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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Tempur Sealy International Inc | NYSE:TPX | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.04 | -0.08% | 50.38 | 51.97 | 50.29 | 51.50 | 1,444,079 | 01:00:00 |
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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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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Proposed maximum aggregate value of transaction:
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(5)
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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)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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elect seven directors to each serve for a one-year term and until the director’s successor has been duly elected and qualified;
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ratify the appointment of Ernst & Young LLP as the Company’s independent auditors for the year ending December 31, 2017;
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approve the Amended and Restated 2013 Equity Incentive Plan;
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ratify the Amended and Restated Rights Agreement;
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hold an advisory vote to approve the compensation of our Named Executive Officers;
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hold an advisory vote on the frequency of future executive compensation votes; and
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transact such other business as may properly come before the meeting or any adjournment thereof.
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PROXY STATEMENT
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VOTE BY INTERNET
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VOTE BY TELEPHONE
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VOTE BY MAIL
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http://www.proxyvote.com
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1-800-690-6903
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24 hours a day/7 days a week until 11:59 p.m. on the day before the meeting
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toll-free 24 hours a day/7 days a week until 11:59 p.m. on the day before the meeting
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Sign and date the proxy card and return it in the enclosed postage-paid envelope.
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Use the Internet to vote your proxy. Have your proxy card in hand when you access the website.
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Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
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Are present and vote in person at the meeting; or
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Have properly submitted a proxy card, via the Internet, telephone or by mail.
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Election of seven (7) Directors to each serve for a one-year term and until the Director’s successor has been duly elected and qualified (Proposal One).
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Ratification of the appointment of the firm of Ernst & Young LLP as Tempur Sealy International’s independent auditors for the year ending December 31, 2017 (Proposal Two).
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Approval of the Amended and Restated 2013 Equity Incentive Plan (Proposal Three).
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Ratification of the Amended and Restated Rights Agreement (Proposal Four).
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Advisory vote to approve the compensation of our Named Executive Officers (Proposal Five).
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Advisory vote on the frequency of future executive compensation votes (Proposal Six).
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Each Director shall be elected by the affirmative vote of a majority of the votes cast at the Annual Meeting. The term “majority of the votes cast” means that the number of shares voted ‘for’ a director must exceed the number of shares voted ‘against’ that Director, and for purposes of this calculation, abstentions, “broker non-votes” and “withheld votes” will not count as votes cast.
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Ratification of the appointment of Ernst & Young LLP as independent auditors for the year ending December 31, 2017 requires the affirmative vote of the majority of shares present or represented by proxy and entitled to vote at the Annual Meeting.
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Approval of the Amended and Restated 2013 Equity Incentive Plan requires the affirmative vote of the majority of shares present or represented by proxy and entitled to vote at the Annual Meeting.
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Ratification of the Amended and Restated Rights Agreement requires the affirmative vote of the majority of shares present or represented by proxy and entitled to vote at the Annual Meeting.
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Approval of the advisory vote on the compensation of our Named Executive Officers requires the affirmative vote of the majority of shares present or represented by proxy and entitled to vote at the Annual Meeting.
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You may vote on whether the advisory vote on executive compensation should be included in the Company's proxy statement every 1, 2 or 3 years, or you may abstain from voting on the matter. The frequency (every 1, 2 or 3 years) that receives the highest number of votes will be deemed to be first choice of the stockholders.
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For proposals other than the election of directors, and the advisory vote on the frequency of future executive compensation votes, abstentions are counted as votes present and entitled to vote and have the same effect as votes "against" the proposal.
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Broker non-votes, if any, will be handled as described below.
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Proposal One: "FOR" the election of seven (7) directors to each serve for a one-year term and until the director’s successor has been duly elected and qualified.
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Proposal Two: "FOR" the ratification of the appointment of the firm of Ernst & Young LLP as Tempur Sealy International’s independent auditors for the year ending December 31, 2017.
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Proposal Three: "FOR" the approval of the Amended and Restated 2013 Equity Incentive Plan.
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Proposal Four: "FOR" the ratification of the Amended and Restated Rights Agreement.
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Proposal Five: "FOR" the advisory vote to approve the compensation of our Named Executive Officers.
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Proposal Six: "FOR" one year as the frequency of future executive compensation votes.
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Sixth Amended and Restated By-Laws (“By-Laws”)
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Core Values
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Corporate Governance Guidelines
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Code of Business Conduct and Ethics for Employees, Executive Officers and Directors
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Policy on Complaints on Accounting, Internal Accounting Controls and Auditing Matters
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Amended and Restated Certificate of Incorporation, as amended ("Certificate of Incorporation")
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Audit Committee Charter
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Compensation Committee Charter
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Nominating and Corporate Governance Committee Charter
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Lead Director Charter
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Related Party Transactions Policy
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Governance Hotline Information
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Conflict Minerals Policy
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Clawback Policy
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Contact the Lead Director
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presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent Directors;
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has the authority to call meetings of the independent Directors;
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serves as the principal liaison between the Chairman and the independent Directors;
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consults with the Chairman regarding all information sent to the Board of Directors, including the quality, quantity, appropriateness and timeliness of such information;
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consults with the Chairman regarding meeting agendas for the Board of Directors;
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consults with the Chairman regarding the frequency of Board of Directors meetings and meeting schedules, assuring there is sufficient time for discussion of all agenda items;
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recommends to the Nominating and Corporate Governance Committee and to the Chairman, selection for the membership and chairman position for each Board committee;
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interviews, along with the chair of the Nominating and Corporate Governance Committee, all Director candidates and makes recommendations to the Nominating and Corporate Governance Committee; and
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will be invited to attend meetings of all other committees of the Board (other than meetings of committees on which he or she is already a member).
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reviewing the scope of internal and independent audits;
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reviewing the Company’s quarterly and annual financial statements and related SEC filings;
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reviewing the adequacy of management’s implementation of internal controls;
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reviewing the Company’s accounting policies and procedures and significant changes in accounting policies;
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reviewing the Company’s business conduct, legal and regulatory requirements, and ethics policies and practices;
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reviewing the Company’s policies with respect to risk assessment and risk management;
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reviewing information to be disclosed and types of presentations to be made in connection with the Company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies;
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preparing an annual evaluation of the committee’s performance and reporting to the Board on the results of this self-evaluation;
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reporting regularly to the Board on the committee’s activities; and
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appointing the independent public accountants and reviewing their independence and performance and the reasonableness of their fees.
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reviewing and approving on an annual basis the corporate goals and objectives with respect to compensation for the chief executive officer, evaluating at least once a year the chief executive officer's performance in light of these established goals and objectives and, based upon these evaluations, determining and approving the chief executive officer's annual compensation, including salary, bonus, incentive, equity compensation, perquisites and other personal benefits;
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reviewing and approving on an annual basis, with the input of the Chief Executive Officer, the corporate goals and objectives with respect to the Company’s compensation structure for all other executive officers (other than the chief executive officer), including perquisites and other personal benefits, and evaluating at least once a year the executive officers’ performance in light of these established goals and objectives and based upon these evaluations, determine and approve the annual compensation for these executive officers, including salary, bonus, incentive, equity compensation, perquisites and other personal benefits;
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reviewing on an annual basis the Company’s compensation policies, including salaries and annual incentive bonus plans, with respect to the compensation of employees whose compensation is not otherwise set by the Compensation Committee;
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reviewing the Company's incentive compensation and stock-based plans and approving changes in such plans as needed, subject to any approval of the Board required by applicable law or the terms of such plans, and having and exercising all the authority of the Board with respect to the administration of such plans;
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reviewing on an annual basis the Company’s compensation structure for its Directors and making recommendations to the Board regarding the compensation of Directors;
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reviewing at least annually the Company’s compensation programs with respect to overall risk assessment and risk management, particularly with respect to whether such compensation programs encourage unnecessary or excessive risk taking by the Company;
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reviewing and discussing with management the "Compensation Discussion and Analysis," and based on such review and discussions, make recommendations to the Board regarding inclusion of that section in the Company’s proxy statement for any annual meeting of stockholders;
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preparing and publishing an annual executive compensation report in the Company's proxy statement;
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reviewing and recommending to the Board for approval the frequency with which the Company will conduct Say on Pay Votes and reviewing and approving the proposals regarding Say on Pay Vote and the frequency of the Say on Pay Vote to be included in the Company’s proxy statement for any annual meeting of stockholders;
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reviewing and approving employment agreements, severance arrangements and change in control agreements and provisions when, and if, appropriate, as well as any special supplemental benefits;
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conducting an annual evaluation of the committee's performance and reporting to the Board on the results of this self-evaluation; and
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reporting regularly to the Board on the committee's activities.
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during 2016, Cook provided no services to and received no fees from the Company other than in connection with the engagement;
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the amount of fees paid or payable by the Company to Cook in respect of the engagement represented (or are reasonably certain to represent) less than 1% of Cook’s total revenue for the 12 month period ended December 31, 2015;
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Cook has adopted and put in place adequate policies and procedures designed to prevent conflicts of interest, which policies and procedures were provided to the Company;
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there are no business or personal relationships between Cook and any member of the Compensation Committee other than in respect of (i) the engagement, or (ii) work performed by Cook for any other company, board of directors or compensation committee for whom such Committee member also serves as an independent director;
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Cook owns no stock of the Company; and
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there are no business or personal relationships between Cook and any executive officer of the Company other than in respect of the engagement.
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identifying individuals qualified to become members of the Board;
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recommending to the Board director nominees to be presented at the annual meeting of stockholders and to fill vacancies on the Board;
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developing appropriate criteria for identifying properly qualified directorial candidates;
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annually reviewing the composition of the Board and the skill sets and tenure of existing directors and discussing longer term transition issues;
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annually reviewing and recommending to the Board members for each standing committee of the Board;
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monitoring and participating in the Company's overall stockholder communications effort so that all of the communications elements are unified and consistent; members of the Committee, individually or collectively, may attend, with management, meetings with stockholders of the Company when requested by the Board or management;
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establishing procedures to assist the Board in developing and evaluating potential candidates for executive positions, including the Chief Executive Officer;
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reviewing various corporate governance-related policies, including the Code of Business Conduct and Ethics, the Related Party Transactions Policy, and the Policy on Insider Trading and Confidentiality, and recommending changes, if any, to the Board;
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reviewing and evaluating related party transactions;
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developing, annually reviewing and recommending to the Board corporate governance guidelines for the Company;
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establishing procedures to exercise oversight of the Company's adherence to such guidelines and the evaluation of the Board and Company management;
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reviewing at least annually the reports on the Company prepared by the major proxy advisory firms and provide a report to the Board;
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developing and overseeing, when necessary, a Company orientation program for new directors and a continuing education program for current directors, and periodically reviewing these programs and updating them as necessary;
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making recommendations to the Board in connection with any Director resignation tendered pursuant to the Company’s Amended and Restated By-Laws;
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preparing an annual evaluation of the committee's performance and reporting to the Board on the results of this self-evaluation; and
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reporting regularly to the Board on the committee's activities.
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a reputation for integrity, honesty and adherence to high ethical standards;
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the ability to exercise sound business judgment;
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substantial business or professional experience and the ability to offer meaningful advice and guidance to the Company’s management based on that experience; and
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the ability to devote the time and effort necessary to fulfill their responsibilities to the Company.
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Name
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Age
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Position
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Scott L. Thompson
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58
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Chairman of the Board, President and Chief Executive Officer
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Barry A. Hytinen
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42
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Executive Vice President and Chief Financial Officer
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Richard W. Anderson
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57
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Executive Vice President and President, North America
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David Montgomery
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56
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Executive Vice President and President of International Operations
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Bhaskar Rao
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51
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Chief Accounting Officer and Senior Vice President Finance
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each person known to beneficially own more than 5% of Tempur Sealy International’s outstanding common stock;
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each of Tempur Sealy International’s Directors and Named Executive Officers (as defined below in "Executive Compensation and Related Information"); and
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all of Tempur Sealy International’s Directors and executive officers as a group.
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Shares Beneficially Owned
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Number of
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Percentage
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Name of Beneficial Owner:
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Shares
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of Class
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5% Stockholders:
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Manulife Financial Corporation
(1)
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7,461,908
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12.89
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%
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H Partners Management, LLC
(2)
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7,000,000
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11.20
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T. Rowe Price Associates, Inc.
(3)
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4,470,343
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7.70
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The Vanguard Group
(4)
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3,948,364
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6.81
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Blackrock, Inc.
(5)
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3,818,153
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6.60
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The London Company
(6)
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3,605,181
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6.23
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Chieftain Capital Management, Inc.
(7)
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3,364,827
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5.80
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State Street Corporation
(8)
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3,136,303
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5.42
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Executive Officers and Directors:
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Scott L. Thompson
(9)(10)
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284,619
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*
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Barry A. Hytinen
(10)
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60,515
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*
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Richard W. Anderson
(10)
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115,027
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*
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David Montgomery
(10)
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431,461
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*
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Jay G. Spenchian
(10)
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34,418
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*
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W. Timothy Yaggi
(10)
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31,745
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*
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Evelyn S. Dilsaver
(10)
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33,465
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*
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John A. Heil
(10)
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33,599
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*
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Jon L. Luther
(10)
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9,949
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*
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Usman S. Nabi
(2)
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see Note
(2)
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see Note
(2)
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Richard W. Neu
(10)
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23,848
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*
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Robert B. Trussell, Jr.
(10),(11)
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58,874
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*
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All Executive Officers and Directors as a group (13 persons
(10)
):
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1,140,679
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2.10
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%
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(1)
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Amounts shown reflect the aggregate number of shares of common stock held by Manulife Financial Corporation's indirect, wholly-owned subsidiaries based on information set forth in a Schedule 13G filed with the SEC on February 9, 2017. Manulife Asset Management (US) LLC reported sole voting power and sole dispositive power over 7,387,950 shares. Manulife Asset Management (North America) Limited reported sole voting power and sole dispositive power over 32,006 shares. Manulife Asset Management Limited reported sole voting power and sole dispositive power over 41,952 of the shares. The address of Manulife Financial Corporation is 200 Bloor Street East, Toronto, Ontario, Canada, M4W 1E5.
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(2)
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Amounts shown reflect the aggregate number of shares of common stock held by H Partners Management, LLC based on information set forth in a Schedule 13D/A filed with the SEC on February 9, 2016. H Partners Management, LLC reported shared voting and shared dispositive power over all 7,000,000 shares. The address of H Partners Management, LLC is 888 Seventh Avenue, 29
th
Floor, New York, NY 10019. Mr. Nabi, a senior partner at H Partners, may be deemed to have voting and dispositive power with respect to these shares. Mr. Nabi disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest.
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(3)
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Amounts shown reflect the aggregate number of shares of common stock held by T. Rowe Price Associates, Inc. based on information set forth in a Schedule 13G filed with the SEC on February 7, 2017. T. Rowe Price Associates, Inc. reported sole voting power over 718,904 shares and sole dispositive power over all 4,470,343 shares. The address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202.
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(4)
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Amounts shown reflect the aggregate number of shares of common stock held by The Vanguard Group based on information set forth in a Schedule 13G/A filed with the SEC on February 10, 2017. The Vanguard Group reported sole voting power over 30,495 shares, shared voting power over 7,171 shares, sole dispositive power over 3,913,686 shares and shared dispositive power over 34,678 shares. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
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(5)
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Amounts shown reflect the aggregate number of shares of common stock held by Blackrock, Inc. based on information set forth in a Schedule 13G/A filed with the SEC on January 27, 2017. Blackrock, Inc. reported sole voting power over 3,627,393 shares and sole dispositive power over all 3,818,153 shares. The address of Blackrock, Inc. is 55 East 52
nd
Street, New York, NY 10055.
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(6)
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Amounts shown reflect the aggregate number of shares of common stock held by The London Company based on information set forth in a Schedule 13G/A filed with the SEC on February 14, 2017. The London Company reported sole voting power over 2,764,745 shares, sole dispositive power over 2,764,745 shares and shared dispositive power over 840,436 shares. The address of The London Company is 1800 Bayberry Court, Suite 301, Richmond, VA 23226.
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(7)
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Amounts shown reflect the aggregate number of shares of common stock held by Chieftain Capital Management, Inc. based on information set forth in a Schedule 13G filed with the SEC on February 14, 2017. Chieftain reported sole voting power over 3,110,732 shares and sole dispositive power over all 3,364,827 shares. The address of Chieftain Capital Management, Inc. is 510 Madison Avenue, New York, NY 10022.
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(8)
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Amounts shown reflect the aggregate number of shares of common stock held by State Street Corporation based on information set forth in a Schedule 13G filed with the SEC on February 9, 2017. State Street Corporation reported shared voting power and shared dispositive power over all 3,136,303 shares. The address of State Street Corporation is State Street Financial Center, One Lincoln Street, Boston, MA 02111.
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(9)
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Includes 38,028 shares of common stock which are the result of the vesting of restricted stock units, however payout of the vested common shares is deferred until thirty days following termination of his employment.
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(10)
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Includes the following number of shares of common stock which a director or executive officer has the right to acquire upon the exercise of stock options that were exercisable as of March 15, 2017, or that will become exercisable within 60 days after that date, or other equity instruments which are scheduled to vest and convert into common shares within 60 days after that date:
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(11)
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Includes 25,000 shares of common stock, owned by RBT Investments, LLC and Robert B. Trussell, Jr. and Martha O. Trussell, Tenants in Common.
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•
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Scott L. Thompson, Chairman, President and Chief Executive Officer ("CEO");
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•
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Barry A. Hytinen, Executive Vice President and Chief Financial Officer ("CFO");
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•
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Richard W. Anderson, Executive Vice President and President, North America;
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•
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David Montgomery, Executive Vice President and President, International;
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•
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Jay G. Spenchian, Former Executive Vice President and Chief Marketing Officer; and
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•
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W. Timothy Yaggi, Former Chief Operating Officer.
|
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|
Year Ended December 31,
|
||||||||||||
(in millions, except percentages and per common share amounts)
|
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2016
|
|
2015
|
|
% Change
|
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% Change
Constant Currency
(3)
|
||||||
Net sales
|
|
$
|
3,127.3
|
|
|
$
|
3,151.2
|
|
|
(0.8
|
)%
|
|
0.7
|
%
|
Net income
(1)
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|
$
|
202.1
|
|
|
$
|
73.5
|
|
|
175.0
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%
|
|
184.4
|
%
|
EPS
(1)
|
|
$
|
3.38
|
|
|
$
|
1.17
|
|
|
188.9
|
%
|
|
199.1
|
%
|
Adjusted EPS
(2)
|
|
$
|
4.05
|
|
|
$
|
3.19
|
|
|
27.0
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%
|
|
30.7
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%
|
EBITDA
(2)
|
|
$
|
510.8
|
|
|
$
|
388.9
|
|
|
31.3
|
%
|
|
34.1
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%
|
Adjusted EBITDA
(2)
|
|
$
|
521.6
|
|
|
$
|
455.8
|
|
|
14.4
|
%
|
|
16.8
|
%
|
(1)
|
In 2015, the Company recorded a change in estimate of its uncertain tax position regarding the previously disclosed Danish tax matter of approximately $60.7 million. For a discussion of this issue please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
|
(2)
|
These are not recognized terms under U.S. Generally Accepted Accounting Principles (“GAAP”) and are non-GAAP financial measures. For more information about these non-GAAP financial measures, including reconciliations to GAAP information, please refer to
Appendix A
to this Proxy Statement.
|
(3)
|
Amounts represent net sales, net income, EPS, Adjusted EPS, EBITDA, and Adjusted EBITDA for 2016 on a “constant currency basis”, which is a non-GAAP financial measure. These references to constant currency basis do not include operational impacts that could result from fluctuations in foreign currency rates. To provide information on a constant currency basis, the applicable financial results are adjusted based on a simple mathematical model that translates current period results in local currency using the comparable prior corresponding period’s currency conversion rate. This approach is used for countries where the functional currency is the local country currency. This information is provided so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby facilitating period-to-period comparisons of business performance.
|
What We Do
|
|
What We Don't Do
|
||
•
|
Emphasize incentive-based compensation to align pay with performance
|
|
•
|
Permit stock option repricing without stockholder approval
|
•
|
Place primary emphasis on equity-based compensation to align executive and stockholder interests
|
|
•
|
Provide uncapped incentive award opportunities
|
•
|
Tie performance-based incentives to metrics that drive the leadership team and other employees to accomplish our most important business goals
|
|
•
|
Provide tax “gross-ups” on any form of compensation
|
•
|
Subject executives to stock ownership guidelines and holding requirements, which were amended in 2016 to increase the ownership requirement for the CEO and members of the Board of Directors
|
|
•
|
Permit stock hedging or stock pledging activities
|
•
|
Maintain a Clawback Policy allowing for the recovery of excess compensation resulting from a material financial restatement and fraud, willful misconduct or gross negligence
|
|
•
|
Provide for multi-year pay guarantees within employment agreements
|
•
|
Use tally sheets and other analytical tools to assesses executive compensation
|
|
•
|
Maintain single trigger vesting provisions in the event of a change of control for cash severance or equity award vesting acceleration
|
•
|
Engage an independent compensation consultant to advise the Compensation Committee
|
|
•
|
Other than the benefits described below, we do not provide additional perquisites or benefits to our NEOs that differ from those provided to other employees
|
(1)
|
2016 base salary was $1,100,000. This reflected no increase from 2015.
|
(2)
|
Target award opportunity equal to 125% of salary. For 2016 Mr. Thompson received an annual bonus, based on achievement against an Adjusted EBITDA goal of $1,934,625, or 140.7% of his target bonus of $1,375,000.
|
(3)
|
In 2015 the Company granted stock options for 310,000 shares and an exercise price of $71.75 per share, and these stock options will only have value if our stock price appreciates between grant date and time of exercise. For the annualized value, the grant date value is averaged over 2 years, since no additional annual grants were made in 2016. For the 2016 total realizable compensation, no value is shown because the exercise price of $71.75 exceeded the closing price of the common stock on December 30, 2016 of $68.28 and the closing price of the common stock on March 1, 2017 of $47.22.
|
(4)
|
In 2015 the Company granted restricted stock units for 118,000 shares. For the annualized value, the grant date value is averaged over 2 years, since no additional annual grants were made in 2016. For the 2016 total realizable compensation, the value is calculated by multiplying one-half of the grant, or 59,000 shares, by $68.28, the closing price of the common stock on December 30, 2016, or $47.22, the closing price of the common stock on March 1, 2017, as applicable.
|
(5)
|
Reflects a $1.6 million one-time signing bonus paid in 2015. If Mr. Thompson voluntarily terminates his employment (other than for Good Reason) prior to December 31, 2017, he must repay a pro-rated portion of the signing bonus to the Company. Annualized over 2.33 years.
|
(6)
|
In September 2015, Mr. Thompson purchased $5 million of Company stock and received a matching grant of 69,686 PRSUs which vest in 3 annual installments subject to meeting a requirement for positive pre-tax income for 2016, which was met. For the annualized value, the value at the date of grant is annualized over the vesting period. For the 2016 total realizable compensation, the value is calculated by multiplying one-third of the grant, or 23,228.7 shares, by $68.28, the closing price of the common stock on December 30, 2016, or $47.22, the closing price of the common stock on March 1, 2017, as applicable.
|
(7)
|
In February 2016, the Compensation Committee approved a special incentive program for senior management pursuant to which the Company would issue PRSUs to match open market stock purchases made by the executives, up to a cap. These PRSUs vest over a 5 year period subject to meeting a requirement for positive profits for 2016, which was met. Mr. Thompson received 51,370 PRSUs to match the purchase of 51,370 shares in the open market for a total purchase price of $2,999,995. For the annualized value, the grant date value is annualized over the vesting period. For the 2016 total realizable compensation, the value is calculated based on one-fifth of the total shares, or 10,274, multiplied by $68.28, the closing price of the common stock on December 30, 2016, or $47.22, the closing price of the common stock on March 1, 2017, as applicable.
|
(8)
|
This grant of 620,000 PRSUs runs through 2017 (or 2018 with a reduced award opportunity) and is tied to an aspirational performance goal of achieving more than $650 million in Adjusted EBITDA for 2017 or 2018. The Compensation Committee believes these are challenging performance hurdles and, if achieved, would likely result in significant stockholder value creation. This is a special grant and the Compensation Committee does not expect that it would grant any similar aspirational award for any performance period beginning prior to 2018. Because the performance requirement for vesting is so challenging, at the time of grant these shares were not expected to vest; therefore, no value attributable to these PRSUs is included in the Summary Compensation Table. In light of the revised business outlook for 2017 the Compensation Committee no longer believes that these aspirational PRSUs serve as a meaningful incentive tool. See “2017 Compensation Actions” below.
|
(9)
|
Amount shown represents the grant date fair value, based on the probable outcome of the performance conditions as of the grant date computed in accordance with the stock-based compensation accounting rules (FASB ASC Topic 718). For a discussion of our accounting treatment for these aspirational PRSU grants, please refer to Note 10 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. For informational purposes, assuming that we achieve more than $650 million in Adjusted EBITDA for 2017, the grant date fair value would be $44,485,000, calculated by multiplying the maximum number of shares issuable under the PRSUs (620,000) by the price on the grant date ($71.75).
|
(10)
|
Does not include value of aspirational PRSU grants, as described in Note 8.
|
AIP
|
|
PRSUs
|
||||
Performance Period
|
|
% of Target Award Earned
(Varies by NEO for 2014 and 2015)
|
|
Performance Period
|
|
% of Target PRSUs Earned
(1)
|
2014
|
|
59% - 78%
|
|
2012 - 2014
|
|
0%
|
2015
|
|
88% - 107%
|
|
2013 - 2014
|
|
0%
|
2016
|
|
140.7%
|
|
2014 - 2015
|
|
79.0%
|
|
|
|
|
2014 - 2016
|
|
71.2%
|
(1)
|
Mr. Thompson did not receive any of these grants as he joined the Company in September 2015.
|
Peer Group
|
||||
Brunswick Corp.
|
|
Harman International Industries, Inc.
|
|
Polaris Industries Inc.
|
Carter's Inc.
|
|
Hasbro Inc.
|
|
Select Comfort Corp.
|
Columbia Sportswear Company
|
|
Herman Miller, Inc.
|
|
Steelcase Inc.
|
Deckers Outdoor Corporation
|
|
La-Z-Boy
|
|
Tupperware Brands Corporation
|
Dorel Industries Inc.
|
|
Leggett & Platt, Inc.
|
|
Under Armour, Inc.
|
Fossil Group Inc.
|
|
Lexmark International, Inc.
|
|
Williams-Sonoma Inc.
|
Gildan Activewear Inc.
|
|
lululemon athletica
|
|
Wolverine World Wide, Inc.
|
Hanesbrands Inc.
|
|
Mohawk Industries, Inc.
|
|
|
Pay Element
|
|
Purpose
|
|
Description
|
|
Link to Performance
|
Annual Base Salary
|
|
To attract and retain leadership talent and to provide a competitive base of compensation that recognizes the executive’s skills, experience and responsibilities in the position.
|
|
Fixed, non-variable cash compensation.
|
|
Base salary levels are based on a number of factors and are significantly influenced by each individual’s sustained performance over time, including promotion to higher positions. Base salary is targeted at a competitive level, generally near the market median for each executive.
|
Annual Incentive Plan (AIP) Awards
|
|
To provide executives with a clear financial incentive to achieve critical short-term financial and operating targets or strategic initiatives.
|
|
Variable annual cash incentive with payout based on Company and individual performance over the fiscal year.
|
|
Annual incentive opportunity is targeted at a competitive level, generally near the market median for each executive. The actual incentive award payout is based on the achievement of the performance criteria and can range from 0% to 200% of target payout. 100% of the FY 2016 AIP payout opportunity was based on the Company’s Adjusted EBITDA for 2016. Using a Company-wide performance goal based on Adjusted EBITDA promotes collaboration and focuses the entire Company on a goal that strongly correlates with stockholder value creation.
|
Annual Long-Term Incentive Awards
|
|
To align a significant portion of executive compensation to the Company's long-term operational performance as well as share price appreciation and total stockholder return. This component serves to motivate and retain executive talent.
|
|
Annual grants of stock options, PRSUs, and/or restricted stock.
|
|
The Company has granted annual LTIP awards in the form of stock options, PRSUs and restricted stock units (“RSUs”). In 2016, the Compensation Committee determined that the size of the target annual long-term incentive grants should transition over time to the median or 50th percentile of the Peer Group from the prior practice of targeting the point between the median and the 75th percentile of the Peer Group.
Stock options have value only if and to the extent our share price increases from the date of grant to the time of exercise.
PRSUs are granted to reward participants for the successful achievement of multi-year performance objectives, using a currency (common stock) that is strongly aligned with stockholder interests.
Target long-term incentive grant values in 2015 were allocated 67% to PRSUs and 33% to stock options. PRSUs awarded in 2015 under the annual grant (to all NEOs except Mr. Thompson) are tied to our three-year Adjusted EPS performance over the 2015 - 2017 periods.
The annual LTIP grants for 2016 were in the form of RSUs vesting over 4 years. The Compensation Committee chose to use RSUs rather than PRSUs primarily to enhance retention and equity stakes. The RSUs awarded to our NEOs were also subject to satisfaction of a performance test for Section 162(m) purposes of “positive profits” for 2016, which was met. In addition, the NEOs had a number of PRSU grants still outstanding and RSUs are less dilutive, in terms of overall share usage, than stock options, and may help manage potential stockholder dilution from equity plans.
|
Special Long-Term Incentive Awards
|
|
|
|
|
|
In addition to annual LTIP grants, the Company has also issued special or one-time grants, for several different purposes, including aspirational awards tied to very challenging performance goals and matching awards to incent our NEOs to make significant long term cash investments in our common stock.
In the latter part of 2015, NEOs and other senior executives received special aspirational PRSU grants tied to the goal of achieving more than $650 million in Adjusted EBITDA in 2017. If the aspirational goals are not met in 2017 but are achieved in 2018, participants can earn one-third of the total shares subject to the awards. The Compensation Committee believes these are challenging performance hurdles and, if achieved, would likely result in significant stockholder value creation. These PRSU grants are described elsewhere in this Proxy Statement.
In September 2015, Mr. Thompson purchased $5 million of Company stock and received a one-time matching grant of 69,686 PRSUs which vest in 3 annual installments, subject to a threshold performance goal of positive pre-tax income 2016, which was met.
In 2016 we approved a new matching PRSU program for senior executives, including the NEOs, under which the Company issued PRSUs to match purchases of shares in the open market, up to specified caps. These PRSUs vest over five years, subject to a threshold performance goal of positive pre-tax income for 2016, which was met.
Mr. Thompson’s other equity awards are described above under “CEO Annualized Compensation Values and Pay-for-Performance Alignment” and include grants of stock options and RSUs intended to cover both 2015 and 2016 awards.
|
(1)
|
Mr. Thompson’s chart excludes the performance-based Matching PRSU grants, his initial signing bonus and the special grant of aspirational PRSUs, as these are all viewed as special or one-time grants (see “CEO Annualized Compensation Values and Pay-for-Performance Alignment - Supplemental Table of Pro-Forma Annualized Target Total Direct Compensation Value for Mr. Thompson” for a description of the elements included in Mr. Thompson’s compensation). In addition, the stock option and restricted stock grants to Mr. Thompson made in 2015 are annualized over 2 years since Mr. Thompson did not receive a regular annual long term incentive award in 2016.
|
(2)
|
The chart for other NEOs excludes the aspirational PRSU grants in light of the nature of the grant and the probability that the performance target will not be achieved.
|
Named Executive Officer
|
|
2015 Annual Salary
|
|
2016 Annual Salary
|
|
Increase (%)
|
||||
Scott L. Thompson
|
|
$
|
1,100,000
|
|
|
$
|
1,100,000
|
|
|
—
|
Barry A. Hytinen
(1)
|
|
$
|
430,000
|
|
|
$
|
460,000
|
|
|
7%
|
Richard W. Anderson
|
|
$
|
441,000
|
|
|
$
|
441,000
|
|
|
—
|
David Montgomery
|
|
£
|
298,576
|
|
|
£
|
298,576
|
|
|
—
|
Jay G. Spenchian
|
|
$
|
440,000
|
|
|
$
|
440,000
|
|
|
—
|
(1)
|
Mr. Hytinen was promoted to CFO during 2015. Amount shown represents his annualized salary at the end of 2015.
|
Named Executive Officer
|
|
Target Award as a % of
Salary
|
|
Target Award
|
|
Maximum Award as a %
of Salary
|
||
Scott L. Thompson
|
|
125%
|
|
$
|
1,375,000
|
|
|
250%
|
Barry A. Hytinen
|
|
70%
|
|
$
|
322,000
|
|
|
140%
|
Richard W. Anderson
|
|
70%
|
|
$
|
308,700
|
|
|
140%
|
David Montgomery
|
|
70%
|
|
£
|
209,003
|
|
|
140%
|
Jay G. Spenchian
|
|
70%
|
|
$
|
308,000
|
|
|
140%
|
Named Executive Officer
|
|
2016 Target
|
|
Percentage of Overall Incentive Target
|
|
2016 Actual Payout
|
|||||
Scott L. Thompson
|
|
$
|
1,375,000
|
|
|
140.7
|
%
|
|
$
|
1,934,625
|
|
Barry A. Hytinen
|
|
$
|
322,000
|
|
|
140.7
|
%
|
|
$
|
453,054
|
|
Richard W. Anderson
|
|
$
|
308,700
|
|
|
140.7
|
%
|
|
$
|
434,341
|
|
David Montgomery
|
|
£
|
209,003
|
|
|
140.7
|
%
|
|
£
|
294,067
|
|
Jay G. Spenchian
|
|
$
|
308,000
|
|
|
140.7
|
%
|
|
$
|
433,356
|
|
Named Executive Officer
|
|
Position at Time of Grant
|
|
Value($)
|
||
Barry A. Hytinen
|
|
EVP, Corporate Development & Finance
|
|
$
|
450,000
|
|
Richard W. Anderson
|
|
EVP and President, North America
|
|
500,000
|
|
|
David Montgomery
|
|
EVP and President, International
|
|
500,000
|
|
|
Jay G. Spenchian
|
|
EVP and Chief Marketing Officer
|
|
500,000
|
|
|
|
Long-Term Incentive Programs
|
||
|
2015 (Annual Grant)
|
|
2016 (Annual Grant)
|
|
Allocation
|
|
67% PRSUs
33% Stock Options
(Mix excludes CEO)
|
|
100% RSUs with a Section 162(m) performance threshold for NEOs
|
Vesting Period
|
|
3 year ratable (for stock options)
|
|
4 year ratable
|
Performance Measurement Period
|
|
3 years (for PRSUs)
|
|
1 year (for RSUs awarded to NEOs)
|
PRSU Performance Goals
|
|
Adjusted EPS
(1)
|
|
—
|
PRSU Maximum Payout (as % of Target)
|
|
300%
|
|
—
|
(1)
|
Adjusted EPS is not a recognized term under GAAP and does not purport to be an alternative to EPS calculated in accordance with GAAP. For more information on this non-GAAP financial measure please refer to
Appendix A
.
|
Named Executive Officer
|
|
Fair Value ($) 2016 LTIP Grant Date
|
|
# of RSUs
|
||
Scott L. Thompson
|
|
$
|
—
|
|
|
—
|
Barry A. Hytinen
|
|
975,000
|
|
|
18,262
|
|
Richard W. Anderson
|
|
975,000
|
|
|
18,262
|
|
David Montgomery
|
|
1,100,000
|
|
|
20,603
|
|
Jay G. Spenchian
|
|
975,000
|
|
|
18,262
|
Named Executive Officer
|
|
# of Aspirational PRSUs Earned for Meeting Hurdle in 2017
|
|
# of Aspirational PRSUs Earned for Meeting Hurdle in 2018
|
|
Scott L. Thompson
|
|
620,000
|
|
206,667
|
|
Barry A. Hytinen
|
|
125,000
|
|
41,667
|
|
Richard W. Anderson
|
|
80,000
|
|
26,667
|
|
David Montgomery
|
|
125,000
|
|
41,667
|
|
Jay G. Spenchian
|
|
80,000
|
|
26,667
|
Named Executive Officer
|
|
2016 Stock Purchase Program Company Matching Limit - PRSUs ($)
|
|
Total Matchable Purchases Made by NEO($)
|
|
Number of Matching PRSUs Issued
|
|
Value of
Matching PRSUs at Time of Grant($)
|
||||||
Scott L. Thompson
|
|
$
|
3,000,000
|
|
|
$
|
3,000,000
|
|
|
51,370
|
|
$
|
3,181,573
|
|
Barry A. Hytinen
|
|
1,000,000
|
|
|
1,000,000
|
|
|
16,663
|
|
987,283
|
|
|||
Richard W. Anderson
|
|
1,000,000
|
|
|
1,000,000
|
|
|
17,430
|
|
1,101,402
|
|
|||
David Montgomery
|
|
1,000,000
|
|
|
—
|
|
|
—
|
|
—
|
|
|||
Jay G. Spenchian
(1)
|
|
1,000,000
|
|
|
900,000
|
|
|
15,800
|
|
919,342
|
|
(1)
|
Mr. Spenchian left the Company effective February 28, 2017. As a result, Mr. Spenchian forfeited all of this grant of matching PRSUs in accordance with the terms of the award agreement and his separation agreement. For a discussion of the terms relating to Mr. Spenchian’s departure please refer to “2017 Compensation Actions - Departure of Mr. Spenchian."
|
Named Executive Officer
|
|
2017 LTIP Grant Date Fair Value ($)
(1)
|
|
# of RSUs
|
||
Scott L. Thompson
|
|
$
|
7,000,000
|
|
|
100,719
|
Barry A. Hytinen
|
|
975,000
|
|
|
14,029
|
|
Richard W. Anderson
|
|
975,000
|
|
|
14,029
|
|
David Montgomery
|
|
1,100,000
|
|
|
15,827
|
|
Jay G. Spenchian
(2)
|
|
975,000
|
|
|
14,029
|
(1)
|
The grant date fair value is based on $69.50, the closing price of the Company’s common stock on January 5, 2017, the grant date. On March 1, 2017, the closing price of the common stock was $47.22.
|
(2)
|
Mr. Spenchian left the Company effective February 28, 2017. As a result, Mr. Spenchian forfeited a portion of this grant of RSUs in accordance with the terms of the award agreement and his separation agreement. For a discussion of the terms relating to Mr. Spenchian’s departure please refer to “2017 Compensation Actions - Departure of Mr. Spenchian.”
|
(1)
|
The grant date fair value is based on the Black-Scholes value determined as of January 5, 2017, the grant date. On March 1, 2017, the closing price of the common stock was $47.22.
|
(2)
|
Mr. Spenchian left the Company effective February 28, 2017. As a result, Mr. Spenchian forfeited all of this grant of stock options in accordance with the terms of the award agreement and his separation agreement. For a discussion of the terms relating to Mr. Spenchian’s departure please refer to “2017 Compensation Actions - Departure of Mr. Spenchian.”
|
•
|
|
Base Salary
: Mr. Yaggi, like the other NEOs other than Mr. Hytinen, did not receive a salary increase as part of the normal review process in 2016. At the time of his departure, Mr. Yaggi’s annual salary was $690,000.
|
|
|
|
•
|
|
Retention Bonus Award
: Mr. Yaggi participated in the 2015 Retention Bonus Plan, with a target award value of $1,000,000. Since the Company achieved the 2015 performance hurdle associated with this incentive, and since Mr. Yaggi was terminated by the Company without Cause, he received this award in June 2016, per the terms of the Retention Bonus Plan. This value is included in the Summary Compensation Table.
|
|
|
|
•
|
|
Annual Incentive
: Mr. Yaggi’s 2016 target annual incentive opportunity of 80% of salary was identical to his 2015 target opportunity. Per the terms of his employment agreement, Mr. Yaggi did not receive any annual incentive pay for 2016, but he did receive
an additional severance payment in a lump sum payment in the amount of $137,622, equal to a prorated portion of his base salary based on the number of days of the calendar year prior to the effective date of termination, following his termination by the Company without Cause on March 31, 2016.
|
|
|
|
•
|
|
Long-term Incentives
: Under the regular annual grant process, on February 11, 2016, Mr. Yaggi received 35,587 RSUs with the same terms as grants to other NEOs as described above under the heading “2016 Annual Long-Term Incentive Grants (Regular Annual Grants).” Pursuant to the terms of the award agreement, following Mr. Yaggi’s termination by the Company without Cause, the number of RSUs was reduced to 8,897 shares to reflect his partial year of service in 2016, with the remaining RSUs subject to the original performance conditions and vesting schedule.
|
Name
|
|
Benefits and Payments
|
|
Termination By Company
Without Cause($)
|
||
W. Timothy Yaggi
|
|
Cash Severance
(1)
|
|
$
|
1,900,891
|
|
|
|
Annual Incentive Payment
(2)
|
|
—
|
|
|
|
|
Acceleration of Equity Awards
(3)
|
|
—
|
|
|
|
|
Health and Welfare Continuation
(4)
|
|
15,912
|
|
|
|
|
Reimbursement of Legal Fees and Outplacement Services
|
|
—
|
|
(1)
|
For Mr. Yaggi, the amount presented under Cash Severance for Termination by Company without Cause includes consulting fees of $62,500 per month for 12 months, an additional lump sum amount equal to the pro-rata portion of base salary based on the number of days of the calendar year prior to the effective date of termination and payment of accrued but unused vacation.
|
(2)
|
Mr. Yaggi’s agreement did not provide for payment of a prorated portion of the 2016 annual incentive compensation. Rather, it provided for the additional lump sum amount described in footnote 1 above.
|
(3)
|
None of Mr. Yaggi’s equity awards accelerated as a result of his termination of employment. The number of shares of stock covered by certain of the outstanding awards was prorated downward as a result of the termination event, and these awards will continue to vest, subject to the original performance conditions where applicable and vesting schedule as described above under “2016 Annual Long-Term Incentive Grants (Regular Annual Grants).”
|
(4)
|
Mr. Yaggi is eligible to continue to participate in welfare benefit plans offered by the Company for a period of one year following termination without Cause.
|
|
Submitted by,
|
|
|
|
COMPENSATION COMMITTEE
|
|
Jon L. Luther (Chair)
|
|
Usman S. Nabi
|
|
Richard W. Neu
|
Name and Principal Position
|
|
Year
|
|
Salary ($)
|
|
Bonus ($)
(1)
|
|
Stock Awards
($)
(2)
|
|
Option Awards ($)
(2)
|
|
Non-Equity
Incentive Plan
Compensation
($)
(3)
|
|
Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings ($)
|
|
All Other
Compensation
($)
(4)
|
|
Total ($)
|
||||||||||||||||
Scott L. Thompson
Chairman, President and Chief Executive Officer
|
|
2016
|
|
$
|
1,100,000
|
|
|
$
|
—
|
|
|
$
|
3,181,573
|
|
|
$
|
—
|
|
|
$
|
1,934,625
|
|
|
$
|
—
|
|
|
$
|
20,976
|
|
|
$
|
6,237,174
|
|
|
|
2015
|
|
342,692
|
|
|
2,058,000
|
|
|
13,617,689
|
|
|
7,212,825
|
|
|
—
|
|
|
—
|
|
|
57,413
|
|
|
23,288,619
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Barry A. Hytinen
EVP and Chief Financial Officer
|
|
2016
|
|
460,000
|
|
|
450,000
|
|
|
1,962,283
|
|
|
—
|
|
|
453,054
|
|
|
—
|
|
|
16,605
|
|
|
3,341,942
|
|
||||||||
|
|
2015
|
|
387,281
|
|
|
—
|
|
|
402,000
|
|
|
198,000
|
|
|
273,126
|
|
|
—
|
|
|
14,555
|
|
|
1,274,962
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Richard W. Anderson
EVP and President, North America
|
|
2016
|
|
441,000
|
|
|
500,000
|
|
|
2,076,402
|
|
|
—
|
|
|
434,341
|
|
|
—
|
|
|
23,960
|
|
|
3,475,703
|
|
||||||||
|
|
2015
|
|
436,962
|
|
|
—
|
|
|
653,250
|
|
|
321,750
|
|
|
322,437
|
|
|
—
|
|
|
23,365
|
|
|
1,757,764
|
|
||||||||
|
|
2014
|
|
420,000
|
|
|
—
|
|
|
637,500
|
|
|
212,500
|
|
|
161,616
|
|
|
—
|
|
|
24,445
|
|
|
1,456,061
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
David Montgomery
(5)
EVP and President, International Operations
|
|
2016
|
|
365,756
|
|
|
500,000
|
|
|
1,100,000
|
|
|
—
|
|
|
360,233
|
|
|
—
|
|
|
76,705
|
|
|
2,402,694
|
|
||||||||
|
|
2015
|
|
439,927
|
|
|
—
|
|
|
737,000
|
|
|
363,000
|
|
|
273,323
|
|
|
—
|
|
|
90,097
|
|
|
1,903,347
|
|
||||||||
|
|
2014
|
|
453,099
|
|
|
—
|
|
|
693,750
|
|
|
231,250
|
|
|
201,403
|
|
|
—
|
|
|
91,812
|
|
|
1,671,314
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Jay G. Spenchian
(6)
EVP and Chief Marketing Officer
|
|
2016
|
|
440,000
|
|
|
500,000
|
|
|
1,894,342
|
|
|
—
|
|
|
433,356
|
|
|
—
|
|
|
23,746
|
|
|
3,291,444
|
|
||||||||
|
|
2015
|
|
440,000
|
|
|
636,765
|
|
|
653,250
|
|
|
321,750
|
|
|
306,864
|
|
|
—
|
|
|
59,953
|
|
|
2,418,582
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
W. Timothy Yaggi
(7)
Chief Operating Officer
|
|
2016
|
|
183,115
|
|
|
1,000,000
|
|
|
1,900,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
933,199
|
|
|
4,016,314
|
|
||||||||
|
|
2015
|
|
686,154
|
|
|
—
|
|
|
1,273,000
|
|
|
627,000
|
|
|
592,269
|
|
|
—
|
|
|
308,208
|
|
|
3,486,631
|
|
||||||||
|
|
2014
|
|
670,000
|
|
|
—
|
|
|
1,125,000
|
|
|
375,000
|
|
|
344,648
|
|
|
—
|
|
|
24,445
|
|
|
2,539,093
|
|
(1)
|
In May 2016, the Company paid out retention bonuses that were awarded in connection with the termination of our previous CEO and the commencement of the search for a new CEO, the Board of Directors approved a retention program for NEOs and other senior executives, as described in the Compensation Discussion and Analysis section, above, under the heading “Performance-Based Retention Bonus Program." The performance target for calendar year 2015 was met. In 2015, Mr. Thompson joined the Company and pursuant to his employment agreement, received a sign on bonus of $1,600,000 and a guaranteed bonus of $458,000 for 2015 calculated as 125% of his base salary for 2015 prorated to reflect the portion of the year in which he was employed. Mr. Spenchian earned a sign on bonus in 2015, once he successfully completed 90 days of employment.
|
(2)
|
No option awards were granted in 2016. For stock awards granted, the value set forth is the grant date fair value, in accordance with FASB ASC 718. See Note 10 "Stock-based Compensation" to the Company’s Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for a complete description of the valuation. Stock awards include RSUs, which are subject to a performance threshold for Section 162(m) purposes, and matching PRSU grants, both of which are described in the Compensation Discussion and Analysis section and in the Grants of Plan Based Awards table elsewhere in this Proxy Statement. The grant date fair values of these grants represent the value at the grant date based upon the probable outcome of the performance conditions set forth in the awards. With respect to the RSUs granted on February 11, 2016, with a performance period that ended December 31, 2016, the maximum potential value of the awards is 100% of target, based on achievement of a target based on profit as defined in the award agreement. With respect to the matching PRSUs granted between October 2015 and June 2016, with a performance period that ended December 31, 2016, the maximum potential value of the matching PRSU is 100% of target, based on achievement of a target based on profit as defined in the applicable award agreements, and this performance test was met.
|
Named Executive Officer
|
|
Number of Shares at Target
|
|
Value based on Closing Price of Stock at Grant Date ($)
|
Scott L. Thompson
|
|
620,000
|
|
$44,485,000
|
Barry A. Hytinen
|
|
125,000
|
|
9,156,250
|
Richard W. Anderson
|
|
80,000
|
|
5,860,000
|
David Montgomery
|
|
125,000
|
|
9,156,250
|
Jay G. Spenchian
|
|
80,000
|
|
5,860,000
|
W. Timothy Yaggi
|
|
170,000
|
|
12,452,500
|
(3)
|
Non-Equity Incentive Plan Compensation payouts were earned in 2016 and paid in 2017 pursuant to the Company's annual incentive bonus program for 2016. As described in the Compensation Discussion and Analysis section, above, for 2016 all amounts earned were subject to a threshold objective performance metric. Once that metric was met, the maximum amount was earned, subject to the discretion of the Compensation Committee to reduce (but not increase) the amounts payable.
|
Named Executive Officer
|
|
Life and Disabilities
Insurance Premiums ($)
|
|
Contributions to
Qualified Defined Contribution Plans ($)
|
|
Car Allowance($)
|
|
Tax Preparation, Legal and Financial Planning Fees($)
|
|
Relocation($)
|
|
Severance Payments($)(a)
|
||||||||||||
Scott L. Thompson
|
|
$
|
3,360
|
|
|
$
|
7,615
|
|
|
$
|
—
|
|
|
$
|
10,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Barry A. Hytinen
|
|
3,360
|
|
|
10,600
|
|
|
—
|
|
|
2,645
|
|
|
—
|
|
|
—
|
|
||||||
Richard W. Anderson
|
|
3,360
|
|
|
10,600
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
||||||
David Montgomery
|
|
21,078
|
|
|
36,576
|
|
|
18,375
|
|
|
676
|
|
|
—
|
|
|
—
|
|
||||||
Jay G. Spenchian
|
|
3,146
|
|
|
10,600
|
|
|
—
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
||||||
W. Timothy Yaggi
|
|
840
|
|
|
10,600
|
|
|
—
|
|
|
4,959
|
|
|
—
|
|
|
916,800
|
|
(a)
|
For additional information regarding the elements included in the severance provided to Mr Yaggi, see “2016 Compensation for Former Named Executive Officer” in the Compensation Discussion and Analysis section in this Proxy Statement.
|
(5)
|
Mr. Montgomery’s salary and Non-Equity Incentive Plan Compensation are paid in British Pounds (£) and are converted to United States Dollars ($) using the spot rate on December 30, 2016, the last business day of the year. The variation in Mr. Montgomery's salary reported in 2015 compared to 2016 is due to variation in the conversion rate.
|
(6)
|
Mr. Spenchian left the Company effective February 28, 2017. For a discussion relating to the terms of Mr. Spenchian's departure please refer to "Compensation Discussion and Analysis - 2017 Compensation Actions - Departure of Mr. Spenchian."
|
(7)
|
Timothy Yaggi, our Chief Operating Officer, left the Company effective March 31, 2016. For a discussion of the terms relating to Mr. Yaggi’s departure please refer to “Compensation Discussion and Analysis - 2016 Compensation for Former Named Executive Officer.”
|
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
(1)
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards
(2)
|
|
All Other Stock Awards: Number of Shares of Stock of Units (#)
|
|
All Other Option Awards:
Number of
Securities
Underlying
Options
(#)
|
|
Exercise or
Base Price of
Option
Awards
($/Sh)
|
|
Grant Date
Fair Value of
Stock and
Option Awards
($)
(3)
|
||||||||||||||||||
Name/Type of Award
|
|
Grant Date
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum ($)
|
|
Threshold (#)
|
|
Target (#)
|
|
Maximum (#)
|
|
|||||||||||||||||
Scott L. Thompson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Annual Incentive Bonus
(1)
|
|
2/1/2016
|
|
$
|
0
|
|
|
$
|
1,375,000
|
|
|
$
|
2,750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
||||
Stock Award (RSU)
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Matching PRSU
(5)
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
35,000
|
|
|
35,000
|
|
|
|
|
|
|
|
|
2,211,650
|
|
|||
Matching PRSU
(5)
|
|
5/6/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
16,370
|
|
|
16,370
|
|
|
|
|
|
|
|
|
969,925
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Barry A. Hytinen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Annual Incentive Bonus
(1)
|
|
2/1/2016
|
|
0
|
|
|
322,000
|
|
|
644,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Stock Award (RSU)
(4)
|
|
2/11/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
18,262
|
|
|
18,262
|
|
|
|
|
|
|
|
|
975,000
|
|
|||
Matching PRSU
(5)
|
|
5/6/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
16,663
|
|
|
16,663
|
|
|
|
|
|
|
|
|
987,283
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Richard W. Anderson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Annual Incentive Bonus
(1)
|
|
2/1/2016
|
|
0
|
|
|
308,700
|
|
|
617,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Stock Award (RSU)
(4)
|
|
2/11/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
18,262
|
|
|
18,262
|
|
|
|
|
|
|
|
|
975,000
|
|
|||
Matching PRSU
(5)
|
|
3/18/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
17,430
|
|
|
17,430
|
|
|
|
|
|
|
|
|
1,101,402
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
David Montgomery
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Annual Incentive Bonus
(1)
|
|
2/1/2016
|
|
0
|
|
|
313,506
|
|
|
627,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Stock Award (RSU)
(4)
|
|
2/11/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
20,603
|
|
|
20,603
|
|
|
|
|
|
|
|
|
1,100,000
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Jay G. Spenchian
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Annual Incentive Bonus
(1)
|
|
2/1/2016
|
|
0
|
|
|
308,000
|
|
|
616,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Stock Award (RSU)
(4)
|
|
2/11/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
18,262
|
|
|
18,262
|
|
|
|
|
|
|
|
|
975,000
|
|
|||
Matching PRSU
(5)
|
|
5/20/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
8,800
|
|
|
8,000
|
|
|
|
|
|
|
|
|
513,832
|
|
|||
Matching PRSU
(5)
|
|
6/17/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
7,000
|
|
|
7,000
|
|
|
|
|
|
|
|
|
405,510
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
W. Timothy Yaggi
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Annual Incentive Bonus
(1)
|
|
2/1/2016
|
|
0
|
|
|
552,000
|
|
|
1,104,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Stock Award (RSU)
(4)
|
|
2/11/2016
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
35,587
|
|
|
35,587
|
|
|
|
|
|
|
|
|
1,900,000
|
|
(1)
|
These columns show the 2016 annual award opportunities under the Company's annual incentive bonus program for 2016. They do not reflect the actual amounts paid out under the program, which are included in the Summary Compensation Table and discussed in the Compensation Discussion and Analysis section under "2016 Compensation Actions - 2016 Annual Incentive Program."
|
(2)
|
These columns show the 2016 equity incentive awards, which include awards of RSUs subject to a performance threshold and matching PRSUs pursuant to a Matching PRSU Program adopted by the Board on February 25, 2016 that was open through September 15, 2016. The terms of these awards are described more fully in Notes (4) and (5), below.
|
(3)
|
This column shows the grant date fair value of the RSU subject to a performance threshold and Matching PRSU awards computed in accordance with FASB ASC 718. See Note 10 "Stock-based Compensation" to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for a complete description of the valuations.
• For the RSUs subject to the performance threshold, the grant date fair value displayed represents the value of the shares based on the closing price of the common stock on the NYSE on the grant date.
• For the Matching PRSUs granted under the Matching PRSU Program, described in detail in Note (5) below, the grant date fair value displayed represents the value of the shares based on the closing price of the common stock on the NYSE on the grant date. The maximum value of the award is 100% of target.
The amounts do not reflect the risk that the awards may be forfeited in certain circumstances or, in the case of performance awards, that there is no payout if the required performance measures are not met.
|
(4)
|
On February 11, 2016, the Board approved the grant of RSUs, subject to a performance threshold that the Company have “positive profits” for calendar year 2016, as defined in the applicable award agreements. If the performance threshold is achieved, which it was, the RSUs will vest over the first four anniversaries of the grant dates. Mr. Thompson did not participate in this award in light of his joining the Company in September 2015 and receiving equity grants at that time.
|
(5)
|
On February 25, 2016, the Board approved a Matching PRSU Program, pursuant to which the Company would grant Matching PRSUs to an eligible executive, including the NEOs, covering the number of shares of Common Stock purchased by the executive in open market purchases between February 25, 2016 and September 15, 2016 (the “Purchased Shares”). The Matching PRSUs are subject to a performance requirement that the Company have “positive profits” for calendar year 2016, as defined in the applicable award agreements. If the performance threshold is achieved, which it was, the Matching PRSUs will vest over the first five anniversaries of the grant dates. Under the terms of the Matching PRSU Agreements, in the event a participating executive sells any of the Purchased Shares at any time prior to the fifth anniversary of the grant date all remaining unvested Matching PRSUs are forfeited.
|
(6)
|
Mr. Montgomery’s salary is paid in British Pounds (£). As a result, the Annual Incentive Bonus threshold, target and maximum opportunities were converted into United States Dollars ($) based on the exchange spot rate on December 31, 2016.
|
(7)
|
Mr. Spenchian left the Company effective February 28, 2017. For a discussion relating to the terms of Mr. Spenchian's departure please refer to "Compensation Discussion and Analysis - 2017 Compensation Actions - Departure of Mr. Spenchian."
|
(8)
|
Mr. Yaggi left the Company effective March 31, 2016. For a discussion of the terms relating to Mr. Yaggi’s departure please refer to “Compensation Discussion and Analysis - 2016 Compensation for Former Named Executive Officer.”
|
|
|
Option Awards
|
|
Stock Awards
(1)
|
|||||||||||||||||||||
Name
|
|
Number of Securities Underlying Options
|
|
Option Exercise Price
|
|
Option
Expiration Date
|
|
Number of Shares or Units of Stock that Have Not Yet Vested
|
|
Market Value of Shares or Units of Stock that Have Not Yet Vested
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights That Have Not Vested
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
|
|||||||||||
|
|
(#) Exercisable
|
|
(#) Unexercisable
|
|
($)
|
|
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|||||||||
Scott L. Thompson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
103,334
|
|
|
206,666
|
|
(2)
|
$
|
71.75
|
|
|
9/3/2025
|
|
|
|
$
|
|
|
|
|
$
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,686
|
|
(3)
|
4,758,160
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
(4)
|
2,389,800
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,370
|
|
(4)
|
1,117,744
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
78,666
|
|
(5)
|
5,371,314
|
|
|
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Barry A. Hytinen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
1,570
|
|
|
—
|
|
(6)
|
46.68
|
|
|
2/21/2021
|
|
|
|
|
|
|
|
|
||||||
|
|
1,172
|
|
|
—
|
|
(7)
|
71.50
|
|
|
2/8/2022
|
|
|
|
|
|
|
|
|
||||||
|
|
4,500
|
|
|
—
|
|
(8)
|
24.89
|
|
|
11/18/2022
|
|
|
|
|
|
|
|
|
||||||
|
|
6,003
|
|
|
—
|
|
(9)
|
37.05
|
|
|
2/21/2023
|
|
|
|
|
|
|
|
|
|
|||||
|
|
1,240
|
|
|
619
|
|
(10)
|
51.87
|
|
|
2/28/2024
|
|
|
|
|
|
|
|
|
|
|||||
|
|
3,376
|
|
|
6,752
|
|
(11)
|
57.51
|
|
|
2/26/2025
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,301
|
|
(12)
|
88,832
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,990
|
|
(13)
|
477,277
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,262
|
|
(14)
|
1,246,929
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,663
|
|
(4)
|
1,137,750
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Richard W. Anderson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
6,082
|
|
|
—
|
|
(6)
|
46.68
|
|
|
2/21/2021
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
4,838
|
|
|
—
|
|
(7)
|
71.50
|
|
|
2/8/2022
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
24,345
|
|
|
—
|
|
(8)
|
37.05
|
|
|
11/18/2022
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
5,852
|
|
|
2,925
|
|
(10)
|
51.87
|
|
|
2/28/2024
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
5,486
|
|
|
10,972
|
|
(11)
|
57.51
|
|
|
2/26/2025
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,145
|
|
(12)
|
419,581
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,359
|
|
(13)
|
775,593
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,262
|
|
(14)
|
1,246,929
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,430
|
|
(4)
|
1,190,120
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
David Montgomery
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
45,000
|
|
|
—
|
|
(15)
|
6.14
|
|
|
2/27/2019
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
6,082
|
|
|
—
|
|
(6)
|
46.68
|
|
|
2/21/2021
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
4,838
|
|
|
—
|
|
(7)
|
71.50
|
|
|
2/8/2022
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
26,864
|
|
|
—
|
|
(9)
|
37.05
|
|
|
2/21/2023
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
6,368
|
|
|
3,184
|
|
(10)
|
51.87
|
|
|
2/27/2024
|
|
|
|
|
|
|
|
|
||||||
|
|
6,190
|
|
|
12,378
|
|
(11)
|
57.51
|
|
|
2/26/2025
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,687
|
|
(12)
|
456,588
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,815
|
|
(13)
|
875,008
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,603
|
|
(14)
|
1,406,773
|
|
Jay G. Spenchian
(16)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
5,486
|
|
|
10,972
|
|
(11)
|
57.51
|
|
|
2/26/2025
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
10,530
|
|
(17)
|
$
|
718,988
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,359
|
|
(13)
|
775,593
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,262
|
|
(14)
|
1,246,929
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,800
|
|
(4)
|
600,864
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
(4)
|
477,960
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
W. Timothy Yaggi
(18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
10,369
|
|
|
—
|
|
(9)
|
37.05
|
|
|
3/30/2019
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
5,163
|
|
(10)
|
51.87
|
|
|
3/30/2019
|
|
|
|
|
|
|
|
|
|
||||||
|
|
—
|
|
|
21,381
|
|
(11)
|
57.51
|
|
|
3/30/2019
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,844
|
|
(12)
|
740,428
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,135
|
|
(13)
|
1,511,378
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,966
|
|
(14)
|
202,518
|
|
(1)
|
During 2015 and 2016, the Company granted "aspirational" PRSUs that will vest at target if the Company achieves an adjusted EBITDA performance for 2017. If the performance metric is not met in 2017 but the Company achieves the performance metric in 2018, then one-third of the PRSUs will vest (at the threshold level), and the remaining PRSUs will be forfeited. The Company has excluded these awards from this table as it is not considered probable that the Company will achieve the specified performance metric as of December 31, 2017, or December 31, 2018.
|
(2)
|
These options, granted on September 4, 2015, have a 10-year term and become exercisable in three equal installments over three years, beginning with the one-year anniversary date of the grant.
|
(3)
|
These PRSUs, granted on September 4, 2015, cover a performance period ending December 31, 2016. The performance target for 2016 was met. The awards will vest in three equal installments over three years, beginning with the one-year anniversary date of the grant. The amounts in this column represent the distribution of the PRSUs based on achievement of the performance metrics at the target. The grant agreement was amended on October 12, 2015.
|
(4)
|
On February 25, 2016, the Board approved a Matching PRSU Program, pursuant to which the Company would grant "matching PRSUs" to an eligible executive, including the NEOs, covering the number of shares of Common Stock purchased by the executive in open market purchases between February 25, 2016 and September 15, 2016 (the “Purchased Shares”). The matching PRSUs are subject to a performance requirement that the Company have “positive Profits” for calendar year 2016, as defined in the applicable award agreements. If the performance threshold is achieved, which it was, the matching PRSUs will vest over the first five anniversaries of the grant dates. Under the terms of the Matching PRSU Agreements, in the event a participating executive sells any of the Purchased Shares at any time prior to the fifth anniversary of the grant date all remaining unvested matching PRSUs are forfeited.
|
(5)
|
These RSUs, granted on September 4, 2015, will vest in three equal installments over three years, beginning with the one-year anniversary date of the grant.
|
(6)
|
These options, granted on February 22, 2011, have a 10-year life and become exercisable in equal installments over three years, beginning with the one-year anniversary of the grant date.
|
(7)
|
These options, granted on February 9, 2012, have a 10-year life and become exercisable in equal installments over three years, beginning with the one-year anniversary of the grant date.
|
(8)
|
These options, granted on November 19, 2012, have a 10-year life and became exercisable on the one-year anniversary of the grant date.
|
(9)
|
These options, granted on February 22, 2013, have a 10-year term and became exercisable in two equal installments over two years, beginning with the one-year anniversary date of the grant.
|
(10)
|
These options, granted on February 28, 2014, have a 10-year term and become exercisable in three equal installments over three years, beginning with the one-year anniversary date of the grant.
|
(11)
|
These options, granted on February 27, 2015, have a 10-year term and become exercisable in three equal installments over three years, beginning with the one-year anniversary date of the grant.
|
(12)
|
These PRSUs, granted on February 28, 2014, covered a three-year performance period ending December 31, 2016. Distribution of the awards is dependent upon the achievement of certain performance metrics within a range set forth by the Compensation Committee and the Board, and is to occur no later than the fifteenth day of the third month following December 31, 2016. The amounts in this column represent the distribution of the PRSUs based on achievement of the performance metrics at the target.
|
(13)
|
These PRSUs, granted on February 27, 2015, covered a three-year performance period ending December 31, 2017. Distribution of the awards is dependent upon the achievement of certain performance metrics within a range set forth by the Compensation Committee and the Board, and is to occur no later than the fifteenth day of the third month following December 31, 2017. The amounts in this column represent the distribution of the PRSUs based on achievement of the performance metrics at the target.
|
(14)
|
On February 11, 2016, the Board approved the grant of RSUs, subject to a performance threshold that the Company have “positive Profits” for calendar year 2016, as defined in the applicable award agreements. If the performance threshold is achieved, which it was, the RSUs will vest over the first four anniversaries of the grant dates.
|
(15)
|
These options, granted on February 27, 2009, have a 10-year life and become exercisable in equal installments over four years, beginning with the one-year anniversary of the grant date.
|
(16)
|
Mr. Spenchian left the Company effective February 28, 2017. For a discussion relating to the term of Mr. Spenchian's departure please refer to "Compensation Discussion and Analysis - 2017 Compensation Actions - Departure of Mr. Spenchian."
|
(17)
|
These RSUs, granted on December 1, 2014, will vest on the third anniversary of the grant date.
|
(18)
|
Mr. Yaggi left the Company effective March 31, 2016. For a discussion of the terms relating to Mr. Yaggi’s departure please refer to “Compensation Discussion and Analysis - 2016 Compensation for Former Named Executive Officer.”
|
|
|
Option Awards
|
|
Stock Awards
|
|
||||||||||
Name
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
Value Realized on
Exercise ($)
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
Value Realized on
Vesting ($)
|
|
||||||
Scott L. Thompson
|
|
—
|
|
|
$
|
—
|
|
|
39,334
|
|
|
$
|
2,822,215
|
|
|
Barry A. Hytinen
|
|
—
|
|
|
—
|
|
|
1,028
|
|
|
53,311
|
|
|
||
Richard W. Anderson
|
|
75,000
|
|
|
4,504,250
|
|
|
4,855
|
|
|
251,806
|
|
|
||
David Montgomery
|
|
83,333
|
|
|
3,505,229
|
|
|
5,283
|
|
|
274,015
|
|
|
||
Jay G. Spenchian
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
||
W. Timothy Yaggi
(2)
|
|
61,017
|
|
|
1,897,635
|
|
|
8,567
|
|
|
444,358
|
|
|
(1
|
)
|
|
Mr. Spenchian left the Company effective February 28, 2017. For a discussion relating to the term of Mr. Spenchian's departure please refer to "Compensation Discussion and Analysis - 2017 Compensation Actions - Departure of Mr. Spenchian."
|
(2
|
)
|
|
Mr. Yaggi left the Company effective March 31, 2016. For a discussion of the terms relating to Mr. Yaggi’s departure please refer to “Compensation Discussion and Analysis - 2016 Compensation for Former Named Executive Officer - Departure of Mr. Yaggi.”
|
|
|
|
|
Termination
By Company
Without Cause
|
|
Employee
Resignation
For Good Reason
|
|
Termination
By Company
For Cause
|
|
Termination
Due to
Disability
|
|
Death
|
|
Change of
Control
|
|
Change of
Control and
Termination
|
||||||||||||||
Name
|
|
Benefits and Payments
|
|
($)
(1)
|
|
($)
(1)
|
|
($)
|
|
($)
(1)
|
|
($)
(1)
|
|
($)
(2)
|
|
($)
(2)
|
||||||||||||||
Scott L. Thompson
|
|
Cash Severance
(3)
|
|
$
|
2,221,200
|
|
|
$
|
2,221,200
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Annual Incentive Payment
(4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
|
Acceleration of equity awards
(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,322,744
|
|
|
16,322,744
|
|
|
—
|
|
|
58,656,344
|
|
|||||||
|
|
Health and Welfare Continuation
(6)
|
|
31,126
|
|
|
31,126
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Barry A. Hytinen
|
|
Cash Severance
(7)
|
|
460,000
|
|
|
460,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
|
Annual Incentive Payment
(4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
|
Acceleration of equity awards
(8)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,467,556
|
|
|
3,033,665
|
|
|
—
|
|
|
11,568,665
|
|
|||||||
|
|
Health and Welfare Continuation
(6)
|
|
11,943
|
|
|
11,943
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1
|
)
|
Excludes amounts for both unpaid, earned salary and for accrued, unused vacation, if applicable.
|
(2
|
)
|
The NEOs' employment agreements do not provide for any payments solely due to a change in control of Tempur Sealy International or Tempur Sealy International Limited, as applicable. To the extent equity award agreements trigger acceleration of vesting of awards, such accelerations are noted in the column and the specific details are described in separate footnotes. To the extent a termination of employment occurs in connection with a change in control, any severance or bonus payments would only be made to the extent the termination qualified as a termination by the Company without cause or as a resignation by the employee for good reason, and such payments are described in the appropriate column in the table.
|
(3
|
)
|
For Mr. Thompson, the amount presented under Cash Severance for Termination by Company without Cause and for Employee Resignation for Good Reason includes two years of base salary (reduced by any salary continuation benefit paid for under any plan maintained by the Company) and cash payments for certain benefits that may not be continued after termination of employment due to the provisions of the applicable plans.
|
(4
|
)
|
With respect to the currently employed NEOs, because the termination event is deemed to have occurred on December 31, 2016, any incentive compensation is payable as earned under the terms of the annual incentive program, so no additional amounts would be payable as a result of the deemed termination.
|
(5
|
)
|
The acceleration of equity awards represents the fair value of awards that would accelerate upon vesting as of the event date. Mr. Thompson’s stock option, base RSU and matching PRSU agreements dated September 4, 2015 provide that if he is terminated due to disability, death, or in the event of a change in control, if Mr. Thompson is terminated without cause or if he resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his remaining equity awards under those agreements immediately vest. Mr. Thompson’s Aspirational PRSU award agreement dated September 4, 2015 provides that if a change of control occurs before December 31, 2018, any remaining Aspirational PRSUs will automatically convert into RSUs vesting over time, and thereafter if Mr. Thompson is terminated without cause or he resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, these RSUs immediately vest.
|
(6
|
)
|
Mr. Thompson would be eligible to continue to participate in welfare benefit plans offered by the Company for a period of two years, and Messrs. Hytinen, Anderson and Spenchian for one year, following termination without cause or resignation for good reason.
|
(7
|
)
|
For Messrs. Hytinen, Anderson and Spenchian, the amount presented under Cash Severance for Termination by Company without Cause and for Employee Resignation for Good Reason represents twelve months of base salary.
|
(8
|
)
|
Mr. Hytinen's stock option agreements dated February 28, 2014 and February 27, 2015 provide that if he is terminated due to disability, death, or in the event of a change in control, if Mr. Hytinen is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his remaining unvested options immediately vest. Mr. Hytinen's PRSU agreements dated February 28, 2014 and February 27, 2015 provided that if he is terminated due to death, or in the event of a change of control, if Mr. Hytinen is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his target PRSU awards immediately vest. Mr. Hytinen's Aspirational PRSU award agreement dated October 26, 2015, provides that if a change of control occurs before December 31, 2018, any remaining Aspirational PRSUs will automatically convert into RSUs vesting over time, and thereafter if Mr. Hytinen is terminated without cause or he resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, these RSUs immediately vest.
|
(9
|
)
|
Mr. Anderson's stock option agreements dated February 28, 2014 and February 27, 2015 provide that if he is terminated due to disability, death, or in the event of a change in control, if Mr. Anderson is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his remaining unvested options immediately vest. Mr. Anderson's PRSU agreements dated February 28, 2014 and February 27, 2015 provided that if he is terminated due to death, or in the event of a change of control, if Mr. Anderson is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his target PRSU awards immediately vest. Mr. Anderson's Aspirational PRSU award agreement dated October 26, 2015, provides that if a change of control occurs before December 31, 2018, any remaining Aspirational PRSUs will automatically convert into RSUs vesting over time, and thereafter if Mr. Anderson is terminated without cause or he resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, these RSUs immediately vest.
|
(10
|
)
|
For Mr. Montgomery, the amount presented under Cash Severance for Termination by Company without Cause and for Employee Resignation for Good Reason includes a lump sum payment equal to one year of base salary. Mr. Montgomery’s cash severance amounts are denominated in British Pounds and have been converted to United States Dollars using the spot conversion rate as of December 31, 2015.
|
(11
|
)
|
For death while in service to the Company, insurance coverage exists which will provide for four (4) times base salary paid in a lump sum, of which the payout as of December 31, 2015 would have been $1,812,396: this benefit is available to all other employees who work in the United Kingdom (UK) at three (3) times base salary. In addition, a widow’s benefit insurance contract exists that pays an amount of up to 25% of base salary until normal retirement age of 65; the payout for this component would have been $1,246,022 as of December 31, 2015. The widow’s benefit is only available to Mr. Montgomery. Mr. Montgomery also has Company-provided insurance coverage providing a lump sum of four times base salary at the time he experiences an illness or injury preventing him from future service. The payout as of December 31, 2015, would have been $1,812,396; this benefit is available to all other members of the management team in the UK at three (3) times base salary. In the case of long term disability, permanent health insurance coverage will be provided equal to 55% of salary until normal retirement age; the payout for this component is also covered by an insurance contract and would have been $2,741,249 as of December 31, 2015. The permanent health insurance coverage benefit is only available to Mr. Montgomery. Each of these amounts is based on Mr. Montgomery’s base salary, which is denominated in British Pounds, and has been converted to United States Dollars using the spot conversion rate as of December 31, 2015.
|
(12
|
)
|
The acceleration of equity awards represents the fair value of awards that would accelerate upon vesting as of the event date. Mr. Montgomery’s stock option agreements dated February 28, 2014 and February 27, 2015 provide that if he is terminated due to disability, death, change in control, or in the event of a change in control, if Mr. Montgomery is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his remaining unvested options immediately vest. Mr. Montgomery’s PRSU agreements dated February 28, 2014 and February 27, 2015 provide that if he is terminated due to death, or in the event of a change in control, if Mr. Montgomery is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his target PRSU awards immediately vest. Mr. Montgomery's Aspirational PRSU award agreement dated October 26, 2015, provides that if a change of control occurs before December 31, 2018, any remaining Aspirational PRSUs will automatically convert into RSUs vesting over time, and thereafter if Mr. Montgomery is terminated without cause or he resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, these RSUs immediately vest.
|
(13
|
)
|
For Mr. Montgomery, the amount presented under Pension benefits for Termination by Company without Cause and for Employee Resignation for Good Reason includes continuation of pension benefits for a period of twelve months.
|
(14
|
)
|
For Mr. Montgomery, the amount presented under Car Allowance benefits for Termination by Company without Cause and for Employee Termination for Good Reason includes continuation of car allowance benefits for a period of twelve months.
|
(15
|
)
|
Mr. Spenchian's RSU award agreement dated December 1, 2014, provides that if he is terminated due to disability, death, or in the event of a change in control, if Mr. Spenchian is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, the RSUs vest immediately.Mr. Spenchian's stock option agreements dated February 27, 2015 provide that if he is terminated due to disability, death, or in the event of a change in control, if Mr. Spenchian is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his remaining unvested options immediately vest. Mr. Spenchian's PRSU agreement dated February 27, 2015 provide that if he is terminated due to death, or in the event of a change of control, if Mr. Spenchian is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his target PRSU awards immediately vest. Mr. Spenchian's Aspirational PRSU award agreement dated October 26, 2015, provides that if a change of control occurs before December 31, 2018, any remaining Aspirational PRSUs will automatically convert into RSUs vesting over time, and thereafter if Mr. Spenchian is terminated without cause or he resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, these RSUs immediately vest.
|
(16
|
)
|
For Mr. Yaggi, the amount presented under Cash Severance for Termination by Company without Cause and for Employee Resignation for Good Reason includes two years of base salary and an additional lump sum amount equal to 80% of the pro-rata portion of base salary based on the number of days of the calendar year prior to the effective date of termination. Upon Termination as a result of Death or Disability, Mr. Yaggi will receive a lump sum payment equal to 80% of the pro-rata portion of base salary based on the number of days of the calendar year prior to the effective date of Death or Disability.
|
(17
|
)
|
The acceleration of equity awards represents the fair value of awards that would accelerate upon vesting as of the event date. Mr. Yaggi’s stock option agreements dated February 28, 2014 and February 27, 2015, provide that if he is terminated due to disability, death, or in the event of a change in control, if Mr. Yaggi is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his remaining unvested options immediately vest. Mr. Yaggi’s PRSU agreements dated February 28, 2014 and February 27, 2015, provide that if he is terminated due to death, or in the event of a change in control, if Mr. Yaggi is terminated without cause or resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, his target PRSU awards immediately vest. Mr. Yaggi's Aspirational PRSU award agreement dated October 26, 2015, provides that if a change of control occurs before December 31, 2018, any remaining Aspirational PRSUs will automatically convert into RSUs vesting over time, and thereafter if Mr. Yaggi is terminated without cause or he resigns for good reason (as defined in his employment agreement) within twelve months of the change in control, these RSUs immediately vest.
|
Plan category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted-average exercise price of outstanding options, warrants and rights($)
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
||||
|
|
(a)
|
|
(b)
|
|
(c)
|
||||
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
||||
2003 Amended and Restated Equity Incentive Plan
(1)
|
|
650,094
|
|
|
$
|
36.48
|
|
|
—
|
|
2013 Equity Incentive Plan
(2)
|
|
3,657,787
|
|
|
61.69
|
|
|
1,323,062
|
|
|
Equity Compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
4,307,881
|
|
|
$
|
50.46
|
|
|
1,323,062
|
|
(1)
|
In May 2013, our Board of Directors adopted a resolution that prohibited further grants under the 2003 Amended and Restated Equity Incentive Plan. The number of securities to be issued upon exercise of outstanding stock options, warrants and rights issued under the 2003 Amended and Restated Equity Incentive Plan includes 404 shares issuable under restricted stock units and deferred stock units. These restricted and deferred stock units are excluded from the weighted average exercise price calculation above.
|
(2)
|
The number of securities to be issued upon exercise of outstanding stock options, warrants and rights issued under the 2013 Equity Incentive Plan includes 396,622 shares issuable under restricted stock units and deferred stock units. Additionally, this number includes 2,452,889 performance restricted stock units assuming a maximum payout of the awards granted and also includes 1,242,700 aspirational PRSU awards. For more information on the aspirational PRSU awards, please see "Compensation Discussion and Analysis - 2016 Compensation Actions - Aspirational Grants." These restricted, deferred and performance restricted stock units are excluded from the weighted average exercise price calculation above.
|
|
|
Fees Earned Or Paid In Cash ($)
(1)
|
|
Stock Awards
(2) (4)
|
|
Option Awards
(3)(4)
|
|
Non-Equity Incentive Plan Compensation($)
|
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings($)
|
|
All other Compensation($)
|
|
|
||||||||||||||||||||
Name
|
|
|
$
|
|
#
|
|
$
|
|
#
|
|
|
|
|
Total ($)
|
||||||||||||||||||||
Evelyn S. Dilsaver
|
|
$
|
98,000
|
|
|
$
|
130,000
|
|
|
2,156
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
230,156
|
|
John A. Heil
|
|
86,445
|
|
|
130,000
|
|
|
2,156
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
218,601
|
|
|||||||
Jon L. Luther
|
|
76,445
|
|
|
130,000
|
|
|
2,156
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
208,601
|
|
|||||||
Usman S. Nabi
(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Richard W. Neu
|
|
70,000
|
|
|
165,000
|
|
|
2,736
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
237,736
|
|
|||||||
Robert B. Trussell, Jr.
|
|
70,000
|
|
|
130,000
|
|
|
2,156
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
202,156
|
|
|||||||
Frank Doyle
(6)(7)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Peter K. Hoffman
(7)
|
|
55,445
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55,445
|
|
|||||||
Sir Paul Judge
(7)
|
|
34,300
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,300
|
|
|||||||
Nancy F. Koehn
(7)
|
|
37,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,500
|
|
|||||||
Lawrence J. Rogers
(7)(8)
|
|
35,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102,081
|
|
|
137,081
|
|
(1)
|
Director compensation is based on the Board year, which is the period from one annual meeting to the next annual meeting, and fees are paid in arrears at the end of July, October, January and April. As required by SEC rules, the amounts shown in this table were paid during calendar year 2016. The table reflects amounts paid during the second half of the 2015 Board Year (which ended on May 5, 2016) and amounts paid through December 31, 2016 of the 2016 Board Year.
|
(2)
|
The DSUs granted during calendar year 2016 vest in four equal increments at the end of July 2016, October 2016, January 2017 and April 2017. Vesting of each DSU is subject to the applicable grant recipient being a member of the Board as of the applicable vesting date. All DSUs which become vested shall be paid on the third anniversary date of the grant date applicable to each DSU, or such later date elected by the director in accordance with the Non-Employee Director Deferred Compensation Plan. The value of the DSU awards set forth is the grant date fair value, calculated in accordance with FASB ASC 718. See the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for a complete description of the valuations.
|
(3)
|
No stock options were granted to non-employee Board members during calendar year 2016.
|
(4)
|
The following table sets forth the aggregate number of option awards and stock awards outstanding for each director as of December 31, 2016, other than for Mr. Thompson whose outstanding equity awards are set forth in the "Outstanding Equity Awards at Fiscal Year-End" table elsewhere in this Proxy Statement:
|
Name
|
|
Aggregate Option Awards
Outstanding As Of
December 31, 2016
|
|
Aggregate DSU Awards Outstanding As of December 31, 2016
|
||
Vested
|
|
Unvested
(a)
|
||||
Evelyn S. Dilsaver
|
|
18,669
|
|
3,617
|
|
1,078
|
John A. Heil
|
|
9,878
|
|
3,617
|
|
1,078
|
Jon L. Luther
|
|
1,669
|
|
2,202
|
|
1,078
|
Usman S. Nabi
|
|
—
|
|
—
|
|
—
|
Richard W. Neu
|
|
675
|
|
1,805
|
|
1,368
|
Robert B. Trussell, Jr.
|
|
23,478
|
|
3,617
|
|
1,078
|
Frank Doyle
|
|
—
|
|
4,619
|
|
—
|
Peter K. Hoffman
|
|
—
|
|
2,539
|
|
—
|
Sir Paul Judge
|
|
—
|
|
2,539
|
|
—
|
Nancy F. Koehn
|
|
—
|
|
2,539
|
|
—
|
Lawrence J. Rogers
|
|
—
|
|
2,539
|
|
—
|
(a)
|
Reflects DSUs granted to members of the Board that are unvested, or are vested, but are still subject to the applicable deferral period required in the award agreement. Shares released upon satisfaction of the applicable deferral period and still held by the director are reflected in the Beneficial Ownership Table elsewhere in this Proxy Statement.
|
(5)
|
In accordance with the policies of H Partners, of which he is a Senior Partner, Mr. Nabi declined to accept any compensation.
|
(6)
|
Mr. Doyle elected to receive his 2015 Board Year cash compensation in the form of DSUs. As a result, in 2015, he received an additional grant of 1,408 DSUs in lieu of all cash compensation that would otherwise have been paid during the 2015 Board year. These elective DSUs vested in equal increments at the end of July 2015, October 2015, January 2016 and April 2016. As a result, Mr. Doyle did not receive any cash fees during calendar year 2016. These DSUs are included in the table in footnote 4, above.
|
(7)
|
Messrs. Doyle, Hoffman, Judge, Rogers and Ms. Koehn left the Board at the end of the 2015 Board Year, so their compensation for calendar year 2016 includes payments from January 1, 2016 through April 30, 2016. They did not receive any option or DSU awards during calendar year 2016.
|
(8)
|
Effective upon the date Mr. Rogers’ left the Board, the Company entered into a one year consulting agreement with him to remain on certain of the Company’s joint venture Boards and to provide certain bedding market insights. The agreement provides that Mr. Rogers will receive an annual fee of $175,000 paid monthly.
|
|
|
2016
|
|
2015
|
||||
Audit fees
(1)
|
|
$
|
4,338
|
|
|
$
|
4,310
|
|
Audit-related fees
(2)
|
|
50
|
|
|
535
|
|
||
Tax fees
(3)
|
|
3,012
|
|
|
2,807
|
|
||
Total
|
|
$
|
7,400
|
|
|
$
|
7,652
|
|
(1)
|
Audit fees for
2016
and
2015
relate to professional services provided in connection with the audit of our consolidated financial statements and internal control over financial reporting, the reviews of our quarterly consolidated financial statements and audit services provided in connection with other regulatory filings and the statutory audits of certain subsidiaries.
|
(2)
|
Audit-related fees in
2016
and
2015
principally relate to assurance and related services.
|
(3)
|
Tax fees in
2016
and
2015
principally relate to professional services rendered in connection with domestic and international tax compliance, tax audits, and other international tax consulting and planning services.
|
|
Submitted by,
|
|
|
|
AUDIT COMMITTEE:
|
|
Evelyn S. Dilsaver (Chair)
|
|
John A. Heil
|
|
Richard W. Neu
|
•
|
aligns the long-term interests of key employees and stockholders by creating a direct link between key employee compensation and stockholder return;
|
•
|
enables key employees to develop and maintain a substantial stock ownership in the Company; and
|
•
|
provides incentives for key employees to contribute to our success.
|
•
|
Adoption of One-Year Minimum Vesting Periods for All Awards
. The Amended Plan provides, notwithstanding any provision of the Amended Plan to the contrary, for a standard minimum vesting schedule of at least one year with respect to all awards granted, except that up to 5% of the total authorized shares under the Amended Plan may be covered by awards that do not have this minimum vesting requirement.
|
•
|
“
Fungible” Share Pool
. The Amended Plan contains a “fungible share pool” provision, whereby options and stock appreciation rights will reduce the number of shares available for future grants under the Amended Plan (referred to as the “share reserve”) by one share for each share subject to the applicable stock option or stock appreciation right, but any award other than an option or stock appreciation right (referred to as a “full value award”) will reduce the share reserve by two shares for each share subject to the full value award.
|
•
|
Individual Limits
. The Amended Plan amends the annual limits on the size of grants to individuals including an amended limit that provides that non-employee Directors may not be granted awards under the Amended Plan in any one fiscal year of the Company which, taken together with all cash compensation paid during that fiscal year, have an aggregate maximum value of more than $700,000, subject to certain exceptions. In addition, the Amended Plan modifies certain individual limits based on annual periods to limits based on three year periods, in order to provide the Company with more flexibility to make multi-year grants.
|
•
|
Implementation of Clawback Policy
. The Amended Plan provides for a robust recoupment policy with respect to awards that may be granted to participants.
|
•
|
Restriction on Dividends on Unearned Awards
. The Amended Plan provides that, although the Company may accrue dividends or other distributions, no dividends or other distributions may be paid with respect to restricted stock or restricted stock units unless and until any vesting and performance tests have been met. In addition the Amended Plan does not permit the payment of dividends or other distributions with respect to stock options or stock appreciation rights, or SARs.
|
•
|
Performance Goals
. The Amended Plan expands the types of performance goals that may be used for qualified performance based awards in order to expand the types of objective goals that may be used in compliance with Section 162(m) of the Code.
|
•
|
Prohibition on Liberal Share Recycling
. The Amended Plan provides that shares used or withheld to pay the exercise price of an award or to satisfy tax withholding obligations, shares not issued as a result of a net settlement of an outstanding stock option or stock appreciation right and shares the Company purchases using proceeds from option exercises will not be re-credited to the share reserve under the Amended Plan.
|
•
|
Prohibition on Repricing.
The Amended Plan contains an expanded prohibition of “repricing” actions without stockholder approval, other than in corporate transactions, including that the terms of options and SARs, may not be amended to reduce their exercise or base price, and options and SARs may not be cancelled in exchange for cash, options or SARs with an exercise price that is less than the exercise price of the original options or SARs or other awards.
|
•
|
Double-Trigger Change in Control Treatment; No Liberal Change in Control Definition
. The Amended Plan provides, with respect to awards that are assumed, replaced, or converted in connection with a change of control, for a “double trigger” structure as the standard provision.
With respect to awards that are not assumed, replaced or converted in connection with a change of control, the Amended Plan provides that all options will immediately vest and remain outstanding, and all other awards subject to vesting will immediately vest and if such award is a qualified performance-based award, any remaining performance goals shall be deemed to have been met at the target level of performance. The change in control definition in the Amended Plan is not "liberal" and, for example, would not occur merely upon shareholder approval of a transaction or upon a change in the composition of the Board of Directors. A change in control must actually occur in order for the change in control provisions in the Amended Plan to be triggered.
|
•
|
Other Changes
. The Amended Plan also provides for certain clarifying changes and revisions, including with respect to the treatment of vesting and adjustments of awards in the event of certain corporate transactions and other administrative provisions and definitions and to address current “best practices” with respect to issues arising under Sections 162(m) and 409A of the Code.
|
|
|
As of December 31, 2016
|
|
As of February 28, 2017
|
||||
Total number of shares of common stock subject to outstanding stock options
|
|
1,461,344
|
|
|
2,018,895
|
|
||
Weighted-average exercise price of outstanding stock options
|
|
$
|
50.46
|
|
|
$
|
56.01
|
|
Weighted-average remaining term of outstanding stock options
|
|
6.71
|
|
|
7.53
|
|
||
Total number of shares of common stock subject to outstanding full value awards
(1)
|
|
2,172,761
|
|
|
2,226,951
|
|
||
Total number of shares of common stock available for grant under the Existing Plan
|
|
1,323,062
|
|
|
765,764
|
|
(1)
|
Includes at December 31, 2016 and February 28, 2017 the following summary of shares outstanding:
|
Shares Outstanding:
|
|
As of December 31, 2016
|
|
As of February 28, 2017
|
RSUs/DSUs
|
|
397,026
|
|
686,976
|
Matching PRSUs
|
|
193,316
|
|
154,287
|
Aspirational PRSUs
|
|
1,242,700
|
|
1,180,100
|
Other PRSUs
|
|
339,719
|
|
205,588
|
Total
|
|
2,172,761
|
|
2,226,951
|
|
|
|
|
|
|
|
As of March 15, 2017 Record Date
|
||
Total number of shares of common stock outstanding
|
|
53,885,518
|
|
|
Per-share closing price of common stock as reported on NYSE
|
|
$
|
45.92
|
|
|
|
Fiscal Year 2016
|
Fiscal Year 2015
|
Fiscal Year 2014
|
|||
Total number of shares of common stock subject to stock options granted
|
|
—
|
|
757,827
|
|
239,093
|
|
Total number of shares of common stock subject to RSUs, DSUs, and target PRSUs granted
(1)
|
|
482,833
|
|
1,854,195
|
|
311,984
|
|
Weighted-average number of shares of common stock outstanding
|
|
59,019,801
|
|
61,669,925
|
|
60,838,400
|
|
Burn Rate (options, RSUs, DSUs, and
target
PRSUs granted)
|
|
0.82
|
%
|
4.24
|
%
|
0.91
|
%
|
Total number of shares of common stock subject to RSUs, DSUs, and PRSUs earned
(1)
|
|
393,895
|
|
133,573
|
|
52,562
|
|
Burn Rate (options, RSUs, DSUs, and
earned
PRSUs)
|
|
0.67
|
%
|
1.45
|
%
|
0.48
|
%
|
•
|
shares under the Amended Plan or our 2003 Equity Incentive Plan reserved for issuance upon exercise or settlement of awards to the extent they lapse, expire, terminate or are cancelled, surrendered, exchanged or forfeited without the underlying shares being issued;
|
•
|
restricted stock under the Amended Plan or our 2003 Equity Incentive Plan to the extent it is forfeited or surrendered before the restriction period expires; and
|
•
|
shares issued pursuant to an award under the Amended Plan or our 2003 Equity Incentive Plan and that we subsequently reacquire such shares pursuant to rights reserved upon the issuance of such shares.
|
•
|
shares delivered in payment of the exercise price of an award or the base price of a stock appreciation right;
|
•
|
shares delivered or withheld to satisfy tax withholding obligations;
|
•
|
shares we purchased using proceeds from option exercises; and
|
•
|
shares not issued or delivered as a result of a net settlement of an outstanding option or stock appreciation right.
|
•
|
Nonstatutory stock options and incentive stock options, or stock options, are rights to purchase common stock of the Company. A stock option may be immediately exercisable or become exercisable in such installments, cumulative or non-cumulative, as the Compensation Committee may determine. A stock option may be exercised by the recipient giving written notice to the Company, specifying the number of shares with respect to which the stock option is then being exercised, and accompanied by payment of an amount equal to the exercise price of the shares to be purchased. The purchase price may be paid by cash, check, by delivery to the Company of shares of common stock (with some restrictions), by surrender of the stock option as to all or part of the shares of common stock for which the stock option is then exercisable, or through and under the terms and conditions of any formal cashless exercise program authorized by the Company. The Amended Plan does not permit the payment of dividends or other distributions with respect to stock options.
|
•
|
Incentive stock options may be granted only to employees of the Company, or any parent or subsidiary Company, and must have an exercise price of not less than 100% of the fair market value of the Company's common stock on the date of grant (110% for incentive stock options granted to any recipient holding more than 10% of the stock of the Company immediately prior to the date of grant). In addition, the term of an incentive stock option may not exceed ten years (five years, if granted to any 10% stockholder) and the amount of the aggregate fair market value of common stock (as of the date of grant of the stock option) exercisable for the first time by the recipient during any calendar year under an incentive stock option may not exceed $100,000, minus the aggregate fair market value of common stock then exercisable by the recipient for the first time under all incentive stock options previously granted to the recipient under all plans of the Company and its affiliates.
|
•
|
Nonstatutory stock options must have an exercise price of not less than 100% of the fair market value of the Company's common stock on the date of grant and the term of any nonstatutory stock option may not exceed ten years.
|
•
|
Stock appreciation rights, or SARs, are rights to receive any appreciation in the fair market value of shares of common stock over a specified exercise price. Stock appreciation rights may be granted in tandem with a stock option, such that the recipient has the opportunity to exercise either the stock option or the SAR, but not both. The base exercise price (above which any appreciation is measured) will not be less than 100% of the fair market value of the common stock on the date of grant of the SAR or, in the case of a SAR granted in tandem with a stock option, the exercise price of the related stock option. SARs are subject to terms and conditions substantially similar to those applicable to nonstatutory stock options, except as the Compensation Committee may deem inappropriate or inapplicable. No SAR may be exercised on or after the tenth anniversary of the grant date. The Amended Plan does not permit the payment of dividends or other distributions with respect to SARs.
|
•
|
Awards of restricted stock are grants of rights to receive shares of common stock which are subject to limitations on transferability and a risk of forfeiture arising on the basis of conditions related to the performance of services, Company or affiliate performance or otherwise as the Compensation Committee may determine. Awards of restricted stock will be subject to a risk of forfeiture during a restriction period, established by the Compensation Committee. Prior to the lapse of the risk of forfeiture of an award of restricted stock, the recipient will have all of the rights of a stockholder of the Company, including the right to vote but subject to the limitations on dividends described below. Any dividends payable in shares of stock of the Company shall constitute additional restricted stock. The Compensation Committee may determine, at the time of the award, that payment of cash dividends be deferred and reinvested in additional restricted stock. Notwithstanding anything in the Amended Plan or any award agreement to the contrary, although the Committee may authorize the accrual of dividends or other distributions during the applicable restriction period, in no event will any dividends or distributions be paid with respect to any outstanding shares of restricted stock prior to the end of the applicable restriction period, and any dividends declared or other distributions made during the restriction period will be forfeited if during the restriction period the underlying right to restricted stocks is forfeited or otherwise terminated.
|
•
|
Awards of restricted stock units are grants of rights to receive shares of common stock arising on the basis of conditions relating to the performance of services, Company or affiliate performance or otherwise as the Compensation Committee may determine, which are issued at the close of the applicable restriction period. Notwithstanding anything in the Amended Plan or any award agreement to the contrary, in no event will any dividends or distributions be paid with respect to any outstanding restricted stock units prior to the end of the applicable restriction period. The Compensation Committee may permit or require the payment of dividends to be deemed reinvested in additional restricted stock units to the extent shares are available under the Amended Plan.
|
•
|
Awards of performance units are grants of rights to receive cash, stock or other awards, at the close of a specified performance period and subject to the achievement of specified business objectives, including performance goals, as set by the Compensation Committee. The Compensation Committee may permit or require the recipient to defer receipt of payment that would otherwise be due by virtue of the satisfaction of any requirements or goals with respect to the performance units. The recipient may be entitled to receive any dividends declared with respect to the common stock which have been earned in connection with the grant of the performance units; however, such dividends or dividend equivalents shall not be paid if the underlying performance goals are not achieved and the performance unit is not earned.
|
•
|
A stock grant is a grant of shares of common stock not subject to restrictions or other forfeiture conditions. Stock grants may be awarded only in recognition of significant prior or expected contributions to the success of the Company or its affiliates, as an inducement to employment, in lieu of compensation otherwise already due and in such other limited circumstances as the Compensation Committee deems appropriate.
|
•
|
Qualified performance-based awards are awards which include performance criteria intended to satisfy Section 162(m) of the Code. Section 162(m) of the Code limits the Company's federal income tax deduction for compensation to certain specified senior executives to $1 million dollars, but excludes from that limit "performance-based compensation." Any form of award permitted under the Amended Plan, other than a stock grant, may be granted as a qualified performance-based award, but in each case will be subject to satisfaction of performance goals (or in the case of stock options based on continued service). The performance criteria used to establish performance goals are limited to the following:
|
•
|
cash flow (before or after dividends), including, without limitations, operating cash flow and free cash flow return on invested capital
|
|
•
|
earnings
|
•
|
stock price
|
|
•
|
earnings per share
|
•
|
stockholder return or total stockholder return
|
|
•
|
earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation and amortization (EBITDA), and any version of the foregoing that includes other exclusions or add-backs determined at the time of the award
|
•
|
return on investment
|
|
•
|
return on equity
|
•
|
market capitalization
|
|
•
|
return on capital (including without limitation return on total capital or return on invested capital)
|
•
|
debt leverage (debt-to-capital ratio)
|
|
•
|
return on assets or net assets
|
•
|
net debt
|
|
•
|
economic value added
|
•
|
net debt to EBIT or EBITDA (as defined herein)
|
|
•
|
revenue
|
•
|
sales or net sales
|
|
•
|
backlog
|
•
|
income, pre-tax income or net income
|
|
•
|
operating income or pre-tax profit
|
•
|
operating profit, net operating profit
|
|
•
|
gross margin, operating margin or profit margin
|
•
|
economic profit
|
|
•
|
cash from operations
|
•
|
return on operating revenue or return on operating assets
|
|
•
|
operating revenue
|
•
|
operating ratio
|
|
•
|
general and administrative expenses
|
•
|
market share improvement
|
|
•
|
cost reduction challenges
|
•
|
supply chain achievements (including relationship with manufactures or suppliers of component materials and manufacturers of the Company and/or its subsidiaries' products)
|
|
•
|
co-development, co-marketing, profit sharing, joint venture or other similar arrangements
|
•
|
achievement of business or operational goals such as market share, business development and/or customer objectives, or debt ratings
|
|
•
|
manufacturing achievements (including obtaining particular yields from manufacturing runs and other measurable objectives related to process development activities)
|
•
|
strategic business criteria, consisting of one or more objectives based on meeting specified market share, market penetration, business expansion targets, project milestones, production volume levels, or cost targets
|
|
•
|
accomplishment of, or goals relating to mergers, acquisitions, dispositions, public offerings or similar business transactions
|
•
|
working capital
|
|
•
|
cost of capital
|
•
|
customer service
|
|
•
|
any other objective goals established by the Compensation Committee
|
•
|
Stock Options Assumed
. With respect to stock options that are assumed, converted or replaced by a successor organization following a change of control, if the recipient’s employment is terminated without cause (as defined in the Amended Plan) or if the recipient resigns for good reason (defined in the Amended Plan as relocation of the participant's principal workplace over sixty (60) miles from the existing workplace, without the participant's prior consent) within twelve months of the change of control, all the unvested stock options shall immediately vest and remain outstanding and exercisable until the one year anniversary of the termination of employment.
|
•
|
Other Awards Assumed
. With respect to awards, other than stock options, that are assumed, converted or replaced by a successor organization following a change of control, if the participant’s employment is terminated by the Company or any of its affiliates other than for cause or if the participant resigns for good reason, in either case within twelve (12) months after the occurrence of a change of control, all of the participant’s awards subject to vesting which have not become vested awards pursuant to the applicable award agreement as of the date of such termination of employment shall immediately become vested awards, and if such award is a qualified performance-based award, any remaining performance goals with respect to such award shall be deemed to have been met at the maximum performance level.
|
•
|
Awards Not Assumed
. With respect to awards that are not assumed, converted or replaced by a successor organization following a change of control, in the case of stock options, all unvested options shall immediately vest and remain outstanding and exercisable until the one year anniversary of the change of control, and in the case of all other awards, all of the participant’s awards subject to vesting which have not become vested awards as of the date of such change of control shall immediately become vested awards and if such award is a qualified performance-based award, any remaining performance goals with respect to such award shall be deemed to have been met at the target level of performance, if applicable.
|
•
|
Nonstatutory Stock Options
. Generally, there are no federal income tax consequences to a participant upon grant of a nonstatutory stock option. Rather, upon the exercise of such an option, the participant will recognize ordinary income in an amount equal to the amount by which the fair market value of the common stock acquired upon the exercise of such option exceeds the exercise price, if any. The Company is generally entitled to a tax deduction in an amount equal to the compensation income recognized by the participant. Upon a subsequent sale of common stock acquired under a nonstatutory stock option, the participant will realize a short-term or long-term capital gain or loss equal to the difference between the fair market value of the common stock on the exercise and sale dates. capital gain (or loss) will be short-term if the common stock is disposed of within one year after the nonqualified stock option is exercised, and long-term if the common stock was held more than 12 months as of the sale date.
|
•
|
Incentive Stock Options
. Except as noted at the end of this paragraph, there are no federal income tax consequences to a participant upon grant or exercise of an incentive stock option, and the Company will not be entitled to a tax deduction at the time of the grant or the exercise of the option; provided, however, that the difference between the value of the common stock received on the exercise date and the exercise price paid is an item of tax preference for purposes of determining the participant’s alternative minimum tax. If the participant holds shares of common stock purchased pursuant to the exercise of an incentive stock option for at least two years after the date the option was granted and at least one year after the exercise of the option, the subsequent sale of common stock will give rise to a long-term capital gain or loss to the participant and no deduction will be available to the Company. If the participant sells the shares of common stock within two years after the date an incentive stock option is granted or within one year after the exercise of an option, the participant will recognize ordinary income in an amount equal to the difference between the fair market value at the exercise date and the option exercise price, and any additional gain or loss will be a capital gain or loss depending on the holding period. If the participant recognizes ordinary income upon a disposition within these holding periods, the Company generally will be entitled to a tax deduction in the same amount.
|
•
|
Restricted Stock
. A participant that receives a restricted stock award under the Amended Plan normally will not be required to recognize income for federal income tax purposes at the time of grant, nor is the Company entitled to any deduction, to the extent the common stock award has not vested (i.e., is no longer subject to a substantial risk of forfeiture). When any part of a restricted share award vests, the participant will generally recognize ordinary income in an amount equal to the amount by which the then fair market value of the common stock acquired exceeds the price he or she has paid for it, if any. Recipients of restricted stock may, however, within 30 days of receiving an award of restricted stock, choose to have any applicable risk of forfeiture disregarded for tax purposes by making an "83(b) election." If the participant makes an 83(b) election, he or she will have to report compensation income equal to the difference between the value of the shares and the price paid for the shares, if any, at the time of the transfer of the restricted stock. If the shares subject to such election are subsequently forfeited, the recipient will not be entitled to any deduction, refund or loss for tax purposes with respect to the forfeited shares. If an 83(b) election has not been made, any dividends received with respect to the restricted share award prior to the lapse of the restrictions will be treated as additional compensation that is taxable as ordinary income to the participant. The Company will be entitled to a deduction in the same amount and at the same time that the participant recognizes ordinary income. Upon the sale of the vested common stock, the participant will realize short-term or long-term capital gain or loss depending on the holding period. The holding period generally begins when the restriction period expires. If the recipient timely made a Section 83(b) election, the holding period commences on the date of the grant.
|
•
|
Stock Appreciation Rights
. Stock appreciation rights are treated very similarly to nonstatutory stock options for tax purposes. A participant receiving a stock appreciation right will not normally recognize any taxable income upon the grant of the stock appreciation right. Upon the exercise of the share appreciation right, a participant will generally recognize ordinary income equal to either: (i) the cash received upon the exercise; or (ii) if common stock is received upon the exercise of the stock appreciation right, the fair market value of the common stock received. The Company will generally be entitled to a tax deduction in an amount equal to the compensation income recognized by the participant.
|
•
|
Restricted Stock Units and Performance Units
. A recipient of restricted stock or performance units will not be required to recognize any income for federal income tax purposes, and the Company is not entitled to a deduction, at the time of grant. Rather, upon the settlement of units, the participant will generally recognize ordinary income on receipt of any shares of common stock, cash or other property in settlement of any of these awards under the Amended Plan, and the Company generally will be entitled to a deduction equal to the amount of the ordinary income realized by the participant. If the participant is an employee, the participant will be subject to Social Security and Medicare taxes at the time the units vest, even though the recipient of units has not received payment with respect to such units at such time. However, no additional Social Security or Medicare taxes will be due when such payment is made (even if the market value of the underlying shares has increased). If the recipient receives shares of common stock upon settlement then, upon disposition of such shares, appreciation or depreciation after the settlement date is treated as either short-term or long-term capital gain or loss, depending on how long the shares have been held.
|
•
|
Unrestricted Stock Grants
. The tax consequences of receiving common stock pursuant to a share award under the Amended Plan is similar to receiving cash compensation from the Company, unless the common stock awarded consists of restricted shares (i.e., subject to a substantial risk of forfeiture). If the shares of common stock are unrestricted (i.e., not subject to a substantial risk of forfeiture), the participant must recognize ordinary income equal to the fair market value of the common stock received, less any amount paid for common stock. The Company generally is entitled to a tax deduction for compensation paid to a participant at the same time and in the same amount as the participant recognizes ordinary income.
|
•
|
Performance Awards
. A participant generally will not recognize income upon the grant of a performance award. Upon payment of the performance award, the participant will recognize ordinary income in an amount equal to the cash received or, if the performance award is payable in common stock, the fair market value of the common stock received. When the participant recognizes ordinary income upon payment of a performance award, the Company generally will be entitled to a tax deduction in the same amount.
|
•
|
Consequences of a Change in Control
. If a change of control of the Company causes awards under the Amended Plan to accelerate vesting or is deemed to result in the attainment of performance goals, the participants could, in some cases, be considered to have received “excess parachute payments,” which could subject participants to a 20% excise tax on the excess parachute payments and result in a disallowance of the Company’s deductions under Section 280G of the Code.
|
•
|
Potential Deferred Compensation
. Section 409A of the Code (“409A”) applies to compensation that individuals earn in one year but that is not paid until a future year. This is referred to as nonqualified deferred compensation. If deferred compensation covered by 409A meets the requirements of 409A, then 409A has no effect on the individual’s taxes. The compensation is taxed in the same manner as it would be taxed if it were not covered by 409A. If such a deferred compensation arrangement does not meet the requirements of 409A, the compensation is subject to accelerated taxation in the year in which such compensation is no longer subject to a substantial risk of forfeiture and certain additional taxes, interest and penalties, including a 20% additional income tax. Awards of stock options, stock appreciation rights, restricted stock units and performance awards under the Amended Plan may, in some cases, result in the deferral of compensation that is subject to the requirements of 409A. Awards under the Amended Plan are intended to comply with 409A, the regulations issued thereunder or an exception thereto. Notwithstanding, 409A may impose upon a participant certain taxes or interest charges for which the participant is responsible. Section 409A does not impose any penalties on the Company and does limit the Company’s deduction with respect to compensation paid to a participant.
|
•
|
Section 162(m) Limitations on the Company's Tax Deduction
. In general, whenever a recipient is required to recognize ordinary income in connection with an award, the Company will be entitled to a corresponding tax deduction. However, Section 162(m) of the Code limits the deductibility of compensation paid to each of the Company’s chief executive officers and the three other highest compensated officers, other than the chief financial officer (collectively, the “covered employees”), in any one year to $1,000,000, unless the compensation is “qualified performance-based compensation.” The Amended Plan has been structured in a manner that enables the covered employees to receive grants of award that are designed to satisfy the requirements of “qualified performance-based compensation” within the meaning of Section 162(m). Among other requirements, for compensation to be “performance-based” for purposes of Section 162(m), the performance goals must be pre-approved and objective. These awards are referred to as “qualified performance-based awards” and are in addition to options and SARs, which also are expressly authorized under the Amended Plan and also may qualify as qualified performance-based compensation for purposes of Section 162(m). While approval of the Amended Plan by stockholders will enable us to grant awards that qualify as “performance-based compensation” under Section 162(m), we believe that it is in our best interests and the interests of our stockholders to maintain the flexibility also to grant awards that do not qualify as “performance-based compensation” as determined in the discretion of the Committee.
|
Recipients
|
|
Dollar Value ($)
2016 LTIP Grant Value
|
|
Number of Units
|
||||
|
# of Stock Options
|
|
# of RSUs
|
|
# of PRSUs/DSUs
|
|||
Scott L. Thompson
|
|
—
|
|
—
|
|
—
|
|
—
|
Barry A. Hytinen
|
|
975,000
|
|
—
|
|
18,262
|
|
—
|
Richard W. Anderson
|
|
975,000
|
|
—
|
|
18,262
|
|
—
|
David Montgomery
|
|
1,100,000
|
|
—
|
|
20,603
|
|
—
|
Jay G. Spenchian
|
|
975,000
|
|
—
|
|
18,262
|
|
—
|
W. Timothy Yaggi
|
|
1,900,000
|
|
—
|
|
35,587
|
|
—
|
All executive officers as a group
|
|
6,525,000
|
|
—
|
|
122,214
|
|
—
|
All non-executive directors as a group
|
|
685,000
|
|
—
|
|
—
|
|
11,360
|
All employees excluding executive officers as a group
|
|
7,968,916
|
|
—
|
|
149,258
|
|
—
|
•
|
Current Trading Price of the Common Shares
. Our Common Shares continue to trade at a significant discount to historical levels, which we believe continues to be largely due to investor concerns related to the Company’s termination of its supplier contracts with Mattress Firm as of January 27, 2017. As of March 15, 2017, the most recent practicable date prior to the filing of this Proxy Statement, the per share closing price of the Common Shares on the NYSE was
$45.92
, which was 44% below the Common Shares’ 52-week high per share trading price on the NYSE.
|
•
|
Better Ability for Board to Respond to Unsolicited Acquisition Proposals
.
The Rights Agreement is intended to enable the Board, as elected representatives of the stockholders, to be better positioned to respond to an unsolicited acquisition proposal, especially at a time when the Company's common stock is trading at a significant discount to historical levels. It is also intended to ensure that all stockholders are treated fairly in an acquisition of the Company. The Rights Agreement does not prevent parties from making an unsolicited offer for, or acquisition of, the Company at a full and fair price and on fair terms. It does, however, give the Board the ability to defend stockholders against abusive or coercive takeover tactics by a potential acquirer that could be used to gain control of the Company without the acquirer paying all stockholders a fair price for their shares, including a partial or two-tier tender offer that fails to treat all stockholders equally.
|
•
|
Encourages Good Faith Negotiations
. The Rights Agreement is intended to induce potential acquirers to negotiate in good faith with the Board and thereby strengthens the Board’s bargaining position for the benefit of all stockholders by providing the Board with the opportunity, flexibility and additional time to (i) determine whether any proposed transaction is in the best interests of all of the Company’s stockholders; (ii) attempt to negotiate better terms for any such transaction that, if accepted, would result in a transaction that the Board determines to be in the best interests of all of the Company’s stockholders; (iii) achieve a fair price for the stockholders that is consistent with the intrinsic value of the Company and its long-term prospects; (iv) reject any transaction that the Board determines to be inadequate; and (v) consider alternative transactions and opportunities. The existence of the Rights Agreement does not diminish the responsibility of the Board to consider acquisition proposals in a manner consistent with the Board’s fiduciary duties to stockholders.
|
•
|
Control of a Sale Process.
The Rights Agreement is intended to enable the Board to better manage and control an auction of the Company or other sale process to the extent the Board may, in the future, decide to consider strategic alternatives or sell the Company. It enhances the Board’s ability to protect a negotiated transaction from uninvolved third parties once the auction or other sale process is completed. It also may be effective in providing the Board sufficient time to evaluate a proposed transaction and, if necessary, seek alternative courses of action to maximize stockholder value.
|
•
|
Deters “Creeping Acquisitions.”
The Rights Agreement deters “creeping acquisitions” on the open market and the attendant implications of having a meaningful block of shares in the hands of an acquirer or two or more acquirers “acting in concert” with one another.
|
•
|
Deters an Acquirer from Seeking Control By Opportunistically Taking Advantage of Adverse Market Conditions
. The Rights Agreement is also intended to deter an acquirer or two or more acquirers “acting in concert” with one another from taking advantage of adverse market conditions, short-term declines in share prices, or anticipated improvements in operating results before such improvements are fully reflected in the market price of the Common Shares, and from acquiring control of the Company at a price that does not reflect the Company’s intrinsic value or long-term prospects.
|
•
|
Rights Agreement Contains Various Stockholder-Friendly Terms
. In addition to the fact that the Rights Agreement is being submitted to stockholders for ratification at the first meeting of stockholders called since the Rights Agreement was initially adopted on February 8, 2017, the Rights Agreement’s provisions are intended to comply with the published guidelines regarding stockholder rights plans contained in the 2017 Proxy Voting Guidelines of ISS. Such provisions include the following: (i) a term of less than three years, (ii) the ownership trigger threshold for a “flip-in” or “flip-over” event has been set at twenty percent (20%) of the Common Shares; (iii) no dead-hand, slow-hand, no-hand or similar features that would limit the ability of a future board of directors of the Company to redeem the Rights or otherwise make the Rights Agreement non-applicable to a particular transaction; and (iv) a stockholder exemption feature that, pursuant to the terms of the Rights Agreement, provides that if the Company receives a Qualifying Offer and the Board has not redeemed the outstanding Rights or exempted such Qualifying Offer from the terms of the Rights Agreement or called a Special Meeting for the purpose of voting on whether or not to exempt such Qualifying Offer from the terms of the Rights Agreement, in each case by the end of the ninety (90) business days following the commencement of such Qualifying Offer and such offer remains a Qualifying Offer, the holders of record of ten (10) percent of the Common Shares may request that the Board call a Special Meeting to vote on a resolution authorizing the exemption of the Qualifying Offer from the terms of the Rights Agreement.
|
•
|
Vulnerability of Company Due To Absence of Certain Other Anti-takeover Devices and Statutory Protections
. The Company does not have some of the takeover defenses and statutory protections available to many other public companies. In addition, some of the Company’s corporate governance provisions make it more vulnerable to unsolicited acquisition proposals and other actions of third parties that may not be in the best interests of all stockholders. Specifically, (i) all members of the Board are elected on an annual basis, (ii) directors are elected pursuant to a majority vote standard unless the election is contested, thus making the Company more vulnerable to a “vote no” campaign against its nominees for election to the Board, (iii) the members of the Board may be removed by stockholders with or without cause, and (iv) the Company has opted out of the protections of Section 203 (“Section 203”) of the Delaware General Corporation Law (the “DGCL”), Delaware’s anti-takeover statute. As such, the Company is unable to take advantage of the significant anti-takeover protection provided by Section 203. Section 203 generally provides that a stockholder acquiring more than fifteen percent (15%) of the outstanding voting shares of a corporation (an “Interested Stockholder”) but less than eighty-five percent (85%) of such shares may not engage in certain business combinations with the corporation for a period of three years subsequent to the date on which the stockholder became an Interested Stockholder unless prior to such date, the board of directors of the corporation approves either the business combination or the transaction which resulted in the stockholder becoming an Interested Stockholder or the business combination is approved by the board of directors and by the affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the outstanding voting stock that is not owned by the Interested Stockholder. This type of anti-takeover provision is often referred to as a “freezeout provision.”
|
•
|
the Rights will be evidenced by and trade with the certificates for the Common Shares (or, with respect to any uncertificated Common Shares registered in book entry form, by notation in book entry), together with a copy of the Summary of Rights, and no separate rights certificates will be distributed;
|
•
|
new certificates for Common Shares issued after the Record Date will contain a legend incorporating the Rights Agreement by reference (for uncertificated Common Shares registered in book-entry form, this legend will be contained in a notation in book-entry);
|
•
|
the surrender for transfer of any certificates for Common Shares (or the surrender for transfer of any uncertificated Common Shares registered in book-entry form) will also constitute the transfer of the Rights associated with such Common Shares; and
|
•
|
the Rights will accompany any new Common Shares that are issued after the Record Date.
|
•
|
the tenth (10th) business day (or such later date as may be determined by the Board) after the public announcement that either discloses that a person or a group of Related Persons has acquired beneficial ownership of twenty percent (20%) or more of the Common Shares other than as a result of repurchases of Common Shares by the Company or certain inadvertent acquisitions (an “Acquiring Person”) or information which reveals the existence of an Acquiring Person, or
|
•
|
the tenth (10th) business day (or such later date as may be determined by the Board) after a person or a group of Related Persons announce or commence a tender or exchange offer that would result in a person or a group of Related Persons becoming an Acquiring Person. The date on which the Rights separate from the Common Shares and become exercisable is referred to as the “Distribution Date.”
|
•
|
not be redeemable;
|
•
|
entitle holders to quarterly dividend payments of $0.001 per one one-thousandth of a Preferred Share, or an amount equal to the dividend paid on one Common Share, whichever is greater;
|
•
|
entitle holders upon liquidation either to receive $1.00 per one one-thousandth of a Preferred Share or an amount equal to the payment made on one Common Share, whichever is greater;
|
•
|
have one vote per one one-thousandth of a Preferred Share; and
|
•
|
entitle holders to a payment per one one-thousandth of a Preferred Share equal to the payment made on one Common Share, if the Common Shares are exchanged via merger, consolidation or a similar transaction.
|
•
|
is a fully financed all-cash tender offer or an exchange offer offering shares of common stock of the offeror, or a combination thereof, for any and all of the outstanding Common Shares (whether such shares are outstanding at the commencement of the offer or become outstanding thereafter upon the exercise or conversion of options or other securities that are outstanding at the commencement of the offer);
|
•
|
is an offer whose per share offer price and consideration represent a reasonable premium over the highest reported per share market price of the Common Shares in the immediately preceding twenty four (24) months immediately preceding the date on which the offer is commenced;
provided
that to the extent that an offer includes common stock of the offeror, such per share offer price with respect to such common stock of the offeror will be determined for purposes of the foregoing provision using the lowest reported market price for common stock of the offeror during the five (5) trading days immediately preceding and the five (5) trading days immediately following the date on which the offer is commenced;
|
•
|
is an offer that, within twenty (20) business days after the commencement date of the offer (or within ten (10) business days after any increase in the offer consideration), does not result in a nationally recognized investment banking firm retained by the Board rendering an opinion to the Board that the consideration being offered to the holders of the Common Shares is either inadequate or unfair;
|
•
|
is an offer that is subject only to the minimum tender condition described below and other customary terms and conditions, which conditions shall not include any financing, funding or similar condition or any requirements with respect to the offeror or its agents or any other Person being permitted any due diligence with respect to the books, records, management, accountants and other outside advisors of the Company;
|
•
|
is an offer pursuant to which the Company has received an irrevocable written commitment of the offeror that the offer will remain open for at least ninety (90) business days and, if a Special Meeting is duly requested by stockholders in accordance with the terms of the Rights Agreement, for at least ten (10) business days after the date of the Special Meeting or, if no Special Meeting is held within ninety (90) business days following receipt of the Special Meeting notice delivered in accordance with the Rights Agreement, for at least ten (10) business days following such ninety (90) business day period;
|
•
|
an offer that is conditioned on a minimum of at least two-thirds of the outstanding Common Shares not held by the Person making such offer (and such Person’s Related Persons) being tendered and not withdrawn as of the offer’s expiration date, which condition shall not be waivable;
|
•
|
an offer pursuant to which the Company has received an irrevocable written commitment by the offeror to consummate as promptly as practicable upon successful completion of the offer a second-step transaction whereby all Common Shares not tendered into the offer will be acquired at the same consideration per share actually paid pursuant to the offer, subject to statutory appraisal rights, if any;
|
•
|
an offer pursuant to which the Company has received an irrevocable, legally binding written commitment of the offeror that no amendments will be made to the offer to reduce the consideration being offered or to otherwise change the terms of the offer in a way that is adverse to a tendering stockholder (other than extensions of the offer consistent with the terms of the Rights Agreement); and
|
•
|
an offer that is otherwise in the best interests of the Company and its stockholders.
|
•
|
the close of business on February 7, 2018;
|
•
|
the redemption of the Rights; and
|
•
|
the exchange of the Rights.
|
•
|
The vast majority of our executives’ total compensation opportunity is in the form of incentive-based compensation, the majority of which is equity-based, tied to long-term performance objectives, and aligned with stockholder interests.
|
•
|
We tie performance-based incentives to metrics that drive the leadership team and other associates to accomplish our most important business goals.
|
•
|
We require our executives to meet meaningful stock ownership and retention requirements.
|
•
|
In 2015, we adopted a Clawback Policy providing that certain performance-based compensation is recoverable from specified officers, including the NEOs, if that officer has engaged in fraud, willful misconduct or gross negligence that directly caused or otherwise directly contributed to the need for a material restatement of the Company’s financial results.
|
•
|
We prohibit the hedging or pledging of Company securities by employees, executive officers and members of the Board.
|
•
|
We prohibit the re-pricing or exchange of stock options or stock appreciation rights without stockholder approval.
|
•
|
We provide minimal executive perquisites as described elsewhere in this Proxy Statement. Other than those benefits described, we do not provide additional perquisites or benefits to our NEOs that differ from those provided to other employees.
|
•
|
We do not provide tax "gross-ups" for any element of executive compensation.
|
Corporate Secretary
Tempur Sealy International, Inc.
1000 Tempur Way
Lexington, Kentucky 40511
|
•
|
providing written notice that is received by Tempur Sealy International’s Corporate Secretary between December 12, 2017 and January 11, 2018 (subject to adjustment if the date of the 2018 annual meeting is moved by more than 30 days, or delayed by more than 60 days, from the first anniversary date of the 2017 annual meeting, as provided in Article II, Section 2.12 of the By-Laws); and
|
•
|
supplying the additional information listed in Article II, Section 2.12 of the By-Laws.
|
(in millions)
|
|
2016
|
|
2015
|
||||
Net income
|
|
$
|
202.1
|
|
|
$
|
73.5
|
|
Interest expense
|
|
85.2
|
|
|
96.1
|
|
||
Loss on extinguishment of debt
|
|
47.2
|
|
|
—
|
|
||
Income taxes
|
|
86.8
|
|
|
125.4
|
|
||
Depreciation and amortization
|
|
89.5
|
|
|
93.9
|
|
||
EBITDA
|
|
$
|
510.8
|
|
|
$
|
388.9
|
|
Adjustments:
|
|
|
|
|
||||
Restructuring
(1)
|
|
7.8
|
|
|
11.9
|
|
||
Integration
(2)
|
|
2.0
|
|
|
28.6
|
|
||
Executive management transition and retention compensation
(3)
|
|
1.0
|
|
|
10.7
|
|
||
Pension settlement
(4)
|
|
—
|
|
|
1.3
|
|
||
Other income
(5)
|
|
—
|
|
|
(9.5
|
)
|
||
German legal settlement
(6)
|
|
—
|
|
|
17.6
|
|
||
2015 Annual Meeting costs
(7)
|
|
—
|
|
|
6.3
|
|
||
Adjusted EBITDA
|
|
$
|
521.6
|
|
|
$
|
455.8
|
|
(1)
|
Restructuring costs represents costs associated with headcount reduction and store closures.
|
(2)
|
Integration costs represents costs, including legal fees, professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs related to the continued alignment of the North America business segment related to the Sealy Acquisition.
|
(3)
|
Executive management transition and retention compensation represents certain costs associated with the transition of certain of the Company's executive officers following the 2015 Annual Meeting.
|
(4)
|
Pension settlement represents pension expense recorded in conjunction with a settlement offered to terminated, vested participants in a defined benefit pension plan.
|
(5)
|
Other income includes income from a partial settlement of a legal dispute.
|
(6)
|
German legal settlement represents the previously announced €15.5 million ($17.6 million) settlement the Company reached in 2015 with the German Foreign Cartel Office ("FCO") to fully resolve the FCO's antitrust investigation, and related legal fees.
|
(7)
|
2015 Annual Meeting costs represent additional costs related to the Company's 2015 Annual Meeting and related issues.
|
(in millions, except per share amounts)
|
2016
|
|
2015
|
||||
GAAP net income:
|
$
|
202.1
|
|
|
$
|
73.5
|
|
Integration costs
(1)
|
2.0
|
|
|
28.7
|
|
||
German legal settlement
(2)
|
—
|
|
|
17.6
|
|
||
Executive management transition and retention compensation
(3)
|
3.0
|
|
|
16.2
|
|
||
Restructuring costs
(4)
|
8.3
|
|
|
13.5
|
|
||
Stock compensation benefit
(5)
|
(3.8
|
)
|
|
0.0
|
|
||
Interest expense and financing costs
(6)
|
2.1
|
|
|
12.0
|
|
||
Other income
(7)
|
—
|
|
|
(9.5
|
)
|
||
2015 Annual Meeting costs
(8)
|
—
|
|
|
6.3
|
|
||
Pension settlement
(9)
|
—
|
|
|
1.3
|
|
||
Loss on extinguishment of debt
(10)
|
47.2
|
|
|
—
|
|
||
Tax adjustments
(11)
|
(18.5
|
)
|
|
40.3
|
|
||
Adjusted net income
|
$
|
242.4
|
|
|
$
|
199.9
|
|
|
|
|
|
||||
Adjusted earnings per share, diluted
|
$
|
4.05
|
|
|
$
|
3.19
|
|
|
|
|
|
||||
Diluted shares outstanding
|
59.8
|
|
62.6
|
(1)
|
Integration costs represents costs, including legal fees, professional fees, compensation costs and other charges related to the transition of manufacturing facilities, and other costs related to the continued alignment of the North America business segment related to the Sealy Acquisition.
|
(2)
|
German legal settlement represents the previously announced €15.5 million ($17.6 million) settlement the Company reached in 2015 with the German Foreign Cartel Office ("FCO") to fully resolve the FCO's antitrust investigation, and related legal fees.
|
(3)
|
Executive management transition and retention compensation represents certain costs associated with the transition of certain of the Company's executive officers following the 2015 Annual Meeting.
|
(4)
|
Restructuring costs represents costs associated with headcount reduction and store closures.
|
(5)
|
Stock compensation benefit represents the fourth quarter change in estimate to reduce accumulated performance based stock compensation amortization to actual cost based on financial results for the year ended December 31, 2016.
|
(6)
|
Interest expense and financing costs in 2015 represents non-cash interest costs related to the accelerated amortization of deferred financing costs associated with the $493.8 million voluntary prepayment of the Company’s term loans, subsequent to the issuance by the Company of $450 million aggregate principal amount of 5.625% senior notes due 2023. Interest expense in 2016 represents incremental interest incurred upon the senior notes due 2026 sold in the second quarter of 2016 and the senior notes due 2020, which were repaid with the proceeds of the new senior notes due 2026.
|
(7)
|
Other income includes income from a partial settlement of a legal dispute.
|
(8)
|
2015 Annual Meeting costs represent additional costs related to the Company's 2015 Annual Meeting and related issues.
|
(9)
|
Pension settlement represents pension expense recorded in conjunction with a settlement offered to terminated, vested participants in a defined benefit pension plan.
|
(10)
|
Loss on extinguishment of debt represents costs associated with the completion of a new credit facility and senior notes offering in the second quarter of 2016.
|
(11)
|
Tax adjustments represents adjustments associated with the aforementioned items and other discrete income tax events.
|
1.
|
Purpose
|
2.
|
Definitions
|
3.
|
Term of the Plan
|
4.
|
Stock Subject to the Plan
|
5.
|
Administration
|
6.
|
Authorization of Grants
|
7.
|
Specific Terms of Awards
|
•
|
cash flow (before or after dividends), including, without limitations, operating cash flow and free cash flow return on invested capital
|
|
•
|
earnings
|
•
|
stock price
|
|
•
|
earnings per share
|
•
|
stockholder return or total stockholder return
|
|
•
|
earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation and amortization (EBITDA), and any version of the foregoing that includes other exclusions or add-backs determined at the time of the award
|
•
|
return on investment
|
|
•
|
return on equity
|
•
|
market capitalization
|
|
•
|
return on capital (including without limitation return on total capital or return on invested capital)
|
•
|
debt leverage (debt-to-capital ratio)
|
|
•
|
return on assets or net assets
|
•
|
net debt
|
|
•
|
economic value added
|
•
|
net debt to EBIT or EBITDA (as defined herein)
|
|
•
|
revenue
|
•
|
sales or net sales
|
|
•
|
backlog
|
•
|
income, pre-tax income or net income
|
|
•
|
operating income or pre-tax profit
|
•
|
operating profit, net operating profit
|
|
•
|
gross margin, operating margin or profit margin
|
•
|
economic profit
|
|
•
|
cash from operations
|
•
|
return on operating revenue or return on operating assets
|
|
•
|
operating revenue
|
•
|
operating ratio
|
|
•
|
general and administrative expenses
|
•
|
market share improvement
|
|
•
|
cost reduction challenges
|
•
|
supply chain achievements (including relationship with manufactures or suppliers of component materials and manufacturers of the Company and/or its Subsidiaries' products)
|
|
•
|
co-development, co-marketing, profit sharing, joint venture or other similar arrangements
|
•
|
achievement of business or operational goals such as market share, business development and/or customer objectives, or debt ratings
|
|
•
|
manufacturing achievements (including obtaining particular yields from manufacturing runs and other measurable objectives related to process development activities)
|
•
|
strategic business criteria, consisting of one or more objectives based on meeting specified market share, market penetration, business expansion targets, project milestones, production volume levels, or cost targets
|
|
•
|
accomplishment of, or goals relating to mergers, acquisitions, dispositions, public offerings or similar business transactions
|
•
|
working capital
|
|
•
|
cost of capital
|
•
|
customer service
|
|
•
|
any other objective goals established by the Compensation Committee
|
8.
|
Adjustment Provisions
|
9.
|
Change of Control
|
10.
|
Settlement of Awards
|
11.
|
Reservation of Stock
|
12.
|
Limitation of Rights in Stock; No Special Service Rights
|
13.
|
Unfunded Status of Plan
|
14.
|
Nonexclusivity of the Plan
|
15.
|
No Guarantee of Tax Consequences
|
16.
|
Termination and Amendment of the Plan
|
17.
|
Notices and Other Communications
|
18.
|
Governing Law
|
19.
|
Clawback
|
20.
|
Compliance with Section 409A of the Code
|
|
|
Page
|
Section 1.
|
Certain Definitions
|
1
|
Section 2.
|
Appointment of the Rights Agent
|
9
|
Section 3.
|
Issuance of Rights Certificates
|
9
|
Section 4.
|
Form of Rights Certificates
|
11
|
Section 5.
|
Countersignature and Registration
|
12
|
Section 6.
|
Transfer, Split-Up, Combination, and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates
|
13
|
Section 7.
|
Exercise of Rights; Purchase Price; Expiration Date of Rights
|
14
|
Section 8.
|
Cancellation and Destruction of Rights Certificates
|
16
|
Section 9.
|
Reservation and Availability of Capital Stock
|
16
|
Section 10.
|
Preferred Shares Record Date
|
18
|
Section 11.
|
Adjustment of Purchase Price, Number and Kind of Shares, or Number of Rights
|
18
|
Section 12.
|
Certificate of Adjusted Purchase Price or Number of Shares
|
25
|
Section 13.
|
Consolidation, Merger, or Sale or Transfer of Assets, Cash Flow or Earning Power
|
26
|
Section 14.
|
Fractional Rights and Fractional Shares
|
29
|
Section 15.
|
Rights of Action
|
30
|
Section 16.
|
Agreement of Rights Holders
|
31
|
Section 17.
|
Rights Certificate Holder Not Deemed a Stockholder
|
31
|
Section 18.
|
Concerning the Rights Agent
|
32
|
Section 19.
|
Merger or Consolidation or Change of Name of the Rights Agent
|
32
|
Section 20.
|
Duties of the Rights Agent
|
33
|
Section 21.
|
Change of the Rights Agent
|
35
|
Section 22.
|
Issuance of New Rights Certificates
|
36
|
Section 23.
|
Redemption and Termination
|
37
|
Section 24.
|
Exchange of Rights
|
37
|
Section 25.
|
Notice of Certain Events
|
39
|
Section 26.
|
Notices
|
40
|
Section 27.
|
Supplements and Amendments
|
41
|
Section 28.
|
Successors
|
42
|
Section 29.
|
Determinations and Actions by the Board
|
42
|
Section 30.
|
Benefits of this Agreement
|
42
|
Section 31.
|
Severability
|
42
|
Section 32.
|
Governing Law
|
43
|
Section 33.
|
Counterparts; Facsimiles and PDFs
|
43
|
Section 34.
|
Descriptive Headings
|
43
|
Section 35.
|
Force Majeure
|
43
|
Section 36.
|
Further Assurance
|
44
|
Exhibits
|
|
Exhibit A:
|
Form of Certificate of Designation of Series A Junior Participating Preferred Stock
|
Exhibit B:
|
Form of Rights Certificate
|
Exhibit C:
|
Summary of Rights to Purchase Preferred Stock
|
By:
|
|
Name:
|
|
Title:
|
|
By:
|
|
Name:
|
|
Title:
|
|
By:
|
|
Name:
|
|
Title:
|
|
By:
|
|
Name:
|
|
Title:
|
|
By:
|
|
Name:
|
|
Title:
|
|
By:
|
|
Name:
|
|
Title:
|
|
By:
|
|
Name:
|
|
Title:
|
|
By:
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Name:
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Title:
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By:
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Name:
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Title:
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the Rights will be evidenced by the certificates for Common Shares (or, if uncertificated, by the book entry account that evidences record ownership of such shares) and not by separate rights certificates; and
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the Rights will be transferable by, and only in connection with, the transfer of Common Shares.
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the close of business on the tenth (10th) business day (or such later date as may be determined from time to time by action of a majority of the Board prior to the Distribution Date that would otherwise have occurred) following the first date of public announcement that any person, together with such person’s Related Persons (as defined below) (other than the Company or certain related entities), has become the beneficial owner of twenty percent (20%) or more of the then outstanding Common Shares other than as a result of repurchases of Common Shares by the Company, certain stock option or restricted stock grants by the Company or the exercise or conversion thereof, or certain inadvertent acquisitions (such person is an “
Acquiring Person
”) or that discloses information which reveals the existence of an Acquiring Person;
provided
,
however
, that stockholders who beneficially own twenty percent (20%) or more of the outstanding Common Shares as of the time of the first public announcement by the Company of the adoption of the Original Rights Agreement (including any shares beneficial ownership of which is acquired on the date of such announcement pursuant to orders placed prior to such announcement), will not be considered an Acquiring Person unless and until such stockholder or any of its Related Persons
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the close of business on the tenth (10th) business day (or such later date as a majority of the Board shall determine prior to the occurrence of a Distribution Date) after the date of the commencement of, or first public announcement of the intent of any person (other than the Company or certain related entities) to commence (within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the U.S. Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), a tender or exchange offer that, if completed, would result in such person becoming an Acquiring Person
provided, however
, that if a tender or exchange offer is terminated prior to the occurrence of a Distribution Date, then no Distribution Date shall occur as a result of such tender or exchange offer.
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is considered a “beneficial owner” of the Common Shares under Rule 13d-3 of the General Rules and Regulations under the Exchange Act;
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has the right to acquire the Common Shares, either immediately or in the future, pursuant to any agreement, arrangement, or understanding (other than a customary underwriting agreement relating to a bona fide public offering of the Common Shares) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise, except that a person will not be deemed to be a beneficial owner of (a) Common Shares tendered pursuant to a tender offer or exchange offer by or on behalf of such person or any affiliated or associated persons of such person until the tendered Common Shares are accepted for purchase or exchange, (b) securities issuable upon exercise of a Right before the occurrence of a Triggering Event (as defined in Section 5 below), or (c) securities issuable upon exercise of a Right after the occurrence of a Triggering Event if the Rights are originally issued Rights or were issued in connection with an adjustment to originally issued Rights;
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has the right to vote or dispose of the Common Shares pursuant to any agreement, arrangement, or understanding (other than a right to vote arising from the granting of a revocable proxy or consent that is not also then reportable on a Schedule 13D); or
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has an agreement, arrangement, or understanding with another person who beneficially owns Common Shares and the agreement, arrangement, or understanding is for the purpose of acquiring, holding, voting, or disposing of any securities of the Company (other than customary underwriting agreements relating to a bona fide public offering of Common Shares or a right to vote arising from the granting of a revocable proxy or consent that is not also then reportable on a Schedule 13D).
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is a fully financed all-cash tender offer or an exchange offer offering shares of common stock of the offeror, or a combination thereof, for any and all of the outstanding Common Shares (whether such shares are outstanding at the commencement of the offer or become outstanding thereafter upon the exercise or conversion of options or other securities that are outstanding at the commencement of the offer);
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is an offer whose per share offer price and consideration represent a reasonable premium over the highest reported per share market price of the Common Shares of in the immediately preceding twenty four (24) months immediately preceding the date on which the offer is commenced;
provided
that to the extent that an offer includes common stock of the offeror, such per share offer price with respect to such common stock of the offeror will be determined for purposes of the foregoing provision using the lowest reported market price for common stock of the offeror during the five (5) trading days immediately preceding and the five (5) trading days immediately following the date on which the offer is commenced;
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is an offer that, within twenty (20) business days after the commencement date of the offer (or within ten (10) business days after any increase in the offer consideration), does not result in a nationally recognized investment banking firm retained by the Board rendering an opinion to the Board that the consideration being offered to the holders of the Common Shares is either inadequate or unfair;
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is an offer that is subject only to the minimum tender condition described below and other customary terms and conditions, which conditions shall not include any financing, funding or similar condition or any requirements with respect to the offeror or its agents or any other Person being permitted any due diligence with respect to the books, records, management, accountants and other outside advisors of the Company;
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is an offer pursuant to which the Company has received an irrevocable written commitment of the offeror that the offer will remain open for at least ninety (90) business days and, if a Special Meeting is duly requested by stockholders in accordance with the terms of the Rights Agreement, for at least ten (10) business days after the date of the Special Meeting or, if no Special Meeting is held within ninety (90) business days following receipt of the Special Meeting notice delivered in accordance with the Rights Agreement, for at least ten (10) business days following such ninety (90) business day period;
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an offer that is conditioned on a minimum of at least two-thirds of the outstanding Common Shares not held by the Person making such offer (and such Person’s Related Persons) being tendered and not withdrawn as of the offer’s expiration date, which condition shall not be waivable;
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an offer pursuant to which the Company has received an irrevocable written commitment by the offeror to consummate as promptly as practicable upon successful completion of the offer a second-step transaction whereby all Common Shares not tendered into the offer will be acquired at the same consideration per share actually paid pursuant to the offer, subject to statutory appraisal rights, if any;
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an offer pursuant to which the Company has received an irrevocable, legally binding written commitment of the offeror that no amendments will be made to the offer to reduce the consideration being offered or to otherwise change the terms of the offer in a way that is adverse to a tendering stockholder (other than extensions of the offer consistent with the terms of the Rights Agreement); and
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an offer that is otherwise in the best interests of the Company and its stockholders.
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