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Share Name | Share Symbol | Market | Type |
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Navistar International Corp | NYSE:NAV | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 44.50 | 0 | 01:00:00 |
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Preliminary Proxy Statement
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Definitive Proxy Statement
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Soliciting Material Pursuant to Section 240.14a-12
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3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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5) Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
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1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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To our stockholders:
On behalf of the Board of Directors of Navistar International Corporation, you are cordially invited to attend our 2020 Annual Meeting of Stockholders.
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When
Tuesday, February 25, 2020,
11:00 A.M. — Central Time |
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Voting Matters
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Board Recommendation
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Page
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Proposal 1:
To elect as directors the nominees named in the accompanying proxy statement
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FOR each
director nominee |
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Where
Navistar Corporate Headquarters 2701 Navistar Drive, Lisle, Illinois 60532
Whether or not you plan to attend the 2020 Annual Meeting of Stockholders, please vote your proxy either by mail, telephone, mobile device or over the Internet.
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Proposal 2:
To act on an advisory vote on executive compensation as disclosed in the accompanying proxy statement
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FOR
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Proposal 3:
To ratify the appointment of our independent registered public accounting firm
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FOR
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We will also act upon any other matters properly brought before the annual meeting.
We plan to send a Notice of Internet Availability of Proxy Materials on or about January 6, 2020. The Notice of Internet Availability of Proxy Materials contains instructions on how to access our materials on the Internet, as well as instructions on obtaining a paper copy of the proxy materials. The Notice of Internet Availability of Proxy Materials is not a form for voting and presents only an overview of the proxy materials. In order to attend our 2020 Annual Meeting of Stockholders, you must have an admission ticket. Procedures for requesting an admission ticket are detailed in the accompanying proxy statement. Attendance and voting is limited to stockholders of record at the close of business on December 31, 2019.
By Order of the Board of Directors,
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How to vote
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In Person:
Stockholders who obtain an admission ticket can attend and vote at the annual meeting.
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Via the Internet:
http://www.proxyvote.com
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By Mail:
Complete, sign and mail the enclosed proxy card.
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RICHARD E. BOND
Secretary
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YOUR VOTE IS IMPORTANT!
Important Notice of Internet Availability of Proxy Materials for the Stockholders Meeting.
The Annual Report and Proxy Statement are available at http://www.navistar.com/navistar/investors
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By Telephone (Toll Free):
1-800-690-6903
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By Scanning your QR Code:
Vote with your mobile device.
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2020 Proxy Statement
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1
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2
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PROPOSAL 1
ELECTION OF DIRECTORS
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For further information, please see page 7.
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Your Board of Directors recommends a vote FOR each of the Director nominees.
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Current Committee Membership
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Nominee and Principal Occupation
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Age
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Director Since
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A
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C
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F
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NG
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Troy A. Clarke
President and Chief Executive Officer of Navistar |
64
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April 2013
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José María Alapont
Former Chairman, President and Chief Executive Officer of Federal-Mogul Corporation |
69
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October 2016
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Stephen R. D'Arcy
Partner, Quantum Group LLC |
65
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October 2016
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Vincent J. Intrieri
Founder, President and Chief Executive Officer, VDA Capital Management LLC |
63
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October 2012
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Raymond T. Miller
Principal, MHR Fund Management LLC |
35
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April 2018
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Mark H. Rachesky, M.D.
Founder and President, MHR Fund Management LLC |
60
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October 2012
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Andreas H. Renschler
Chief Executive Officer, TRATON SE |
61
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February 2017
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Christian Schulz
Chief Financial Officer, TRATON SE |
42
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August 2018
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Kevin M. Sheehan
Former President and Chief Executive Officer, Scientific Games |
66
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October 2018
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Dennis A. Suskind
Retired General Partner, Goldman Sachs & Company |
77
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October 2016
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A Audit
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C Compensation
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F Finance
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NG Nominating & Governance
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Chair
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Co-Chair
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Member
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2020 Proxy Statement
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3
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OUR 2019 ACCOMPLISHMENTS
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OUR EXPECTATIONS GOING FORWARD
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ü Continued Focus on Customer and Market Segmentation
ü Strong Core Market Share Growth
ü Delivering Operational Excellence Through Investments in Manufacturing Footprint and Cost Management
ü Business Transformation to Strengthen Brand
ü TRATON Strategic Alliance Progress
ü Enhanced Our Cross-Functional Teamwork and Winning Culture
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ü Focus on Costs to Fund Growth Initiatives
ü Continue to Grow Market Share and Margins
ü Deliver Superior Shareholder Return
ü Continue Driving High Performing Cross-Functional Teams
ü Create Sustainable Long-Term Performance Advantage
ü Focus on Key Markets
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Ten of our 11 directors are independent under our corporate governance guidelines and the New York Stock Exchange (‘‘NYSE’’) listing standards.
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All of the members of our Audit Committee, Compensation Committee, Finance Committee and the Nominating and Governance Committee are independent and financially literate.
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We have Co-Independent
Lead Directors. |
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10 of 11 directors are independent under our corporate governance guidelines and the New York Stock Exchange (‘‘NYSE’’) listing standards.
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We have Co-Independent Lead Directors.
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We have Board standing committees that are composed of 100% independent directors.
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We have a declassified Board.
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We have stockholder representation on all of our Board committees.
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We have a director resignation policy for directors who fail to obtain a majority vote.
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We have no super-majority voting provisions to approve transactions, including a merger.
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We have a claw-back policy to re-coup incentive-based compensation in the event of an accounting restatement or intentional misconduct.
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We do not provide tax gross-ups for perquisites and other similar benefits to officers who are subject to Section 16 (the ‘‘Section 16 Officers’’) of the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’). Additionally, we do not provide tax gross-ups for any cash or equity awards for any employees.
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We have ‘‘double trigger’’ change in control severance benefits.
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Our Named Executive Officers (“NEOs”) and directors are subject to stock ownership guidelines and stock retention requirements.
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Our executives and directors are prohibited from engaging in short sales, derivatives trading and hedging transactions, and we impose restrictions on pledges and margin account use.
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4
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PROPOSAL 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
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For further information, please see page 29.
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Your Board of Directors recommends a vote FOR the approval of named executive officer compensation.
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Highlights of the changes made in 2019 include:
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Retained an Annual Incentive (“AI”) plan that leverages our scorecard approach, retained the adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") multiplier, the individual performance factor, and market share, cost and liquidity metrics and replaced the quality metric with an uptime (24 hour repair velocity) metric
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In our 2019 Long-Term Incentive (“LTI”) plan we retained the current vehicles and mix of performance-based and time-based equity as well as the use of adjusted EBITDA, Revenue Growth and the relative Total Shareholder Return (“TSR”) multiplier
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2020 Proxy Statement
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5
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WHAT WE DO
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WHAT WE DON’T DO
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ü We use multiple performance measures in our short-term and long-term incentive plans. These performance measures are designed to link pay to performance and stockholder interests.
ü The Compensation Committee reviews external market data when making compensation decisions.
ü The Compensation Committee selects and engages its own independent advisor, Pay Governance LLC.
ü We maintain a clawback policy to recoup incentive-based compensation in the event of an accounting restatement.
ü Change in Control severance benefits are payable only upon a Change in Control (also referred to in this proxy statement as “CIC”) with termination of employment (“double trigger”).
ü To aid in aligning the interest of our shareholders and officers, all officers are subject to stock ownership requirements, ranging from 6x base pay for the CEO to 3x base pay for other senior executives - including a retention requirement.
ü Our 2019 long-term incentive plan includes both absolute and relative performance metrics.
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û The Company maintains policies that eliminate all tax gross-ups for perquisites and other similar benefits to Section 16 Officers, and prohibit tax gross-ups for any cash or equity awards for all employees.
û We do not reprice stock options or provide cash buyouts of underwater options.
û We prohibit short selling, trading in derivatives or engaging in hedging transactions by executives and directors. In addition, any pledging and margin account use must be pre-cleared through the Corporate Secretary or the General Counsel.
û We do not accelerate the vesting of long-term incentive awards, except in certain situations upon death.
û We do not grant extra pension service
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PROPOSAL 3
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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For further information, please see page 68.
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Your Board of Directors recommends a vote FOR the ratification of the appointment of KPMG LLP ("KPMG") as Navistar’s independent registered public accounting firm for 2020.
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6
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PROPOSAL 1
ELECTION OF DIRECTORS
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Your Board of Directors recommends a vote FOR each of the Director nominees.
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knowledge and contacts in the Company’s industry and other relevant industries
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positive reputation in the business community
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the highest personal and professional ethics and integrity and values that are compatible with the Company’s values
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experiences and achievements that provide the nominee with the ability to exercise good business judgment
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ability to make significant contributions to the Company’s success
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ability to work successfully with other directors
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willingness to devote the necessary time to the work of the Board and its committees which includes being available for the entire time of meetings
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ability to assist and evaluate the Company’s management
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2020 Proxy Statement
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7
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involvement only in other activities or interests that do not create a conflict with his or her responsibilities to the Company and its stockholders
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understanding of and ability to meet his or her responsibilities to the Company’s stockholders, including the duty of care (making informed decisions) and the duty of loyalty (maintaining confidentiality and avoiding conflicts of interest)
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potential to serve on the Board for at least five years
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8
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Troy A. Clarke
Chief Executive Officer
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Professional Highlights
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Mr. Clarke has served as President and Chief Executive Officer of Navistar since April 2013. Prior to this position, Mr. Clarke served as President and Chief Operating Officer of Navistar since August 2012, as President of the Truck and Engine Group of Navistar, Inc. from June 2012 to August 2012, as President of Asia-Pacific Operations of Navistar, Inc. from 2011 to 2012, and as Senior Vice President of Strategic Initiatives of Navistar, Inc. from 2010 to 2011. Prior to joining Navistar, Inc., Mr. Clarke held various positions at General Motors Company, including President of General Motors North America from 2006 to 2009 and President of General Motors Asia Pacific from 2003 to 2006. Over the course of his career with GM, he held several additional leadership roles, including President and Managing Director of GM de Mexico and Director of Manufacturing for GM de Mexico.
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Age
64
Director since
April 2013 |
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Past Directorships
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• Director of Fuel System Solutions, a publicly-traded company, from December 2011 to June 2016 where he served as the chair of its Compensation Committee
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Education
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Mr. Clarke received a bachelor’s degree in engineering from the General Motors Institute in 1978 and a master’s degree in business administration from the University of Michigan in 1982.
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Skills and Qualifications
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Mr. Clarke’s vast experience in the automotive industry over the past 40 years is invaluable to the Board in evaluating and directing the Company’s future. As a result of his professional and other experiences, Mr. Clarke possesses particular knowledge and experience in a variety of areas, including corporate governance, engineering, manufacturing (international and domestic), mergers and acquisitions, sales (international and domestic) and union/labor relations, which strengthens the Board’s collective knowledge, capabilities and experience and well qualifies him to serve on our Board.
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2020 Proxy Statement
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9
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José María Alapont
Independent
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Professional Highlights
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Mr. Alapont served as President and Chief Executive Officer of Federal-Mogul Corporation, a supplier of automotive powertrain and safety components, from March 2005 to March 2012. He was the Chief Executive Officer and a director of Fiat Iveco, S.p.A., a leading global manufacturer of commercial trucks and vans, buses, recreational, off-road, firefighting, defense and military vehicles of the Fiat Group, from 2003 to 2005. Mr. Alapont has held executive, Vice President and President positions for more than 30 years at other leading global vehicle manufacturers and suppliers such as Delphi Corporation, Valeo S.A., and Ford Motor Company.
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Age
69
Director since
October 2016
Committees
Finance and Nominating & Governance (Chair) |
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Other Current Directorships
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• Director of Ferroglobe Plc., a publicly-traded silicon, manganese and special alloys producer company, since January 2018, member of its Audit and Compensation Committees, since 2018, and Senior Lead Director and Chairman of its Governance Committee, since January 2019
• Director of Ashok Leyland, a publicly-traded commercial trucks, vans, buses and defense manufacturing company, since January 2017, and member of its Nomination and Remuneration Committee, since 2018, and its Audit Committee, since 2019
• Member of the board of Hinduja Investment and Project Services Limited, a privately-held investment and service group, since 2016
• Director of Hinduja Automotive Limited, a privately-held automotive holding group, since November 2014
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Past Directorships
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• Director of Manitowoc Company, a publicly-traded crane manufacturing company, from March 2016 to February 2018
• Has served as a director of a number of other companies prior to 2016
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Education
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Mr. Alapont holds a degree in Industrial Engineering from the Valencia Technical School and a degree in Philosophy from the University of Valencia, Spain.
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Skills and Qualifications
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Mr. Alapont brings broad executive and leadership experience of more than 30 years serving several automotive manufacturing companies, together with his significant experience as a member of other public and private company boards. Mr. Alapont’s particular knowledge and experience in a variety of areas, including corporate finance, accounting, corporate governance, distribution, engineering, finance, human resources, manufacturing (domestic and international), marketing, mergers and acquisitions, military and government contracting, purchasing, sales (domestic and international), tax and treasury matters and union and labor relations, well qualify him to serve on our Board.
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10
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Stephen R. D’Arcy
Independent
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Professional Highlights
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Mr. D’Arcy has been a Partner of Quantum Group LLC, an investment and consulting firm, since 2010. Previously he was a Partner at PricewaterhouseCoopers LLP, a multinational professional services firm, for 34 years, serving most recently as Global Automotive Leader from 2002 to 2010.
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Other Current Directorships
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• Director of Premier, Inc., a publicly-traded healthcare improvement company, since October 2013
• Penske Corporation, a privately-held, diversified, on-highway, transportation services company, since 2011
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Age
65
Director since
October 2016
Committees:
Audit (Chair) |
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Past Directorships
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• Member of the Board of Directors of Vanguard Health Systems Inc., a company previously listed on the NYSE, from 2011 to 2013
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Skills and Qualifications
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Mr. D’Arcy has broad experience as a member of other public and private company boards of directors, including as chairman of an audit committee. He possesses strong skills and experience in accounting, corporate governance, finance and mergers and acquisitions matters, which well qualifies him to serve on our Board.
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Vincent J. Intrieri
Independent
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Professional Highlights
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In January 2017, Mr. Intrieri founded VDA Capital Management LLC, a private investment firm, where he currently serves as President and Chief Executive Officer. Mr. Intrieri was employed by Icahn related entities from October 1998 to December 2016 in various investment related capacities. Mr. Intrieri served as Senior Managing Director of Icahn Capital LP, the entity through which Carl C. Icahn manages private investment funds from January 2008 to December 2016. In addition, Mr. Intrieri was a Senior Managing Director of Icahn Onshore LP, the general partner of Icahn Partners LP, and Icahn Offshore LP, the general partner of Icahn Partners Master Fund LP, entities through which Mr. Icahn invests in securities from November 2004 to December 2016. Mr. Intrieri also served as Senior Vice President of Icahn Enterprises L.P. from October 2011 to September 2012.
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Age
63
Director since
October 2012 (Co-Independent Lead Director since October 2018)
Committees
Finance (Co-Chair) and Nominating & Governance |
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Other Current Directorships
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• Director of Hertz Global Holdings, Inc., a publicly-traded company engaged in the car rental business, since September 2014
• Director of Transocean Ltd., a publicly-traded provider of offshore contract drilling services for oil and gas wells, since May 2014
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2020 Proxy Statement
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11
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Past Directorships
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• Director of Chesapeake Energy Corporation, an oil and gas exploration and production company, from June 2012 to September 2016
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Director of Ferrous Resources Limited, a privately-held iron ore mining company with operations in Brazil, from June 2015 to December 2016
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Director of Conduent Incorporated, a business process services company that was launched following its separation from Xerox, from January 2017 to May 2018
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Director of Energen Corporation, an oil and gas exploration company, from March 2018 to December 2018
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Has served on more than 15 corporate boards during his career
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Education
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Mr. Intrieri graduated in 1984, with distinction, from The Pennsylvania State University (Erie Campus) with a B.S. in Accounting and was a Certified Public Accountant.
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Skills and Qualifications
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Mr. Intrieri possesses strong skills and experience in accounting, corporate governance, finance, mergers and acquisitions and treasury matters. Mr. Intrieri’s significant experience as a director of various companies enables him to understand complex business and financial issues, which contributes greatly to the capabilities and composition of our Board and well qualifies him to serve on our Board.
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12
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Mark H. Rachesky, M.D.
Independent
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Professional Highlights
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Dr. Rachesky is the founder and President of MHR Fund Management LLC, an investing firm that manages approximately $5 billion of assets and utilizes a private equity approach to investing in middle market companies with an emphasis on special situation and distressed investments.
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Other Current Directorships
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• Chairman of the board of directors of Loral Space & Communications Inc., a publicly-traded satellite communications company, since 2006, and Director. since 2005
• Chairman of the board of directors of Lions Gate Entertainment Corp., a publicly-traded entertainment company, since 2015, and Director, since 2009
• Chairman of the board of directors of Telesat Canada, a privately-held satellite company, since 2012, and Director since 2007
• Member of the Board of Directors of Titan International, Inc., a publicly-traded wheel, tire and undercarriage systems and components company, since 2014
• Member of the Board of Directors of Emisphere Technologies, Inc., a publicly-traded biopharmaceutical company, since 2005
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Age
60
Director since
October 2012 (Co-Independent Lead Director since October 2018)
Committees
Finance (Co-Chair) and Nominating & Governance |
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Past Directorships
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• Member and chairman of the board of Leap Wireless International, Inc., a publicly-traded digital wireless company, from 2004 until its acquisition by AT&T in March 2014
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Education
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Dr. Rachesky holds a B.S. in molecular aspects of cancer from the University of Pennsylvania, an M.D. from the Stanford University School of Medicine and an M.B.A. from the Stanford University School of Business.
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Skills and Qualifications
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Dr. Rachesky brings significant corporate finance and business expertise to our Board due to his background as an investor and fund manager. Dr. Rachesky also has significant expertise and perspective as a member of the boards of directors of private and public companies engaged in a wide range of businesses. Dr. Rachesky’s broad and insightful perspectives relating to economic, financial and business conditions affecting the Company and its strategic direction well qualify him to serve on our Board.
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2020 Proxy Statement
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13
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Andreas H. Renschler
Independent
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Professional Highlights
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Mr. Renschler has been Chief Executive Officer of TRATON SE, a leading commercial vehicle manufacturer, since February 2015. He has also served as a member of the Board of Management of Volkswagen AG since February 2015. He served as a member of the Daimler AG Board of Management in charge of Manufacturing and Procurement at Mercedes-Benz Cars & Mercedes-Benz Vans from April 2013 to January 2014. Mr. Renschler began his career at Daimler-Benz AG in 1988. Following various posts at Daimler-Benz AG, he led the M Class unit, serving as President and CEO of Mercedes-Benz US. Later he served as Senior Vice President, Executive Management Development, at DaimlerChrysler AG and President of smart GmbH in the same year. He was assigned to Mitsubishi Motors in Japan in 2004 and was subsequently named a member of the Daimler AG Board of Management with responsibility for the Daimler Trucks Division.
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Age
61
Director since
February 2017
Committees
Compensation and Nominating & Governance |
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Past Directorships
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• Member of the Board of Management of Daimler AG from October 2004 to January 2014
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Skills and Qualifications
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Mr. Renschler has broad experience as a Chief Executive Officer, executive officer and board member of other automotive manufacturing companies. He possesses strong skills and experience in accounting, corporate governance, distribution (domestic and international), finance, human resources, compensation, employee benefits, manufacturing (domestic and international), marketing, mergers and acquisitions, purchasing, sales (domestic and international) and union/ labor relations matters, which well qualifies him to serve on our Board.
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Christian Schulz
Independent
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Professional Highlights
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Mr. Schulz has been the Chief Financial Officer and a member of the Board of Management of TRATON SE since June 2018. Previously he was in charge of Corporate Development, Strategy and Mergers & Acquisitions at TRATON SE from January 2017 to June 2018. As part of this role, he led the advancement of both TRATON SE’s strategic development and its strategic partnership.
Prior to joining TRATON SE, Mr. Schulz spent five years as Director of Controlling Operations worldwide at Mercedes-Benz Cars and its shareholdings abroad from 2011 to 2017. Mr. Schulz was the Controlling Director for Purchasing, Production, and R&D at Mitsubishi Fuso in Japan from 2008 to 2010. His previous roles included management responsibilities in the fields of finance and controlling at Daimler Group, including serving as Chief Financial Officer of the transmissions plant in Gaggenau, Germany.
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Age
42
Director since
August 2018
Committees
Finance |
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Skills and Qualifications
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Mr. Schulz possesses strong financial expertise, having served in key management roles in fields of finance, controlling and business development within the automotive manufacturing business. His background and experience well qualify him to serve on our Board.
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14
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Kevin M. Sheehan
Independent
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Professional Highlights
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From August 2016 to June 2018, Mr. Sheehan served as the President and Chief Executive Officer at Scientific Games, a gaming and lottery company. From February 2015 through August 2016, Mr. Sheehan taught full time as the John J. Phelan, Jr. Distinguished Visiting Professor of Business at Adelphi University. Mr. Sheehan previously held several senior positions with Norwegian Cruise Line Holdings Ltd., a global cruise company, from November 2007 to January 2015. These positions included President from August 2010 to January 2015; Chief Executive Officer from November 2008 to January 2015; and Chief Financial Officer from November 2007 to September 2010.
|
|
|
||
Age
66
Director since
October 2018
Committees
Audit and Compensation |
||
|
Other Current Directorships
|
|
|
• Director of Hertz Global Holdings, Inc. since August 2018 where he currently serves on the Finance and IT committees
• Director of Dave & Buster’s, Inc. since 2013 where he currently chairs the Audit Committee and serves on the Finance Committee
• Lead Director of Gannett Co., Inc. (formerly know as New Media Investment Group Inc.) since 2019, and Director since November 2013 where he chairs the Audit Committee and serves on the Compensation Committee
|
|
|
Past Directorships
|
|
|
• Director of Bob Evans Farms, Inc. from 2013 to 2017 where he served on the Audit Committee.
|
|
|
Education
|
|
|
Mr. Sheehan is a graduate of Hunter College and New York University Graduate School of Business (with a Masters degree in finance and taxation) and is a Certified Public Accountant.
|
|
|
Skills and Qualifications
|
|
|
Mr. Sheehan has broad experience as a Chief Executive Officer of several large, diversified corporations and as a member of the board of directors of other public companies. He has experience as a Chief Financial Officer of several global businesses. Mr. Sheehan possesses particular expertise, knowledge, and strong skills in accounting, corporate governance, finance, mergers and acquisitions, and treasury matters, which strengthens the Board’s collective knowledge, capabilities, and experiences and well qualifies him to serve on our Board.
|
2020 Proxy Statement
|
15
|
|
|
|
|
|
Dennis A. Suskind
Independent
|
|
Professional Highlights
|
|
|
Mr. Suskind is a retired General Partner of Goldman Sachs & Company, a multinational finance company that engages in global investment banking. Mr. Suskind served as Vice Chairman of NYMEX, Vice Chairman of COMEX, a member of the board of the Futures Industry Association, a member of the board of International Precious Metals Institute, and a member of the boards of the Gold and Silver Institutes in Washington, D.C.
|
|
|
Other Current Directorships
|
|
|
|
• Director of CME Group, Inc., since August 2008 where he chairs the Risk Committee and also serves on the Audit Committee
• Director of Bridge Bancorp Inc. since July 2002 where he is Vice Chairman and chairs the Governance Committee
|
Age
77
Director since
October 2016
Committees
Compensation (Chair) and Nominating & Governance |
|
|
|
Skills and Qualifications
|
|
|
Mr. Suskind has broad experience as a member of other public company boards of directors, including as chairman of a risk committee and a governance committee. He possesses strong skills and experience in accounting, corporate governance, finance, human resources, marketing and mergers and acquisitions matters, which well qualifies him to serve on our Board.
|
|
|
|
|
|
Jeffrey A. Dokho
Independent
|
|
Professional Highlights
|
|
|
Mr. Dokho is currently the Assistant Director of the United Automotive Workers’ ("UAW") Research Department, where he directs a group of financial analysts and oversees the union’s financial research and analysis. Mr. Dokho has worked on many high-profile contract negotiations between the UAW and large multinational companies and plays a leading role in the development and implementation of profit sharing plans, including those currently in place for UAW members at General Motors Company, Ford Motor Company and Fiat Chrysler Automobiles N.V. Before joining the UAW in 2006, Mr. Dokho was a Senior Analyst at Lear Corporation, a tier 1 supplier to the automotive industry. While at Lear, Mr. Dokho focused largely in mergers & acquisitions and joint ventures. From 2000 to 2002, Mr. Dokho provided both audit and business risk consulting to clients in a wide range of industries, including defense and manufacturing, while at Ernst & Young, a global public accounting firm. Prior to Ernst & Young, Mr. Dokho conducted regulatory compliance audits at the National Futures Association, the self-regulatory organization for the U.S. derivatives industry.
|
|
|
||
Age
45
Director since
April 2017
Committees
Audit and Finance |
||
|
Education
|
|
|
Mr. Dokho received a B.A. in Accounting from Michigan State University and is a licensed Certified Public Accountant in the state of Michigan.
|
|
|
Skills and Qualifications
|
|
|
Mr. Dokho possesses a broad range of experience in accounting, financial analysis, business risk consulting, mergers and acquisitions and profit-sharing plan design and implementation, including in the automotive sector.
|
16
|
|
2020 Proxy Statement
|
17
|
|
CYBERSECURITY RISK MANAGEMENT
The Board recognizes the threats and consequences posed by cybersecurity incidents and is committed to the Company's creation and maintenance of a robust process to prevent, timely detect and mitigate the effects of any such events on the Company. The Audit Committee oversees the Company's controls related to cybersecurity. The Company's Chief Information Officer gives regular reports to the Audit Committee on cyber risks and threats, the status of ongoing efforts to strengthen the Company's information security systems, assessments of the Company's security program and the emerging threat outlook. In turn, the Audit Committee updates the full Board on these matters.
|
|
18
|
|
2020 Proxy Statement
|
19
|
20
|
|
|
Committee Membership (as of December 31, 2019)
|
|||
Members
|
Audit
|
Compensation
|
Finance
|
Nominating & Governance
|
Troy A. Clarke
|
|
|
|
|
José María Alapont
|
|
|
|
|
Stephen R. D’Arcy
|
|
|
|
|
Jeffrey A. Dokho
|
|
|
|
|
Vincent J. Intrieri
|
|
|
|
|
Raymond T. Miller
|
|
|
|
|
Mark H. Rachesky
|
|
|
|
|
Andreas H. Renschler
|
|
|
|
|
Christian Schulz
|
|
|
|
|
Kevin M. Sheehan
|
|
|
|
|
Dennis A. Suskind
|
|
|
|
|
|
Chair
|
|
Co-Chair
|
|
Member
|
|
|
Current Members
Stephen R. D’Arcy (Chair)
Jeffrey A. Dokho Raymond T. Miller Kevin M. Sheehan
Meetings in 2019
8
Attendance
100%
|
Roles and Responsibilities
• Assists the Board in fulfilling its responsibility for oversight of the Company’s financial reporting process, the Company’s legal and regulatory compliance, the retention, compensation, engagement partner selection, independence, qualifications and performance of the Company’s independent registered public accounting firm and the performance of the Company’s internal audit function and corporate compliance function
• Reviews the audit plans of the Company’s independent registered public accounting firm and internal audit staff, reviews the audit of the Company’s accounts with the independent registered public accounting firm and the internal auditors, considers the adequacy of the audit scope and reviews and discusses with the auditors and management the auditors’ reports
• Reviews environmental reports and compliance activities for the Company’s facilities and the expense accounts of executive officers and directors
• Reviews and decides on conflicts of interest and waivers of compliance with the Company’s Code of Conduct that may affect executive officers and directors and discusses policies and guidelines with respect to risk assessment and risk management
• Reviews and recommends to the Board that the Board either approve, ratify, reject or take other action with respect to related person transactions and it prepares and approves the Audit Committee Report for inclusion in the Company’s proxy statement
All members of the Audit Committee are independent and the Board designated each of the Audit Committee members as an ‘‘audit committee financial expert,’’ as defined by applicable law, rules and regulations.
The Audit Committee conducted an evaluation of its performance in October 2019. Additional information on the roles and responsibilities of the Audit Committee is provided in the Audit Committee Report section of this proxy statement.
|
2020 Proxy Statement
|
21
|
|
|
Current Members
Dennis A. Suskind (Chair)
Raymond T. Miller Andreas H. Renschler Kevin M. Sheehan
Meetings in 2019
7
Attendance
86%
|
Roles and Responsibilities
• Makes recommendations to the Board with respect to the appointment and responsibilities of all executive officers
• Reviews and approves the compensation of executive officers who are not also directors of the Company
• Reviews and approves the Company’s compensation strategy and any associated risks
• Recommends to the independent members of the Board the compensation of executive officers who also are directors of the Company
• Administers the Company’s equity and incentive compensation plans
• Engages the compensation consultants that advise the Compensation Committee
• Approves the consultants’ fees and terms of engagement
• Furnishes an annual Compensation Committee Report on executive compensation
• Reviews and discusses the Compensation Discussion & Analysis (‘‘CD&A’’) with management and recommends to the Board the inclusion of the CD&A in the Company’s proxy statement
• Upon management’s recommendation, reviews basic changes to non-represented employees’ base compensation and incentive and benefit plans
•
Oversees the development and implementation of succession plans for senior executives (with the exception of our CEO)
In 2019, the Compensation Committee continued its annual delegation of authority to approve certain equity awards pursuant to the 2013 Performance Incentive Plan ("2013 PIP") to the Committee Chair, Dennis A. Suskind. The equity awards are for retention, new hire, promotion or special recognition purposes and are subject to share- and value-based limitations established by the Compensation Committee. Periodically, but no less frequently than annually, such awards are communicated to the other members of the Compensation Committee. The Compensation Committee conducted an evaluation of its performance in October 2019. Additional Information on the roles and responsibilities of the Compensation Committee is provided in the CD&A section of this proxy statement.
|
|
|
Current Members
Vincent J. Intrieri (Co-Chair)
Mark H. Rachesky (Co-Chair) José María Alapont Jeffrey A. Dokho Christian Schulz
Meetings in 2019
8
Attendance
95%
|
Roles and Responsibilities
• Reviews the Company’s financing requirements, procedures by which projections and estimates of cash flow are developed, dividend policy and investment spending and capital expenditure budgets
• Oversees the Company’s policies with respect to financial risk assessment and financial risk management, including liquidity and access to capital and macroeconomic trends/ environment risks
The Finance Committee conducted an evaluation of its performance in October 2019.
|
|
|
Current Members
José María Alapont (Chair)
Vincent J. Intrieri Mark H. Rachesky Andreas H. Renschler Dennis A. Suskind
Meetings in 2019
5
Attendance
92%
|
Roles and Responsibilities
• Responsible for the organizational structure of the Board and its committees
• Recommending to the Board the directors to serve on the standing Board committees
• Reviewing and making recommendations to the Board concerning nominees for election as directors and CEO succession planning
• Reviewing and making recommendations to the Board concerning corporate governance practices and policies and changes to our Restated Certificate of Incorporation and our By-Laws
• Overseeing risks related to corporate governance and the political environment
• Leads the Board in its self-evaluation process
• Monitors compliance with the Corporate Governance Guidelines
The Nominating and Governance Committee conducted an evaluation of its performance in October 2019.
|
22
|
|
•
|
10 of 11 directors are independent under our Corporate Governance Guidelines and the NYSE listing standards.
|
•
|
We have Co-Independent Lead Directors.
|
•
|
We have Board standing committees that are composed of 100% independent directors.
|
•
|
We have a declassified Board.
|
•
|
We have stockholder representation on all of our Board committees.
|
•
|
We have a director resignation policy for directors who fail to obtain a majority vote.
|
•
|
We have no super-majority voting provisions to approve transactions, including a merger.
|
•
|
We have a claw-back policy to recoup incentive-based compensation in the event of an accounting restatement or intentional misconduct.
|
•
|
We do not provide tax gross-ups for perquisites and other similar benefits to Section 16 Officers and we do not provide tax gross-ups for any cash or equity awards for any employees.
|
•
|
We have ‘‘double trigger’’ change in control benefits.
|
•
|
Our NEOs and directors are subject to stock ownership guidelines and stock retention requirements.
|
•
|
Our executives and directors are prohibited from engaging in short sales, derivatives trading and hedging transactions, and we impose restrictions on pledges and margin account use.
|
2020 Proxy Statement
|
23
|
1.
|
Navistar pays MAN Truck & Bus AG (“MAN”), an indirect subsidiary of TRATON, a royalty for the use of certain base technology associated with our current A26 diesel engine and our discontinued 13 liter diesel engine. The royalty payment for 2019 was €2,102,000 (US$2,363,823).
|
24
|
|
2.
|
MWM International Motores, S.A. (“MWM”), one of our Brazil operating subsidiaries, purchases various parts from MAN and its direct and indirect subsidiaries, and generators from Scania AB, a subsidiary of TRATON. In 2019, the amount paid for such parts, including commissions, was US$2,479,487.
|
3.
|
MWM contract manufactures the D08 engine (6.9 and 4.6 liter) for MAN Latin America Indústria e Comércio de Veículos Ltda. (“MAN Latin America”), an indirect subsidiary of TRATON. MWM assembles and supplies D26 13L engines, produces the D26 block cylinder and sells loose engines and spare parts to MAN Latin America. MWM also sells block cylinders to MAN. The net revenue associated with this relationship during 2019 was approximately US$157,299,423.
|
4.
|
Global Truck & Bus Procurement LLC (the “Procurement JV”), a joint venture entity, was formed and commenced operations in 2017. Owned 51% by TRATON, LLC (formerly known as Volkswagen Truck & Bus, LLC), a subsidiary of TRATON, and 49% by International Truck and Engine Investments Corporation (“ITEIC”), an indirect subsidiary of the Company, the purpose of the Procurement JV is to make sourcing recommendations to TRATON and Navistar. The Procurement JV’s annual operating budget is funded on a cost plus basis. In 2019, the parties each made operating cost payments to the Procurement JV in the amount of $2,310,041.
|
5.
|
Certain of our subsidiaries have entered into agreements, or are currently proposing to enter into agreements, with certain indirect subsidiaries of TRATON with respect to supplying us with big bore diesel engines with after-treatment and transmissions, certain consulting and /or engineering services in connection with our development and building of a prototype electric school bus, an electric battery for medium duty trucks, and a transmission for use with A26 engines. Payments made by us under these agreements during 2019 totaled US$2,789,368.
|
6.
|
Certain direct or indirect subsidiaries or affiliates of TRATON have paid MWM for engineering services related to the homologation of engines and the distribution and after-sale support for certain MAN engines. Payments made to us associated with this relationship totaled US$284,650 during 2019.
|
7.
|
Navistar has entered into arrangements with certain direct and indirect subsidiaries of TRATON for the lease of certain office spaces, workshops, studies and training. Payments made pursuant to these arrangements totaled US$621,384 in 2019. Navistar has leased vehicles manufactured by Volkswagen AG for certain of its salesforce, through a third party leasing company which is not affiliated with Navistar or TRATON. The amount paid by Navistar to the third party leasing company for such vehicles in 2019 was US$1,171,265.
|
2020 Proxy Statement
|
25
|
Compensation Element
|
Calendar Year 2019 Compensation Program
|
New Calendar Year 2020 Compensation Program
|
Annual Retainer
|
$130,000 retainer (paid quarterly); $105,000 paid in cash, $25,000 paid in fully vested shares of our Common Stock
|
$115,000 cash retainer (paid quarterly);
$150,000 equity retainer paid in restricted stock units that vest on the first anniversary of the grant |
Lead Director Additional
Annual Retainer |
$25,000
|
$25,000
|
Committee Chairman Additional Annual Retainer
|
$25,000 for Audit Committee
$15,000 for Compensation Committee $15,000 for Finance Committee $15,000 for Nominating and Governance Committee |
$25,000 for Audit Committee
$15,000 for Compensation Committee $15,000 for Finance Committee $15,000 for Nominating and Governance Committee |
Committee Member
Additional Annual Retainer |
None
|
None
|
Attendance Fees
|
None
|
None
|
Stock Options
|
5,000 shares annually (the exercise price is equal to the fair market value of our Common Stock on the date of grant) which vest in equal annual installments on the first three anniversaries of the grant date.
|
None
|
Other Benefits
|
We also pay the premiums on directors’ and officers’ liability insurance policies covering the directors and reimburse directors for expenses related to attending Board and committee meetings and director continuing education seminars.
|
We also pay the premiums on directors’ and officers’ liability insurance policies covering the directors and reimburse directors for expenses related to attending Board and committee meetings and director continuing education seminars.
|
Special Committees
|
Determined on a case by case basis.
|
Determined on a case by case basis.
|
26
|
|
Name
|
Fees Earned
or Paid in Cash ($)(1)(2)(3) |
|
Stock
Awards ($)(2)(3)(4)(5)(6) |
|
Option
Awards ($)(5)(6)(7) |
|
All Other
Compensation ($) |
|
Total
($) |
|
José María Alapont
|
117,545
|
|
24,968
|
|
63,000
|
|
—
|
|
205,513
|
|
Stephen R. D'Arcy
|
127,545
|
|
24,968
|
|
63,000
|
|
—
|
|
215,513
|
|
Jeffrey A. Dokho(8)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Vincent J. Intrieri
|
122,928
|
|
25,000
|
|
63,000
|
|
—
|
|
210,928
|
|
Raymond T. Miller
|
—
|
|
128,342
|
|
63,000
|
|
—
|
|
191,342
|
|
Mark H. Rachesky
|
—
|
|
147,928
|
|
63,000
|
|
—
|
|
210,928
|
|
Andreas Renschler
|
103,374
|
|
24,968
|
|
63,000
|
|
—
|
|
191,342
|
|
Christian Schulz(9)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Kevin M. Sheehan
|
103,374
|
|
24,968
|
|
63,000
|
|
—
|
|
191,342
|
|
Dennis A. Suskind
|
—
|
|
142,513
|
|
63,000
|
|
—
|
|
205,513
|
|
(1)
|
Amounts in this column reflect fees earned by our non-employee directors in 2019.
|
(2)
|
Under our Non-Employee Directors Deferred Fee Plan (the ‘‘Deferred Fee Plan’’), our directors who are not employees received an annual retainer, payable quarterly, at their election, either in shares of our Common Stock or in cash. A director may elect to defer any portion of such compensation until a later date in deferred share units (" DSUs") or in cash. Each such election is made prior to December 31st for the next succeeding calendar year or within 30 days of first joining the Board. Mr. Intrieri, Mr. Miller, Dr. Rachesky, and Mr. Suskind elected to defer the receipt of some or all of their compensation received for their retainer fees in 2019. Mr. Intrieri deferred receipt of 100% of the 2019 first calendar year quarterly retainer fee normally paid in shares of our Common Stock and received a total of 773.994 DSUs in 2019. Mr. Miller deferred receipt of 100% of his quarterly retainer fees in DSUs and received 4,250.691 DSUs in 2019. Dr. Rachesky deferred receipt of 100% of his quarterly retainer fees, except the portion payable in shares of our Common Stock, in calendar year 2019 and received 4,112.483 DSUs. Mr. Suskind deferred receipt of 100% of his quarterly retainer fees, except the portion payable in shares of our Common Stock, in calendar year 2019 and received 3,943.587 DSUs. The amount of DSUs for Mr. Intrieri, Mr. Miller, Dr. Rachesky, and Mr. Suskind has been credited as stock units in an account under each of their names at the then current market price of our Common Stock. The units issued to Mr. Intrieri during 2019 will be converted into Common Stock and issued within 60 days after his separation from service on the Board. The units issued to Mr. Miller, Dr. Rachesky, and Mr. Suskind during 2019 will be converted into Common Stock and issued within 60 days after January 1, 2020.
|
(3)
|
Effective April 1, 2019, each non-employee director, other than Mr. Dokho and Mr. Schulz, received 773 shares of our Common Stock in lieu of $25,000 of their first quarter retainer, except for Mr. Intrieri and Mr. Miller who each elected to defer receipt of their shares in DSUs, as described in footnote 2 above. The grant date fair value of the restricted stock and DSUs was determined in accordance with FASB ASC Topic 718. Mr. Dokho does not personally receive compensation for his service on the Board, as noted under footnotes 5 and 8 below, and Mr. Schulz has declined compensation for his service on the Board. For additional information regarding assumptions underlying valuation of equity awards see Note 18 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended October 31, 2019.
|
(4)
|
The aggregate number of shares subject to stock awards granted by the Company that were outstanding for each non-employee director as of October 31, 2019, including DSUs earned or owned by Mr. Intrieri, Mr. Miller, Dr. Rachesky, and Mr. Suskind is indicated in the table below. All of these stock awards and DSUs are 100% vested:
|
Name
|
Total Number of Stock
Awards Outstanding (#) |
|
José María Alapont
|
1,509
|
|
Stephen R. D'Arcy
|
2,156
|
|
Jeffrey A. Dokho
|
—
|
|
Vincent J. Intrieri
|
10,956
|
|
Raymond T. Miller
|
5,647
|
|
Mark H. Rachesky
|
32,724
|
|
Andreas H. Renschler
|
1,244
|
|
Christian Schulz
|
—
|
|
Kevin M. Sheehan
|
773
|
|
Dennis A. Suskind
|
8,017
|
|
(5)
|
At the request of the UAW, the UAW representative director, Jeffrey Dokho, does not receive stock or stock option awards. Mr. Schulz has declined compensation for his service on the Board at this time.
|
(6)
|
The values in these columns reflect the grant date fair value as determined in accordance with FASB ASC Topic 718. For additional information see Note 18 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended October 31, 2019, regarding assumptions underlying valuation of equity awards.
|
2020 Proxy Statement
|
27
|
(7)
|
The number of options granted in 2019 and the aggregate number of stock options outstanding for each non-employee director as of October 31, 2019, are indicated in the table below.
|
Name
|
Total Stock Option
Awards Outstanding at 2019 Year End |
|
Option Awards
Granted During Fiscal 2019 (#) |
|
Grant Price
($) |
|
Grant Date Fair Value of
Option Awards Granted During Year ($)(a) |
|
José María Alapont
|
15,000
|
|
5,000
|
|
27.31
|
|
63,000
|
|
Stephen R. D’Arcy
|
15,000
|
|
5,000
|
|
27.31
|
|
63,000
|
|
Jeffrey A. Dokho
|
—
|
|
—
|
|
—
|
|
—
|
|
Vincent J. Intrieri
|
30,000
|
|
5,000
|
|
27.31
|
|
63,000
|
|
Raymond J. Miller
|
5,000
|
|
5,000
|
|
27.31
|
|
63,000
|
|
Mark H. Rachesky
|
35,000
|
|
5,000
|
|
27.31
|
|
63,000
|
|
Andreas H. Renschler
|
10,000
|
|
5,000
|
|
27.31
|
|
63,000
|
|
Christian Schulz
|
—
|
|
—
|
|
—
|
|
—
|
|
Kevin M. Sheehan
|
5,000
|
|
5,000
|
|
27.31
|
|
63,000
|
|
Dennis A. Suskind
|
15,000
|
|
5,000
|
|
27.31
|
|
63,000
|
|
(a)
|
These amounts do not reflect compensation realized by our directors. The amounts shown represent the value of the stock options based on the grant date fair value of the award as determined in accordance with FASB ASC Topic 718. The stock options generally vest over a three year period with ⅓rd vesting on each of the first three anniversaries of the date on which they are awarded, so that in three years the stock options are 100% vested. The stock options granted on December 11, 2018, expire ten years after the date of grant. For additional information regarding assumptions underlying valuation of equity awards see Note 18 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended October 31, 2019.
|
(8)
|
At the request of the UAW, the organization which recommended Mr. Dokho to the Board, the entire cash portion of Mr. Dokho's annual retainer is contributed to a trust which was created in 1993 pursuant to a restructuring of our retiree health care and life insurance benefits.
|
(9)
|
As stated in footnote 5 above, Mr. Schulz has declined receiving compensation for his service on the Board at this time. For 2019 the Company would have paid Mr. Schulz the sum of $191,342.
|
28
|
|
|
|
PROPOSAL 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
|
|
|
Your Board of Directors recommends a vote FOR the approval of named executive officer compensation.
|
•
|
The 2017 LTI performance results are slightly above target for the performance-based portion of the award.
|
•
|
The 2018 LTI performance results are projected to be above target for Adjusted EBITDA and at target for Revenue Growth.
|
•
|
The 2019 LTI performance results are projected to be above target for Adjusted EBITDA and at target for Revenue Growth.
|
•
|
The 2019 AI awards will be paid out at 134.7% of target percentage due to our achievements.
|
29
|
|
|
|
|
|
|
|
|
|
|
TROY A. CLARKE
President and Chief Executive Officer |
|
WALTER G. BORST
Executive Vice President and Chief Financial Officer |
|
PERSIO V. LISBOA
Executive Vice President and Chief Operating Officer |
|
WILLIAM V.
MCMENAMIN President, Financial Services and Treasurer |
|
CURT A. KRAMER
Senior Vice President and General Counsel |
|
|
|
|
•
Core market share up 1.3 points
◦
Class 6/7 up 3.7 points
•
Revenue up 10%, primarily reflects higher volumes in our Core markets
•
Core chargeouts up 18%
◦
Up double digits in Class 8 and Class 6/7 trucks
|
•
Adjusted net income up 29% to $423 million
•
Adjusted EBITDA up 7% to $882 million
•
Opened new parts distribution center in Olive Branch, MS near Memphis, TN
•
Expanded our service network through our partnership with Love's Travel Stops
•
Continued cadence of actions to improve the balance sheet
|
30
|
|
OPERATIONAL RESULTS
($ in millions, except figures expressed as per share)
|
|
Years Ended
October 31(A) |
|||||
|
2019
|
|
2018
|
|
||
Chargeouts(B)
|
87,200
|
|
73,900
|
|
||
Sales and revenues
|
$
|
11,251
|
|
$
|
10,250
|
|
Net income(C)
|
$
|
221
|
|
$
|
340
|
|
Diluted income per share(C)
|
$
|
2.22
|
|
$
|
3.41
|
|
Adjusted Net income
|
$
|
423
|
|
$
|
327
|
|
Adjusted EBITDA
|
$
|
882
|
|
$
|
826
|
|
Adjusted EBITDA margin
|
7.8
|
%
|
8.1
|
%
|
(A)
|
2019 results reflect ASC 606 while 2018 results are as reported
|
(B)
|
Includes U.S. and Canada School buses and Class 6-8 trucks.
|
(C)
|
Amounts attributable to Navistar International Corporation. Excludes net income attributable to non-controlling interests.
|
•
|
The Company approved 2019 long-term equity awards for each executive based on an assessment of such executive’s performance and scope of the executive’s role.
|
•
|
Based on 2019 results, the 2019 LTI awards based on performance measures are projected to be above target for adjusted EBITDA and at target for Revenue Growth.
|
•
|
Based on 2019 performance measures of our short-term annual incentive plan, 2019 AI awards will be paid at 134.7% of target.
|
•
|
For 2020, AI performance goals as determined by our Compensation Committee will include Market Share, Cost, Liquidity and A26 Sales Mix with both an adjusted EBITDA multiplier and an individual performance factor.
|
•
|
Maintained our clawback policy, which enables the Company to recover incentive-based compensation in the event of an accounting restatement due to material non-compliance with financial reporting requirements, as well as intentional misconduct; and
|
•
|
Continued to exclude pro-rata bonus from the calculation of any pension/retirement benefit under our Executive Severance Agreements.
|
2020 Proxy Statement
|
31
|
•
|
The 2017 LTI performance results are slightly above target for the performance-based portion of the award.
|
•
|
The 2018 LTI performance results are projected to be above target for Adjusted EBITDA and at target for Revenue Growth.
|
•
|
The 2019 LTI performance results are projected to be above target for Adjusted EBITDA and at target for Revenue Growth.
|
FY 2017
|
Portion of
LTI Award |
Award Type
|
Performance Measure
|
Goals/Conditions
|
Results
|
Adjustment for 3-Year
Relative TSR Modifier (+/- 25%) |
|
Performance RCUs —Adjusted EBITDA
|
Adjusted EBITDA in each year and cumulatively
over all three years |
2017: $600M
2018: $700M 2019: $825M 2017-2019: $2.125B |
2017: $582M
2018: $826M 2019: $882M 2017-2019: $2.29B => 107.25% Payout |
-3%
|
|
Performance RCUs —Market Share
|
Market Share in each
year and cumulatively over all three years |
2017: 16.3%
2018: 17.8% 2019: 18.4% 2017-2019: 17.5% |
2017: 17.3%
2018: 17.5% 2019: 18.8% 2017-2019: 17.9% => 101% Payout |
-3%
|
|
Time-Based RSUs
|
Value realized is
determined by stock price |
Continued service
|
Share price on 10/31/19 = $31.28
|
NA
|
|
Stock Options
|
Value realized is
determined by increase (if any) in stock price over strike price of $27.48 |
Continued service
|
Share price on 10/31/19 = $31.28
|
NA
|
32
|
|
FY 2018
|
Portion of
LTI Award |
Award Type
|
Performance Measure
|
Goals/Conditions
|
Results
|
Adjustment for 3-Year
Relative TSR Modifier (+/- 25%) |
|
Performance RCUs —Adjusted EBITDA
|
Total Adjusted EBITDA, 2018-2020
|
Threshold: $1.818B
Target: $2.272B Distinguished: $2.726B |
2018 Performance is
projected to be above target |
projected to be
below target |
|
Performance RCUs —Revenue Growth
|
Revenue Growth in each year and cumulatively over all three years
|
2018: 10%
2019: 4.8% 2020: 5.4% 2018-2020: 21.5% |
2018 Performance is projected to be at target
|
projected to be
below target |
|
Time-Based RSUs
|
Value realized is determined by stock price
|
Continued service
|
Share price on 10/31/19 = $31.28.
Exercise price/closing price grant |
N/A
|
|
Stock Options
|
Value realized is determined by increase (if any) in stock price over strike price of $40.18.
|
Continued service
|
Share price on 10/31/19 = $31.28.
|
N/A
|
FY 2019
|
Portion of
LTI Award |
Award Type
|
Performance Measure
|
Goals/Conditions
|
Results
|
Adjustment for 3-Year
Relative TSR Modifier (+/- 25%) |
|
Performance RCUs —Adjusted EBITDA
|
Total Adjusted EBITDA, 2019-2021
|
Threshold: $1.96B
Target: $2.45B Distinguished: $2.94B |
2019 Performance is projected to be above target
|
projected to be
below target |
|
Performance RCUs —Revenue Growth
|
Revenue Growth in each year and cumulatively over all three years
|
2019: 11%
2020: -5% 2021: 9% 2019-2021: 14.9% |
2019 Performance is projected to be at target
|
projected to be
below target |
|
Time-Based RSUs
|
Value realized is
determined by stock price |
Continued service
|
Share price on 10/31/19 = $31.28.
Exercise price/closing price grant |
N/A
|
|
Stock Options
|
Value realized is determined by increase (if any) in stock price
|
Continued service
|
Share price on 10/31/19 = $31.28.
|
N/A
|
•
|
50% performance-based LTI awards for the NEOs and the CEO, with grant sizes adjusted based on the performance of the individual and their scope within the organization.
|
•
|
An AI program designed to align with key Company performance targets which resulted in a payout at 134.7% of target.
|
2020 Proxy Statement
|
33
|
WHAT WE DO
|
|
WHAT WE DON’T DO
|
ü We use multiple performance measures in our short-term and long-term incentive plans. These performance measures are designed to link pay to performance and stockholder interests.
ü The Compensation Committee reviews external market data when making compensation decisions.
ü The Compensation Committee selects and engages its own independent advisor, Pay Governance LLC.
ü We maintain a clawback policy to recoup incentive-based compensation in the event of an accounting restatement.
ü Change in Control severance benefits are payable only upon a CIC with termination of employment (“double trigger”).
ü To aid in aligning the interest of our shareholders and officers, all officers are subject to stock ownership requirements, ranging from 6x base pay for the CEO to 3x base pay for other senior executives - including a retention requirement.
ü Our 2019 long-term incentive plan includes both absolute and relative performance metrics.
|
|
û The Company maintains policies that eliminate all tax gross-ups for perquisites and other similar benefits to Section 16 Officers, and prohibit tax gross-ups for any cash or equity awards for all employees.
û We do not reprice stock options or provide cash buyouts of underwater options.
û We prohibit short selling, trading in derivatives or engaging in hedging transactions by executives and directors. In addition, any pledging and margin account use must be pre-cleared through the Corporate Secretary or the General Counsel.
û We do not accelerate the vesting of long-term incentive awards, except in certain situations upon death.
û We do not grant extra pension service
|
•
|
Opened a new parts distribution center in Olive Branch, Mississippi near the FedEx World Hub in Memphis, Tennessee which will provide next day parts delivery to 95% of our dealer locations
|
34
|
|
•
|
Enhanced our predictive parts stocking through digitalization
|
•
|
Expanded to the industry's largest service network with over 1,000 locations through our partnership with Love's Travel Stops
|
•
|
Reduced our warranty expense as a percentage of manufacturing revenue from 1.7% in 2018 to 1.4% in 2019
|
•
|
Announced investments in our manufacturing footprint to expand our capabilities in Huntsville, Alabama for an integrated powertrain with TRATON Group and building a benchmark truck manufacturing facility in San Antonio, Texas
|
•
|
Our core market share improved from 17.5% in 2018 to 18.8% in 2019
|
•
|
We expanded the footprint of parts availability by adding 5 new Fleetrite retail outlets in the U.S. and Canada
|
•
|
Created a new aftersales function that will manage every facet of the business after the initial sale of the truck, including oversight of parts and service, warranty, and dealer development
|
•
|
Launched a new business unit, NEXT eMobility Solutions ("NEXT"), to deliver customized electrification solutions in the truck and school bus markets using lean, agile practices. NEXT establishes a comprehensive "four C's" approach to developing eMobility solutions: Consulting, Constructing, Charging, and Connecting
|
•
|
Additional actions to de-risk the balance sheet through the purchase of a Canadian pension annuity, paying off $411 million in subordinated convertible notes with cash on hand in April, expanding the revolving credit facilities of NFC, and ending the year with $1.4 billion in consolidated cash, cash equivalents and marketable securities
|
•
|
Selling off non-core business units including a 70% equity interest in our former defense business, ND Holdings, LLC, and our ownership in our former joint venture in China with Anhui Jianghuai Automobile Co., Ltd
|
•
|
People: Driving high performing cross-functional teams while recruiting and developing key leadership roles by:
|
◦
|
Expanding on our lean culture through visual management, agile approaches, and a focus on execution
|
◦
|
Developing our best resources and redeploying resources to focus on our growth initiatives, and
|
◦
|
Leveraging our strong values
|
•
|
Performance: Creating a sustainable long-term performance advantage within our products and services by investing in those areas with the greatest impact on our margins and overall financial performance. These areas include the following:
|
◦
|
Enterprise Platform Strategy: A shared platform strategy for all key vehicle systems
|
◦
|
Advanced Modular Architecture: Optimizing parts used in our vehicles to be able to deliver a customized solution to customers with the least amount of engineering work. This creates the potential to significantly improve productivity in engineering and research & development and provide us more flexibility to invest in new products and technologies
|
◦
|
Integrated Manufacturing: Investments that will allow us to optimize our manufacturing network by having a strong supplier footprint, and provide mutually beneficial relationships with our suppliers
|
2020 Proxy Statement
|
35
|
◦
|
Aftersales Acceleration: Builds on our commitment to organically grow the parts business by helping our dealers to improve their parts sales though enhanced training, data analysis and market knowledge
|
◦
|
Integrated Powertrain: Joint effort between Navistar and TRATON Group to incorporate the requirements we need for the North American market into their next generation of products that when combined with our investment in our Huntsville, Alabama facility for localizing the next generation big-bore diesel powertrain, will provide significant growth and margin opportunities
|
•
|
#1 Choice: Identifying and focusing on key markets where we have a differentiated value, defining how we will operate in that market, and how to prove to our customers that we are their #1 choice by:
|
◦
|
Following a Listen-Understand-Deliver approach to provide our customers what they truly need to succeed
|
◦
|
Understanding our customers better than our competitors, ensuring that our products and services provide value to our customers, and by organizing to be aligned with our customers
|
◦
|
Ensuring our products and services provide leading uptime and low total cost of ownership
|
◦
|
Strengthening our brand and residual values to capture more of the 2nd and 3rd owner markets, and
|
◦
|
Strengthening our dealers and building stronger partnerships with them through our Vision 2025 strategy
|
|
|
|
COMPETITIVE POSITIONING
|
PAY-FOR-PERFORMANCE
|
OWNERSHIP AND RESPONSIBILITY
|
Total remuneration is designed to attract and retain the executive talent necessary to achieve our goals through a market competitive total remuneration package.
|
A substantial portion of each NEO's compensation is performance-based with a direct link to Company as well as individual performance. It is designed to align the interests of executives and stockholders.
|
Compensation programs are designed to recognize individual contributions as well as link NEO and stockholder interests through programs that reward our NEOs, based on the financial success of the Company and increases to stockholder value.
|
|
|
|
36
|
|
NAVISTAR CEO TARGET TDC MIX
|
|
MARKET CEO TARGET TDC MIX
|
|
|
|
|
|
|
NAVISTAR CFO TARGET TDC MIX
|
|
MARKET CFO TARGET TDC MIX
|
|
|
|
2020 Proxy Statement
|
37
|
NAVISTAR NEO TARGET TDC MIX
|
|
MARKET NEO TARGET TDC MIX
|
|
|
|
Pay Element
|
What it Does
|
Performance Measures
|
Base Salary
|
Provides competitive base salary, typically reviewed annually, and balances risk-taking concerns with stockholder interests
|
Job scope, experience, performance and market data
|
Short-term Annual Incentive or AI
|
Provides a competitive incentive opportunity and aligns individual and Company performance
|
The goals established for 2019 include Market Share, Cost, Liquidity and Uptime as well as an adjusted EBITDA multiplier
|
Long-Term Equity Incentives or LTI (including stock option grants)
|
Aligns executive and stockholder interests by tying compensation to share price appreciation, builds long-term stockholder value, and cultivates stock ownership
|
The amount of the 2019 LTI awards were adjusted for each executive based upon an evaluation of market data, individual performance, and scope of the position within the organization
|
38
|
|
Pay Element
|
Contractual Terms
|
Annual Base Salary
|
$1,050,000
|
Short-term Annual Incentive or AI(1)
|
Target AI of 125% of Base Salary Maximum AI of 250% of Base Salary. For the fiscal year in which his employment term ends, Mr. Clarke will be entitled to a pro-rata portion of AI (based on actual performance results) paid in a lump sum, even if he is not employed by the Company on the payment date.
|
Long-Term Incentive or LTI
|
Value of $5,500,000 in 2019
|
Total Target Direct Compensation
|
$7,862,500
|
Other Benefits
|
Eligible to participate in the Company plans, policies, perquisites and arrangements that are applicable to other senior officers of the Company, including life insurance equal to five times base salary and vacation equal to four weeks
|
Severance Provisions
|
In the event that Mr. Clarke’s employment is terminated without Cause or due to constructive termination other than in connection with a CIC, he would receive severance of: (i) two times Mr. Clarke’s base salary plus target AI award, (ii) a pro-rated portion of the AI award that would have been paid to Mr. Clarke had he remained employed at the time such payments are made to the employees generally, (iii) 12 months continued health care coverage with an option to purchase an additional 12 months at the cost of coverage rate, and (iv) continued life insurance for 24 months after termination.
In the event that Mr. Clarke’s employment is terminated without Cause or due to constructive termination within either 90 days prior to a CIC or within 24 months after a CIC, he would receive severance of: (i) two times Mr. Clarke’s base salary plus target AI award, (ii) a pro-rated portion of the target AI award, (iii) 12 months continued health care coverage with an option to purchase an additional 12 months at the cost of coverage rate, and (iv) continued life insurance for 24 months after termination.
Following expiration of his employment term, if requested by the Board, Mr. Clarke will serve as executive chairman of the Board for a period of not more than two years. During such period, his compensation will be equal to the cash equivalent of the non-employee director cash and equity retainer. Vesting of equity awards and performance cash incentives outstanding following Mr. Clarke’s termination of employment will continue regardless of whether he has been requested by the Board to serve as executive chairman following his employment term, subject to his continued compliance with non-competition and non-solicitation covenants.
|
(1)
|
Actual payout at 134.7% of target for 2019.
|
2020 Proxy Statement
|
39
|
Leadership Accomplishments
|
• Completed strong succession plans for all key positions
• Made changes to senior leadership to support the desired performance and organizational culture
|
Product Accomplishments
|
• Created e-Mobility business unit and opened e-technology center
• Introduced concept e-MB and e-IC school bus
• Increased focus on product line profitability
|
Operation Accomplishments
|
• Significantly improved material cost in the face of commodity increases
• Made substantial progress toward the 5 year cost savings target from the procurement JV with TRATON
|
Commercial Accomplishments
|
• Increased overall market share
• Implemented new after-sales organization and support network transformation
• Surpassed the Uptime performance of a key competitor
|
•
|
Management of the alliance relationship, procurement JV, and product programs
|
•
|
Analysis of options for enhancing our powertrain portfolio
|
•
|
Implementation of a product line profitability process to manage mix, content, complexity and pricing
|
•
|
Preparation of business plans that are responsive to uncertain 2020 market conditions
|
•
|
Acceleration of succession plans for key leader positions and further develop CEO transition plan
|
NEO
|
Current Base Salary
|
|
Effective Date
|
Previous Base Salary
|
|
Effective Date
|
||
Troy A. Clarke
|
$
|
1,050,000
|
|
April 16, 2018
|
$
|
1,000,000
|
|
April 22, 2016
|
Walter G. Borst(2)
|
$
|
772,335
|
|
February 1, 2018
|
$
|
749,840
|
|
February 1, 2016
|
Persio V. Lisboa(1)
|
$
|
765,450
|
|
February 1, 2019
|
$
|
729,000
|
|
February 1, 2018
|
William V. McMenamin(2)
|
$
|
460,000
|
|
September 1, 2017
|
$
|
386,650
|
|
February 1, 2016
|
Curt A. Kramer(1)
|
$
|
471,656
|
|
February 1, 2019
|
$
|
440,800
|
|
February 1, 2018
|
(1)
|
Messrs. Lisboa and Kramer received base salary increases due to performance in February 2019.
|
(2)
|
In lieu of a base salary increase, Messrs. Borst and McMenamin received one-time lump sum bonus payments in February 2019 of $30,893 and $18,400, respectively, due to the Compensation Committee's subjective determination of each executive's performance.
|
40
|
|
•
|
Each AI financial performance metric is independent. Eligibility for payout is based on the attainment of each individual metric.
|
•
|
We use two design features: an adjusted EBITDA multiplier which scales the annual incentive up or down from the target level based upon actual financial performance of Navistar, and an individual performance factor.
|
•
|
We continue to leverage our AI scorecard using multiple performance metrics. This allows the NEOs to see how their individual achievements contribute to the overall effort and success of the Company.
|
(1)
|
Liquidity metric is $395M less dividends. In addition, management applied a discretionary reduction based on elements that were not in the original scope of the AI plan, including the exclusion of any receivables purchased by NFC from Canada operations and any NFC advanced tax payments.
|
2020 Proxy Statement
|
41
|
2020 Performance Goal
|
Weighting
|
|
Description
|
Target
|
Market Share
|
30
|
%
|
Segment-Weighted
|
19.7%
|
Gross Margin
|
30
|
%
|
Segment-Weighted
|
19.0%
|
Liquidity
|
30
|
%
|
Operating Cash Flow
|
$0
|
A26 Sales Mix
|
10
|
%
|
Charge-outs
|
35.0%
|
•
|
Continuing to use Market Share and Liquidity metrics.
|
•
|
Replacing the Cost metric with a Gross Margin metric.
|
•
|
Replacing the Uptime metric with an A26 Sales Mix metric.
|
•
|
Continuing the use of the adjusted EBITDA multiplier and an individual performance factor.
|
•
|
Aligning NEO and stockholder interests by tying compensation to share price appreciation.
|
•
|
Building long-term stockholder value.
|
•
|
Cultivating stock ownership.
|
42
|
|
*
|
We have a 3-Year Relative Total Shareholder Return (TSR) “wrapper” around the annual goals in order to measure Navistar’s stock price against our proxy peer group and any payouts are subject to the TSR multiplier which can decrease the payment by as much as 25% or increase the payment by as much as 25%, depending on the value of the TSR at the end of fiscal year 2021.
|
NEO
|
Performance-
Based RCUs |
|
Time-Based Restricted Stock Units
|
Time-Based Stock Options
|
Targeted
Economic Value |
|
||
Troy A. Clarke(1)
|
$
|
2,750,000
|
|
46,955
|
66,747
|
$
|
5,500,000
|
|
Walter G. Borst(1)
|
$
|
1,050,000
|
|
17,958
|
30,900
|
$
|
2,205,000
|
|
Persio V. Lisboa(1)
|
$
|
900,000
|
|
15,393
|
26,485
|
$
|
1,890,000
|
|
William V. McMenamin(1)
|
$
|
250,000
|
|
4,275
|
7,356
|
$
|
525,000
|
|
Curt A. Kramer(1)
|
$
|
375,000
|
|
6,413
|
11,035
|
$
|
787,500
|
|
(1)
|
Long-term incentive awards for all NEOs were granted in February 2019 with the exception of Mr. Clarke. Mr. Clarke’s long-term incentive awards were granted in April 2019.
|
2020 Proxy Statement
|
43
|
TARGET
|
|
|
|
|
|
|
|
|
|
|
|
|
80%
Adjusted EBITDA |
+
|
20%
Market Share |
|
×
|
|
TSR Multiplier
|
=
|
|
Performance Cash Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
ADJUSTED EBITDA GOAL
|
|
MARKET SHARE GOALS
|
|
||||
|
|
Threshold
(50%) |
Target
(100%) |
Distinguished
(125%) |
|
Threshold
(50%) |
Target
(100%) |
Distinguished
(125%) |
|
|
2019
|
|
2019
|
|
|
||||
|
2018
|
|
2018
|
|
|
||||
|
2017
|
|
2017
|
|
|
||||
|
Results:
2017 – 2019 Weighted Total |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
*
|
Values shown reflect the new segment-weighted methodology for 2019.
|
RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
|
85.8%
Adjusted EBITDA (80% x 107.25% = 85.8%) |
+
|
20.2%
Market Share (20% x 101% = 20.2%) |
|
×
|
|
0.97
TSR Multiplier |
=
|
|
102.8%
Performance Cash Payout |
|
|
|
|
|
|
|
|
|
|
|
44
|
|
SUMMARY OF THE EXECUTIVE SALARY PLANNING APPROVAL PROCESS
|
1
|
|
2
|
|
3
|
|
The CEO makes base salary recommendations for the NEOs and most Section 16 Officers to the Compensation Committee. The CEO does not participate in decisions regarding his own compensation.
|
The Compensation Committee reviews the salary for the CEO and reviews, approves and/or adjusts the CEO’s base salary recommendations for the other NEOs and Section 16 Officers included in the CEO’s recommendation.
|
The Compensation Committee then recommends, and the independent members of the Board approve or adjust, the salary recommendation for the CEO.
|
•
|
Attend committee meetings at the request of the Compensation Committee
|
•
|
Advise the Compensation Committee on market trends, regulatory issues and developments and how these could impact our executive compensation programs
|
•
|
Review the compensation strategy and executive compensation programs for alignment with our strategic business objectives
|
•
|
Advise on the design of executive compensation programs to ensure the linkage between pay and performance;
|
•
|
Provide market data analysis to the Company
|
•
|
Advise the Compensation Committee and the Board on setting the CEO pay
|
•
|
Review the annual compensation of the other NEOs as recommended by the CEO
|
•
|
Perform such other activities as requested by the Compensation Committee.
|
2020 Proxy Statement
|
45
|
•
|
Included in the Aerospace and Defense, Construction Machinery and Heavy Trucks, Industrial Machinery, Auto Parts and Equipment, Tires and Rubber or Agricultural and Farm Machinery sub-industries (i.e., primary industries), as defined by the S&P Global Industry Classification Standard (“GICS”)
|
•
|
Headquarters or primary operations are in the U.S. (preference for companies headquartered in the Midwest)
|
•
|
Names Navistar as a peer group company
|
•
|
Similar revenues
|
•
|
Was included in the prior year’s peer group
|
3-Year Average Revenues(1)
($ mil.) |
|
(1)
|
Average of trailing 12-month revenues, as of August 31, 2016, 2017, and 2018 (excluding American Axle, for which trailing 12-month revenues are as of August 2018 only. 2016 and 2017 data were not applicable, because trailing 12 month revenues for such periods were before American Axle's acquisition of Metaldyne and did not provide meaningful results as such trailing 12-month revenues skewed the 3-year average for American Axle much lower).
|
46
|
|
TRAILING 12 MONTHS ASSETS
($ mil.) |
|
TRAILING 12 MONTHS ENTERPRISE VALUE
($ mil.) |
|
•
|
All financial and market data are taken from Standard & Poor’s Capital IQ database.
|
•
|
All data is as of August 31, 2018 unless otherwise noted.
|
•
|
All data shown as reviewed by the Compensation Committee at the time of the peer group approval.
|
2020 Proxy Statement
|
47
|
48
|
|
NEO
|
Life Insurance(1)
|
Executive Flexible
Perquisite Program(2) |
Pension/Retirement/401(k) Plans(3)
|
||
RAP
|
SRAP
|
SERP
|
|||
Troy A. Clarke
|
|
|
|
|
|
Walter G. Borst
|
|
|
|
|
|
Persio V. Lisboa
|
|
|
|
|
|
William V. McMenamin
|
|
|
|
|
|
Curt A. Kramer
|
|
|
|
|
|
(1)
|
Life Insurance. We provide our executives Company-paid life insurance equal to five times base salary. The beneficiary of each individual policy is as designated by the executive.
|
(2)
|
Executive Flexible Perquisites. This provides a cash stipend to each of our NEOs, the amount of which varies by executive, based upon the executive’s organization level and is set forth in the table below. In addition, a spouse may accompany an NEO while he or she is traveling on Company business. Although this occurs on a limited basis, the spouse’s travel expense is included in taxable compensation of the NEO.
|
(3)
|
Pension/Retirement/401(k) Plans
|
•
|
Retirement Accumulation Plan (‘‘RAP’’). This is our tax-qualified defined contribution/401(k) plan for salaried employees. Our NEOs receive age-weighted contributions and/or matching contributions depending on their eligibility for retiree medical coverage.
|
•
|
Supplemental Retirement Accumulation Plan (‘‘SRAP’’). This is our non-qualified deferred compensation plan designed primarily to restore the age-weighted contributions that participants would otherwise have received if the IRC compensation limit had not applied to the RAP.
|
•
|
Supplemental Executive Retirement Plan (‘‘SERP’’). This is designed as a pension supplement to attract and retain key executives. The SERP is unfunded and is not qualified for tax purposes.
|
Named Executive Officer
|
Annual Flexible
Perquisite Payment ($) |
Perquisite Payment
($) |
|
|
Total Perquisite Payment
($) |
Troy A. Clarke
|
46,000
|
2,003
|
|
(1)
|
48,003
|
Walter G. Borst
|
37,000
|
—
|
|
|
37,000
|
Persio V. Lisboa
|
37,000
|
—
|
|
|
37,000
|
William V. McMenamin
|
28,000
|
—
|
|
|
28,000
|
Curt A. Kramer
|
24,000
|
—
|
|
|
24,000
|
(1)
|
$2,003 was paid on behalf of Mr. Clarke for legal fees incurred with the 2019 Employment Agreement Amendment.
|
2020 Proxy Statement
|
49
|
|
Up to Age 55
|
On or After Age 55
|
|
Each Year of Age
|
1/2%
|
1
|
%
|
Each Year of Service
|
1/2%
|
1
|
%
|
50
|
|
2020 Proxy Statement
|
51
|
•
|
A requirement that an executive retain a certain amount of shares received pursuant to Company executive compensation programs (75% for the CEO and 50% for other executives) until the executive satisfies the stock ownership guideline multiples described above
|
•
|
A one-year holding period (75% for the CEO and 50% for other executives) of shares received pursuant to Company executive compensations programs after the executive satisfies the stock ownership guideline multiples described above
|
52
|
|
•
|
The expiration date of the agreement period post-Change in Control will be the date that occurs eighteen (18) months after the date of the CIC;
|
•
|
A CIC will not occur if certain ‘‘Excluded Persons’’ (including Mark H. Rachesky, Icahn Enterprises and employee or retirement benefit plans or trusts sponsored or established by the Company) become the ‘‘Beneficial Owner’’ of securities representing 50% or more of the combined voting power of the Company’s then-outstanding securities;
|
•
|
The level of ownership of securities required to trigger a CIC is 50% or more of the combined voting power of the Company’s then-outstanding securities;
|
•
|
A termination will be deemed to occur after a CIC if it occurs during the agreement period or during the eighteen (18) month period immediately following the CIC;
|
•
|
A diminution of authority sufficient to trigger a termination for ‘‘Good Reason’’ occurs if the executive officer experiences a decrease in his or her organizational level, a reduction in base salary by ten percent (10%) or more, or a change to his or her reporting structure that requires the executive to report to a supervisor whose organizational level is below the executive’s current organizational level;
|
•
|
The executive officer’s obligations (i) not to disclose confidential, secret, proprietary or privileged information pertaining to the business of the Company, (ii) to refrain from making any defamatory, disparaging, slanderous, libelous or derogatory statements about the Company and (iii) to cooperate and provide assistance to the Company in connection with litigation or any other matters, continue at all times during the agreement period of the ESA and at all times following the executive officer’s termination of employment for any reason;
|
•
|
The Compensation Committee may require the executive officer to repay incentive pay previously received from the Company if the Compensation Committee determines that repayment is due on account of a restatement of the Company’s financial statements or for another reason under the Company’s Clawback Policy;
|
•
|
Continued life insurance coverage provided for an 18 month period following termination;
|
•
|
In the event of a termination under the ESA, the executive officer’s eligibility for separation payments and benefits is conditioned on the executive officer’s timely signing, and not revoking, a written release agreement in a form acceptable to the Company; and
|
•
|
No payments are eligible for IRC Section 280G excise tax gross-up.
|
2020 Proxy Statement
|
53
|
•
|
Be paid the value of unused and accrued vacation;
|
•
|
Not be eligible for an AI payment if the termination occurred prior to year-end or if the termination occurred after year end and prior to the payment date;
|
•
|
Be able to exercise vested stock options for twelve months, following a voluntary termination;
|
•
|
Forfeit any unvested time and performance-based stock options;
|
•
|
Forfeit any unvested restricted stock and time and performance-based RSUs;
|
•
|
Forfeit any unvested cash-settled performance shares; and
|
•
|
Forfeit any unvested RCUs.
|
•
|
The value of unused and accrued vacation;
|
•
|
Monthly income from any defined benefit pension plans, both tax-qualified and non-tax-qualified, that the executive participated in solely to the extent provided under the terms of such plans;
|
•
|
Lump sum distributions from any defined contribution plans, both tax-qualified and non-tax-qualified, that the executive participated in solely to the extent provided under the terms of such plans; and
|
•
|
A pro-rata portion of cash-settled RCUs.
|
•
|
An amount equal to one-hundred to two-hundred percent (100% to 200%) of the total of (i) the executive’s annual base salary in effect at the time of termination and (ii) the executive’s AI plan award at target level (the ‘‘Severance Pay’’);
|
•
|
Continued health insurance for the 24-month period following termination; provided that for the first 12 month period, the executive shall pay for such coverage at no greater after tax costs to the executive than the after-tax cost to the executive officer immediately prior to the date of termination and for the remaining 12-month period, the executive officer shall pay for such coverage on a monthly cost of coverage basis;
|
•
|
Pro-rata annual incentive for the number of months of fiscal year eligible participation which is based upon actual results and will only be paid if and at the same time that the Company pays AI plan awards to active employees;
|
•
|
Continued life insurance coverage for the 18-month period following termination;
|
•
|
Outplacement services;
|
54
|
|
•
|
Retention of any flexible perquisite allowance actually paid to the executive officer on or before the time of termination;
|
•
|
A lump sum cash payment equal to the value of unused and accrued vacation;
|
•
|
Such pension and post-retirement health and life insurance benefits due to the executive officer upon his or her termination pursuant to and in accordance with the respective Company-sponsored benefit plans, programs, or policies under which they are accrued and/or provided (including grow-in rights as provided under the terms of the applicable plan, program or policy);
|
•
|
The right to exercise vested stock options for twelve months; and
|
•
|
Forfeit any unvested RCUs, any unvested stock options and any unvested restricted stock, or RSUs.
|
•
|
An amount equal to (i) a pro-rata portion of the executive officer’s AI plan award at target level (the ‘‘CIC Prorated Bonus’’), which payment shall be in lieu of any payment to which the executive officer may otherwise have been entitled to receive under a Change in Control-sponsored incentive or bonus plan, plus (ii) a multiplier ranging from 150% to 300% of the sum of the executive officer’s annual base salary in effect at the time of termination and the executive officer’s AI award at target level (the ‘‘CIC Severance Pay’’). The CIC Severance Pay and the CIC Prorated Bonus shall be paid in a lump sum on the payment date;
|
•
|
Continued health insurance for the 24-month period following termination; provided that for the first 12 month period, the executive officer shall pay for such coverage at no greater after tax costs to the executive officer than the after tax cost to the executive officer immediately prior to the date of termination and for the remaining 12-month period, the executive officer shall pay for such coverage on a monthly cost of coverage basis;
|
•
|
Continued life insurance coverage for the 18-month period following termination;
|
•
|
Outplacement services;
|
•
|
Tax counseling and tax preparation services;
|
•
|
Retention of any flexible perquisite allowance actually paid to the executive officer on or before the time of termination;
|
•
|
A lump sum cash payment equal to the value of unused vacation;
|
•
|
Acceleration of the vesting of all options, which such options will be exercisable for a period of three years from the date of the Change in Control, or if earlier the original term of the Award.
|
•
|
Acceleration of the vesting of cash-settled RCUs at the target performance level;
|
•
|
Acceleration of vesting of the SRAP balance; and
|
•
|
A lump sum cash payment equal to the difference in (i) the actuarial present value of the executive officer’s non-tax-qualified pension benefits assuming the executive officer was 18 months older and had 18 more months of service, over (ii) the actuarial present value of the executive officer’s non-tax-qualified pension benefits at the date of termination.
|
2020 Proxy Statement
|
55
|
NEO
|
Multiplier – Involuntary Not for
Cause or Good Reason Termination |
|
Multiplier – Change
in Control |
|
Troy A. Clarke(1)
|
200
|
%
|
200
|
%
|
Walter G. Borst
|
200
|
%
|
300
|
%
|
Persio V. Lisboa
|
200
|
%
|
300
|
%
|
William V. McMenamin
|
150
|
%
|
300
|
%
|
Curt A. Kramer
|
150
|
%
|
200
|
%
|
(1)
|
Mr. Clarke does not have an ESA. Per the Employment Agreement, as amended, in the event his employment with the Company is terminated (i) by the Company without Cause, or (ii) by executive due to Constructive Termination, as defined in the Employment Agreement, as amended, then in addition to accrued obligations, he is eligible for the sum of 200% of his base salary plus target annual incentive.
|
56
|
|
(1)
|
The amounts reported in this column reflect the aggregate fair value of stock-based awards (other than stock options) granted in the year computed in accordance with FASB ASC Topic 718. Generally the aggregate grant date fair value is the amount that the Company expects to expense for accounting purposes over the award’s vesting schedule and does not correspond to the actual value that will be realized by the officers. The fair values of stock-based awards are estimated using the closing price of our stock on the grant date. Stock-based awards settle in common stock on a one-for-one basis, or the cash equivalent of the common stock. The grant date fair values of each individual stock based award in 2019 are set forth in the Grants of Plan-Based Awards table on page 59. Additional information about these values is included in Note 18 to our audited financial statements included in our Annual Report on Form 10-K for the year ended October 31, 2019.
|
(2)
|
The amounts reported in this column reflect the aggregate fair value of stock options, granted in the year computed in accordance with FASB ASC Topic 718. These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be realized by the officers. Assumptions used in the calculation of these values are included in Note 18 to our audited financial statements included in our Annual Report on Form 10-K for the year ended October 31, 2019. A description of stock options appears in the narrative text following the Grants of Plan-Based Awards table.
|
(3)
|
The amounts reported in this column represent the 2019 AI plan award payment based on an actual payout at 134.7% of target and performance- based RCUs earned in 2019 under the 2017 LTI. AI awards are projected to be paid in February 2020. The value of the 2019 AI Awards are as follows: Mr. Clarke $1,767,938, Mr. Borst $780,251, Mr. Lisboa $773,296, Mr. McMenamin $371,772, and Mr. Kramer $381,192. In addition, we reported the value of performance-based RCUs earned in fiscal year 2019 based on the probable outcome of such performance conditions, which was not maximum. The value of the performance-based RCUs for each NEO are as follows: Mr. Clarke $2,437,902, Mr. Borst $1,137,688, Mr. Lisboa $866,810, Mr. McMenamin $270,878, and Mr. Kramer $108,351.
|
2020 Proxy Statement
|
57
|
(4)
|
These amounts represent the difference in the market interest rate under the IRC and the interest credit rate of 7.5% per annum compounded on a daily basis on the SRAP. The 7.5% is the rate used to design the SRAP as a comparable replacement for the Managerial Retirement Objective (“MRO”). The interest credit rate constitutes an “above-market interest rate” under the IRC. These amounts also represent the change in actuarial present value of the SERP for Messrs. Clarke, Borst, Lisboa, McMenamin and Kramer.
|
(5)
|
“All Other Compensation” reflects the following items: flexible perquisite cash allowances; Company-paid legal fees; Company-paid life and accidental death and disability (“AD&D”) insurance premiums; Company contributions to the RAP and the SRAP; and taxable spouse travel.
|
NEO
|
Flexible
Perquisites Cash Allowances |
|
Company-Paid Legal Fees(1)
|
|
Company
Paid Life and AD&D Insurance Premiums |
|
Company Contributions to RAP
|
|
Company Contributions to SRAP
|
|
Taxable Spouse Travel
|
|
Other Comp
|
|
Total
|
|
||||||||
Clarke
|
$
|
46,000
|
|
$
|
2,003
|
|
$
|
32,256
|
|
$
|
27,700
|
|
$
|
146,771
|
|
$
|
0
|
|
$
|
0
|
|
$
|
254,730
|
|
Borst
|
$
|
37,000
|
|
$
|
0
|
|
$
|
13,324
|
|
$
|
27,700
|
|
$
|
75,997
|
|
$
|
0
|
|
$
|
0
|
|
$
|
154,021
|
|
Lisboa
|
$
|
37,000
|
|
$
|
0
|
|
$
|
8,992
|
|
$
|
27,070
|
|
$
|
68,639
|
|
$
|
816
|
|
$
|
0
|
|
$
|
142,517
|
|
McMenamin
|
$
|
28,000
|
|
$
|
0
|
|
$
|
9,881
|
|
$
|
27,700
|
|
$
|
33,517
|
|
$
|
82
|
|
$
|
0
|
|
$
|
99,180
|
|
Kramer
|
$
|
24,000
|
|
$
|
0
|
|
$
|
4,304
|
|
$
|
27,700
|
|
$
|
26,722
|
|
$
|
0
|
|
$
|
0
|
|
$
|
82,726
|
|
(1)
|
The amount reported for Mr. Clarke represent legal fees incurred in connection with the 2019 Employment Agreement Amendment and paid on Mr. Clarke’s behalf.
|
2020 Proxy Statement
|
58
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards |
All Other
Stock Awards: Number of Shares of Stock or Units #(1) |
All Other
Option Awards: Number of Securities Underlying Options (#)(2) |
Exercise or
Base Price of Option Awards ($/Sh) |
Grant
Date Fair Value of Stock and Option Awards ($)(3) |
||
Name
|
Grant Date
|
Threshold
($) |
Target
($) |
Maximum
($) |
||||
Troy A. Clarke
|
|
|
|
|
|
|
|
|
Performance RCU - Adjusted EBITDA(4)
|
4/24/2019
|
515,625
|
1,375,000
|
3,437,500
|
|
|
|
|
Performance RCU - Revenue Growth(4)
|
4/24/2019
|
515,625
|
1,375,000
|
3,437,500
|
|
|
|
|
AI Plan Award - Cash(5)
|
|
131,250
|
1,312,500
|
2,953,125
|
|
|
|
|
RSU
|
4/24/2019
|
|
|
|
46,955
|
|
|
1,649,999
|
Stock Option
|
4/24/2019
|
|
|
|
|
66,747
|
35.14
|
1,099,991
|
Walter G. Borst
|
|
|
|
|
|
|
|
|
Performance RCU - Adjusted EBITDA(4)
|
2/13/2019
|
196,875
|
525,000
|
1,312,500
|
|
|
|
|
Performance RCU - Revenue Growth(4)
|
2/13/2019
|
196,875
|
525,000
|
1,312,500
|
|
|
|
|
AI Plan Award - Cash(5)
|
|
57,925
|
579,251
|
1,303,315
|
|
|
|
|
RSU
|
2/13/2019
|
|
|
|
17,958
|
|
|
629,967
|
Stock Option
|
2/13/2019
|
|
|
|
|
30,900
|
35.08
|
524,991
|
Persio V. Lisboa
|
|
|
|
|
|
|
|
|
Performance RCU - Adjusted EBITDA(4)
|
2/13/2019
|
168,750
|
450,000
|
1,125,000
|
|
|
|
|
Performance RCU - Revenue Growth(4)
|
2/13/2019
|
168,750
|
450,000
|
1,125,000
|
|
|
|
|
AI Plan Award - Cash(5)
|
|
54,675
|
546,750
|
1,230,188
|
|
|
|
|
RSU
|
2/13/2019
|
|
|
|
15,393
|
|
|
539,986
|
Stock Option
|
2/13/2019
|
|
|
|
|
26,485
|
35.08
|
449,980
|
William V. McMenamin
|
|
|
|
|
|
|
|
|
Performance RCU - Adjusted EBITDA(4)
|
2/13/2019
|
46,875
|
125,000
|
312,500
|
|
|
|
|
Performance RCU - Revenue Growth(4)
|
2/13/2019
|
46,875
|
125,000
|
312,500
|
|
|
|
|
AI Plan Award - Cash(5)
|
|
27,600
|
276,000
|
621,000
|
|
|
|
|
RSU
|
2/13/2019
|
|
|
|
4,275
|
|
|
149,967
|
Stock Option
|
2/13/2019
|
|
|
|
|
7,356
|
35.08
|
124,978
|
Curt A. Kramer
|
|
|
|
|
|
|
|
|
Performance RCU - Adjusted EBITDA(4)
|
2/13/2019
|
70,313
|
187,500
|
468,750
|
|
|
|
|
Performance RCU - Revenue Growth(4)
|
2/13/2019
|
70,313
|
187,500
|
468,750
|
|
|
|
|
AI Plan Award - Cash(5)
|
|
28,299
|
282,994
|
636,737
|
|
|
|
|
RSU
|
2/13/2019
|
|
|
|
6,413
|
|
|
224,968
|
Stock Option
|
2/13/2019
|
|
|
|
|
11,035
|
35.08
|
187,485
|
(1)
|
Restricted Stock Units. The amounts shown for RSUs represent the number of RSUs awarded to the NEO’s in the fiscal year under our 2013 PIP, as described more fully under the Long-Term Incentives section of this proxy statement. The RSUs will cliff vest as to 100% of the units awarded on the 3 year anniversary of the date the award was granted, subject to service conditions being met. The RSUs will be settled in shares at the time they vest.
|
(2)
|
Stock Options. The amounts shown represent the number of stock options awarded to the NEO’s in the fiscal year under our 2013 PIP, as described more fully under the Long-Term Incentives section of this proxy statement. The stock options generally vest over a three-year period with ⅓rd of the award vesting on each of the first three anniversaries of the date on which they are awarded, so that in three years the stock options are 100% vested, subject to service conditions being met. The stock options expire ten years after the date of grant.
|
2020 Proxy Statement
|
59
|
(3)
|
The amounts shown do not reflect realized compensation by the NEOs. The amounts shown represent the value of the stock settled RSUs and stock options granted to the NEOs based on the grant date fair value of the awards as determined in accordance with FASB ASC Topic 718.
|
(4)
|
Performance RCUs - EBITDA and Performance RCUs - Revenue Growth. The amounts shown represent the threshold, target and maximum number of performance RCUs that we awarded in the fiscal year to the NEOs under our 2013 PIP, as described more fully under the Long Term Incentives section of this proxy statement. The extent to which our NEOs will receive any amounts under the EBITDA performance award is based on the 3 year cumulative Adjusted EBITDA target percentage achieved for 2019, 2020 and 2021, with a relative 3 year TSR modifier. The extent to which our NEOs will receive any amounts under the Revenue Growth performance award is based on the individual Revenue Growth rates for fiscal years 2019, 2020 and 2021, and a Cumulative Revenue Growth rate, based on the combined percentage increase/decrease in Revenue Growth for fiscal years 2019, 2020 and 2021, with a 3-year relative TSR modifier. The RCUs represent a cash plan with each RCU representing $1. These amounts may not be paid to or realized by the NEOs. The RCUs generally cliff vest as to 100% of the units awarded on the 3 year anniversary of the date the award was granted, subject to the service conditions and performance conditions being met.
|
(5)
|
The amounts set forth in this row represent the estimated cash payments to be awarded to our NEO’s under the Company’s 2019 AI Plan. The actual cash payments will be based on achievement at 134.7% of target. For additional information regarding the 2019 cash AI awards, see the Annual Incentives section of this proxy statement. Under the AI plan, the performance metric threshold is 40% of target, target is 100% and for purposes of this table maximum equals distinguished which is 150% of target. In addition, there is an EBITDA multiplier under the AI plan which is 25% for under threshold, 40% at threshold, 100% at target and 150% at distinguished.
|
2020 Proxy Statement
|
60
|
|
Option Awards(1)(3)
|
|
Stock Awards
|
||||||||
|
Number of Securities
Underlying Unexercised Options |
Option
Exercise Price ($) |
Option
Expiration Date |
|
Number of Shares or Units of Stock
Held that Have Not Vested (#)(2)(3) |
|
Market Value of Shares or Units of Stock Held that
Have Not Vested ($) |
|
|||
Name
|
Exercisable
(#)
|
|
Unexercisable
(#)
|
|
|||||||
Troy A. Clarke
|
224,000
|
|
—
|
|
38.300
|
4/22/2020
|
|
49,126
|
|
1,536,661
|
|
|
373,333
|
|
—
|
|
30.640
|
4/22/2020
|
|
40,530
|
|
1,267,778
|
|
|
135,012
|
|
—
|
|
35.090
|
3/10/2021
|
|
46,955
|
|
1,468,752
|
|
|
81,007
|
|
—
|
|
43.860
|
3/10/2021
|
|
—
|
|
—
|
|
|
45,489
|
|
22,744
|
|
27.480
|
2/14/2027
|
|
—
|
|
—
|
|
|
18,333
|
|
37,664
|
|
40.710
|
4/16/2028
|
|
—
|
|
—
|
|
|
—
|
|
66,747
|
|
35.140
|
4/24/2029
|
|
—
|
|
—
|
|
Total:
|
877,174
|
|
127,155
|
|
|
|
|
136,611
|
|
4,273,191
|
|
Walter G. Borst
|
58,789
|
|
—
|
|
35.220
|
8/1/2020
|
|
22,925
|
|
717,094
|
|
|
12,476
|
|
—
|
|
27.670
|
2/11/2022
|
|
15,679
|
|
490,439
|
|
|
14,971
|
|
—
|
|
27.670
|
2/11/2022
|
|
17,958
|
|
561,726
|
|
|
21,228
|
|
10,614
|
|
27.480
|
2/14/2027
|
|
—
|
|
—
|
|
|
7,539
|
|
15,078
|
|
40.180
|
2/13/2028
|
|
—
|
|
—
|
|
|
—
|
|
30,900
|
|
35.080
|
2/13/2029
|
|
—
|
|
—
|
|
Total:
|
115,003
|
|
56,592
|
|
|
|
|
56,562
|
|
1,769,259
|
|
Persio V. Lisboa
|
32,895
|
|
—
|
|
27.240
|
2/19/2020
|
|
15,283
|
|
478,052
|
|
|
8,317
|
|
—
|
|
27.670
|
2/11/2022
|
|
2,097
|
|
65,594
|
|
|
9,981
|
|
—
|
|
27.670
|
2/11/2022
|
|
11,946
|
|
373,671
|
|
|
14,152
|
|
7,076
|
|
27.480
|
2/14/2027
|
|
15,393
|
|
481,493
|
|
|
1,946
|
|
973
|
|
28.610
|
3/1/2027
|
|
—
|
|
—
|
|
|
5,744
|
|
11,488
|
|
40.180
|
2/13/2028
|
|
—
|
|
—
|
|
|
—
|
|
26,485
|
|
35.080
|
2/13/2029
|
|
—
|
|
—
|
|
Total:
|
73,035
|
|
46,022
|
|
|
|
|
44,719
|
|
1,398,810
|
|
William V. McMenamin
|
9,663
|
|
—
|
|
27.240
|
2/19/2020
|
|
5,458
|
|
170,726
|
|
|
1,723
|
|
—
|
|
27.670
|
2/11/2022
|
|
3,733
|
|
116,768
|
|
|
2,067
|
|
—
|
|
27.670
|
2/11/2022
|
|
4,275
|
|
133,722
|
|
|
5,054
|
|
2,527
|
|
27.480
|
2/14/2027
|
|
—
|
|
—
|
|
|
1,795
|
|
3,590
|
|
40.180
|
2/13/2028
|
|
—
|
|
—
|
|
|
—
|
|
7,356
|
|
35.080
|
2/13/2029
|
|
—
|
|
—
|
|
Total:
|
20,302
|
|
13,473
|
|
|
|
|
13,466
|
|
421,216
|
|
Curt A. Kramer
|
1,028
|
|
—
|
|
27.240
|
2/19/2020
|
|
606
|
|
18,956
|
|
|
1,028
|
|
—
|
|
27.240
|
2/19/2020
|
|
2,437
|
|
76,229
|
|
|
2,202
|
|
1,101
|
|
24.620
|
3/31/2027
|
|
3,733
|
|
116,768
|
|
|
1,795
|
|
3,590
|
|
40.180
|
2/13/2028
|
|
6,413
|
|
200,599
|
|
|
—
|
|
11,035
|
|
35.080
|
2/13/2029
|
|
—
|
|
—
|
|
Total:
|
6,053
|
|
15,726
|
|
|
|
|
13,189
|
|
412,552
|
|
(1)
|
All stock options, other than performance stock options, became or will become exercisable under the following schedule: ⅓rd on each of the first three anniversaries of the date of grant. Performance stock options that expire on February 19, 2020 or February 11, 2022, cliff
|
2020 Proxy Statement
|
61
|
(2)
|
Amounts in this column represent RSUs. In general RSUs become vested as to 1/3rd of the shares granted on each of the first three anniversaries of the date of grant or cliff vest as to 100% of the units granted three years after the grant date.
|
(3)
|
The vesting dates of outstanding unexercisable stock options and unvested RSUs at October 31, 2019, are listed below.
|
Name
|
Type of
Award |
Grant Date
|
Number of
Unexercised or Unvested Shares Remaining from Original Grant |
Number of
Shares Vesting and Vesting Date in 2020 |
Number of
Shares Vesting and Vesting Date in 2021 |
Number of
Shares Vesting and Vesting Date in 2022 |
Troy A. Clarke
|
Options
|
2/14/2017
|
22,744
|
22,744 on 2/14/2020
|
|
|
|
Options
|
4/16/2018
|
37,664
|
18,832 on 4/16/2020
|
18,832 on 4/16/2021
|
|
|
Options
|
4/24/2019
|
66,747
|
22,249 on 4/24/2020
|
22,249 on 4/24/2021
|
22,249 on 4/24/2022
|
|
RSUs
|
2/14/2017
|
49,126
|
49,126 on 2/14/2020
|
|
|
|
RSUs
|
4/16/2018
|
40,530
|
|
40,530 on 4/16/2021
|
|
|
RSUs
|
4/24/2019
|
46,955
|
|
|
46,955 on 4/24/2022
|
Walter G. Borst
|
Options
|
2/14/2017
|
10,614
|
10,614 on 2/14/2020
|
|
|
|
Options
|
2/13/2018
|
15,078
|
7,539 on 2/13/2020
|
7,539 on 2/13/2021
|
|
|
Options
|
2/13/2019
|
30,900
|
10,300 on 2/13/2020
|
10,300 on 2/13/2021
|
10,300 on 2/13/2022
|
|
RSUs
|
2/14/2017
|
22,925
|
22,925 on 2/14/2020
|
|
|
|
RSUs
|
2/13/2018
|
15,679
|
|
15,679 on 2/13/2021
|
|
|
RSUs
|
2/13/2019
|
17,958
|
|
|
17,958 on 2/13/2022
|
Persio V. Lisboa
|
Options
|
2/14/2017
|
7,076
|
7,076 on 2/14/2020
|
|
|
|
Options
|
3/1/2017
|
973
|
973 on 3/1/2020
|
|
|
|
Options
|
2/13/2018
|
11,488
|
5,744 on 2/13/2020
|
5,744 on 2/13/2021
|
|
|
Options
|
2/13/2019
|
26,485
|
8,829 on 2/13/2020
|
8,828 on 2/13/2021
|
8,828 on 2/13/2022
|
|
RSUs
|
2/14/2017
|
15,283
|
15,283 on 2/14/2020
|
|
|
|
RSUs
|
3/1/2017
|
2,097
|
2,097 on 3/1/2020
|
|
|
|
RSUs
|
2/13/2018
|
11,946
|
|
11,946 on 2/13/2021
|
|
|
RSUs
|
2/13/2019
|
15,393
|
|
|
15,393 on 2/13/2022
|
William V. McMenamin
|
Options
|
2/14/2017
|
2,527
|
2,527 on 2/14/2020
|
|
|
|
Options
|
2/13/2018
|
3,590
|
1,795 on 2/13/2020
|
1,795 on 2/13/2021
|
|
|
Options
|
2/13/2019
|
7,536
|
2,452 on 2/13/2020
|
2,452 on 2/13/2021
|
2,452 on 2/13/2022
|
|
RSUs
|
2/14/2017
|
5,458
|
5,458 on 2/14/2020
|
|
|
|
RSUs
|
2/13/2018
|
3,733
|
|
3,733 on 2/13/2021
|
|
|
RSUs
|
2/13/2019
|
4,275
|
|
|
4,275 on 2/13/2022
|
Curt A. Kramer
|
Options
|
3/31/2017
|
1,101
|
1,101 on 3/31/2020
|
|
|
|
Options
|
2/13/2018
|
3,590
|
1,795 on 2/13/2020
|
1,795 on 2/13/2021
|
|
|
Options
|
2/13/2019
|
11,035
|
3,679 on 2/13/2020
|
3,678 on 2/13/2021
|
3,678 on 2/13/2022
|
|
RSUs
|
2/14/2017
|
606
|
606 on 2/14/2020
|
|
|
|
RSUs
|
3/31/2017
|
2,437
|
2,437 on 3/31/2020
|
|
|
|
RSUs
|
2/13/2018
|
3,733
|
|
3,733 on 2/13/2021
|
|
|
RSUs
|
2/13/2019
|
6,413
|
|
|
6,413 on 2/13/2022
|
2020 Proxy Statement
|
62
|
Name
|
Option Awards
|
|
Stock Awards
|
||||
Number of Shares
Acquired on Exercise (#) |
|
Value Realized
Upon Exercise ($) |
|
|
Number of Shares
Acquired on Vesting (#) |
Value Realized
Upon Vesting ($)(1) |
|
Troy A. Clarke
|
102,796
|
|
295,025
|
|
|
51,270
|
1,773,498
|
Walter G. Borst
|
—
|
|
—
|
|
|
28,215
|
928,970
|
Persio V. Lisboa
|
—
|
|
—
|
|
|
19,008
|
625,917
|
William V. McMenamin
|
—
|
|
—
|
|
|
6,567
|
216,438
|
Curt A. Kramer
|
—
|
|
—
|
|
|
1,201
|
41,071
|
(1)
|
The value realized upon vesting for our NEOs is attributable to the vesting of cash and share settled RSUs during the year ended October 31, 2019.
|
Named Executive Officers
|
Number of Years of
Credited Service (#) |
Present Value of
Accumulated Benefit ($)(1) |
Payments During
Last Fiscal Year ($) |
|
Troy A. Clarke
|
9.0
|
8,242,858
|
—
|
|
Walter G. Borst
|
6.5
|
3,668,031
|
—
|
|
Persio V. Lisboa
|
21.0
|
3,232,530
|
—
|
|
William V. McMenamin
|
18.6
|
2,492,861
|
—
|
|
Curt A. Kramer
|
18.0
|
1,038,819
|
—
|
|
(1)
|
Unless otherwise noted, all present values reflect benefits payable at the earliest retirement date when the pension benefits are unreduced. Also unless otherwise noted, form of payment, discount rate (3.15%) and mortality (115% of RP2014 White Collar headcount-weighted table projected using Scale MP2019 with generational projection, modified to converge to 75% of long-term improvement rates by 2035) is based on assumptions from the guidance on accounting for pensions. Additionally, SERP benefits have only been offset by benefits under Navistar sponsored retirement programs. At actual retirement, these benefits will also be offset by benefits accumulated under programs for employment prior to Navistar.
|
Named Executive Officers
|
Registrant
Contributions in Last Fiscal Year(1) ($) |
Executive
Contributions in Last Fiscal Year ($) |
|
Aggregate
Earnings In Last Fiscal Year(2) ($) |
Aggregate
Withdrawals/ Distributions ($) |
|
Aggregate Balance
As of Last Fiscal Year End(3) ($) |
Troy A. Clarke
|
146,771
|
—
|
|
47,396
|
—
|
|
896,653
|
Walter G. Borst
|
75,997
|
—
|
|
25,994
|
—
|
|
710,345
|
Persio V. Lisboa
|
68,639
|
—
|
|
19,197
|
—
|
|
300,655
|
William V. McMenamin
|
33,517
|
—
|
|
11,669
|
—
|
|
225,801
|
Curt A. Kramer
|
26,722
|
—
|
|
3,953
|
—
|
|
61,406
|
(1)
|
Our contributions represent any notional contribution credits to the SRAP during the year. These contributions are also included in the "All Other Compensation" column of the "Summary Compensation Table".
|
2020 Proxy Statement
|
63
|
(2)
|
‘‘Aggregate Earnings in Last Fiscal Year’’ represent the notional interest credited during the year for participants in the SRAP plus the change in value from the beginning of the year to the end of the year in the PSUs and/or DSUs held by each NEO, if applicable. For the SRAP, ‘‘Aggregate Earnings in Last Fiscal Year’’ is the interest credited to each NEO from the beginning of the year until the end of the year at a 7.5% interest crediting rate. The above market portion of this notional interest is included in the “Change in Pension Value & Non-Qualified Deferred Compensation” column of the “Summary Compensation Table”. The above market portions are: $11,430 for Mr. Clarke, $6,271 for Mr. Borst, $4,625 for Mr. Lisboa, $2,815 for Mr. McMenamin and $947 for Mr. Kramer. ‘‘Aggregate Earnings in Last Fiscal Year’’ for purposes of the PSUs is the aggregate change in value of the PSUs held during the year.
|
(3)
|
The ‘‘Aggregate Balance as of Last Fiscal Year End’’ consists of the sum of each NEO’s notional account balance in the SRAP at the end of the year and the value at year end of the outstanding PSUs and/or DSUs. The “Aggregate Balance as of Last Fiscal Year End” reported in the prior year’s proxy statement were: Mr. Clarke $715,996, Mr. Borst $631,262, Mr. Lisboa $213,758, Mr. McMenamin $184,330 and Mr. Kramer $30,731.
|
NEO
|
Severance
Amount/Cash Payment ($) |
|
Payment
Under Non- Qualified Plan ($) |
|
Stock
Options ($)(1) |
|
Restricted
Stock/Units ($)(2) |
|
Performance
Units ($)(3) |
|
Benefit
Continuation ($)(4) |
|
Outplacement
Counseling ($)(5) |
|
Total
($) |
|
Troy A. Clarke
|
|
|
|
|
|
|
|
|
||||||||
Involuntary Termination Without Cause or Voluntary Termination with Good Reason(6)
|
4,725,000
|
|
—
|
|
—
|
|
2,927,745
|
|
6,682,500
|
|
74,031
|
|
25,000
|
|
14,434,276
|
|
Change in Control(6)(11)
|
6,037,500
|
|
788,029
|
|
86,427
|
|
4,464,407
|
|
7,750,000
|
|
74,031
|
|
25,000
|
|
19,225,394
|
|
Disability(7)
|
630,000
|
|
788,029
|
|
86,427
|
|
4,464,407
|
|
8,763,464
|
|
—
|
|
—
|
|
14,732,327
|
|
Death(8)
|
—
|
|
—
|
|
86,427
|
|
4,464,407
|
|
8,763,464
|
|
—
|
|
—
|
|
13,314,298
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for Cause
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Walter G. Borst
|
|
|
|
|
|
|
|
|
||||||||
Involuntary Termination Without Cause or Voluntary Termination with Good Reason(9)
|
2,703,173
|
|
—
|
|
—
|
|
324,248
|
|
—
|
|
34,461
|
|
25,000
|
|
3,086,882
|
|
Change in Control(10)(11)
|
4,634,010
|
|
386,096
|
|
40,333
|
|
2,093,508
|
|
3,150,000
|
|
34,461
|
|
25,000
|
|
10,363,408
|
|
Disability(7)
|
463,401
|
|
386,096
|
|
40,333
|
|
2,093,508
|
|
1,949,702
|
|
—
|
|
—
|
|
4,933,040
|
|
Death(8)
|
—
|
|
—
|
|
40,333
|
|
2,093,508
|
|
1,949,702
|
|
—
|
|
—
|
|
4,083,543
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for Cause
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Persio V. Lisboa
|
|
|
|
|
|
|
|
|
||||||||
Involuntary Termination Without Cause or Voluntary Termination with Good Reason(9)
|
2,679,075
|
|
—
|
|
—
|
|
87,271
|
|
—
|
|
28,210
|
|
25,000
|
|
2,819,556
|
|
Change in Control(10)(11)
|
4,592,700
|
|
339,752
|
|
29,487
|
|
1,486,082
|
|
2,500,000
|
|
28,210
|
|
25,000
|
|
9,001,231
|
|
Disability(7)
|
459,270
|
|
339,752
|
|
29,487
|
|
1,486,082
|
|
1,516,496
|
|
—
|
|
—
|
|
3,831,087
|
|
Death(8)
|
—
|
|
—
|
|
29,487
|
|
1,486,082
|
|
1,516,496
|
|
—
|
|
—
|
|
3,032,065
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for Cause
|
—
|
|
—
|
|
—
|
|
73,977
|
|
—
|
|
—
|
|
—
|
|
73,977
|
|
William V. McMenamin(12)
|
|
|
|
|
|
|
|
|
||||||||
Involuntary Termination Without Cause or Voluntary Termination with Good Reason(9)
|
1,104,000
|
|
197,925
|
|
9,603
|
|
340,076
|
|
383,187
|
|
14,656
|
|
25,000
|
|
2,074,447
|
|
Change in Control(10)(11)
|
2,484,000
|
|
580,338
|
|
9,603
|
|
473,798
|
|
750,000
|
|
14,656
|
|
25,000
|
|
4,337,395
|
|
Disability(7)
|
276,000
|
|
197,925
|
|
9,603
|
|
473,798
|
|
464,215
|
|
—
|
|
—
|
|
1,421,541
|
|
Death(8)
|
—
|
|
202,619
|
|
9,603
|
|
473,798
|
|
464,215
|
|
—
|
|
—
|
|
1,150,235
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for Cause
|
—
|
|
197,925
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
197,925
|
|
Curt A. Kramer
|
|
|
|
|
|
|
|
|
||||||||
Involuntary Termination Without Cause or Voluntary Termination with Good Reason(9)
|
1,131,974
|
|
—
|
|
—
|
|
—
|
|
—
|
|
21,283
|
|
25,000
|
|
1,178,257
|
|
Change in Control(10)(11)
|
1,792,293
|
|
61,406
|
|
7,333
|
|
412,552
|
|
725,000
|
|
21,283
|
|
25,000
|
|
3,044,867
|
|
Disability(7)
|
282,994
|
|
61,406
|
|
7,333
|
|
412,552
|
|
361,789
|
|
—
|
|
—
|
|
1,126,074
|
|
Death(8)
|
—
|
|
—
|
|
7,333
|
|
412,552
|
|
361,789
|
|
—
|
|
—
|
|
781,674
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for Cause
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2020 Proxy Statement
|
64
|
*
|
For more information see the Potential Payments upon Termination or Change in Control section on page 53 of this proxy statement.
|
(1)
|
The amount includes the value of unvested in-the-money stock options. The per share value for options is equal to the difference between the option exercise price and the closing price as of the last day of the fiscal year (October 31, 2019), which was $31.28 per share. Please refer to the Outstanding Equity Awards Table of this proxy statement for more information on this subject as the amounts in this column represent awards that have already been granted to the NEOs in previous years. The value in the table actually realized by the terminated executive could be higher or lower than what is set forth in the table due to the price at the time the terminated executive exercises the option, if the terminated executive does, in fact timely exercise.
|
(2)
|
The value of outstanding restricted stock, RSUs or PSUs is based on the October 31, 2019 closing price of $31.28 per share. Please refer to the Outstanding Equity Awards Table of this proxy statement for more information on this subject as the amounts in this column represent awards that have already been granted to the NEOs in previous years. Amounts indicated for voluntary and involuntary for Cause termination represent deferred shares that have already been earned.
|
(3)
|
This amount includes the value of all un-vested cash-settled performance RCUs based on current forecasting models with respect to the attainment of the applicable performance goal. The value to be received is contingent on actual performance achieved.
|
(4)
|
Benefits include 12 months continued health care coverage with an option to purchase an additional 12 months at the cost of coverage rate. Benefits also include 18 months of continued life insurance coverage for all NEOs (per their ESAs) terminated without Cause, with Good Reason or following a Change in Control.
|
(5)
|
This amount represents our cost for NEO outplacement counseling and services.
|
(6)
|
In the event Mr. Clarke’s employment and service with the Company terminate for any reason, including due to his death or disability, Mr. Clarke will be entitled to unpaid and accrued payments and benefits.
|
1.
|
A lump sum severance payment equal to 200% of the sum of his base salary and AI target;
|
2.
|
Twelve months continued health care coverage with an option to purchase an additional 12 months at the cost of coverage rate;
|
3.
|
24 months continued life insurance coverage;
|
4.
|
Outplacement services;
|
5.
|
Retention of any remaining flexible perquisite allowance already paid;
|
6.
|
Company-paid tax counseling and tax forms preparation services up to and including the taxable year of Mr. Clarke in which the termination occurred; and
|
7.
|
Pro-rata portion of the earned AI award that would have been payable to Mr. Clarke for the Company’s fiscal year in which the termination occurred, based on actual performance effective October 31
|
(7)
|
This amount is 60% of annualized base salary as of October 31, 2019 and is not offset by other sources of income, such as Social Security. It represents the amount that would be paid annually over the term of the disability. In addition, the NEOs would be eligible for a SRAP benefit.
|
(8)
|
Our NEOs participate in our defined contribution plans and a deferred benefit plan that provides a surviving spouse benefit.
|
(9)
|
This calculation, as described in the ESA, is 150% to 200% of the sum of the NEO’s annual base salary plus AI target.
|
(10)
|
The Change in Control calculation, as defined in the ESA, is 200% to 300% of the sum of the executive’s annual base salary plus AI target plus pro-rata AI.
|
(11)
|
Included in the Payment Under Non-Qualified Plan figure above for Change in Control is the lump sum cash payment equal to the difference in (i) the actuarial present value of the NEOs non-tax qualified pension benefits assuming the executive was 18 months older and had 18 months more of service, over (ii) the actuarial present value of the NEOs’ non-tax qualified pension benefits at the date of termination. The lump sum cash payment for Mr. McMenamin is $382,413. The lump sum cash payments for Messrs. Borst, Lisboa, and Kramer are $0., because the vesting of their SRAP under a CIC, which offsets the non--tax qualified pension benefits, mitigates effect of the additional 18 months of age and service. The lump sum cash payment for Mr. Clarke is $0 as Mr. Clarke’s Employment Agreement does not have a provision for this lump sum cash payment. Also included in the Payment Under Non-Qualified Plan figure above for Change in Control, is the value of the SRAP account which immediately vests upon a CIC. For Messrs. Borst and Kramer, the SRAP would be paid as a lump sum and the figure reported is the SRAP account balance which is $386,096 for Mr. Borst and $61,406 for Mr. Kramer. For Messrs. Clarke, Lisboa and McMenamin, the SRAP would be paid as an annuity and the figure reported is the actuarial present value of the SRAP annuity which is $788,029 for Mr. Clarke, $339,752 for Mr. Lisboa, and $197,925 for Mr. McMenamin. The monthly annuities are in the form of 55% Joint & Survivor and a payable for the lifetime of the participant to the participant and 55% of the monthly benefit is paid to the spouse following the death of the participant. The monthly benefit amounts are $3,658.37 for Mr. Clarke, $1,387.90 for Mr. Lisboa and $782.46 for Mr. McMenamin.
|
(12)
|
Mr. McMenamin is retirement eligible under the SRAP plan and therefore is eligible for his SRAP benefit in all termination circumstances.
|
2020 Proxy Statement
|
65
|
Plan Category(1)
|
(a)
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
|
|
(b)
Weighted–Average Exercise Price of Outstanding Options, Warrants and Rights |
|
(c)
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
|
|
Equity compensation plans approved by stockholders
|
2,581,792
|
|
(2)
|
$32.82
|
(3)
|
3,106,390
|
|
(4)(5)
|
Equity compensation plans not approved by stockholders(6)
|
6,974
|
|
(6)(7)
|
N/A
|
(3)
|
—
|
|
|
Total
|
2,588,766
|
|
|
N/A
|
|
3,106,390
|
|
|
(1)
|
This table does not include information regarding our 401(k) plans. Our 401(k) plans consist of the following: Navistar, Inc. 401(k) Plan for Represented Employees and Navistar, Inc. Retirement Accumulation Plan. As of October 31, 2019, there were 1,306,079 shares of Common Stock held in these plans.
|
(2)
|
This number includes stock options, DSUs and PSUs (as described in the Executive Stock Ownership Program discussed below) granted under our 2004 PIP; and stock options, performance stock options, RSUs, DSUs, and PSUs granted under our 2013 PIP. Stock options awarded to employees for the purchase of Common Stock from the 2004 PIP and the 2013 PIP were granted with an exercise price equal to the fair market value of the stock on the date of grant, generally have a 10-year contractual life, except for options granted under the 2004 PIP after December 15, 2009 and options granted under the 2013 PIP between February 19, 2013 and December 12, 2017, which have a contractual life of 7-years, and generally become exercisable as to one-third of the shares on each of the first three anniversaries of the date of grant, so that in three years the shares are 100% vested. Performance stock options granted under the 2013 PIP generally do not become exercisable until after the three year anniversary of the date of grant and only if performance conditions are met. The terms of RSU awards granted under the 2013 PIP were established by the Board or a committee thereof at the time of issuance. The 2004 PIP expired on February 18, 2013, and as such no further awards may be granted under the 2004 PIP. As of October 31, 2019, 10,000 stock option awards, 1,338 DSUs, and 13,521 PSUs remain outstanding for shares of Common Stock reserved for issuance under the 2004 PIP, and 2,050,818 stock options, including performance stock options, 475,824 RSUs, 17,813 DSUs and 12,478 PSUs remain outstanding for shares of Common Stock reserved for issuance under the 2013 PIP. For more information on the 2013 PIP, see footnote 5 below.
|
(3)
|
RSUs, DSUs, and PSUs settled in shares do not have an exercise price and are settled only for shares of our Common Stock on a one-for-one basis. These awards have been disregarded for purposes of computing the weighted-average exercise price. For more information on DSUs and PSUs, see the discussion in footnote 6 below entitled ‘‘The Ownership Program.’’ There were no options or warrants outstanding under the unapproved plans as of October 31, 2019.
|
(4)
|
Our 2004 PIP was approved by the Board and the Compensation and Governance Committee on October 21, 2003, and, subsequently by our stockholders on February 17, 2004. Our 2004 PIP was amended on December 14, 2004, which amendment was approved by stockholders on March 23, 2005. The plan was subsequently amended on December 13, 2005, April 16, 2007, June 18, 2007, May 27, 2008, December 16, 2008, January 9, 2009, December 15, 2009, and April 19, 2010. The 2004 PIP replaced, on a prospective basis, our 1994 PIP, the 1998 Supplemental Stock Plan, both of which expired on December 16, 2003, and our 1998 Non-Employee Director Stock Option Plan (collectively, the ‘‘Prior Plans’’). A total of 3,250,000 shares of Common Stock were reserved for awards under the 2004 PIP. On February 16, 2010, our stockholders approved an amendment to increase the number of shares available for issuance under the 2004 PIP from 3,250,000 to 5,750,000. Shares subject to awards under the 2004 PIP, or the Prior Plans after February 17, 2004 and before February 19, 2013, that were canceled, expired, forfeited, settled in cash, tendered to satisfy the purchase price of an award, withheld to satisfy tax obligations or otherwise terminated without a delivery of shares to the participant again became available for awards.
|
(5)
|
The 2013 PIP was approved by the Board and the Compensation Committee on December 11, 2012 and by our stockholders on February 19, 2013. Our 2013 PIP was amended on February 11, 2015. The 2013 PIP replaced on a prospective basis the 2004 PIP and the Prior Plans, and awards may no longer be granted under the 2004 PIP or the Prior Plans. A total of 3,665,500 shares of Common Stock were reserved for awards under the 2013 PIP. Shares subject to awards under the 2013 PIP, the 2004 PIP or the Prior Plans after February 19, 2013, that are canceled, expired, forfeited, settled in cash, tendered to satisfy the purchase price of an award, withheld to satisfy tax obligations or otherwise terminated without a delivery of shares to the participant again become available for awards. This number represents the remaining number of unused shares from the year ended October 31, 2019, which are available for issuance.
|
(6)
|
The following plans were not approved by our stockholders: The Executive Stock Ownership Program (the ‘‘Ownership Program’’), and the Deferred Fee Plan, except that any DSUs awarded out of the Deferred Fee Plan on or after September 30, 2013, are now issued out of the 2013 PIP. Below is a brief description of the material features of each plan, but in each case the information is qualified in its entirety by the text of such plans.
|
66
|
|
(7)
|
Includes 3,091 PSUs granted under the Ownership Program and 3,883 deferred stock units granted under the Deferred Fee Plan; all of which were outstanding as of October 31, 2019.
|
2020 Proxy Statement
|
67
|
|
|
PROPOSAL 3
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
|
The Board is asking our stockholders to ratify the Audit Committee’s appointment of KPMG as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2020. KPMG has been the Company’s auditors since 2006. For additional information regarding the Company’s relationship with KPMG, please refer to the Report of the Audit Committee and the Fees of Independent Registered Public Accounting Firm contained below.
If the appointment of KPMG as our independent registered public accounting firm for 2020 is not ratified by our stockholders, the adverse vote will be considered a direction to the Audit Committee to consider other auditors for next year. However, because of the difficulty in making any substitution of auditors after the beginning of the current year, the appointment for 2020 will stand, unless the Audit Committee finds other good reason for making a change.
Representatives of KPMG will be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so. The representatives will also be available to respond to questions at the Annual Meeting.
|
|
|
|
|
Your Board of Directors recommends a vote FOR the ratification of the appointment of KPMG as Navistar’s independent registered public accounting firm for fiscal year 2020.
|
|
2019(1)
|
|
2018(1)
|
|
||
Audit fees
|
|
$10.8
|
|
|
$10.3
|
|
Audit-related fees
|
0.1
|
|
0.1
|
|
||
Tax fees
|
0.1
|
|
0.1
|
|
||
All other fees
|
—
|
|
—
|
|
||
Total fees
|
|
$11.0
|
|
|
$10.5
|
|
(1)
|
In millions.
|
68
|
|
2020 Proxy Statement
|
69
|
Name and Address
|
Total Amount
and Nature of Beneficial Ownership |
Percent of
Class(A) |
|
Carl C. Icahn
c/o Icahn Associates Corp., 767 Fifth Avenue, Suite 4700 New York, NY 10153 |
16,729,960(B)
|
16.9
|
%
|
TRATON SE
Dachauer Str. 641 80995 Munich, Germany |
16,629,667(C)
|
16.8
|
%
|
Mark H. Rachesky, M.D.
1345 Avenue of the Americas, 42 Floor New York, NY 10105 |
16,294,019(D)
|
16.4
|
%
|
Franklin Resources, Inc.
One Franklin Parkway San Mateo, CA 94403-1906 |
8,580,292(E)
|
8.6
|
%
|
GAMCO Investors, Inc. et. al.
One Corporate Center Rye, NY 10580-1435 |
7,496,697(F)
|
7.6
|
%
|
(A)
|
Applicable percentage ownership is based upon 99,254,705 shares of Common Stock outstanding as of December 31, 2019.
|
(B)
|
As reported in Schedule 13D/A, as filed with the SEC on March 17, 2017, by High River Limited Partnership (“High River”), Hopper Investments LLC (“Hopper”), Barberry Corp. (“Barberry”), Icahn Partners Master Fund LP (“Icahn Master”), Icahn Offshore LP (“Icahn Offshore”), Icahn Partners LP (“Icahn Partners”), Icahn Onshore LP (“Icahn Onshore”), Icahn Capital LP (“Icahn Capital”), IPH GP LLC (“IPH”), Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”), Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), Beckton Corp. (“Beckton”), and Carl C. Icahn (collectively, the “Icahn Reporting Persons”). The Icahn Reporting Persons reported the following: High River has sole voting power and sole dispositive power with regard to 3,345,991 shares of Common Stock and each of Hopper, Barberry and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares of Common Stock; Icahn Master has sole voting power and sole dispositive power with regard to 5,446,990 shares of Common Stock and each of Icahn Offshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares of Common Stock; and Icahn Partners has sole voting power and sole dispositive power with regard to 7,936,979 shares of Common Stock and each of Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares of Common Stock. Barberry is the sole member of Hopper, which is the general partner of High River. Icahn Offshore is the general partner of Icahn Master. Icahn Onshore is the general partner of Icahn Partners. Icahn Capital is the general partner of each of Icahn Offshore and Icahn Onshore. Icahn Enterprises Holdings is the sole member of IPH, which is the general partner of Icahn Capital. Beckton is the sole stockholder of Icahn Enterprises GP, which is the general partner of Icahn Enterprises Holdings. Mr. Icahn is the sole stockholder of each of Barberry and Beckton. As such, Mr. Icahn is in a position indirectly to determine the investment and voting decisions made by each of the Icahn Reporting Persons. In addition, Mr. Icahn is the indirect holder of approximately 92.6% of the outstanding depositary units representing limited partnership interests in Icahn Enterprises L.P. (“Icahn Enterprises”). Icahn Enterprises GP is the general partner of Icahn Enterprises, which is the sole limited partner of Icahn Enterprises Holdings. See the Schedule 13D/A filed by the Icahn Reporting Persons for certain disclaimers of beneficial ownership.
|
(C)
|
As reported in a Schedule 13D/A filed with the SEC on April 18, 2018, by Volkswagen Truck and Bus GmbH (“VW T&B”) and Volkswagen AG (“Volkswagen” and together with VW T&B, the “Reporting Persons”). The Reporting Persons are each the beneficial owners of 16,629,667 shares of Common Stock. In August 2018, VW T&B changed its name to TRATON AG and on December 20, 2018 changed its name to TRATON SE (“TRATON”). TRATON and Volkswagen have shared power to vote and to dispose of 16,629,667 shares of Common Stock. TRATON is a wholly-owned subsidiary of Volkswagen.
|
(D)
|
As reported in a Schedule 13D/A filed with the SEC on April 18, 2018 by MHR Institutional Partners III LP, MHR Institutional Advisors III LLC, MHR Fund Management LLC, MHR Holdings LLC and Mark H. Rachesky, M.D. (collectively, the “MHR Reporting Persons”), and as further supplemented by reports filed on Form 4 by Dr. Rachesky, pursuant to Section 16(a) of the Exchange Act. The MHR Reporting Persons
|
70
|
|
(E)
|
As reported in a Schedule 13G/A filed with the SEC on December 31, 2018, by Franklin Resources, Inc. (“FRI”), Charles B. Johnson, Rupert H. Johnson, Jr. and Templeton Global Advisors Limited. These securities are beneficially owned by one or more open- or closed-end investment companies or other managed accounts that are investment management clients of investment managers that are direct and indirect subsidiaries of FRI. Charles B. Johnson and Rupert H. Johnson, Jr. each own in excess of 10% of the outstanding common stock of FRI and are the principal stockholders of FRI. See the Schedule 13G/A for certain disclaimers of beneficial ownership.
|
(F)
|
As reported in a Schedule 13D/A filed with the SEC on May 16, 2019, by Gabelli Funds, LLC, GAMCO Asset Management, Inc., Teton Advisors, Inc., Gabelli & Company Investment Advisers, Inc., MJG Associates, Inc., GGCP, Inc., GAMCO Investors, Inc., Associated Capital Group, Inc., and Mario J. Gabelli (collectively, the “Gabelli Reporting Persons”). The Gabelli Reporting Persons reported the following: Gabelli Funds LLC has sole voting and dispositive power with regard to 2,749,300 shares of Common Stock, GAMCO Asset Management Inc. has sole voting power with regard to 4,451,422 shares of Common Stock and sole dispositive power with regard to 4,665,722 shares of Common Stock, Teton Advisers, Inc. has sole voting and dispositive power with regard to 20,000 shares of Common Stock, Gabelli & Company Investment Advisers, Inc. has sole voting and dispositive power with regard to 4,375 shares of Common Stock, MJG Associates, Inc. has sole voting and dispositive power with regard to 50,000 shares of Common Stock, GGCP, Inc. has sole voting and dispositive power with regard to 1,300 shares of Common Stock, GAMCO Investors, Inc. has no voting or dispositive power with regard to any shares of Common Stock, Associated Capital Group, Inc. has no voting or dispositive power with regard to any shares of common stock, and Mario J. Gabelli has sole voting and dispositive power with regard to 6,000 shares of Common Stock. Mr. Gabelli is deemed to have beneficial ownership of the shares of Common Stock owned beneficially by each of the foregoing entities due to the fact that he directly or indirectly controls or acts as chief investment officer for such entities. Gabelli & Company Investment Advisers, Inc. is deemed to have beneficial ownership of the Common Stock owned beneficially by G. research, Inc., Associated Capital Group, Inc., GAMCO Investors, Inc. and GGCP, Inc. are deemed to have beneficial ownership of the shares of Common Stock owned beneficially by each of the Gabelli Reporting Persons other than Mr. Gabelli and the Gabelli Foundation, Inc. See the Schedule 13D/A filed by the Gabelli Reporting Persons for certain disclaimers of beneficial ownership.
|
2020 Proxy Statement
|
71
|
Name/Group
|
Owned(A)
|
|
Number of DSUs,
PSUs or RSUs Convertible into Common Stock(B) |
|
Obtainable
Through Stock Option Exercise |
|
Total
|
|
Percent of
Class |
|
José María Alapont - Director
|
1,509
|
|
—
|
|
10,000
|
|
11,509
|
|
*
|
|
Walter G. Borst - EVP and CFO
|
76,893
|
|
33,291
|
|
143,456
|
|
253,640
|
|
*
|
|
Troy A. Clarke - Chairman, President & CEO
|
136,532
|
|
142,724
|
|
900,418
|
|
1,179,674
|
|
1.2
|
%
|
Stephen R. D’Arcy - Director
|
5,656
|
|
—
|
|
10,000
|
|
15,656
|
|
*
|
|
Jeffrey A. Dokho(C) - Director
|
—
|
|
—
|
|
—
|
|
—
|
|
*
|
|
Vincent J. Intrieri - Director
|
2,204
|
|
8,752
|
|
30,000
|
|
40,956
|
|
*
|
|
Curt A. Kramer - SVP and General Counsel
|
2,385
|
|
—
|
|
11,527
|
|
13,912
|
|
*
|
|
Persio V. Lisboa - EVP and COO
|
36,218
|
|
20,170
|
|
95,657
|
|
152,045
|
|
*
|
|
William V. McMenamin - President,
Financial Services and Treasurer |
24,964
|
|
15,147
|
|
27,076
|
|
67,187
|
|
*
|
|
Raymond T. Miller - Director
|
2,542
|
|
4,229
|
|
1,667
|
|
8,438
|
|
*
|
|
Mark H. Rachesky(D) - Director
|
16,259,913
|
|
4,106
|
|
30,000
|
|
16,294,019
|
|
16.4
|
%
|
Andreas H. Renschler - Director
|
1,244
|
|
—
|
|
5,000
|
|
6,244
|
|
*
|
|
Christian Schulz - Director
|
—
|
|
—
|
|
—
|
|
—
|
|
*
|
|
Kevin M. Sheehan - Director
|
773
|
|
—
|
|
1,667
|
|
2,440
|
|
*
|
|
Dennis A. Suskind - Director
|
5,326
|
|
3,944
|
|
10,000
|
|
19,270
|
|
*
|
|
All Directors and Executive Officers as a Group
(17 persons)(E) |
16,568,172
|
|
237,821
|
|
1,293,162
|
|
18,099,155
|
|
18.2
|
%
|
*
|
Percentage of shares beneficially owned does not exceed one percent.
|
(A)
|
The number of shares shown for each NEO (and all directors and executive officers as a group) includes the number of shares of Common Stock owned indirectly, as of December 31, 2019, by such executive officers in our Retirement Accumulation Plan, as reported to us by the Plan trustee.
|
(B)
|
For additional information on DSUs, PSUs and RSUs, see below.
|
(C)
|
At the request of the UAW, the UAW representative director, Jeffrey Dokho, does not receive stock or stock option grant awards.
|
(D)
|
As reported in various Form 4’s filed with the SEC during 2019 by MHR Institutional Partners III LP, MHR Institutional Advisors III LLC, MHR Fund Management LLC, MHR Holdings LLC and Dr. Rachesky. See also Footnote D to the section Persons Owning More Than Five Percent of Navistar Common Stock in this proxy statement.
|
(E)
|
Includes all current directors and executive officers (including Section 16 Officers) as a group.
|
72
|
|
2020 Proxy Statement
|
73
|
•
|
FOR the election of each of the director nominees (Proposal 1);
|
•
|
FOR the approval of the advisory vote on executive compensation (Proposal 2);
|
•
|
FOR the ratification of the appointment of KPMG as our independent registered public accounting firm (Proposal 3).
|
•
|
Stockholders of record on December 31, 2019;
|
•
|
An authorized proxy holder of a stockholder of record on December 31, 2019; or
|
•
|
An authorized representative of a stockholder of record who has been designated to present a properly-submitted stockholder proposal.
|
74
|
|
•
|
In person — stockholders who obtain an admission ticket (following the specified procedures) and attend the Annual Meeting in person may cast a ballot received at the Annual Meeting.
|
•
|
By Internet — stockholders may access the internet at www.proxyvote.com and follow the instructions on the proxy card or in the Notice.
|
•
|
By scanning your QR code — to vote with your mobile device.
|
•
|
By phone — stockholders may call toll-free 1-800-690-6903 and follow the instructions on the proxy card or in the Notice.
|
•
|
By mail — if you requested and received your proxy materials by mail, you may complete, sign, date and mail the enclosed proxy card.
|
•
|
Proposal 1 (election of directors) requires a plurality vote of the shares present or represented by proxy at the Annual Meeting and entitled to vote, meaning that the director nominees with the greatest number of affirmative votes are elected to fill the available seats. As outlined in our Corporate Governance Guidelines, any director who receives more ‘‘withhold’’ votes than ‘‘for’’ votes in an uncontested election is required to tender his resignation to the Nominating and Governance Committee for consideration and recommendation to the Board.
|
2020 Proxy Statement
|
75
|
•
|
Proposal 2 (Say-On-Pay proposal) represents an advisory vote and the results will not be binding on the Board or the Company. The affirmative vote of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter will constitute the stockholders’ non-binding approval with respect to our executive compensation programs. Our Board will review the voting results and take them into consideration when making future decisions regarding executive compensation.
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Proposal 3 (ratification of the appointment of KPMG as our independent registered public accounting firm) requires the affirmative vote of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote.
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76
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2020 Proxy Statement
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77
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78
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Registered Stockholders (if appointing a representative to attend and/
or vote on his/her behalf) |
Beneficial Holders
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For ownership verification provide:
• Name(s) of stockholder
• Address
• Phone number
• Social security number and/or stockholder account number; or
• A copy of your proxy card showing stockholder name and address
Also include:
• Name of authorized proxy representative, if one appointed
• Address where tickets should be mailed and phone number
|
For ownership verification provide:
• A copy of your January brokerage account statement showing Navistar stock ownership as of the record date (12/31/19);
• A letter from your broker, bank or other nominee verifying your record date (12/31/19) ownership; or
• A copy of your brokerage account voting instruction card showing stockholder name and address
Also include:
• Name of authorized proxy representative, if one appointed
• Address where tickets should be mailed and phone number
|
2020 Proxy Statement
|
79
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1 Year Navistar Chart |
1 Month Navistar Chart |
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