UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Minerals Technologies Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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April 2, 2015 | ||
Sincerely, | ||
/s/ Joseph C. Muscari | ||
Joseph C. Muscari | ||
Chairman and Chief Executive Officer |
Table of Contents | ||
Page | ||
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS | 1 | |
PROXY SUMMARY | 2 | |
PROXY STATEMENT | 7 | |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING | 7 | |
CORPORATE GOVERNANCE | 10 | |
COMMITTEES OF THE BOARD OF DIRECTORS | 17 | |
REPORT OF THE CORPORATE GOVERNANCE AND NOMINATING COMMITTEE | 19 | |
EXECUTIVE OFFICERS | 20 | |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 21 | |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 23 | |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 24 | |
ITEM 1–ELECTION OF DIRECTORS | 25 | |
ITEM 2–RATIFICATION OF APPOINTMENT OF AUDITORS | 28 | |
REPORT OF THE AUDIT COMMITTEE | 28 | |
ITEM 3–ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | 30 | |
COMPENSATION DISCUSSION AND ANALYSIS | 31 | |
REPORT OF THE COMPENSATION COMMITTEE | 52 | |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS | 53 | |
ITEM 4–APPROVAL OF THE 2015 STOCK AWARD AND INCENTIVE PLAN | 67 | |
APPENDIX A–ADDITIONAL INFORMATION REGARDING NON-GAAP FINANCIAL | ||
MEASURES (UNAUDITED) | 73 | |
APPENDIX B–2015 STOCK AWARD AND INCENTIVE PLAN | 74 |
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS |
Minerals Technologies Inc. |
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS |
May 13, 2015 |
1. | the election of three directors; |
2. | a proposal to ratify the appointment of KPMG LLP as the independent registered public accounting firm of Minerals Technologies Inc. for the 2015 fiscal year; |
3. | an advisory vote to approve executive compensation; |
4. | a proposal to approve the 2015 Stock Award and Incentive Plan; and |
5. | any other business that properly comes before the meeting, either at the scheduled time or after any adjournment. |
Shareholders of record as of the close of business on March 24, 2015, are entitled to notice of and to vote at the meeting. |
April 2, 2015 | ||
New York, New York | ||
By Order of the Board of Directors, | ||
/s/ Thomas J. Meek | ||
Thomas J. Meek | ||
Senior Vice President, General Counsel, | ||
Human Resources, Secretary and Chief Compliance Officer |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE MINERALS TECHNOLOGIES INC. ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 13, 2015 The 2015 Proxy Statement and 2014 Annual Report to Shareholders are available at: www.proxyvote.com |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 1 |
PROXY SUMMARY |
PROXY SUMMARY | |||||
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider and you should read the entire proxy statement before voting. For more complete information regarding the Company’s 2014 performance, please review the Company’s Annual Report on Form 10-K. | |||||
2015 Annual Meeting of Shareholders | |||||
Date and Time: May 13, 2015, 9:00 a.m. Place: 1 Highland Avenue, Conference Center, Bethlehem, Pennsylvania 18017 Record Date: March 24, 2015 | |||||
Voting Matters and Board Recommendations | |||||
Our Board’s Recommendation | |||||
Proposal | Issue | FOR | |||
Item 1. | Director Nomination | þ | |||
01 | Elect Robert L. Clark | þ | |||
02 | Elect John J. Carmola | þ | |||
03 | Elect Marc E. Robinson | þ | |||
Item 2. | Ratification of Approval of Auditors for 2015 Fiscal Year | þ | |||
Item 3. | Advisory Vote to Approve Executive Compensation | þ | |||
Item 4. | Approval of the 2015 Stock Award and Incentive Plan | þ |
2014 Highlights | ||||
● | On May 9, 2014, MTI acquired AMCOL International Corporation for $1.8 billion. The result is: | |||
● | A $2 billion Global Minerals-based Company | |||
● | World leader in Precipitated Calcium Carbonate (“PCC”) and Bentonite | |||
● | Demonstrated Leadership in Technology and Innovation | |||
● | Expanded Platform for Geographic and New Product Innovation | |||
● | Provides the Company with a Broader, Less Cyclical Portfolio | |||
● | An Acquisition that is Highly Accretive to Earnings | |||
● | The Potential for Significant Earnings and Cash Flow Synergies | |||
● | Strong Cash Flow Generation from All Businesses | |||
In 2014, the Company delivered strong operating results. | ||||
● | The Company achieved record earnings for the fifth consecutive year with earnings of $4.00 per share compared with $2.42 per share in 2013. This represents 65% accretion with only seven full months of post-acquisition earnings. The third quarter and fourth quarter earnings in 2014 were 98% and 100% accretive, respectively. | |||
● | Operating income of $235 million was a record with 89% growth over 2013 and operating margins expanded significantly to 13.6% of sales compared with 12.2% of sales in 2013. | |||
● | All five business segments generated double digit operating margins. | |||
● | At the time of the transaction, the Company expected the acquisition of AMCOL to generate $50 million in estimated synergies over the next two to three years and up to $70 million over the next five years. Since that time, we have accelerated the integration and presently expect to generate $70 million of annualized synergies by the end of 2015. | |||
2 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
PROXY SUMMARY |
● | The integration is tracking successfully on all fronts. | ||||
● | Our cash flow for the year was very strong. Cash flow from operations was $314.1 million compared with $137.5 million in 2013. We have accelerated our debt reduction program by repaying $100 million of debt in the second half of 2014. | ||||
● | We had a record safety performance in 2014 and are approaching world class safety levels. | ||||
● | The Company continued to advance the execution of its growth strategies of geographic expansion and new product innovation and development. We began operations at one new satellite facility in China in the second quarter. In addition, we are currently constructing four additional satellite plants in China, including the recently announced 50,000 metric ton facility with Zhejiang Zhengda Paper Group Ltd that should be operational in the fourth quarter of 2015. This is our first on-site satellite plant that produces PCC for the coated packaging market. The total capacity being installed with these four new satellite plants is approximately 300,000 tons. | ||||
● | The Company continued to see progress in our major growth strategy of developing and commercializing new products in advancing our FulFill® platform of technologies of higher filler loading. In 2014, we signed 4 commercial agreements for FulFill® with a North American paper company. We presently have twenty commercial contracts for FulFill®. | ||||
● | We concluded our strategic review on the acquired businesses with focus on the following: | ||||
● | Performance Materials, Construction Technologies and Energy Services will each focus on geographic expansion and new product development as their overarching strategies to achieve growth. | ||||
● | In our Performance Materials Metalcasting business we intend to maintain and grow with the market in North America while leveraging our strong China position to grow faster. India will also become a more significant part of Performance Materials growth strategy. | ||||
● | In January 2015, the Company announced that it entered into agreement with Glencore in South Africa, where the Company mines chromite, an iron chromium oxide, for its Performance Materials segment. Under the agreement, Glencore will supply chromite products from the Glencore-Merafe joint venture that will be exclusively distributed by the Company in certain territories, including the Americas. | ||||
● | In Fabric Care, we see significant opportunities to advance the use of our surfactants processing know how with consumer products companies producing detergents in both developed and developing regions. | ||||
● | In Pet Care, a major thrust will be to maintain or improve our position as key supplier of the traditional clumping pet litter, and to grow lightweight pet litter, which is gaining acceptance. | ||||
● | Construction Technologies has new, differentiated product offerings, especially with its Resistex geosynthetic linings, that we will be taking to the global market quickly. These lining systems and remediation technologies offer innovative alternatives to traditional construction options. In addition, our Building Materials / Waterproofing Systems offer excellent growth potential worldwide. China will become a point of greater focus and growth for both these areas as part of Construction Technologies’ geographic expansion strategy | ||||
● | In Energy Services, we will focus on the higher return businesses of Filtration and Well Testing, and significantly reduce overheads and capital spending in the Coiled Tubing, Pipeline and Nitrogen businesses. Rapid overhead reductions along with improved operating efficiencies are key strategic imperatives of this business. | ||||
Executive Compensation Highlights | |||||
2014 marked a year of continued significant returns to our shareholders. The following illustrates the directional relationship between earnings per share and market capitalization – two key metrics of Company performance that we believe correlate to shareholder value – and the compensation of our Chairman and Chief Executive Officer over the past three years. | |||||
MINERALS TECHNOLOGIES 2015 Proxy Statement | 3 |
PROXY SUMMARY |
Earnings Per Share | Market Capitalization (in millions) | Chairman and CEO Total Compensation ($ millions) | ||
* | Chairman and Chief Executive Officer Compensation represents compensation for Joseph C. Muscari, who resumed responsibilities as Chief Executive Officer in February 2014, as reported in the 2014 Summary Compensation Table (see page 53). Mr. Muscari previously was Chairman and Chief Executive Officer from March 2007 until March 2013, and Executive Chairman from March 2013 until February 2014. See “Compensation Discussion and Analysis – Chief Executive Officer Compensation.” | ||||
For those who wish to consider total shareholder return when evaluating executive compensation, the graphs below compare: | |||||
● | The Company’s cumulative 3-year total shareholder return on common stock with the percentage increase in compensation for Mr. Muscari. | ||||
● | The Company’s cumulative 3-year total shareholder return on common stock with the cumulative total returns of the S&P 400 and the comparator group used for the Company’s long-term incentive plan during this period (see page 49). As illustrated below, the Company’s common stock outperformed both the S&P Midcap 400 Index and the Company’s comparator group during this period. | ||||
For total shareholder return, these graphs track the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from 12/31/2011 to 12/31/2014. Mr. Muscari’s compensation is indexed at 100 for 2011 and shows the relative increase for the years 2012 through 2014. | |||||
TOTAL SHAREHOLDER RETURN AND CEO COMPENSATION | 3-YEAR INDEXED TOTAL SHAREHOLDER RETURN | ||||
4 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
PROXY SUMMARY |
Set forth below is the compensation for Mr. Muscari for the past three years, as determined under the Securities and Exchange Commission (“SEC”) rules A full discussion and analysis of the compensation paid to Mr. Muscari in 2014, including the relationship between Mr. Muscari’s pay and the Company’s performance, is set forth in the “Compensation Discussion and Analysis” section of this Proxy Statement, beginning on page 31. | ||||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation* ($)(3) | Change in Pension Value and Non- qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||
(a) | (b) | (c) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||||
Joseph C. Muscari | 2014 | $ | 900,000 | $ | 1,278,070 | $ | 966,283 | $ | 4,617,676 | $ | 192,726 | $ | 49,126 | $ | 8,003,881 | |||||||||||
Chairman and | 2013 | $ | 900,000 | $ | 1,278,049 | $ | 935,350 | $ | 4,207,876 | $ | 108,348 | $ | 50,956 | $ | 7,480,579 | |||||||||||
Chief Executive Officer** | 2012 | $ | 900,000 | $ | 1,397,767 | $ | 711,623 | $ | 3,130,740 | $ | 92,700 | $ | 837,314 | $ | 7,070,512 | |||||||||||
* | See the notes accompanying the 2014 Summary Compensation Table on page 53 for more information. | |||||||||||||||||||||||||
** | Mr. Muscari was Executive Chairman of the Company from March 2013 to February 2014. | |||||||||||||||||||||||||
Consideration of Results of 2014 Shareholder Advisory Vote | ||||||||||||||||||||||||||
At our 2014 Annual Meeting, our shareholders approved the 2013 compensation of our named executive officers with 85% of the shares voting on the matter at the meeting voting in favor. We believe that the large margin of approval of our 2014 “Say-on-Pay” proposal resulted in large measure from the extensive shareholder engagement effort we undertook in 2012. We continued this shareholder outreach program in 2014, including contacting all of our top 41 shareholders, who at the time collectively held in excess of 80% of our stock. Specifically, we solicited our shareholders’ views on whether they considered the disclosure in our 2014 proxy statement sufficient and understandable, whether they had any concerns with our executive compensation program, especially our program’s design and the linkage between pay and performance, and whether there were any other ways we could enhance our corporate governance structure to be more effective in driving shareholder value. The shareholders that engaged with us responded positively with respect to our 2014 disclosure, to the changes we had made in 2012 and early 2013 to our executive compensation program and corporate governance, and to the linkage between pay and performance under our executive compensation program. | ||||||||||||||||||||||||||
The following is a sampling of several of the comments we received from our shareholders through this engagement process that reflected the overall response: | ||||||||||||||||||||||||||
I have reviewed MTX’s proxy and found it very transparent and readable. Our group has no qualms about any aspect of MTX corporate governance or executive compensation program. | ||||||||||||||||||||||||||
We have generally been very happy with MTX as a stock and a company, and specifically regarding corporate governance and disclosures. | ||||||||||||||||||||||||||
It’s good you are doing this....proactive and positive...this action alone speaks volumes in my book! | ||||||||||||||||||||||||||
I think you guys are good operators, and that you are working hard to create shareholder value. So keep doing what you are doing! | ||||||||||||||||||||||||||
We have never had a major problem with MTX, either in terms of disclosure or incentive based compensation. | ||||||||||||||||||||||||||
I think your overall disclosure is great, especially for a company of your size. | ||||||||||||||||||||||||||
Good executive summary, especially the business highlights section. | ||||||||||||||||||||||||||
I like the candid summary of the company’s performance and the historical challenges it has faced. | ||||||||||||||||||||||||||
MTX should be commended for its leading position on Sustainability. We often point to your Sustainability Report as an example other companies should follow. | ||||||||||||||||||||||||||
MINERALS TECHNOLOGIES 2015 Proxy Statement | 5 |
PROXY SUMMARY |
As a result of the majority of shares favoring our “Say-on-Pay” proposal at our 2014 Annual Meeting, and the overwhelmingly positive feedback we received during our 2014 shareholder outreach program, we have substantially maintained our executive compensation policies. The Compensation Committee will continue to consider the views of our shareholders in connection with our executive compensation program and make improvements based upon evolving best practices, market compensation information and changing regulatory requirements. | ||
6 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
PROXY STATEMENT |
1. | Why am I being sent these materials? |
2. | Who is asking for my proxy? |
3. | What is the agenda for the Annual Meeting? |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 7 |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING |
4. | How does the Board of Directors recommend I vote? |
5. | Who can attend the Annual Meeting? |
6. | Who can vote at the Annual Meeting? |
7. | What constitutes a quorum for the meeting? |
8. | How many votes are required for each question to pass? |
9. | What is the effect of abstentions and broker non-votes? |
8 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND THE ANNUAL MEETING |
10. | Who will count the votes? |
11. | Who are the Company’s largest shareholders? |
12. | How can I cast my vote? |
13. | What if I submit a proxy but don’t mark it to show my preferences? |
14. | What if I submit a proxy and then change my mind? |
15. | Who is paying for this solicitation of proxies? |
16. | Where can I learn the outcome of the vote? |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 9 |
CORPORATE GOVERNANCE |
Meetings and Attendance |
Director Independence |
● | the director was employed by the Company, or an immediate family member of the director was employed by the Company, as an executive officer; |
● | the director or an immediate family member of the director received more than $120,000 per year in direct compensation from the Company, other than director and committee fees and pensions or other forms of direct compensation for prior service (provided such compensation is not contingent in any way on continued service); |
● | the director was employed by or affiliated with the Company’s independent registered public accounting firm or an immediate family member of the director was employed by or affiliated with the Company’s independent registered public accounting firm in a professional capacity; |
● | the director or an immediate family member was employed as an executive officer of another company where any of the Company’s present executives served on that company’s compensation committee; and |
10 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
CORPORATE GOVERNANCE |
● | the director was an executive officer or an employee, or had an immediate family member who was an executive officer, of a company that made payments to, or received payments from, the Company for goods or services in an amount which, in any single fiscal year, exceeded the greater of $1,000,000 or 2% of the other company’s consolidated gross revenues. |
Board Leadership Structure |
Board Size and Committees |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 11 |
CORPORATE GOVERNANCE |
Identification and Evaluation of Directors |
Director Qualifications and Diversity Considerations |
● | Industry and Technology Experience—Vice President, Chemicals at Axiall Corporation and Former Executive Vice President and Chief Operating Officer at BASF Corporation, the world’s leading chemical company. |
● | Operational Experience—Extensive experience in engineering, management, marketing and operations. |
● | Relevant President Experience—Former Segment President at Goodrich Corporation and former President, Aerospace Customers and Business Development of United Technologies. |
● | Operational and Engineering Experience—Extensive experience in engineering, management, product delivery and operations. |
12 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
CORPORATE GOVERNANCE |
● | Industry and Technology Experience—Extensive academic experience in the materials science field at the University of Rochester and Duke University. |
● | Research and Development Expertise—Extensive research and development experience through various roles, including his current position as Senior Vice President for Research, University of Rochester, and formerly Senior Associate Dean for Research, Pratt School of Engineering, Duke University and Vice President and Senior Research Scientist for Adaptive Technologies Incorporated. |
● | Intellectual Property Management Experience—Founder of the intellectual property company SparkIP. |
● | Process Manufacturing Expertise—Holds a Ph.D. in Mechanical Engineering from Virginia Polytechnic Institute and State University and research in this field. |
● | Government Contracting Expertise—Headed numerous research programs funded by government agencies, including the National Aeronautics and Space Administration and the National Science Foundation. |
● | Relevant Chief Executive Officer/President Experience—Former Chairman and Chief Executive Officer of Bethlehem Steel Corporation. |
● | Industry and Technology Experience—Extensive experience in the steel industry, one of the Company’s most important market areas. |
● | Board Experience—Prior service on the Company’s Board, as well as on the board of Bethlehem Steel Corporation. |
● | Operational Experience—Experience in manufacturing, management and operations, mining operations and reserves, marketing, labor relations, environmental, health and safety oversight, compensation, and human resources oversight with Bethlehem Steel Corporation. |
● | Relevant Chief Executive Officer/President Experience—Executive Chairman of the Company and Chief Executive Officer of the Company since 2007. |
● | High Level of Financial Literacy—Extensive financial oversight experience in senior management roles with the Company and Alcoa Inc. |
● | Industry and Technology Experience—Extensive experience in the manufacturing field. |
● | Board Experience—Prior service on the Company’s Board, as well as on the boards of EnerSys and Dana Holding Corporation. |
● | Extensive International Experience—Experience from leadership positions with several international divisions of Alcoa, covering Asia, Latin America and Europe. |
● | High Level of Financial Literacy—Extensive experience in managing global and regional business units for Johnson & Johnson, Pfizer Inc, and Warner-Lambert Company. |
● | Industry and Technology Experience—Extensive strategic and operational experience in the consumer health care industry, with special focus in marketing, sales, research and development, finance, and human resources at Johnson & Johnson, Pfizer Inc, and Warner-Lambert Company. |
● | Operational Experience—Extensive experience in innovation, human capital development, mergers and acquisitions, licensing, and global marketing. |
● | Global Expertise—Extensive global experience managing large multi-functional businesses in emerging and developed markets in North America, Europe, Pacific, Asia, and Latin America. |
● | High Level of Financial Literacy—Extensive financial oversight experience in senior management roles with Commercial Metals Company, Gerdau Ameristeel and FARO Technologies Inc., plus over 20 years’ experience in a variety of financial leadership positions with Alcoa Inc. |
● | Industry and Technology Experience—Extensive experience in the steel industry, one of the Company’s most important markets, as well as in the areas of aerospace, automotive and commercial transportation, much of which are cyclical, commodity-based markets like the Company’s. |
● | Operational Experience—Experience in manufacturing, mergers and acquisitions, capital markets, and joint ventures. |
● | International Experience—Experience from leadership positions in international organizations with Commercial Metals Company, Gerdau Ameristeel, FARO Technologies and Alcoa. |
● | Industry and Technology Experience—Extensive experience in the aerospace and defense industry as a systems engineer, program manager and corporate executive. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 13 |
CORPORATE GOVERNANCE |
● | Engineering Expertise—Holds a doctorate in physics from the University of Michigan and elected as a member of the National Academy of Engineering. |
● | Operational and International Experience—President and CEO of TRW Systems (later Northrop Grumman Mission Systems) from 2010 to 2012, a business engaged in systems engineering, information technology and services addressing defense, intelligence, civil and commercial markets, with operations throughout the U.S., U.K., Northern and Eastern Europe, the Middle East and the Pacific Rim. |
● | Governmental Experience—Served as 74th Secretary of the Navy, where he led America’s Navy and Marine Corps Team, from January 2006 to March 2009. |
Board and Committee Self-Evaluation |
Term Limits |
Director Stock Ownership Requirements |
● | At least 400 shares of the Company’s common stock outright (excluding any stock units awarded by the Company and any unexercised stock options); and |
● | a number of shares equal to five times the then current annual cash retainer for directors (inclusive of any stock units, restricted stock or similar awards by the Company in connection with service as an employee or Director, and, if applicable, shares purchased with amounts invested in the MTI retirement plans, but excluding any unexercised stock options). |
The Board’s Role in Risk Oversight |
14 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
CORPORATE GOVERNANCE |
The Board’s Role in Succession Planning |
Shareholder Proposals and Nominations |
● | The name and address of the shareholder giving notice, as they appear in our books (and of the beneficial owner, if other than the shareholder, on whose behalf the proposal is made); |
● | the class and number of shares of stock owned of record or beneficially by the shareholder giving notice (and by the beneficial owner, if other than the shareholder, on whose behalf the proposal is made); |
● | a representation that the shareholder is a holder of record of stock entitled to vote at the meeting, and intends to appear at the meeting in person or by proxy to make the proposal; and |
● | a representation whether the shareholder (or beneficial owner, if any) intends, or is part of a group which intends, to deliver a proxy statement and form of proxy to holders of at least the percentage of outstanding stock required to elect the nominee or approve the proposal and/or otherwise solicit proxies from shareholders in support of the nomination or proposal. |
● | A brief description of the business desired to be brought before the meeting; |
● | the reason for conducting the business at the meeting; |
● | any material interest in the item of business of the shareholder giving notice (and of the beneficial owner, if other than the shareholder, on whose behalf the proposal is made); and |
● | if the business includes a proposal to amend the bylaws, the language of the proposed amendment. |
● | A signed consent of the nominee to serve as a director, if elected; |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 15 |
CORPORATE GOVERNANCE |
● | the name, age, business address, residential address and principal occupation or employment of the nominee; |
● | the number of shares of the Company’s common stock beneficially owned by the nominee; and |
● | any additional information that would be required under the rules of the SEC in a proxy statement soliciting proxies for the election of that nominee as a director. |
Communications with Directors |
16 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMMITTEES OF THE BOARD OF DIRECTORS |
The Audit Committee |
● | To assist the Board in its oversight of (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the qualifications and independence of the Company’s independent registered public accounting firm, and (iv) the performance of the Company’s internal audit function and independent registered public accounting firm; |
● | to appoint, compensate, and oversee the work of the independent registered public accounting firm employed by the Company (including resolution of disagreements between management and the auditors concerning financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent registered public accounting firm shall report directly to the Committee; |
● | to prepare the report of the Committee required by the rules of the SEC to be included in the Company’s annual proxy statement; and |
● | to discuss the Company’s policies with respect to risk assessment and risk management, in executive sessions and with management, the internal auditors and the independent auditor, in particular with respect to the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. |
The Compensation Committee |
● | To participate in the development of our compensation and benefits policies; |
● | to establish, and from time to time vary, the salaries and other compensation of the Company’s Chief Executive Officer and other elected officers; |
● | to review the Company’s incentive structure to avoid encouraging excessive risk-taking through financial incentives as well as the relationship between compensation and the Company’s risk management policies and practices; and |
● | to participate in top-level management succession planning. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 17 |
COMMITTEES OF THE BOARD OF DIRECTORS |
The Corporate Governance and Nominating Committee |
● | The identification of individuals qualified to become Board members and the recommendation to the Board of nominees for election to the Board at the next annual meeting of shareholders or whenever a vacancy shall occur on the Board; |
● | the establishment and operation of committees of the Board; |
● | the development and recommendation to the Board of corporate governance principles applicable to the Company; and |
● | the oversight of an annual review of the Board’s performance. |
18 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
REPORT OF THE CORPORATE GOVERNANCE AND NOMINATING COMMITTEE |
Robert L. Clark, Chair | |
Joseph C. Breunig | |
Duane R. Dunham | |
Marc E. Robinson | |
Donald C. Winter |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 19 |
EXECUTIVE OFFICERS |
Name | Age | Position | ||
Joseph C. Muscari | 68 | Chairman and Chief Executive Officer | ||
Patrick E. Carpenter | 52 | Vice President and Managing Director, Construction Technologies | ||
Gary L. Castagna | 53 | Senior Vice President and Managing Director, Performance Materials | ||
Michael A. Cipolla | 57 | Vice President, Corporate Controller and Chief Accounting Officer | ||
Douglas T. Dietrich | 46 | Senior Vice President, Finance and Treasury, Chief Financial Officer | ||
Jonathan J. Hastings | 52 | Senior Vice President, Corporate Development | ||
Michael R. Johnson | 56 | Vice President and Managing Director, Energy Services | ||
Douglas W. Mayger | 57 | Senior Vice President, Performance Minerals and MTI Supply Chain | ||
Thomas J. Meek | 58 | Senior Vice President, General Counsel, Human Resources, Secretary and Chief Compliance Officer | ||
D.J. Monagle, III | 52 | Senior Vice President, Chief Operating Officer – Specialty Minerals Inc. and Minteq Group | ||
Johannes C. Schut | 50 | Vice President and Managing Director, Minteq International |
● | Joseph C. Muscari was elected Chairman and Chief Executive Officer effective February 27, 2014, having served previously in the same position from March 2007 to March 2013 and as Executive Chairman from March 2013 to February 2014. Prior to that, he was Executive Vice President and Chief Financial Officer of Alcoa Inc. He has served as a member of the Board of Directors since 2005. |
● | Patrick E. Carpenter was elected Vice President and Managing Director, Construction Technologies in June 2014. Prior to that, he was the Vice President of AMCOL International Corporation (AMCOL) and President of Construction Technologies segment since January 2012. Prior to that, he was the Vice President of Business Development of Colloid Environmental Technologies Company from January 2010 through December 2011, and its Vice President of Construction Materials from January 2007 through December 2009. |
● | Gary L. Castagna was elected Senior Vice President and Managing Director, Performance Materials in June 2014. Prior to that, he was Executive Vice President of AMCOL and President of Performance Materials segment since May 2008. Prior to that, he had been the Senior Vice President, Chief Financial Officer and Treasurer of AMCOL since February 2001 and a consultant to AMCOL since June 2000. Prior to that, he was the Vice President of AMCOL and President of Chemdal International Corporation (former subsidiary of AMCOL) since August 1997. |
● | Michael A. Cipolla was elected Vice President, Corporate Controller and Chief Accounting Officer in July 2003. Prior to that, he served as Corporate Controller and Chief Accounting Officer of the Company since 1998. From 1992 to 1998 he served as Assistant Corporate Controller. |
● | Douglas T. Dietrich was elected Senior Vice President, Finance and Treasury, Chief Financial Officer effective January 1, 2011. Prior to that, he was appointed Vice President, Corporate Development and Treasury effective August 2007. He had been Vice President, Alcoa Wheel Products since 2006 and President, Alcoa Latin America Extrusions and Global Rod and Bar Products since 2002. |
● | Jonathan J. Hastings was elected Senior Vice President, Corporate Development effective September 2012. Before that, he was Vice President, Corporate Development. Prior to that, he was Senior Director of Strategy and New Business Development - Coatings, Global at The Dow Chemical Company. Prior to that he held positions of increasing responsibility at Rohm and Haas, including Vice President & General Manager - Packaging and Building Materials - Europe. |
● | Michael R. Johnson was elected Vice President and Managing Director, Energy Services in June 2014. Prior to that, he was the Senior Vice President of AMCOL since January 2010; President of the Energy Services segment since 2003. Prior to that, he was the Vice President of CETCO Oilfield Services since 2000. |
● | Douglas W. Mayger was elected Senior Vice President, Performance Minerals and Supply Chain in June 2012. Prior to that, he was Vice President and Managing Director, Performance Minerals, which encompasses the Processed Minerals product line and the Specialty PCC product line. Prior to that, he was General Manager - Carbonates West, Performance Minerals and Business Manager - Western Region. Before joining the Company as plant manager in Lucerne Valley in 2002, he served as Vice President of Operations for Aggregate Industries. |
20 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
● | Thomas J. Meek was elected Senior Vice President, General Counsel and Secretary, Chief Compliance Officer in October 2012. In December 2011, he was given the additional responsibility for Human Resources. Prior to that, he was Vice President, General Counsel and Secretary of the Company effective September 1, 2009. Prior to that, he served as Deputy General Counsel at Alcoa. Before joining Alcoa in 1999, Mr. Meek worked with Koch Industries, Inc. of Wichita, Kansas, where he held numerous supervisory positions. His last position there was Interim General Counsel. From 1985 to 1990, Mr. Meek was an Associate/Partner in the Wichita, Kansas law firm of McDonald, Tinker, Skaer, Quinn & Herrington, P.A. |
● | D.J. Monagle III was elected Senior Vice President, Chief Operating Officer – Specialty Minerals Inc. and Minteq Group effective February 27, 2014. Prior to that, he was Senior Vice President and Managing Director, Paper PCC, effective October 2008. In November 2007, he was appointed Vice President and Managing Director - Performance Minerals. He joined the Company in January of 2003 and held positions of increasing responsibility including Vice President, Americas, Paper PCC and Global Marketing Director, Paper PCC. Before joining the Company, Mr. Monagle worked for the Paper Technology Group at Hercules between 1990 and 2003, where he held sales and marketing positions of increasing responsibility. Between 1985 and 1990, he served as an aviation officer in the U.S. Army’s 11th Armored Cavalry Regiment, leaving the service as a troop commander with a rank of Captain. |
● | Johannes C. Schut was elected Vice President and Managing Director, Minteq International, in March 2012. He joined the Company in 2004 as Director of Finance - Europe. In 2006, he was named Vice President, Minteq - Europe, including Middle East and India. Before joining Minerals Technologies Inc., Mr. Schut held positions of increasing responsibility with Royal Phillips Electronics and Royal FrieslandCampina - DMV International. |
Policies and Procedures for Approval of Related Party Transactions |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 21 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
2014 Related Party Transactions |
22 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
Number of | ||||||||||
Amount and | Share | |||||||||
Nature of | Equivalent | |||||||||
Name and Address of | Beneficial | Percent of | Units | |||||||
Title of Class | Beneficial Owner(a) | Ownership(b) | Class | Owned(c) | ||||||
Common | Blackrock, Inc. 40 East 52nd Street New York, NY 10022 | 2,819,255 | (d) | 8.1 | % | — | ||||
Royce & Associates LLC 745 Fifth Avenue New York, NY 10151 | 2,430,657 | (e) | 7.0 | % | — | |||||
Vanguard Group Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 2,135,811 | (f) | 6.2 | % | — | |||||
T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 | 2,013,500 | (g) | 5.8 | % | ||||||
J.C. Muscari | 537,706 | (h) | 1.5 | % | 17,522 | |||||
D.T. Dietrich | 116,208 | (i) | * | 2,282 | ||||||
D.J. Monagle | 157,053 | (j) | * | 2,561 | ||||||
G.L. Castagna | 30 | * | 0 | |||||||
T.J. Meek | 105,709 | (k) | * | 4,704 | ||||||
R.S. Wetherbee | 0 | * | 0 | |||||||
J.C. Breunig | 0 | * | 0 | |||||||
J.J. Carmola | 400 | * | 2,037 | |||||||
R.L. Clark | 400 | * | 10,034 | |||||||
D.R. Dunham | 1,200 | * | 21,973 | |||||||
M.E. Robinson | 404 | * | 5,110 | |||||||
B.R. Smith | 400 | * | 7,992 | |||||||
D.C. Winter | 400 | * | 2,610 | |||||||
Directors and Officers as a group (20 individuals) | 1,118,809 | (l) | 3.2 | % | 85,146 |
* | Less than 1%. |
(a) | The address of each director and officer is c/o Minerals Technologies Inc., 622 Third Avenue, New York, New York 10017-6707. |
(b) | Sole voting and investment power, except as otherwise indicated. Does not include “Share Equivalent Units.” |
(c) | “Share Equivalent Units,” which entitle the officer or director to a cash benefit equal to the number of units in his or her account multiplied by the closing price of our common stock on the business day prior to the date of payment, have been credited to Messrs. Muscari, Dietrich, Monagle, Castagna, Meek and Wetherbee under the Nonfunded Deferred Compensation and Supplemental Savings Plan; and to Mr. Breunig, Mr. Carmola, Dr. Clark, Messrs. Dunham, Muscari, Robinson and Ms. Smith under the Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors. (See “Director Compensation” below.) |
(d) | Based on a statement on Schedule 13G/A filed on January 23, 2015 with the SEC on behalf of Blackrock, Inc. According to Blackrock Inc.’s Schedule 13G/A, various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of the Company’s common stock, but no such person’s interest in the Company’s common stock is more than 5% of the Company’s aggregate outstanding shares of common stock. |
(e) | Based on a statement on Schedule 13G/A filed on January 15, 2015 with the SEC on behalf of investment adviser Royce & Associates LLC. |
(f) | Based on a statement on Schedule 13G/A filed on February 11, 2015 with the SEC on behalf of investment adviser Vanguard Group Inc. |
(g) | Based on a statement on Schedule 13G filed on February 12, 2015 with the SEC on behalf of investment adviser T. Rowe Price Associates, Inc. |
(h) | 1,600 of these shares are held by Mr. Muscari and his wife as joint tenants, and Mr. Muscari has shared investment and voting power with respect to these shares. 235,670 of these shares are subject to options which are exercisable currently or within 60 days. |
(i) | 78,108 of these shares are subject to options which are exercisable currently or within 60 days. |
(j) | 110,124 of these shares are subject to options which are exercisable currently or within 60 days. |
(k) | 77,764 of these shares are subject to options which are exercisable currently or within 60 days. |
(l) | 611,960 of these shares are subjection to options which are exercisable currently or within 60 days. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 23 |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE |
24 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
ITEM 1—ELECTION OF DIRECTORS |
Item 1. Election of Directors | ||
Board Recommendation | ||
A vote FOR election of Messrs. Robert L. Clark, John J. Carmola, and Marc E. Robinson is unanimously recommended. |
Director Nominees for Terms Expiring in 2018 | ||
Robert L. Clark | ||
Age 51 | ||
Professor and Dean of the School of Engineering and Applied Sciences, University of Rochester since September 2008 and Senior Vice President for Research since March 2013. Dean of the Pratt School of Engineering at Duke University August 2007 to September 2008. Between 1992 and August 2007, held increasing positions of academic responsibility at Duke University from Assistant Professor to Senior Associate Dean of Pratt School of Engineering and Chair, Mechanical Engineering and Materials Science. Chair of Strategic Research Advisory Board at AIT Austrian Institute of Technology GmbH since 2013. Director of Minerals Technologies Inc. since 2010. Chairman of the Corporate Governance and Nominating Committee and member of the Audit Committee of Minerals Technologies Inc. | ||
John J. Carmola | ||
Age 59 | ||
Retired Former Segment President at Goodrich Corporation. Previously, President, Aerospace Customers and Business Development of United Technologies in 2012. From 1996 to 2012, held several positions of increasing responsibility at Goodrich, including Segment President for Actuation and Landing Systems and Segment President of Engine Systems and Group President for Engine/Safety/Electronic Systems. From 1977 to 1996, held various engineering and general management positions at General Electric, including Manager of the M&I Engines Division’s Product Delivery Operation. Director of Minerals Technologies Inc. since 2013. Member of the Audit Committee and the Compensation Committee of Minerals Technologies Inc. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 25 |
ITEM 1—ELECTION OF DIRECTORS |
Director Nominees for Terms Expiring in 2018 | ||
Marc E. Robinson | ||
Age 54 | ||
Senior Executive Advisor of PwC Strategy& since December 2011. Company Group Chairman of Johnson & Johnson from 2007 to September 2011. Global President Consumer Healthcare Division of Pfizer from 2003 to 2006. North American President Consumer Healthcare Division of Pfizer from 2000-2002. Regional President, Australia and New Zealand of Warner-Lambert Company from 1999 to 2000. General Manager European Business Process Improvement of Warner Lambert Company from 1996 to 1998. Marketing Assistant, Assistant Product Manager of General Mills from 1984 to 1986. Member of the Capsugel Scientific and Business Advisory Board as of May 2012. Director of Minerals Technologies Inc. since 2012. Member of the Audit Committee and the Corporate Governance and Nominating Committee of Minerals Technologies Inc. | ||
Directors Whose Terms Expire in 2016 | ||
Joseph C. Muscari | ||
Age 68 | ||
Chairman and Chief Executive Officer of the Company from March 2007 to March 2013. Executive Chairman of the Company from March 2013 to February 2014. In February 2014 resumed Chairman and Chief Executive Officer role. Executive Vice President and Chief Financial Officer from January 1, 2006 to December 31, 2006 and Executive Vice President from January 1, 2007 to February 28, 2007 of Alcoa Inc., a producer of aluminum and aluminum products and components and other consumer products. Executive Vice President, Alcoa Inc., and Group President—Rigid Packaging, Foil & Asia from 2004 to 2005; Executive Vice President and Group President, Asia & Latin America from 2001 to 2004; and Vice President Environment, Health, Safety, Audit and Compliance from 1997 to 2001 of Alcoa Inc. Director of Aluminum Corporation of China Limited 2002 to 2007. Director of Dana Holding Corporation since May 2010. Director of EnerSys since June 2008. Director of Minerals Technologies Inc. since January 2005. | ||
Barbara R. Smith | ||
Age 55 | ||
Senior Vice President and Chief Financial Officer of Commercial Metals Company since June 2011. Vice President and Chief Financial Officer of Gerdau Ameristeel from 2007-2011 and Treasurer beginning from July 2006. Senior Vice President and Chief Financial Office of FARO Technologies, Inc. from February 2005 to July 2006. During the more than 20 prior years, Ms. Smith held positions of increasing financial leadership with Alcoa Inc. Director of Minerals Technologies Inc. since 2011. Chair of the Audit Committee and member of the Compensation Committee of Minerals Technologies Inc. | ||
Donald C. Winter | ||
Age 66 | ||
Independent consultant and a Professor of Engineering Practice at the University of Michigan, where he teaches graduate level courses on Systems Engineering, Safety and Reliability, and Maritime Policy. Dr. Winter served as the 74th Secretary of the Navy from January 2006 to March 2009. Previously, Dr. Winter held multiple positions in the aerospace and defense industry as a systems engineer, program manager and corporate executive. From 2000 to 2005, he was President and CEO of TRW Systems (later Northrop Grumman Mission Systems), which he joined in 1972. In 2002, he was elected a member of the National Academy of Engineering. Director of Minerals Technologies Inc. since 2014. Member of the Audit Committee and Corporate Governance and Nominating Committee of Minerals Technologies Inc. |
26 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
ITEM 1—ELECTION OF DIRECTORS |
Directors Whose Terms Expire in 2017 | ||
Duane R. Dunham | ||
Age 73 | ||
Retired President and Chief Operating Officer of Bethlehem Steel Corporation since January 2002. Chairman and Chief Executive Officer of Bethlehem Steel from April 2000 to September 2001. President and Chief Operating Officer from 1999 to April 2000 and President of the Sparrows Point division from 1993 to 1999. Director of Bethlehem Steel Corporation from 1999 to 2002. Director of Minerals Technologies Inc. since 2002. Chairman of the Compensation Committee and member of the Corporate Governance and Nominating Committee of Minerals Technologies Inc. | ||
Joseph C. Breunig | ||
Age 53 | ||
Executive Vice President, Chemicals at Axiall Corporation since 2010. Executive Vice President and Chief Operating Officer, BASF Corporation and President Market and Business Development, North America, BASF SE, from 2005 to 2010. Increasing positions of responsibility since joining BASF Corporation in 1986 as a process engineer, including Global Marketing director, Fiber Products Division, from 1998 to 2000; director, Global Technology, Functional Polymers from 2000 to 2001; and group vice president, Functional Polymers from 2001 to 2005. Director of Minerals Technologies Inc. since 2014. Member of the Audit Committee and Corporate Governance and Nominating Committee of Minerals Technologies Inc. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 27 |
ITEM 2—RATIFICATION OF APPOINTMENT OF AUDITORS |
Item 2. Ratify Auditors | ||
Board Recommendation | ||
A vote FOR ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2015 fiscal year is unanimously recommended. |
Principal Accounting Fees and Services |
2014 | 2013 | |||||||
Audit Fees | $ | 3,210,126 | $ | 1,567,496 | ||||
Audit Related Fees | 91,421 | 68,229 | ||||||
Tax Fees | 337,040 | 23,985 | ||||||
All Other Fees | 293,024 | 4,973 | ||||||
Total Fees | $ | 3,931,611 | $ | 1,664,863 |
28 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
REPORT OF THE AUDIT COMMITTEE |
Barbara R. Smith, Chair | |
Joseph C. Breunig | |
John J. Carmola | |
Marc E. Robinson | |
Donald C. Winter |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 29 |
ITEM 3— ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION |
● | In 2014, the Company acquired AMCOL International Corporation for $1.8 billion. At the same time, the Company delivered strong results as measured both by our financial performance and execution of our strategies of geographic expansion and new product innovation. |
● | The Company’s common stock outperformed all of its comparative indices as well as the Company’s comparator peer group in 2014. |
● | Over 80% of the compensation of our Chairman and Chief Executive Officer, Mr. Joseph C. Muscari, is at risk and variable depending on company and individual performance. |
● | In 2014, we continued to extensively engage with our shareholders to determine how our corporate governance and compensation practices can be improved. |
Item 3. Advisory Vote to Approve Executive Compensation | ||
Board Recommendation | ||
A vote FOR the advisory vote approving 2014 executive compensation is unanimously recommended. |
30 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
Introduction |
Name | Title | |
Joseph C. Muscari | Chairman and Chief Executive Officer | |
Douglas T. Dietrich | Senior Vice President, Finance and Treasury, Chief Financial Officer | |
D.J. Monagle III | Senior Vice President, Chief Operating Officer - Specialty Minerals Inc. and Minteq Group | |
Gary L. Castagna | Senior Vice President and Managing Director, Performance Materials | |
Thomas J. Meek | Senior Vice President, General Counsel, Secretary, Chief Compliance Officer | |
Robert S. Wetherbee | Former President and Chief Executive Officer |
How We Tie Pay to Performance |
● | A $2 billion Global Minerals-based Company |
● | World leader in Precipitated Calcium Carbonate (“PCC”) and Bentonite |
● | Demonstrated Leadership in Technology and Innovation |
● | Expanded Platform for Geographic and New Product Innovation |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 31 |
COMPENSATION DISCUSSION AND ANALYSIS |
● | Provides the Company with a Broader, Less Cyclical Portfolio |
● | An Acquisition that is Highly Accretive to Earnings |
● | Significant Earnings and Cash Flow Synergies |
● | Strong Cash Flow Generation from All Businesses |
Financial Performance Highlights |
● | We had record earnings per share of $4.00, a 65% increase over the previous record in 2013 with only seven full months of post-acquisition earnings. The third quarter and fourth quarter earnings in 2014 were 98% and 100% accretive, respectively. The Company has achieved record earnings for five consecutive years. Our 2014 earnings per share of $4.00 represent a 190% increase over 2006 earnings of $1.38 per share. This represents an 8-year compound annual growth rate of 14.2%. | |
Earnings Per Share* | ||
32 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
● | Operating income of $235 million was a record with 89% growth over 2013 and operating margins expanded significantly to 13.6% of sales compared with 12.2% of sales in 2013. All five business segments generated double digit operating margins. | |
Operating Income* (in millions) | ||
● | Operating margin increased from 9.0% of sales in 2006 to 13.6% of sales in 2014. This improvement was attributable to cost and expense control, productivity improvements and operational excellence as well as strong contributions from the acquired businesses. | |
Operating Margin* (% of Sales) | ||
MINERALS TECHNOLOGIES 2015 Proxy Statement | 33 |
COMPENSATION DISCUSSION AND ANALYSIS |
● | Our cash flow for the year was very strong. Cash flow from operations was $314.1 million compared with $137.5 million in 2013. We have accelerated our debt reduction program by repaying $100 million of debt in the second half of 2014. |
Cash Flow from Operations and Capital Expenditures | |
● | At the time of the transaction, the Company expected the acquisition of AMCOL to generate $50 million in estimated synergies over the next two to three years and up to $70 million over the next five years. Since that time, we have accelerated the integration and presently expect to generate $70 million of annualized synergies by the end of 2015. The following chart sets forth the quarterly savings generated in the final three quarters of 2014 and the range of projected quarterly savings for the first two quarters of 2015. |
Acquisition Synergies Tracking - Projected Quarterly Savings ($ millions) | |
34 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
Strategic Growth Highlights | |||
● | The Company continued to advance the execution of its growth strategies of geographic expansion and new product innovation and development. We began operations at one new satellite facility in China in the second quarter. In addition, we are currently constructing four additional satellite plants in China, including the recently announced 50,000 metric ton facility with Zhejiang Zhengda Paper Group Ltd that should be operational in the fourth quarter of 2015. This is our first on-site satellite plant that produces PCC for the coated packaging market. The total capacity being installed with these four new satellite plants is approximately 300,000 tons. | ||
● | The Company continued to see progress in our major growth strategy of developing and commercializing new products in advancing our FulFill® platform of technologies of higher filler loading. In 2014, we signed 4 commercial agreements for FulFill® with a North American paper company. We presently have twenty commercial contracts for FulFill®. | ||
● | In our Refractories segment, our agreement with United Steel Company B.S.C. (SULB), in Bahrain, which began operations in the third quarter of 2012, generated sales of $11.3 million in 2014. We expected to generate on average $10 million per year over the 3 year term of the contract and have recognized $28 million in sales from inception through 2014. Our Refractories segment entered into a three-year agreement with Bhushan Steel Ltd. of India, to provide cost-per-ton (CPT) steel refractory maintenance for two of Bhushan’s Basic Oxygen Furnaces (BOF) at its new steel-making facility in Angul, India. This is the first CPT contract in India. We expect to generate on average sales of $2 million per year over the 3 year term of the contract. In addition, we entered into a two-year CPT contract with Tata Steel in Europe. We expect to generate on average sales of $2.0 million per year over the term of the contract. | ||
● | We concluded our strategic review on the acquired businesses with focus on the following: | ||
● | Performance Materials, Construction Technologies and Energy Services will each focus on geographic expansion and new product development as their overarching strategies to achieve growth. | ||
● | In our Performance Materials Metalcasting business we intend to maintain and grow with the market in North America while leveraging our strong China position to grow faster. India will also become a more significant part of Performance Materials growth strategy. | ||
● | In January 2015, the Company announced that it entered into agreement with Glencore in South Africa, where the Company mines chromite, an iron chromium oxide, for its Performance Materials segment. Under the agreement, Glencore will supply chromite products from the Glencore-Merafe joint venture that will be exclusively distributed by the Company in certain territories, including the Americas. | ||
● | In Fabric Care, we see significant opportunities to advance the use of our surfactants processing know how with consumer products companies producing detergents in both developed and developing regions. | ||
● | In Pet Care, a major thrust will be to maintain or improve our position as key supplier of the traditional clumping pet litter, and to grow lightweight pet litter, which is gaining acceptance. | ||
● | Construction Technologies has new, differentiated product offerings, especially with its Resistex geosynthetic linings, that we will be taking to the global market quickly. These lining systems and remediation technologies offer innovative alternatives to traditional construction options. In addition, our building Materials / Waterproofing Systems offer excellent growth potential worldwide. China will become a point of greater focus and growth for both these area as part of Construction Technologies’ geographic expansion strategy. | ||
● | In Energy Services, we will focus on the higher return businesses of Filtration and Well Testing, and significantly reduce overheads and capital spending in the Coiled Tubing, Pipeline and Nitrogen businesses. Rapid overhead reductions along with improved operating efficiencies are key strategic imperatives of this business. | ||
● | In 2006 the Company was faced with an R&D pipeline that was nearly dry. The Company established a Technology Lead Team, comprised of senior scientists and business leaders across the Company, which instituted a new product development process. Since 2006, this has generated more than 640 new ideas, of which 60 were moved to the commercializa-tion stage. The Company has added representatives from the former AMCOL technology teams to the Technology Lead Team and has held several innovation retreats. The innovation retreats have been successful in further integrating the technology teams and have produced more than 30 new ideas for innovation and technology development. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 35 |
COMPENSATION DISCUSSION AND ANALYSIS |
Operational Excellence and Safety | |
● | Our Specialty Minerals Segment and Performance Minerals product lines achieved record earnings. The segment continued to improve productivity and efficiency through a disciplined effort of deploying Operational Excellence and Lean principles. |
● | Our efforts to embed Operational Excellence and Lean principles into the Company began in 2007. In 2014 our employees held approximately 1,896 Total Kaizen events (Kaizen events are highly focused improvement workshops that address a particular process or area) and generated over 17,800 ideas of which 65% were implemented. |
Kaizen Events (# of Events) | Global Employee Suggestion System (# of Suggestions) |
● | We had a record safety performance in 2014 and are approaching world class safety levels. | |
Safety: Historical Injury Rates (Injuries/100 Employees) | ||
36 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
Total Shareholder Return |
COMPARISON OF 1 YEAR CUMULATIVE TOTAL RETURN | COMPARISON OF 3 YEAR CUMULATIVE TOTAL RETURN |
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN | 3-YEAR INDEXED TOTAL SHAREHOLDER RETURN |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 37 |
COMPENSATION DISCUSSION AND ANALYSIS |
What We Do | |
Pay for Performance – We tie pay to performance. The great majority of executive pay is not guaranteed. We set clear goals for corporate and business unit performance and differentiate based on individual achievement. The vast majority of our named executive officers’ compensation is at risk and variable depending on Company and individual performance. | |
Use Objective Financial Metrics – A substantial majority (80%) of the awards granted under our Annual Incentive Plan are based on the achievement of corporate financial metrics that we believe are challenging in light of the economic condition in the markets we serve and the risks to achieve high performance. | |
Link Long-Term Compensation to Stock Performance – The majority of our long-term awards are in the form of equity awards that vest over a three-year period. We believe that such awards directly link pay with the interests of shareholders. In addition, two of the three metrics in our long-term incentive plan are based on our stock performance. | |
Use An Appropriate Peer Group – We revised the peer group we used in 2012 to ensure that we use appropriate comparators for benchmarking our compensation program. | |
Expect High Performance – We expect our executives to deliver sustained high performance year-over-year and over time to stay in their respective positions. | |
Review Tally Sheets – We review tally sheets for our named executive officers prior to making annual executive compensation decisions. | |
Double Trigger for Vesting on Change in Control – Our equity compensation plan provides for accelerated vesting of awards after a change in control only if an employee is also terminated (a “double trigger”). | |
Clawback – In 2012, we adopted a policy to recoup certain incentive and other compensation payments (a “clawback” policy) to ensure that our executives do not retain undeserved windfalls and to enhance our pay-for-performance initiatives. | |
Minimal Perquisites – We provide only minimal perquisites that have a sound benefit to the Company’s business. | |
Stringent Stock Ownership Guidelines – We have adopted stringent stock ownership guidelines - six times base salary for our CEO, four times base salary for our CFO and COO, three times base salary for our other executives, and for directors five times their annual cash retainer. | |
Retention Period on Exercised Stock Options and Vested DRSUs – Executives must hold for at least five years a minimum of 50% of after-tax value of appreciation of stock options upon exercise and retain at least 50% of stock received after-tax from Deferred Restricted Stock Units (DRSUs) upon vesting. | |
Independent Compensation Consulting Firm – The Compensation Committee benefits from its utilization of an independent compensation consulting firm which provides no other services to the Company. | |
What We Don’t Do | |
No Increase in our CEO’s Base Salary or Target Incentive Compensation - There was no increase in our Chairman and Chief Executive Officer’s salary from 2009 to 2014, nor any increase in his target incentive compensation from 2011 to 2014. At-risk compensation has increased only as a result of improved performance. | |
We Do Not Pay Dividend Equivalents on Stock Options and Unvested DRSUs | |
No Repricing Underwater Stock Options or Backdating Stock Options | |
No Inclusion of the Value of Equity Awards in Pension or Severance Calculations | |
No Excise Tax Gross-Up Payments Upon Change In Control | |
No Hedging Transactions, Pledges of Stock Or Short Sales By Executives Permitted |
38 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
● | Base salary is the only portion that is not at-risk and not performance-based. |
● | Annual incentive compensation is based on the Company’s achievement with respect to two financial metrics we believe are the most important business metrics that lead to creation of shareholder value (Operating Income (OI) and Return on Capital (ROC)), representing 70% of the plan’s bonus opportunity, and achievement of personal performance objectives. Our OI and ROC performance for the year was strong, with both metrics exceeding the target, leading to payment on this portion of the 2014 Annual Incentive Plan award opportunity at 128.9%. Mr. Muscari’s performance against his personal performance objectives was 150% of target. Accordingly, the total 2014 Annual Incentive Plan award paid for the year to Mr. Muscari, based on Company and individual performance, was 135.2% of target. |
● | The majority of our long-term incentives are two forms of equity-based awards: stock options and DRSUs. These awards provide a direct link between pay and shareholder interests. The awards typically vest in three annual increments. Although this vesting is time-based, we strongly believe that our equity-based awards are performance-based, as vesting only occurs if the executive continues to be employed by the Company on the vesting date. We have a high-performance culture. This means that we expect our executives to perform to high levels. Our history is that executives that do not meet such performance standards leave our Company; in the past eight years, there has been 100% turnover of the positions in our executive management team. These officers have forfeited all of their unvested equity awards. |
● | The remaining long-term incentives are grants of Performance Units under our long-term incentive plan. The Performance Units cliff-vest after three years, meaning that executives who leave prior to the vesting date forfeit the awards, and pay out in cash based on three-year performance goals. Payouts are based on achievement relative to three goals: ROC, which is based on a three-year target in contrast to the one-year ROC target under our Annual Incentive Plan, and total shareholder return relative to a peer index and relative to the broader market. The Performance Units that vested on December 31, 2014 were granted in early 2012 and related to the 2012 - 2014 performance period. During this period, our total shareholder return exceeded both the peer index and relative to the broader market (see the chart on pg. 37), and our ROC also approximated its target, which is based on the Company’s cost of capital. This strong performance is reflected in pay-outs at a level of approximately 266% of target value per unit for units that vested at the end of 2014. The increase in long-term incentive compensation constitutes a large majority of the increase in Mr. Muscari’s compensation in 2014. |
Three Year | Actual Payout as a Percentage of Payout at | ||
Grant Date | Performance Period | Target Performance | |
2012 | 2012 – 2014 | 266% | |
2011 | 2011 – 2013 | 220% | |
2010 | 2010 – 2012 | 150% | |
2009 | 2009 – 2011 | 78% | |
2008 | 2008 – 2010 | 40% | |
2007 | 2007 – 2009 | 0% | |
2006 | 2006 – 2008 | 0% |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 39 |
COMPENSATION DISCUSSION AND ANALYSIS |
Consideration of Results of 2014 Shareholder Advisory Vote |
I have reviewed MTX’s proxy and found it very transparent and readable. Our group has no qualms about any aspect of MTX corporate governance or executive compensation program. |
We have generally been very happy with MTX as a stock and a company, and specifically regarding corporate governance and disclosures. |
It’s good you are doing this....proactive and positive...this action alone speaks volumes in my book! |
I think you guys are good operators, and that you are working hard to create shareholder value. So keep doing what you are doing! |
We have never had a major problem with MTX, either in terms of disclosure or incentive based compensation. |
I think your overall disclosure is great, especially for a company of your size. |
Good executive summary, especially the business highlights section. |
I like the candid summary of the company’s performance and the historical challenges it has faced. |
MTX should be commended for its leading position on Sustainability. We often point to your Sustainability Report as an example other companies should follow. |
40 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
What We Pay and Why: Elements of Our Compensation Program for Named Executive Officers |
2014 Target Direct Remuneration Mix(1) | ||||||
At- | Short- | Long- | ||||
Name | Fixed | Risk | Term | Term | Cash | Equity |
J.C. Muscari | 18% | 82% | 36% | 64% | 62% | 38% |
D.T. Dietrich | 24% | 76% | 43% | 57% | 66% | 34% |
D.J. Monagle | 23% | 77% | 40% | 60% | 64% | 36% |
G.L. Castagna(2) | 31% | 69% | 55% | 45% | 73% | 27% |
T.J. Meek | 25% | 75% | 44% | 56% | 67% | 33% |
R.S. Wetherbee | 100% | 0% | 100% | 0% | 100% | 0% |
(1) | The only fixed component of total direct remuneration at the Company is base salary. All other elements of total direct remuneration are performance-based and at risk (not guaranteed). The short-term components are base salary and annual incentives. The cash component includes base salary, annual incentives and Performance Units (which are denominated in and pay out in cash). |
(2) | Mr. Castagna was an executive of AMCOL International prior to the Company’s acquisition of AMCOL on May 9, 2014. Mr. Castagna’s Target Direct Remuneration Mix is based on his annualized base salary paid by the Company and annualized awards under the Company’s long-term incentive plan, and excludes a special award that was granted to Mr. Castagna upon his election as the Company’s Senior Vice President and Managing Director, Performance Materials. |
Element of Compensation Program | Description | How This Element Promotes Company Objectives/ Positioning vs. Market | ||
Annual Compensation: | ||||
—Base Salary | Fixed annual compensation that is certain as to payment; provides continuous income to meet ongoing living costs. | Intended to be competitive with marketplace, to aid in recruitment and retention. | ||
—Annual Incentives | Offers opportunity to earn performance-based compensation for achieving pre-set annual goals. | Motivate and reward achievement of corporate objectives. | ||
Long-Term Compensation: | ||||
—Stock Options | Stock options granted at fair market value on date of grant with ratable vesting over three years. This represents approximately 20% of target long-term incentive compensation for each individual. | More highly leveraged risk and reward alignment with shareholder value; vesting terms and holding requirements promote retention and a strong linkage to the long-term interests of shareholders. | ||
—DRSUs | Full value grant of stock units with ratable vesting ver three years. This represents approximately 40% of target long-term incentive compensation for each individual. | Intended to increase long-term equity ownership and to focus executives on providing shareholders with superior investment returns; vesting terms and holding requirements promote retention and a strong linkage to the long-term interests of shareholders. | ||
—Performance Units | Units pay out in cash based on three-year performance goals. This represents approximately 40% of target long-term incentive compensation for each individual. | Units earned based on performance metrics that are believed to be key to achieving success in the Company’s strategies. | ||
Other Compensation Elements: | ||||
—Retirement Income | Qualified and non-qualified defined benefit and qualified defined contribution plans intended to provide for replacement of annual compensation with pension or lump-sum payments upon retirement. | Fair and competitive program designed to provide basic retirement benefits and encourage long-term service. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 41 |
COMPENSATION DISCUSSION AND ANALYSIS |
—Deferred Compensation | Nonfunded deferred compensation plan that mirrors the Company’s qualified defined contribution plan and allows for an annual election of deferrals of salary and bonus. Additionally, the program provides a second and separate election opportunity for the deferral of annual base salary and bonus for which these deferrals are credited with interest only. | Modest program that allows executives to have same level of benefits as other participants not subject to IRS limits. | ||
—Severance Payments | Payments and benefits upon termination of an executive’s employment in specified circumstances, including after a change in control. | Intended to provide assurance of financial security to attract lateral hires and to retain executives, especially in disruptive circumstances, such as a Cange in control and leadership transitions; encour ages management to consider transactions that could benefit shareholders. | ||
—Benefits | Health and welfare benefits. | Fair and competitive programs to provide family protection, facilitate recruitment and retention. | ||
—Perquisites | Modest personal benefits limited to financial counseling. | Highly desired benefits which can represent cost- effective elements of compensation. We do not provide tax gross-ups for perquisites. |
42 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
Name | 2014 Base Salary | Target Percentage of Base Salary | Target Annual Incentive Compensation | Maximum Annual Incentive Compensation | Performance Factor Achieved | 2014 Incentive Compensation Earned | |||||||||||||
J.C. Muscari | $ | 900,000 | 100 | % | $ | 900,000 | $ | 1,800,000 | 135.2 | % | $ | 1,217,100 | |||||||
D.T Dietrich | $ | 445,960 | 75 | % | $ | 334,470 | $ | 668,940 | 126.0 | % | $ | 421,400 | |||||||
D.J. Monagle | $ | 440,670 | 75 | % | $ | 330,500 | $ | 661,000 | 119.8 | % | $ | 395,900 | |||||||
G.L. Castagna | $ | 420,000 | 75 | % | $ | 315,000 | $ | 630,000 | 124.7 | % | $ | 392,800 | |||||||
T.J. Meek | $ | 428,170 | 75 | % | $ | 321,130 | $ | 642,260 | 124.0 | % | $ | 398,200 |
Company Financial Targets | Business Unit Financial Targets | Personal Performance | |||||||||||||||||
Name | Weighting | Achievement | Weighting | Achievement | Weighting | Achievement | |||||||||||||
J.C. Muscari | 70 | % | 128.9 | % | — | — | 30 | % | 150.0 | % | |||||||||
D.T Dietrich | 70 | % | 128.9 | % | — | — | 30 | % | 119.2 | % | |||||||||
D.J. Monagle | 50 | % | 128.9 | % | 20 | % | 98.9 | % | 30 | % | 118.5 | % | |||||||
T.J. Meek | 70 | % | 128.9 | % | — | — | 30 | % | 112.5 | % |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 43 |
COMPENSATION DISCUSSION AND ANALYSIS |
● | the performance target range for threshold and maximum performance, representing a weighted average composite of the Business Unit minimum (threshold) and maximum performance, respectively, |
● | the Company performance target if each of the Business Unit level performance factors were achieved at 100% of target, and |
● | actual 2014 performance, representing the weighted average composite performance of the Business Units. |
Threshold | Target | Maximum | Actual 2014 Performance* | |
Operating Income | $90.2 million | $130.8 million | $148.0 million | $132.8 million |
Return on Capital | 7.3% | 10.1% | 11.2% | 10.3% |
* | Does not include performance of the Business Units that were acquired in the acquisition of AMCOL. |
● | Paper PCC Business Unit: 98.9% |
● | Refractories Business Unit: 167.8% |
● | Performance Minerals Business Unit: 126.5% |
● | Overall Company: 128.9%. |
44 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
● | Mr. Muscari: The Compensation Committee reviewed Mr. Muscari’s personal goals and objectives and assessed his performance versus the objectives in areas including, but not limited to, acquiring and integrating AMCOL, succession planning and development of the Company’s leadership team, improving the Company’s safety environment, and maintaining a high performance culture in advancing operational excellence and increasing productivity and earnings. Collectively, Mr. Muscari’s performance against his personal performance objectives was 150.0% of target. |
● | Mr. Dietrich: Mr. Muscari and the Compensation Committee reviewed Mr. Dietrich’s 2014 personal goals and objectives and assessed his performance versus the objectives in areas such as expense reduction, achievement of Hoshin Plans (Hoshin is a structured methodology for executing and achieving strategic goals and objectives) and overall leadership. For Mr. Dietrich, controllable expenses for his resource unit increased in 2014 by 2.3% from 2013 levels, and his target was an increase of 1.8%, which resulted in a payout of 94% for this component of the award. Collectively, Mr. Dietrich’s performance against his personal performance objectives was 119.2% of target. |
● | Mr. Monagle: Mr. Muscari and the Compensation Committee reviewed Mr. Monagle’s 2014 personal performance goals and objectives and assessed his performance versus the objectives in areas such as Operational Excellence deployment, expense management, productivity and overall leadership. For Mr. Monagle, controllable expenses for his Business Unit decreased in 2014 by 1.2% from 2013 levels, and his target was an increase of 0.9%, which resulted in a pay-out of 200% for this component of the award. Productivity improvements measured as Tons Produced per Manufacturing Hour decreased 1.0% from 2013 levels and his target was an improvement of 4.0% which resulted in a payout of 64% for this component of the award. Collectively, Mr. Monagle’s performance against his personal objectives was 118.5% of target. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 45 |
COMPENSATION DISCUSSION AND ANALYSIS |
● | Mr. Meek: Mr. Muscari and the Compensation Committee reviewed Mr. Meek’s 2014 personal goals and objectives and assessed his performance versus the objectives in areas such as expense reduction, achievement of Hoshin Plans and overall leadership. For Mr. Meek, controllable expenses for his resource units increased in 2014 by 6.9% from 2013 levels, and his target was a decrease of 2.3%, which resulted in a payout of 37.5% for this component of the award. Collectively, Mr. Meek’s performance against his personal objectives was 112.5% of target. |
46 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
Grant Date | Three Year Performance Period | Actual Payout as a Percentage of Payout at Target Performance |
2012 | 2012 – 2014 | 266% |
2011 | 2011 – 2013 | 220% |
2010 | 2010 – 2012 | 150% |
2009 | 2009 – 2011 | 78% |
2008 | 2008 – 2010 | 40% |
2007 | 2007 – 2009 | 0% |
2006 | 2006 – 2008 | 0% |
2005 | 2005 – 2007 | 0% |
● | The Company’s ROC performance as compared to target ROC, which is set to exceed the Company’s weighted average cost of capital. |
● | The Company’s stock performance as compared to the S&P MidCap 400 Index and the Russell 2000 Index, based on total shareholder return for the period from January 1, 2014 to December 31, 2016. For this purpose, the total shareholder return of the S&P MidCap 400 Index and the Russell 2000 Index are weighted equally. |
● | The Company’s stock performance as compared to our Peer Company Index, based on total shareholder return for the period from January 1, 2014 to December 31, 2016. Commencing in 2013, we began using a Peer Company Index that is consistent with the new comparator group of peer companies used for our overall compensation benchmarking, which is described in detail below under “—How We Make Compensation Decisions—Comparator Group Companies.” |
ROC Performance* | Component Achievement | ||||
<7.5% | $ | 0 | |||
8.5% | $ | 75 | |||
9.5% | $ | 100 | |||
10.5% | $ | 200 | |||
11.5+% | $ | 300 |
* | Assumes weighted average cost of capital of 9.0% at time of vesting. |
Performance as a % of Target | Component Achievement | ||||
<75% | $ | 0 | |||
75% | $ | 75 | |||
100% | $ | 100 | |||
120% | $ | 200 | |||
130+% | $ | 300 |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 47 |
COMPENSATION DISCUSSION AND ANALYSIS |
Performance as a % of Target | Component Achievement | ||||
<75% | $ | 0 | |||
75% | $ | 40 | |||
100% | $ | 90 | |||
110% | $ | 100 | |||
120% | $ | 200 | |||
130+% | $ | 300 |
48 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
How We Make Compensation Decisions |
● | Provide a market-based, competitive total compensation opportunity that allows the Company to attract, retain, motivate and reward highly skilled executives; |
● | establish a strong pay-for-performance culture based on the achievement of key business objectives and reinforced by incentive-based pay; and |
● | strengthen the linkage between executive and shareholder interests through the usage of equity awards and executive stock ownership. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 49 |
COMPENSATION DISCUSSION AND ANALYSIS |
A. Schulman, Inc. | Harsco Corporation |
Albermarle Corporation | Innophos Holdings, Inc. |
AMCOL International Corporation | Koppers Holdings Inc. |
Arch Coal, Inc. | Kraton Performance Polymers, Inc. |
Cabot Corporation | Kronos Worldwide, Inc. |
Century Aluminum Company | Molycorp, Inc. |
Compass Minerals International, Inc. | Olin Corporation |
Cytec Industries Inc. | OM Group, Inc. |
Ferro Corporation | Sensient Technologies Corp. |
H.B. Fuller Company |
50 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS |
● | Chief Executive Officer—six times base salary (within five years of election) |
● | Chief Financial Officer and Chief Operating Officer –four times base salary (within five years of election) |
● | Other Elected Officers—three times base salary (within five years of election) |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 51 |
COMPENSATION DISCUSSION AND ANALYSIS |
Duane R. Dunham, Chair | |
John J. Carmola | |
Robert L. Clark | |
Barbara R. Smith |
52 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
AND DIRECTORS
Change in | ||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||
and Non-qualified | ||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||
Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||
Name and | Salary | Awards | Awards | Compensation* | Earnings | Compensation | Total | |||||||||||||||||
Principal Position | Year | ($) | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($) | ||||||||||||||||
(a) | (b) | (c) | (e) | (f) | (g) | (h) | (i) | (j) | ||||||||||||||||
Joseph C. Muscari | 2014 | $ | 900,000 | $ | 1,278,070 | $ | 966,283 | $ | 4,617,676 | $ | 192,726 | $ | 49,126 | $ | 8,003,881 | |||||||||
Chairman and | 2013 | $ | 900,000 | $ | 1,278,049 | $ | 935,350 | $ | 4,207,876 | $ | 108,348 | $ | 50,956 | $ | 7,480,579 | |||||||||
Chief Executive Officer*** | 2012 | $ | 900,000 | $ | 1,397,767 | $ | 711,623 | $ | 3,130,740 | $ | 92,700 | $ | 837,314 | $ | 7,070,512 | |||||||||
Douglas T. Dietrich | 2014 | $ | 445,962 | $ | 425,985 | $ | 317,560 | $ | 1,351,245 | $ | 69,089 | $ | 27,946 | $ | 2,637,787 | |||||||||
Senior Vice President, | 2013 | $ | 416,077 | $ | 406,005 | $ | 292,714 | $ | 1,159,210 | $ | 12,709 | $ | 26,676 | $ | 2,313,391 | |||||||||
Finance and Treasury, | 2012 | $ | 385,077 | $ | 393,737 | $ | 195,972 | $ | 623,550 | $ | 25,800 | $ | 25,432 | $ | 1,649,568 | |||||||||
Chief Financial Officer | ||||||||||||||||||||||||
D.J. Monagle, III | 2014 | $ | 440,673 | $ | 460,016 | $ | 362,998 | $ | 1,445,297 | $ | 87,397 | $ | 23,954 | $ | 2,820,335 | |||||||||
Senior Vice President, | 2013 | $ | 407,385 | $ | 423,966 | $ | 310,301 | $ | 1,322,495 | $ | 15,050 | $ | 23,985 | $ | 2,503,182 | |||||||||
Chief Operating Officer – | 2012 | $ | 386,923 | $ | 431,990 | $ | 219,825 | $ | 787,840 | $ | 30,300 | $ | 27,092 | $ | 1,883,970 | |||||||||
Specialty Minerals Inc. | ||||||||||||||||||||||||
and Minteq Group | ||||||||||||||||||||||||
Gary L. Castagna**** | 2014 | $ | 265,789 | $ | 1,660,036 | $ | 112,485 | $ | 392,800 | $ | 138,463 | $ | 15,527 | $ | 2,585,100 | |||||||||
Senior Vice President and | ||||||||||||||||||||||||
Managing Director, | ||||||||||||||||||||||||
Performance Materials | ||||||||||||||||||||||||
Thomas J. Meek | 2014 | $ | 428,173 | $ | 381,989 | $ | 287,299 | $ | 1,314,762 | $ | 66,179 | $ | 30,635 | $ | 2,509,037 | |||||||||
Senior Vice President, General | 2013 | $ | 406,731 | $ | 364,013 | $ | 264,906 | $ | 1,145,927 | $ | 27,022 | $ | 29,692 | $ | 2,238,291 | |||||||||
Counsel and Secretary, | 2012 | $ | 382,539 | $ | 360,949 | $ | 183,713 | $ | 793,900 | $ | 29,700 | $ | 28,617 | $ | 1,779,418 | |||||||||
Chief Compliance Officer | ||||||||||||||||||||||||
Robert S. Wetherbee | 2014 | $ | 204,615 | $ | — | $ | — | $ | — | $ | — | $ | 41,674 | $ | 246,289 | |||||||||
Former President and | 2013 | $ | 538,462 | $ | 600,003 | $ | 441,415 | $ | 500,000 | $ | — | $ | 103,464 | $ | 2,183,344 | |||||||||
Chief Executive Officer |
* | Non-equity Incentive plan compensation consists of the following: |
2014 Annual | 2014 Long-term | |||||||||||
Name | Incentive Bonus | Incentive Payout | Total | |||||||||
J.C. Muscari | $ | 1,217,100 | $ | 3,400,576 | $ | 4,617,676 | ||||||
D.T. Dietrich | $ | 421,400 | $ | 929,845 | $ | 1,351,245 | ||||||
D.J. Monagle | $ | 395,900 | $ | 1,049,397 | $ | 1,445,297 | ||||||
G.L. Castagna | $ | 392,800 | $ | — | $ | 392,800 | ||||||
T.J. Meek | $ | 398,200 | $ | 916,562 | $ | 1,314,762 | ||||||
R. S. Wetherbee | $ | — | $ | — | $ | — |
** | There were no discretionary bonuses paid to any of the named executive officers in 2012, 2013 or 2014. Accordingly, the column entitled “Bonus” has been omitted from this table. |
*** | Mr. Muscari was Executive Chairman of the Company from March 2013 to February 2014. |
**** | Includes compensation commencing May 10, 2014. Mr. Castagna became an employee of the Company on May 10, 2014 in connection with the Company’s acquisition of AMCOL International Corporation. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 53 |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
(1) | Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The Company calculates the “fair value” of stock awards under FASB ASC Topic 718 by multiplying the number of shares by the average of the high and low price of the Company’s common stock on the New York Stock Exchange on the grant date. See Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 for the assumptions made in determining FASB ASC Topic 718 values. |
(2) | Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The Company calculates the “fair value” of option awards under FASB ASC Topic 718 using the Black-Scholes valuation model. See Note 2 to the Consolidated Financial Statements in our Annual Report for the fiscal year ended December 31, 2014 for the assumptions made in determining FASB ASC Topic 718 values. |
(3) | Amounts shown for 2014 represent the sum of (i) 2013 Annual Incentive awards under the 2014 Annual Incentive Plan and (ii) the value of the Performance Units granted by the Company to the named executive officers in 2012 for the performance period 2012-2014, which vested on December 31, 2014, as detailed in the above note (*). |
(4) | Amounts shown in column (h) are solely an estimate of the increase in actuarial present value during 2014 of the named executive officer’s normal retirement age (defined as the earliest age at which the executive can receive a benefit unreduced for early retirement) accumulated benefit under the Company’s Retirement Plan and the Supplemental Retirement Plan, in the cases of the named executive officers other than Mr. Castagna and Mr. Wetherbee, and the AMCOL Retirement Plan and AMCOL Supplemental Retirement Plan for 2014, in the case of Mr. Castagna. Mr. Wetherbee did not participate in any Company pension plans in 2014. The amount attributable to each plan is shown in the table below: |
Change in Pension Value | ||||||||||
Supplemental | ||||||||||
Name | Retirement Plan | Retirement Plan | Total | |||||||
J.C. Muscari | $ | 23,766 | $ | 168,960 | $ | 192,726 | ||||
D.T. Dietrich | $ | 25,191 | $ | 43,898 | $ | 69,089 | ||||
D.J. Monagle | $ | 36,555 | $ | 50,842 | $ | 87,397 | ||||
T.J. Meek | $ | 22,400 | $ | 43,779 | $ | 66,179 | ||||
AMCOL | ||||||||||
AMCOL | Supplemental | |||||||||
Name | Retirement Plan | Retirement Plan | Total | |||||||
G.L. Castagna* | $ | 36,145 | $ | 102,318 | $ | 138,463 |
The change in pension values for Mr. Muscari, Mr. Dietrich, Mr. Monagle, and Mr. Meek are calculated under the cash balance formula, which is described in more detail in the narrative following the Pension Benefits table below. The accumulated benefit under the cash balance formula equals the projected annuity benefit payable at normal retirement age, assuming that the executive remains in employment but receives no future pay credits. The projected annuity benefit is calculated by first projecting the end-of-year cash balance account to normal retirement age using annual interest credits of 1.13% for 2014 calculations and 1.18% for 2013 calculations. The projected cash balance is then converted to an annuity using the September 2014 rates (1.40% for 5 years, 3.98% for next 15 years, 5.04% thereafter) and the 2015 IRS prescribed mortality table for 2014 calculations, and September 2013 rates (1.40% for 5 years, 4.66% for next 15 years, 5.62% thereafter) and the 2014 IRS prescribed mortality table for 2013 calculations. |
54 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
Discount rate: | 2014 year end: | 3.65% for the qualified plan | ||
3.65% for the nonqualified plan | ||||
2013 year end: | 4.45% for the qualified plan | |||
4.45% for the nonqualified plan | ||||
2012 year end: | 3.60% for the qualified plan | |||
3.60% for the nonqualified plan | ||||
Mortality table: | 2014 year end: | “RP-2014 Mortality Table with Generational Projection | ||
(Scale MP-2014)” - post retirement only | ||||
2013 year end: | “IRS 2014 Static Mortality Table” - post retirement only | |||
2012 year end: | “IRS 2013 Static Mortality Table” - post retirement only |
Discount rate: | 2014 year end: | 4.30% for the qualified plan | ||
4.21% for the nonqualified plan | ||||
Mortality table: | 2014 year end: | “RP-2014 fully generational table projected using scale MP-2014” |
(5) | All Other Compensation for 2014 consists of the following: |
Supplemental | |||||||||||||
401 (k) plan | Savings Plan | ||||||||||||
Name | Perquisites* | Match** | Match | Total | |||||||||
J.C. Muscari | $ | 6,880 | $ | 10,400 | $ | 31,846 | $ | 49,126 | |||||
D.T. Dietrich | $ | 1,646 | $ | 10,400 | $ | 15,900 | $ | 27,946 | |||||
D.J. Monagle | $ | 5,000 | $ | 10,400 | $ | 8,554 | $ | 23,954 | |||||
G.L. Castagna | $ | 14,083 | $ | 1,444 | $ | — | $ | 15,527 | |||||
T.J. Meek | $ | 5,000 | $ | 10,400 | $ | 15,235 | $ | 30,635 | |||||
R.S. Wetherbee | $ | 29,551 | $ | 10,400 | $ | 1,723 | $ | 41,674 |
* | Consists solely of financial counseling, except for $1,880 in medical reimbursements for Mr. Muscari pursuant to his employment agreement, $9,083 for Mr. Castagna for automobile allowance from May 10, 2014 through December 31, 2014 (a carryover program from AMCOL that has since been discontinued), and $29,551 to Mr. Wetherbee for reimbursement of relocation expenses. |
** | Consists of plan match under the Savings and Investment Plan, except for Mr. Castagna which consists of plan match under the AMCOL International Corporation Savings Plan from May 10, 2014 through December 31, 2014. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 55 |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
All Other | All Other | |||||||||||||||||||||||||||||
Stock | Option | |||||||||||||||||||||||||||||
Awards: | Awards: | Exercise | Grant Date | |||||||||||||||||||||||||||
Estimated Future Payouts Under | Number of | Number of | or Base | Fair Value | ||||||||||||||||||||||||||
Non-Equity Incentive Plan | Shares of | Securities | Grant | Price of | of Stock | |||||||||||||||||||||||||
Performance | Awards | Stock or | Underlying | Date | Option | and Option | ||||||||||||||||||||||||
Grant | Units | Threshold | Target | Maximum | Units | Options | Closing | Awards | Awards | |||||||||||||||||||||
Name* | Date | (#) | ($) | ($) | ($) | (#)(3) | (#)(4) | Price | ($/Sh)(5) | ($)(6) | ||||||||||||||||||||
J.C. Muscari | (1) | $ | 225,000 | $ | 900,000 | $ | 1,800,000 | |||||||||||||||||||||||
1/22/14 | (2) | 12,800 | $ | 960,000 | $ | 1,280,000 | $ | 3,840,000 | ||||||||||||||||||||||
1/22/14 | 22,049 | (7) | $ | 1,278,070 | ||||||||||||||||||||||||||
1/22/14 | 42,405 | (8) | $ | 58.15 | $ | 57.97 | $ | 966,283 | ||||||||||||||||||||||
D.T. Dietrich | (1) | $ | 83,600 | $ | 334,470 | $ | 668,940 | |||||||||||||||||||||||
1/22/14 | (2) | 4,260 | $ | 319,500 | $ | 426,000 | $ | 1,278,000 | ||||||||||||||||||||||
1/22/14 | 7,349 | $ | 425,985 | |||||||||||||||||||||||||||
1/22/14 | 13,936 | $ | 58.15 | $ | 57.97 | $ | 317,560 | |||||||||||||||||||||||
D.J. Monagle | (1) | $ | 82,600 | $ | 330,500 | $ | 661,000 | |||||||||||||||||||||||
1/22/14 | (2) | 4,400 | $ | 345,000 | $ | 460,000 | $ | 1,380,000 | ||||||||||||||||||||||
1/22/14 | 7,591 | $ | 440,012 | |||||||||||||||||||||||||||
1/22/14 | 14,598 | $ | 58.15 | $ | 57.97 | $ | 332,645 | |||||||||||||||||||||||
4/1/14 | 200 | 307 | $ | 20,004 | ||||||||||||||||||||||||||
4/1/14 | 1,180 | $ | 65.75 | $ | 65.16 | $ | 30,353 | |||||||||||||||||||||||
T.J. Meek | (1) | $ | 80,300 | $ | 321,130 | $ | 642,260 | |||||||||||||||||||||||
1/22/14 | (2) | 3,990 | $ | 299,250 | $ | 399,000 | $ | 1,197,000 | ||||||||||||||||||||||
1/22/14 | 6,590 | $ | 381,989 | |||||||||||||||||||||||||||
1/22/14 | 12,608 | $ | 58.15 | $ | 57.97 | $ | 287,299 | |||||||||||||||||||||||
G. Castagna | (1) | $ | 78,750 | $ | 315,000 | $ | 630,000 | |||||||||||||||||||||||
6/3/14 | (2) | 1,600 | $ | 120,000 | $ | 160,000 | $ | 480,000 | ||||||||||||||||||||||
6/3/14 | 27,096 | $ | 1,660,036 | |||||||||||||||||||||||||||
6/3/14 | 4,696 | $ | 60.60 | $ | 61.27 | $ | 112,485 | |||||||||||||||||||||||
R. Wetherbee | — |
* | The Company did not have any equity incentive plans during 2014, nor does it currently have such plans. Accordingly, the columns entitled “Estimated Future Payouts Under Equity Incentive Plan Awards” have been omitted from this table. |
(1) | Represents threshold, target and maximum payout levels under our 2014 Annual Incentive Plan. The actual amount of incentive award earned by each named executive officer in 2014 is reported in the Summary Compensation Table under note (*). For a more detailed discussion of the 2014 Annual Incentive Plan, see “Compensation Discussion and Analysis—What We Pay and Why: Elements of Our Compensation Program for Named Executive Officer—Annual Incentives.” |
(2) | Represents the number of Performance Units granted to the named executive officers in 2014 under the Company’s long-term incentive program and estimated threshold, target and maximum payouts. Except as otherwise noted, Performance Units vest at the end of a three-year performance period. For the 2014-2016 performance period, the value of each performance unit is based on on the Company’s ROC performance and the Company’s stock comparisons to the S&P MidCap 400 Index and the Russell 2000 Index and to a Peer Group Index. If performance does not meet minimum threshold levels, the Performance Unit will be worth $0. At threshold performance, a Performance Unit is worth $75; at target performance, $100 per unit; at maximum performance, $300 per unit. The Performance Unit value for the 2014-2016 performance period will be paid out (subject to meeting the above performance criteria) in early 2017. For a more detailed discussion of Performance Units, see “Compensation Discussion and Analysis—What We Pay and Why: Elements of Our Compensation Program for Named Executive Officer—Long-term Incentives.” |
(3) | Except as otherwise noted, DRSUs vest in three equal annual installments beginning on the first anniversary of the grant date (subject to accelerated vesting in specified circumstances). DRSUs are not credited with dividends or dividend equivalents prior to vesting. |
(4) | Except as otherwise noted, options vest in three equal annual installments beginning on the first anniversary of the grant date and expire on the tenth anniversary of the grant date (subject to accelerated vesting in specified circumstances). |
56 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
(5) | The exercise price of option awards is determined by the average of the high and low price of the Company’s common stock on the grant date. Accordingly, the exercise price of option awards granted on January 22, 2014 is $57.97, on April 1, 2014 is $65.16, and on June 3, 2014 is $61.27. The closing price of the Company’s common stock on January 22, 2014 was $58.15, on April 1, 2014 was $65.75, and on June 3, 2014 was $60.60. |
(6) | The grant date fair value of each DRSU is determined by the average of the high and low price of the Company’s common stock on the grant date. Accordingly, the per share grant date fair value of each DRSU granted on January 22, 2014 is $57.97, on April 1, 2014 is $65.16 and on June 3, 2014 is $61.27. The grant date fair value, calculated in accordance with FASB ASC Topic 718 using the Black-Scholes valuation method, of each option granted on January 22, 2014 is $22.79, on April 1, 2014 is $25.72 and on June 3, 2014 is $23.95. |
(7) | DRSUs granted in 2014 vest on the first anniversary of the grant date, subject to accelerated vesting in specified circumstances. |
(8) | Options granted in 2014 vest on the first anniversary of the grant date and expire on the tenth anniversary of the grant date, subject to accelerated vesting in specified circumstances. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 57 |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
Option Awards(1) | Stock Awards | |||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||
Equity | Plan | |||||||||||||||||||||||||||||||
Incentive | Awards: | |||||||||||||||||||||||||||||||
Plan | Market or | |||||||||||||||||||||||||||||||
Equity | Awards: | Payout | ||||||||||||||||||||||||||||||
Incentive | Number of | Value of | ||||||||||||||||||||||||||||||
Plan | Market | Unearned | Unearned | |||||||||||||||||||||||||||||
Awards: | Number of | Value of | Shares, | Shares, | ||||||||||||||||||||||||||||
Number of | Number of | Number of | Shares or | Shares or | Units or | Units or | ||||||||||||||||||||||||||
Securities | Securities | Securities | Units of | Units of | Other | Other | ||||||||||||||||||||||||||
Underlying | Underlying | Underlying | Stock | Stock | Rights | Rights | ||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | That | That | That | That | |||||||||||||||||||||||||
Options | Options | Unearned | Exercise | Option | Have Not | Have Not | Have Not | Have Not | ||||||||||||||||||||||||
Exercisable | Unexercisable | Options | Price | Expiration | Vested | Vested | Vested | Vested | ||||||||||||||||||||||||
Name | (#) | (#) | (#) | ($) | Date | (#) | ($)(2) | (#) | ($) | |||||||||||||||||||||||
J.C. Muscari | 67,672 | — | N/A | $ | 32.23 | 1/26/2021 | N/A | N/A | ||||||||||||||||||||||||
66,292 | — | $ | 32.03 | 1/25/2022 | ||||||||||||||||||||||||||||
59,301 | — | $ | 41.29 | 1/22/2023 | ||||||||||||||||||||||||||||
— | 42,405 | $ | 57.97 | 1/22/2024 | ||||||||||||||||||||||||||||
22,049 | (3) | $ | 1,531,303 | |||||||||||||||||||||||||||||
D.T. Dietrich | 4,200 | — | N/A | $ | 32.68 | 8/01/2017 | N/A | N/A | ||||||||||||||||||||||||
10,000 | — | $ | 32.08 | 2/27/2018 | ||||||||||||||||||||||||||||
13,740 | — | $ | 24.56 | 1/27/2020 | ||||||||||||||||||||||||||||
14,894 | — | $ | 32.23 | 1/26/2021 | ||||||||||||||||||||||||||||
12,172 | 6,084 | $ | 32.03 | 1/25/2022 | ||||||||||||||||||||||||||||
6,186 | 12,372 | $ | 41.29 | 1/22/2023 | ||||||||||||||||||||||||||||
— | 13,936 | $ | 57.97 | 1/22/2024 | ||||||||||||||||||||||||||||
17,650 | (4) | $ | 1,225,793 | |||||||||||||||||||||||||||||
D. J. Monagle | 2,200 | — | N/A | $ | 32.31 | 4/25/2017 | N/A | N/A | ||||||||||||||||||||||||
8,000 | — | $ | 32.08 | 2/27/2018 | ||||||||||||||||||||||||||||
24,000 | — | $ | 19.86 | 1/28/2019 | ||||||||||||||||||||||||||||
19,100 | — | $ | 24.56 | 1/27/2020 | ||||||||||||||||||||||||||||
18,364 | — | $ | 32.23 | 1/26/2021 | ||||||||||||||||||||||||||||
13,652 | 6,826 | $ | 32.03 | 1/25/2022 | ||||||||||||||||||||||||||||
6,558 | 13,115 | $ | 41.29 | 1/22/2023 | ||||||||||||||||||||||||||||
— | 14,598 | $ | 57.97 | 1/22/2024 | ||||||||||||||||||||||||||||
— | 1,180 | $ | 65.16 | 4/01/2024 | ||||||||||||||||||||||||||||
18,853 | (5) | $ | 1,309,341 | |||||||||||||||||||||||||||||
T.J. Meek | 10,000 | — | N/A | $ | 22.18 | 9/1/2019 | N/A | N/A | ||||||||||||||||||||||||
20,000 | — | $ | 24.56 | 1/27/2020 | ||||||||||||||||||||||||||||
15,250 | $ | 32.23 | 1/26/2021 | |||||||||||||||||||||||||||||
11,410 | 5,704 | $ | 32.03 | 1/25/2022 | ||||||||||||||||||||||||||||
5,599 | 11,196 | $ | 41.29 | 1/22/2023 | ||||||||||||||||||||||||||||
— | 12,608 | $ | 57.97 | 1/22/2024 | ||||||||||||||||||||||||||||
15,901 | (6) | $ | 1,104,324 | |||||||||||||||||||||||||||||
G.L. Castagna | — | 4,696 | N/A | $ | 61.27 | 6/03/2024 | ||||||||||||||||||||||||||
27,096 | (7) | $ | 1,881,817 | |||||||||||||||||||||||||||||
R. Wetherbee | — | — | N/A | — | — | — | N/A | N/A |
(1) | Except as otherwise noted, option awards vest in three equal annual installments beginning on the first anniversary of the grant date and expire on the tenth anniversary of the grant date, subject to accelerated vesting in specified circumstances. The grant date is ten years earlier than the expiration date reported in the Option Expiration column. |
(2) | The market value is calculated by multiplying the number of DRSUs by $69.45, the closing price of the Company’s common stock on December 31, 2014. |
58 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
(3) | Consists of unvested portions of the following: 22,049 DRSUs granted on January 22, 2014 and vesting on the first anniversary on January 22, 2015. |
(4) | Consists of unvested portions of the following: 11,240 DRSUs January 25, 2012 and vesting in three equal annual installments beginning January 25, 2013; 9,833 DRSUs granted on January 22, 2013 and vesting in three equal annual installments beginning January 22, 2014; and 7,349 DRSUs granted on January 22, 2014 and vesting in three equal annual installments beginning January 22, 2015. |
(5) | Consists of unvested portions of the following: 12,332 DRSUs granted on January 25, 2012 and vesting in three equal annual installments beginning January 25, 2013;10,268 DRSUs granted on January 22, 2013 and vesting in three equal annual installments beginning January 22, 2014; 7,591 DRSUs granted on January 22, 2014 and vesting in three equal annual installments beginning January 22, 2015; and 307 DRSUs granted on April 1, 2014 and vesting in three equal annual installments beginning April 1, 2015. |
(6) | Consists of unvested portions of the following: 10,304 DRSUs granted on January 25, 2012 and vesting in three equal annual installments beginning January 25, 2013; 8,816 DRSUs granted on January 22, 2013 and vesting in three equal annual installments beginning January 22, 2014; and 6,590 DRSUs granted on January 22, 2014 and vesting in three equal annual installments beginning January 22, 2015. |
(7) | Consists of invested portions of the following: 27,096 DRSUs granted on June 3, 2014 and vesting in three equal annual installments beginning June 3, 2015. |
Option Awards | Stock Awards | ||||||||||||
Number of Shares | Value Realized | Number of Shares | Value Realized | ||||||||||
Acquired on Exercise | on Exercise | Acquired on Vesting | on Vesting | ||||||||||
Name | (#) | ($) | (#)(1) | ($) | |||||||||
J.C. Muscari | 210,000 | 9,535,750 | 30,953 | 1,794,191 | |||||||||
D.T. Dietrich | — | — | 10,126 | 573,463 | |||||||||
D.J. Monagle | 4,200 | 179,473 | 11,297 | 639,319 | |||||||||
T.J. Meek | — | — | 9,537 | 539,814 | |||||||||
G.L. Castagna | — | — | — | — | |||||||||
R.S. Wetherbee | — | — | — | — |
(1) | Certain of these shares were withheld for the payment of taxes. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 59 |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
Present Value of | ||||||||||||||
Number of Years | Accumulated | Payments During | ||||||||||||
Credited Service | Benefit | Last Fiscal Year | ||||||||||||
Name | Plan Name | (#) | ($)(1) | ($) | ||||||||||
J.C. Muscari | Retirement Plan | 7.8 | $ | 110,494 | — | |||||||||
Supplemental Retirement Plan | 7.8 | $ | 692,180 | — | ||||||||||
D.T. Dietrich | Retirement Plan | 7.4 | $ | 67,666 | — | |||||||||
Supplemental Retirement Plan | 7.4 | $ | 95,732 | — | ||||||||||
D.J. Monagle | Retirement Plan | 12.0 | $ | 124,895 | — | |||||||||
Supplemental Retirement Plan | 12.0 | $ | 122,752 | — | ||||||||||
G.L. Castagna | AMCOL Retirement Plan | 13.8 | $ | 301,396 | — | |||||||||
AMCOL Supplemental Retirement Plan | 13.8 | $ | 475,995 | — | ||||||||||
T.J. Meek | Retirement Plan | 5.3 | $ | 68,444 | — | |||||||||
Supplemental Retirement Plan | 5.3 | $ | 107,657 | — | ||||||||||
R.S. Wetherbee | — | — | $ | — | — |
60 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||
Contributions | Contributions | Earnings | Withdrawals/ | Balance | ||||||||||||||||
in Last FY | in Last FY | in Last FY | Distributions | at Last FYE | ||||||||||||||||
Name | ($)(1) | ($)(2) | ($)(3) | ($) | ($) | |||||||||||||||
J.C. Muscari | 47,769 | 31,846 | 138,118 | 0 | 1,339,509 | |||||||||||||||
D.T. Dietrich | 19,875 | 15,900 | 22,563 | 0 | 260,031 | |||||||||||||||
D.J. Monagle | 10,692 | 8,554 | 26,532 | 0 | 332,500 | |||||||||||||||
G.L. Castagna | — | — | 12,969 | — | 171,245 | |||||||||||||||
T.J. Meek | 49,986 | 15,235 | 47,478 | 0 | 371,048 | |||||||||||||||
R.S. Wetherbee | 2,154 | 1,723 | 2,971 | –36,524 | 0 |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 61 |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
Upon Termination and Prior to a Change in Control | On or After a Change in Control | |||||||||||||||||||
Name | Voluntary Resignation or “For Cause” Termination | Death, Disability or Retirement | Termination without “Cause” or Resignation for “Good Reason” | No Termination of Employment | Termination without “Cause” or Resignation for “Good Reason” | |||||||||||||||
J.C. Muscari | ||||||||||||||||||||
Severance Payment(1) | $ | 0 | $ | 0 | $ | 3,600,000 | $ | 0 | $ | 18,203,829 | (2) | |||||||||
Benefits(3) | 0 | 0 | 0 | 0 | 39,081 | |||||||||||||||
DRSU Vesting(4) | 0 | 0 | 0 | 0 | 1,531,303 | |||||||||||||||
Stock Option Vesting(5) | 0 | 0 | 0 | 0 | 486,809 | |||||||||||||||
Performance Unit Vesting(6) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
D.T. Dietrich | ||||||||||||||||||||
Severance Payment(1) | $ | 0 | $ | 0 | $ | 1,182,000 | 0 | $ | 2,911,236 | (2) | ||||||||||
Benefits(3) | 0 | 0 | 0 | 0 | 22,086 | |||||||||||||||
DRSU Vesting(4) | 0 | 0 | 0 | 0 | 1,225,793 | |||||||||||||||
Stock Option Vesting(5) | 0 | 0 | 0 | 0 | 736,044 | |||||||||||||||
Performance Unit Vesting(6) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
D.J. Monagle | ||||||||||||||||||||
Severance Payment(1) | $ | 0 | $ | 0 | $ | 1,182,000 | $ | 0 | $ | 3,046,452 | ||||||||||
Benefits(3) | 0 | 0 | 0 | 0 | 50,182 | |||||||||||||||
DRSU Vesting(4) | 0 | 0 | 0 | 0 | 1,309,341 | |||||||||||||||
Stock Option Vesting(5) | 0 | 0 | 0 | 0 | 797,395 | |||||||||||||||
Performance Unit Vesting(6) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
G.L.Castagna | ||||||||||||||||||||
Severance Payment(1) | $ | 0 | $ | 0 | $ | 1,443,750 | $ | 0 | $ | 2,197,650 | (2) | |||||||||
Benefits(3) | 0 | 0 | 0 | 0 | 50,979 | |||||||||||||||
DRSU Vesting(4) | 0 | 0 | 0 | 0 | 1,881,817 | |||||||||||||||
Stock Option Vesting(5) | 0 | 0 | 0 | 0 | 38,413 | |||||||||||||||
Performance Unit Vesting(6) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
T.J. Meek | ||||||||||||||||||||
Severance Payment(1) | $ | 0 | $ | 0 | $ | 1,131,000 | $ | 0 | $ | 2,639,826 | (2) | |||||||||
Benefits(3) | 0 | 0 | 0 | 0 | 39,140 | |||||||||||||||
DRSU Vesting(4) | 0 | 0 | 0 | 0 | 1,104,324 | |||||||||||||||
Stock Option Vesting(5) | 0 | 0 | 0 | 0 | 673,463 | |||||||||||||||
Performance Unit Vesting(6) | 0 | 0 | 0 | 0 | 0 |
62 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 63 |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
64 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-qualified Deferred Compensation Earnings | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||
Joseph C. Breunig | $ | — | $ | — | N/A | N/A | N/A | $ | — | $ | — | ||||||||||||
John J.Carmola | $ | 82,500 | (4) | $ | 80,000 | N/A | N/A | N/A | $ | 302 | $ | 162,802 | |||||||||||
Robert L. Clark | $ | 85,000 | (4) | $ | 80,000 | N/A | N/A | N/A | $ | 1,922 | $ | 166,922 | |||||||||||
Duane R. Dunham | $ | 87,500 | $ | 80,000 | N/A | N/A | N/A | $ | 4,322 | $ | 171,822 | ||||||||||||
Joseph C. Muscari(5) | $ | — | $ | — | N/A | N/A | N/A | $ | 753 | $ | 753 | ||||||||||||
Marc E. Robinson | $ | 82,500 | $ | 80,000 | N/A | N/A | N/A | $ | 956 | $ | 163,456 | ||||||||||||
Barbara R. Smith | $ | 92,500 | $ | 80,000 | N/A | N/A | N/A | $ | 1,453 | $ | 173,953 | ||||||||||||
Donald C. Winter | $ | 61,875 | $ | 80,000 | N/A | N/A | N/A | $ | 287 | $ | 142,162 |
(1) | Amounts shown represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 of phantom stock units awarded to each director pursuant to the Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors calculated by multiplying the number of units by the closing price of our common stock on the grant date. Each Non-Employee Director was granted 1,276.324 phantom stock units on May 14, 2014, on which date the closing price of our common stock was $62.68 per share. Such phantom stock units were non-forfeitable upon grant. |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 65 |
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS |
The following table lists the total number of phantom stock units held by each director as of December 31, 2014. The units are payable in cash upon the director’s termination of service on the Board. (See “Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors” below.) |
J.C. Breunig | 0 | |||
J.J. Carmola | 1,955 | |||
R.L. Clark | 9,999 | |||
D.R. Dunham | 21,973 | |||
J.C. Muscari | 3,774 | |||
M.E. Robinson | 5,110 | |||
B.R. Smith | 7,991 | |||
D.C. Winter | 2,257 |
(2) | The Company does not currently compensate its directors with stock options. |
(3) | All Other Compensation consists of the value of dividends earned, in the amount of $0.05 per unit awarded quarterly and calculated by multiplying the number of units held by the director on the dividend record date. |
(4) | During 2014, Mr. Winter elected to defer his fees, and Dr. Clark, Mr. Carmola, and Ms. Smith elected to partially defer their fees, in units which have the economic value of one share of the Company’s stock as permitted under the Nonfunded Deferred Compensation and Unit Award Plan for Non-Employee Directors. |
(5) | Mr. Joseph C. Muscari served as a non-employee director until his appointment as Chairman and Chief Executive Officer of the Company on March 1, 2007. Since that date, Mr. Muscari is no longer compensated as a director. |
66 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
ITEM 4-APPROVAL OF THE 2015 STOCK AWARD AND INCENTIVE PLAN |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 67 |
ITEM 4-APPROVAL OF THE 2015 STOCK AWARD AND INCENTIVE PLAN |
Number of Shares | ||||||
Remaining | ||||||
Number of Shares | Weighted-Average | Number of Shares | Available for Future | |||
to be Issued Upon Exercise | Exercise Price of | to be Issued Upon Vesting | Issuance | |||
of Outstanding Stock Options | Outstanding Stock Options | of Outstanding DRSUs | Under the Current Plan | |||
951,079 | $ 37.46 | 175,029 | 996,586 |
68 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
ITEM 4-APPROVAL OF THE 2015 STOCK AWARD AND INCENTIVE PLAN |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 69 |
ITEM 4-APPROVAL OF THE 2015 STOCK AWARD AND INCENTIVE PLAN |
70 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
ITEM 4-APPROVAL OF THE 2015 STOCK AWARD AND INCENTIVE PLAN |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 71 |
ITEM 4-APPROVAL OF THE 2015 STOCK AWARD AND INCENTIVE PLAN |
By Order of the Board of Directors, | |
/s/ Thomas J. Meek | |
Thomas J. Meek | |
Senior Vice President, General Counsel, Human Resources, Secretary and Chief Compliance Officer |
72 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
APPENDIX A |
(millions of dollars, except per share data) | Year Ended | |||||||
Dec. 31, | Dec. 31, | |||||||
2014 | 2013 | |||||||
Income from continuing operations attributable to MTI | $ | 90.3 | $ | 86.0 | ||||
Special items: | ||||||||
Acquisition related transaction and integration costs | 19.1 | 0.0 | ||||||
Premium on early extinguishment of debt | 5.8 | 0.0 | ||||||
Non-cash inventory step-up charges | 5.6 | 0.0 | ||||||
Restructuring and other charges | 43.2 | 0.0 | ||||||
Insurance / litigation settlement (gain) | (2.3 | ) | (2.5 | ) | ||||
Related tax effects on special items | (22.6 | ) | 1.0 | |||||
Income from continuing operations attributable to MTI, excluding special items | $ | 139.1 | $ | 84.5 | ||||
Diluted earnings per share, excluding special items | $ | 4.00 | $ | 2.42 | ||||
Segment Operating Income Data | ||||||||
Specialty Minerals Segment | $ | 95.8 | $ | 98.4 | ||||
Refractories Segment | 43.2 | 35.9 | ||||||
Performance Materials Segment | 41.0 | 0.0 | ||||||
Construction Technologies Segment | (0.8 | ) | 0.0 | |||||
Energy Services Segment | 16.3 | 0.0 | ||||||
Unallocated Corporate Expenses | (7.6 | ) | (7.4 | ) | ||||
Acquisition related transaction costs | (19.1 | ) | 0.0 | |||||
Consolidated | $ | 168.8 | $ | 126.9 | ||||
Special Items | ||||||||
Specialty Minerals Segment | $ | 3.0 | $ | 0.0 | ||||
Refractories Segment | (1.5 | ) | (2.5 | ) | ||||
Performance Materials Segment | 10.3 | 0.0 | ||||||
Construction Technologies Segment | 19.5 | 0.0 | ||||||
Energy Services Segment | 15.3 | 0.0 | ||||||
Acquisition related transaction costs | 19.1 | 0.0 | ||||||
Consolidated | $ | 65.7 | $ | (2.5 | ) | |||
Segment Operating Income, Excluding Special Items | ||||||||
Specialty Minerals Segment | $ | 98.8 | $ | 98.4 | ||||
Refractories Segment | 41.7 | 33.4 | ||||||
Performance Materials Segment | 51.3 | 0.0 | ||||||
Construction Technologies Segment | 18.7 | 0.0 | ||||||
Energy Services Segment | 31.6 | 0.0 | ||||||
Unallocated Corporate Expenses | (7.6 | ) | (7.4 | ) | ||||
Consolidated | $ | 234.5 | $ | 124.4 |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 73 |
APPENDIX B |
74 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
APPENDIX B |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 75 |
APPENDIX B |
76 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
APPENDIX B |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 77 |
APPENDIX B |
78 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
APPENDIX B |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 79 |
APPENDIX B |
80 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
APPENDIX B |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 81 |
APPENDIX B |
82 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
APPENDIX B |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 83 |
APPENDIX B |
84 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
APPENDIX B |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 85 |
APPENDIX B |
86 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
APPENDIX B |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 87 |
APPENDIX B |
88 | MINERALS TECHNOLOGIES 2015 Proxy Statement |
APPENDIX B |
MINERALS TECHNOLOGIES 2015 Proxy Statement | 89 |
MINERALS TECHNOLOGIES INC. | VOTE BY INTERNET - www.proxyvote.com ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS VOTE BY PHONE - 1-800-690-6903 VOTE BY MAIL |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||||||||||||||
The Board of Directors recommends you vote FOR the following: | ||||||||||||||||||||||||
o | o | o | ||||||||||||||||||||||
1. | Election of Directors Nominees | |||||||||||||||||||||||
01 Robert L. Clark 02 John J. Carmola 03 Marc E. Robinson | ||||||||||||||||||||||||
The Board of Directors recommends you vote FOR proposals 2, 3 and 4. | For | Against | Abstain | |||||||||||||||||||||
2 | Ratify the appointment of KPMG LLP as the independent registered public accounting firm for the 2015 fiscal year. | o | o | o | ||||||||||||||||||||
3 | Advisory vote to approve executive compensation. | o | o | o | ||||||||||||||||||||
4 | Approve the 2015 Stock Award and Incentive Plan. | o | o | o | ||||||||||||||||||||
| NOTE:Such other business as may properly come before the meeting or any adjournment thereof. |
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| Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. |
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| Signature [PLEASE SIGN WITHIN BOX] | Date |
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| Signature (Joint Owners) | Date |
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0000239604_1 R1.0.0.51160
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Dear Shareholder, |
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Please take note of the important information enclosed with this Proxy Ballot. | |
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Your vote counts and you are strongly encouraged to exercise your right to vote your shares. | |
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Please mark the boxes on the proxy card to indicate how your shares should be voted. Then sign the card, detach and return your proxy vote in the enclosed postage paid envelope. You may also vote your shares by telephone or via the internet. If you choose to vote by telephone or via the internet, you do not need to return the attached card. | |
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If you are a participant in the Minerals Technologies Inc. Savings and Investment Plan, you may direct the trustee of the Plan how to vote the shares allocated to your account under the Plan by casting your vote by May 11, 2015. If you do not direct the trustee, the trustee will vote any undirected shares in the same proportion as those for which it has received instructions. As a participant in the Plan, your vote remains confidential. | |
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Thank you in advance for your prompt consideration of these matters. | |
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Sincerely, |
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Minerals Technologies Inc. |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement is/ are available atwww.proxyvote.com. |
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MINERALS TECHNOLOGIES INC. |
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The undersigned hereby appoints Thomas J. Meek and Douglas T. Dietrich, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Minerals Technologies Inc. Common Stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Shareholders of Minerals Technologies Inc. to be held May 13, 2015 or any adjournment thereof, with all powers which the undersigned would possess if present at the Meeting. |
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THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR THE ELECTION OF THE NOMINEES UNDER PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3, FOR PROPOSAL 4, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. |
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Continued and to be signed on reverse side |
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0000239604_2 R1.0.0.51160