU award (as disclosed in the 2021 Option Exercises and Stock Vested table). All other outstanding equity awards, deferred compensation benefits and earned but unused vacation balances were settled in accordance with the underlying terms of the applicable award agreements and plan documents.
51
Change ofin Control Agreements
Each of Messrs. Buckhout, Chahine, Mehrotra, Walker, and Sharmaour NEOs has entered into an agreement providing benefits in the event of a change ofin control of the Company (the "Change of“Change in Control Agreements"Agreements”). The term of each Change ofin Control Agreement is one-yearone year subject to annual one-year extensions unless there is a notice of non-renewal. Each of the Change ofin Control Agreements provides enhanced severance benefits if, within one yeartwo years following a change of control, such NEO's employment is terminated by the Company without cause or he or she resigns from the Company for good reason. In such circumstances, each of Messrs. Buckhout's, Chahine's, Mehrotra's, and Walker'sthe Change ofin Control Agreement entitles himeach such NEO to a lump sum payment equal to two times (i) the greater of his or her (a) then-current base salary, (b) salary immediately prior to the change in control or (c) salary immediately prior to the announcement of the change in control if such announcement occurs in a different year than the change in control and (ii) the greater of (a) his or her target annual incentive compensationbonus in effect during the fiscal year in which the termination occurs. Inoccurs and (b) the average annual bonuses paid or payable for the three fiscal years ended prior to termination of employment or, if greater, the three fiscal years ended prior to the change in control (or, in each case, a lesser period for which annual bonuses were payable). Such payment is payable on the first payroll date after a release of claims becomes irrevocable, subject to a later payment date of up to six months and one-day following termination of employment, in the event required by Section 409A of the Internal Revenue Code.
The Change in Control Agreements also provide for (i) a pro-rated payment of annual bonus for the performance year in which termination of employment occurs based on actual performance through such termination date and payable at the same circumstances, Mr. Sharma's Change of Control Agreement entitles himtime as bonuses are paid to a lump sum paymentother senior executives, (ii) payments equal to two times (i) his then-current base salary and (ii) the highest annual incentive compensation received by him in anyvalue of the three immediately preceding fiscal years.
The treatment of equity awards granted after March 1, 2019 (“Equity Awards”) are governed by the Change in Control Agreements as follows:
•For Equity Awards that are subject only to service conditions, awards will vest upon a change in control only in the same proportion it didevent the surviving entity does not assume or continue the awards or provide substitute awards of similar value. If such awards are assumed or substituted and a qualifying termination of employment subsequently occurs within two years of the change in control event, any unvested portion of such awards will immediately vest.
•For Equity Awards that are subject to achievement of performance criteria, if the change in control event is also a “change in the ownership of a corporation” or a “change in the ownership of a substantial portion of a corporation's assets” (as set forth in Treas.Reg. 1.409A-3(i)(5)), then any such award (i) will, to the extent not otherwise subject to substantial risk of forfeiture, immediately vest on a pro-rated basis based on the greater of (a) the target number of shares underlying the award or (b) the number of shares determined based on actual performance between the beginning of the performance period and the event date) or (ii) if such award is otherwise subject to a substantial risk of forfeiture, it may be replaced with a substitute award of restricted stock of the successor entity of equal value to the target number of performance shares (or, if greater, the number of shares determined based on actual performance between the beginning of the performance period and change in control date) with vesting to occur on the second anniversary of the change in control if the change in control occurs within the first 12 months of the applicable performance period or on the first anniversary of the change in control date if the change in control occurs after the first 12 months of the applicable performance period, or, if earlier, immediate vesting upon a qualifying termination for upof employment.
The treatment of equity awards granted prior to two yearsMarch 2, 2019 are governed by terms of the underlying award and generally provide (i) in the case of awards that are subject only to service conditions, accelerated vesting upon a change in control and (ii) in the case of awards that are subject to achievement of performance criteria, if the change in control occurs following termination.
the completion of a performance period, accelerated vesting based on actual performance results, otherwise, accelerated vesting of the target number of shares underlying a performance period (or if greater, the number of shares determined based on actual performance). Effective with the 2019 grants,Equity Awards, there is double trigger vesting on unvested equity upon a change in control.
A "change of control"“change in control” for purposes of the Change ofin Control Agreements means any of the following: (i) acquisition of 25%50% or more of the voting power or economic value of the Company’s then outstanding securities; (ii) failureconsummation of incumbent directors (including any director nominated for election by a vote of at least a majority of the incumbent directors other than in connection with a proxy
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incumbent directors for any reason to constitute at least a majority of the Board. In each case above, such event must also constitute a change in ownership or effective control of the Company, intoor a planchange in the ownership of liquidation.
a substantial portion of the assets of the Company, within the meaning of Section 409A(a)(2)(A)(v) of the Internal Revenue Code and U.S. Treasury Regulation Section 1.409A-3(i)(5).
As noted above, the NEO'sNEO’s would not be entitled to benefits under the Severance Agreements in connection with any termination from the Company with respect to which benefits under the Change ofin Control Agreements would be payable. Each of the NEOs listed above also has agreed to comply with non-competition and non-solicitation provisions lasting for the term of employment and one year following termination as consideration for the change ofin control benefits.
Illustration of Potential Payments upon Termination of Employment
The following tables list the estimated amounts that Messrs. Buckhout, Chahine, Mehrotra, Walker,Khandelwal, Najjar and Sharma and Ms. Wenzell would have become entitled to in the event of a termination from the Company or change ofin control of the Company had such termination or change ofin control occurred on December 31, 2019.2021. Assumptions used in preparing these estimates are set forth in the footnotes to each table. These tables do not include amounts that are otherwise earned and vested prior to a termination of employment or a change in control, such as vested stock options or nonqualified deferred compensation, amounts payable under disability or life insurance coverages or the annual incentive bonus which was actually earned for 2019.coverages.
| Scott Buckhout | Scott Buckhout | Scott Buckhout | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Severance and Other Benefits | Severance and Other Benefits | Severance and Other Benefits | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Involuntary Without Cause or Voluntary Resignation With Good Reason Within One Year Following Change of Control | Involuntary Other Than For Cause or Voluntary Resignation With Good Reason at Any Other Time | Involuntary For Cause or Voluntary Resignation Without Good Reason | Change of Control (Irrespective of Whether Termination or Resignation Occurs) | Death or Disability | (8) | Involuntary Without Cause or Voluntary Resignation With Good Reason Within Two Years Following Change in Control | Involuntary Other Than For Cause or Voluntary Resignation With Good Reason at Any Other Time | Involuntary For Cause or Voluntary Resignation Without Good Reason | Change in Control Without a Termination of Employment (“Single Trigger”) | Death or Disability | (13) | |||||||||||||||||||||||||||||||||||||||||
| 12/31/2019 | 12/31/2019 | 12/31/2019 | 12/31/2019 | 12/31/2019 | 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | |||||||||||||||||||||||||||||||||||||||||||
| Cash Severance | $ | 3,221,400 | (1) | $ | 1,610,700 | (4) | Cash Severance | $ | 3,402,000 | (1) | $ | 1,701,000 | (7) | — | — | — | ||||||||||||||||||||||||||||||||||||
| Pro-Rated Bonus | Pro-Rated Bonus | — | (2) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Health Benefits | $ | 60,985 | (2) | $ | 45,739 | (5) | Health Benefits | $ | 65,635 | (3) | $ | 21,975 | (8) | — | — | — | ||||||||||||||||||||||||||||||||||||
| Long-Term Incentives | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gain on accelerated stock options | — | — | — | $ | 3,170,334 | (6) | $ | 3,170,334 | (6) | Gain on accelerated stock options | — | (4) | — | — | — | — | (4) | |||||||||||||||||||||||||||||||||||
| Value of accelerated restricted stock units | — | — | — | $ | 5,573,168 | (7) | $ | 5,573,168 | (7) | Value of accelerated restricted stock units | $ | 6,180,216 | (5) | $ | 960,589 | (9) | — | (10) | — | (11) | $ | 6,146,398 | (12) | |||||||||||||||||||||||||||||
| Total Long-Term Incentives | $ | — | $ | — | $ | — | $ | 8,743,502 | $ | 8,743,502 | ||||||||||||||||||||||||||||||||||||||||||
| TOTAL Value: | $ | 3,282,385 | (3) | $ | 1,656,439 | $ | — | $ | 8,743,502 | $ | 8,743,502 | |||||||||||||||||||||||||||||||||||||||||
| Total Value: | Total Value: | $ | 9,647,851 | (6) | $ | 2,683,564 | $ | — | $ | — | $ | 6,146,398 | ||||||||||||||||||||||||||||||||||||||||
| (1) | This amount reflects payment to Mr. Buckhout that would equal two times his (i) then-current base salary and (ii) | ||||
| (2) | Payment would equal Mr. Buckhout’s then-effective target short-term incentive compensation, to the extent that performance goals were met, prorated based on the date of resignation or termination (no amount is illustrated in this example since the bonus had been earned as of December 31, 2021 as reflected in the Summary Compensation Table in the “Bonus” and “Non-Equity Incentive Plan Compensation” columns). | ||||
| (3) | This amount reflects payments to Mr. Buckhout that would equal the cost of | ||||
| (4) | Mr. Buckhout would be entitled to | ||||
| (5) | This amount reflects the incremental value to which Mr. Buckhout would be entitled due to the immediate vesting of all unvested RSUs including MSPP RSUs and the target number of PSUs assuming target performance results (including PSUs that had not met the performance threshold to vest as of December 31, 2021 but that remain eligible for future vesting) using the closing stock price of $27.18 on December 31, 2021. | ||||
| (6) | These amounts do not reflect a 20% excise tax under Section 4999 of the Internal Revenue Code that may apply depending upon the facts and circumstances in the event of a change in control. This estimate also does not reflect that payments are subject to being reduced in certain circumstances to avoid this tax. | ||||
| (7) | This amount reflects payment to Mr. Buckhout that would equal his (i) then-current base salary and (ii) his then-effective target short-term incentive compensation. | ||||
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| (8) | This amount reflects payments that would be made on Mr. Buckhout’s behalf for the continuation of health insurance coverage for a period of 12 months for Mr. Buckhout and any covered spouse and dependents based on the same cost sharing percentage in effect for the health insurance plans prior to | ||||
| (9) | This amount reflects the incremental value to which Mr. Buckhout would be entitled due to pro-rata vesting of the MSPP RSUs (based on number of full years that he was employed by the Company after the grant date divided by three) using the closing stock price of $27.18 on December 31, 2021, and the remaining unvested MSPP RSUs would be cancelled for a return of the corresponding bonus plus interest at the one-year U.S. Treasury bill rate. | ||||
| (10) | An executive who voluntarily resigns prior to attaining 55 years of age and completing at least five years of service is entitled to receive | ||||
| (11) | As of December 31, 2021, none of Mr. Buckhout's unvested awards were subject to single trigger vesting. | ||||
| (12) | This amount reflects the incremental value to which Mr. Buckhout would be entitled due to (a) pro-rata vesting of the MSPP RSUs (based on number of full years that the executive was employed by the Company after the grant date divided by three) and the remaining unvested MSPP RSUs would be cancelled for a return of the corresponding bonus plus interest at the one-year U.S. Treasury bill rate, (b) the immediate vesting of all other unvested RSUs, and (c) immediate vesting of all unvested PSUs assuming target performance results (including PSUs that had not met the performance threshold to vest as of December 31, 2021 but that remain eligible for future vesting), in each case using the closing stock price of $27.18 on December 31, 2021. | ||||
| (13) | “Disability” for this purpose means qualifying for receipt of long-term disability benefits under the Company’s long-term disability plan as in effect from time to time. | ||||
In connection with Mr. Buckhout's termination of employment on January 19, 2022, the figures in this table are superseded by the amount of severance and stock acceleration he actually received as further described herein, and in Exhibit 10.38 to the Company's 2021 Annual Report on Form 10-K filed with the SEC on July 26, 2022.
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| Abhishek Khandelwal | ||||||||||||||||||||||||||||||||
| Severance and Other Benefits | ||||||||||||||||||||||||||||||||
| Involuntary Without Cause or Voluntary Resignation With Good Reason Within Two Years Following Change in Control | Involuntary Other Than For Cause or Voluntary Resignation With Good Reason at Any Other Time | Involuntary For Cause or Voluntary Resignation Without Good Reason | Change in Control Without a Termination of Employment (“Single Trigger”) | Death or Disability | (8) | |||||||||||||||||||||||||||
| 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | ||||||||||||||||||||||||||||
| Cash Severance | $ | 1,496,000 | (1) | $ | 440,000 | (6) | — | — | — | |||||||||||||||||||||||
| Pro-Rated Bonus | $ | 96,170 | (2) | $ | 96,170 | (2) | — | — | — | |||||||||||||||||||||||
| Health Benefits | $ | 58,913 | (3) | $ | 22,390 | (7) | — | — | — | |||||||||||||||||||||||
| Gain on accelerated stock options | — | — | — | — | — | |||||||||||||||||||||||||||
| Value of accelerated restricted stock units | $ | 1,135,798 | (4) | — | — | — | $ | 1,135,798 | (4) | |||||||||||||||||||||||
| Total Value: | $ | 2,786,881 | (5) | $ | 558,560 | — | $ | — | $ | 1,135,798 | ||||||||||||||||||||||
| (1) | This amount reflects payment to Mr. Khandelwal that would equal two times his (i) then-current base salary and (ii) then-effective target short-term incentive compensation. | ||||
| (2) | This amount reflects payment to Mr. Khandelwal that would equal Mr. Khandelwal’s then-effective target short-term incentive compensation, to the extent that performance goals were met, prorated based on the date of | ||||
| (3) | This amount reflects payments to Mr. Khandelwal that would equal the cost of continued health insurance for a period of two years for Mr. Khandelwal and any covered spouse and dependents. 75% of this amount would be paid in equal monthly installments over the 18-month period following the date of | ||||
| (4) | This amount reflects the incremental value to which Mr. Khandelwal would be entitled due to the immediate vesting of all unvested RSUs using the closing stock price of $27.18 on December 31, 2021. | ||||
| (5) | These amounts do not reflect a 20% excise tax under Section 4999 of the Internal Revenue Code that may apply depending upon the facts and circumstances in the event of a change in control. This estimate also does not reflect that payments are subject to being reduced in certain circumstances to avoid this tax. | ||||
| (6) | This amount reflects payment to Mr. Khandelwal that would equal his then-current base salary. | ||||
| (7) | This amount reflects payments to Mr. Khandelwal that would equal the cost of continued health insurance for a period of one year for Mr. Khandelwal and any covered spouse and dependents based on the same cost sharing percentage in effect for the health insurance plans prior to termination of employment. This amount would be divided into monthly installments with each installment payment conditioned on qualification for coverage under COBRA. | ||||
| (8) | “Disability” for this purpose means qualifying for receipt of long-term disability benefits under the Company’s long-term disability plan as in effect from time to time. | ||||
In connection with Mr. Khandelwal's actual termination of employment on December 31, 2021, he received no severance, bonus, stock acceleration, or other acceleration of payments of any kind.
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| Tony Najjar | ||||||||||||||||||||||||||||||||||||||
| Severance and Other Benefits | ||||||||||||||||||||||||||||||||||||||
| Involuntary Without Cause or Voluntary Resignation With Good Reason Within Two Years Following Change in Control | Involuntary Other Than For Cause or Voluntary Resignation With Good Reason at Any Other Time | Involuntary For Cause or Voluntary Resignation Without Good Reason | Change in Control Without a Termination of Employment (“Single Trigger”) | Retirement | Death or Disability | (14) | ||||||||||||||||||||||||||||||||
| 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | |||||||||||||||||||||||||||||||||
| Cash Severance | $ | 1,268,800 | (1) | $ | 396,500 | (7) | — | — | — | — | ||||||||||||||||||||||||||||
| Pro-Rated Bonus | — | (2) | — | (2) | — | — | — | — | ||||||||||||||||||||||||||||||
| Health Benefits | $ | 66,440 | (3) | $ | 21,975 | (8) | — | — | — | — | ||||||||||||||||||||||||||||
| Gain on accelerated stock options | — | (4) | — | — | — | — | — | (4) | ||||||||||||||||||||||||||||||
| Value of accelerated restricted stock units | $ | 891,368 | (5) | $ | 196,475 | (9) | — | (10) | — | (11) | $ | 304,651 | (12) | $ | 883,450 | (13) | ||||||||||||||||||||||
| Total Value: | $ | 2,226,608 | (6) | $ | 614,950 | — | $ | — | $ | 304,651 | $ | 883,450 | ||||||||||||||||||||||||||
| (1) | This amount reflects payment to Mr. Najjar that would equal two times his (i) then-current base salary and (ii)\then-effective target short-term incentive compensation. | ||||
| (2) | Payment would equal Mr. Najjar’s then-effective target short-term incentive compensation, to the extent that performance goals were met, prorated based on the date of resignation or termination (no amount is illustrated in this example since the bonus had been earned as of December 31, 2021 as reflected in the Summary Compensation Table in the “Bonus and Non-Equity Incentive Plan Compensation” columns). | ||||
| (3) | This amount reflects payments to Mr. Najjar that would equal the cost of continued health insurance for a period of two years for Mr. Najjar and any covered spouse and dependents. 75% of this amount would be paid in equal monthly installments over the 18-month period following the date of termination with each installment payment conditioned on qualification for coverage under COBRA and the remaining 25% would be paid in a lump sum following the 18-month anniversary of employment termination if healthcare coverage is still in effect under COBRA. | ||||
| (4) | Mr. Najjar would be entitled to the immediate vesting of all unvested stock options. The incremental value is reflected as zero since these stock options were underwater based on the closing stock price of $27.18 on December 31, 2021. | ||||
| (5) | This amount reflects the incremental value to which Mr. Najjar would be entitled due to the immediate vesting of all unvested RSUs including MSPP RSUs and the target number of PSUs assuming target performance results (including PSUs that had not met the performance threshold to vest as of December 31, 2021 but that remain eligible for future vesting) using the closing stock price of $27.18 on December 31, 2021. | ||||
| (6) | These amounts do not reflect a 20% excise tax under Section 4999 of the Internal Revenue Code that may apply depending upon the facts and circumstances in the event of a change in control. This estimate also does not reflect that payments are subject to being reduced in certain circumstances to avoid this tax. | ||||
| (7) | This amount reflects payment to Mr. Najjar that would equal his then-current base salary | ||||
| (8) | This amount reflects payments to Mr. Najjar that would equal the cost of continued health insurance for a period of one- year for Mr. Najjar and any covered spouse and dependents based on the same cost sharing percentage in effect for the health insurance plans prior to termination of employment. This amount would be divided into monthly installments with each installment payment conditioned on qualification for coverage under COBRA. | ||||
| (9) | This amount reflects the incremental value to which Mr. Najjar would be entitled due to pro-rata vesting of the MSPP RSUs (based on number of full years that he was employed by the Company after the grant date divided by three) using the closing stock price of $27.18 on December 31, 2021, and the remaining unvested MSPP RSUs would be cancelled for a return of the corresponding bonus plus interest at the one-year U.S. Treasury bill rate. | ||||
| (10) | An executive who voluntarily resigns prior to attaining 55 years of age and completing at least five years of service is entitled to receive a return of short-term incentive cash bonuses used to purchase MSPP RSUs plus interest at the one-year U.S. Treasury bill rate. See footnote (5) to the Outstanding Equity Awards table for the amounts that would be returned to Mr. Najjar due to a voluntary resignation on December 31, 2021. In the event of any involuntary termination, regardless of the reason for it, the executive vests in a pro-rata amount of the MSPP RSUs (based on number of full years that the executive was employed by the Company after the grant date divided by three), and the remaining unvested MSPP RSUs would be cancelled for a return of the corresponding bonus plus interest at the one-year U.S. Treasury bill rate. The value of the shares and cash that would be returned to Mr. Najjar upon an involuntary termination on December 31, 2021 would be $196,475. This amount is reflected in the amount disclosed under “Involuntary Other Than For Cause or Voluntary Resignation With Good Reason at Any Other Time” above. | ||||
| (11) | As of December 31, 2021, none of Mr. Najjar's unvested awards were subject to single trigger vesting. | ||||
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| (12) | This amount reflects the incremental value to which Mr. Najjar would be entitled due to (a) pro-rata vesting of the MSPP RSUs (based on number of full years that the executive was employed by the Company after the grant date divided by three) and the remaining unvested MSPP RSUs would be cancelled for a return of the corresponding bonus plus interest at the one-year U.S. Treasury bill rate, (b) pro-rata vesting of all other unvested RSUs (based on number of days that the executive was employed by the Company during the vesting period), and (c) pro-rata vesting of all unvested PSUs including PSUs that had not met the performance threshold to vest as of December 31, 2021 but that remain eligible for future vesting (determined for each tranche based on number of months that the executive was employed by the Company after the grant date divided by the number of months in each such tranche) based on actual performance results and paid following the conclusion of each tranche. This amount assumes future tranches perform at the same level as inception to date performance as of December 31, 2021 and is valued using the closing stock price of $27.18 on December 31, 2021. | ||||
| (13) | This amount reflects the incremental value to which Mr. Najjar would be entitled due to (a) pro-rata vesting of the MSPP RSUs (based on number of full years that the executive was employed by the Company after the grant date divided by three) and the remaining unvested MSPP RSUs would be cancelled for a return of the corresponding bonus plus interest at the one-year U.S. Treasury bill rate, (b) the immediate vesting of all other unvested RSUs, and (c) immediate vesting of all unvested PSUs assuming target performance results (including PSUs that had not met the performance threshold to vest as of December 31, 2021 but that remain eligible for future vesting), in each case using the closing stock price of $27.18 on December 31, 2021. | ||||
| (14) | “Disability” for this purpose means qualifying for receipt of long-term disability benefits under the Company’s long-term disability plan as in effect from time to time. | ||||
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| Arjun Sharma | ||||||||||||||||||||||||||||||||
| Severance and Other Benefits | ||||||||||||||||||||||||||||||||
| Involuntary Without Cause or Voluntary Resignation With Good Reason Within Two Years Following Change in Control | Involuntary Other Than For Cause or Voluntary Resignation With Good Reason at Any Other Time | Involuntary For Cause or Voluntary Resignation Without Good Reason | Change in Control Without a Termination of Employment (“Single Trigger”) | Death or Disability | (13) | |||||||||||||||||||||||||||
| 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | ||||||||||||||||||||||||||||
| Cash Severance | $ | 1,187,200 | (1) | $ | 371,000 | (7) | — | — | — | |||||||||||||||||||||||
| Pro-Rated Bonus | — | (2) | — | (2) | — | — | — | |||||||||||||||||||||||||
| Health Benefits | $ | 48,824 | (3) | $ | 21,859 | (8) | — | — | — | |||||||||||||||||||||||
| Gain on accelerated stock options | — | (4) | — | — | — | — | (4) | |||||||||||||||||||||||||
| Value of accelerated restricted stock units | $ | 1,089,592 | (5) | $ | 333,148 | (9) | — | (10) | — | (11) | $ | 1,077,989 | (12) | |||||||||||||||||||
| Total Value: | $ | 2,325,616 | (6) | $ | 726,007 | — | $ | — | $ | 1,077,989 | ||||||||||||||||||||||
| (1) | This amount reflects payment to Mr. Sharma that would equal two times his (i) then-current base salary and (ii) then-effective target short-term incentive compensation. | ||||
| (2) | Payment would equal Mr. Sharma’s then-effective target short-term incentive compensation, to the extent that performance goals were met, prorated based on the date of resignation or termination (no amount is illustrated in this example since the bonus had been earned as of December 31, 2021 as reflected in the Summary Compensation Table in the “Bonus” and “Non-Equity Incentive Plan Compensation” columns). | ||||
| (3) | This amount reflects payments to Mr. Sharma that would equal the cost of continued health insurance for a period of two years for Mr. Sharma and any covered spouse and dependents. 75% of this amount would be paid in equal monthly installments over the 18-month period following the date of termination with each installment payment conditioned on qualification for coverage under COBRA and the remaining 25% would be paid in a lump sum following the 18-month anniversary of employment termination if healthcare coverage is still in effect under COBRA. | ||||
| (4) | Mr. Sharma would be entitled to the immediate vesting of all unvested stock options. The incremental value is reflected as zero since these stock options were underwater based on the closing stock price of $27.18 on December 31, 2021. | ||||
| (5) | This amount reflects the incremental value to which Mr. Sharma would be entitled due to the immediate vesting of all unvested RSUs including MSPP RSUs and the target number of PSUs assuming target performance results (including PSUs that had not met the performance threshold to vest as of December 31, 2021 but that remain eligible for future vesting) using the closing stock price of $27.18 on December 31, 2021. | ||||
| (6) | These amounts do not reflect a 20% excise tax under Section 4999 of the Internal Revenue Code that may apply depending upon the facts and circumstances in the event of a change of control. This estimate also does not reflect that payments are subject to being reduced in certain circumstances to avoid this tax. | ||||
| This amount reflects payment to Mr. | |||||
| This amount reflects payments to Mr. | |||||
| coverage under COBRA. | |||||
| (9) | |||||
| (10) An executive who voluntarily resigns prior to attaining 55 years of age and completing at least five years of service is entitled to receive a return of short-term incentive cash bonuses used to purchase MSPP RSUs plus interest at the one-year U.S. Treasury bill rate. See footnote (5) to the Outstanding Equity Awards table for the amounts that would be returned to Mr. Sharma due to a voluntary resignation on December 31, 2021. In the event of any involuntary termination, regardless of the reason for it, the executive vests in a pro-rata amount of the MSPP RSUs (based on number of full years that the executive was employed by the Company after the grant date divided by three), and the remaining unvested MSPP RSUs would be cancelled for a return of the corresponding bonus plus interest at the one-year U.S. Treasury bill rate. The value of the shares and cash that would be returned to Mr. Sharma upon an involuntary termination on December 31, 2021 would be $333,148. This amount is reflected in the amount disclosed under “Involuntary Other Than For Cause or Voluntary Resignation With Good Reason at Any Other Time” above. | |||||
| (11) | As of December 31, 2021, none of Mr. Sharma's unvested awards were subject to single trigger vesting. | ||||
| (12) | This amount reflects the incremental value to which Mr. | ||||
| “Disability” for this purpose means qualifying for receipt of long-term disability benefits under the Company’s long-term disability plan as in effect from time to time. | |||||
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| Chadi Chahine | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jessica Wenzell | Jessica Wenzell | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Severance and Other Benefits | Severance and Other Benefits | Severance and Other Benefits | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Involuntary Without Cause or Voluntary Resignation With Good Reason Within One Year Following Change of Control | Involuntary Other Than For Cause or Voluntary Resignation With Good Reason at Any Other Time | Involuntary For Cause or Voluntary Resignation Without Good Reason | Change of Control (Irrespective of Whether Termination or Resignation Occurs) | Death or Disability | (8) | Involuntary Without Cause or Voluntary Resignation With Good Reason Within Two Years Following Change in Control | Involuntary Other Than For Cause or Voluntary Resignation With Good Reason at Any Other Time | Involuntary For Cause or Voluntary Resignation Without Good Reason | Change in Control Without a Termination of Employment (“Single Trigger”) | Death or Disability | (9) | |||||||||||||||||||||||||||||||||||||||||
| 12/31/2019 | 12/31/2019 | 12/31/2019 | 12/31/2019 | 12/31/2019 | 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | 12/31/2021 | |||||||||||||||||||||||||||||||||||||||||||
| Cash Severance | $ | 1,344,000 | (1) | $ | 420,000 | (4) | Cash Severance | $ | 1,248,000 | (1) | $ | 390,000 | (7) | — | — | — | ||||||||||||||||||||||||||||||||||||
| Pro-Rated Bonus | Pro-Rated Bonus | — | (2) | — | (2) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Health Benefits | $ | 40,411 | (2) | $ | 20,206 | (5) | Health Benefits | $ | 58,913 | (3) | $ | 22,390 | (8) | — | — | — | ||||||||||||||||||||||||||||||||||||
| Long-Term Incentives | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accelerated retention payment | Accelerated retention payment | $ | 4,775 | (4) | $ | 4,775 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Gain on accelerated stock options | — | — | — | $ | 101,195 | (6) | $ | 101,195 | (6) | Gain on accelerated stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Value of accelerated restricted stock units | — | — | — | $ | 717,737 | (7) | $ | 717,737 | (7) | Value of accelerated restricted stock units | $ | 214,423 | (5) | — | — | — | $ | 214,423 | (5) | |||||||||||||||||||||||||||||||||
| Total Long-Term Incentives | $ | — | $ | — | $ | — | $ | 818,933 | $ | 818,933 | ||||||||||||||||||||||||||||||||||||||||||
| TOTAL Value: | $ | 1,384,411 | (3) | $ | 440,206 | $ | — | $ | 818,933 | $ | 818,933 | |||||||||||||||||||||||||||||||||||||||||
| Total Value: | Total Value: | $ | 1,526,111 | (6) | $ | 417,165 | — | $ | — | $ | 214,423 | |||||||||||||||||||||||||||||||||||||||||
