SEC Document


Table of Contents

 

EXECUTIVE COMPENSATION (CONTINUED)

 

 

In determining the actual incentive compensation awards for fiscal 2017, the named executive would receive a portion of his or her award equal to:

 

  40% of his or her base salary, if the Company achieved a 1.9% increase in adjusted earnings before interest and taxes (“EBIT”)*. The Company achieved a 1.6% increase in adjusted EBIT, taking into account foreign exchange rates. Although the Company did not achieve its adjusted EBIT goal in its entirety, the Compensation Committee elected to award one-half of this portion of each named executive officer’s award (i.e., 20% of his or her base salary) in light of narrowly missing the adjusted EBIT growth goal, taking into account foreign exchange rates;

 

  30% of his or her base salary, if the Company achieved revenue growth of 8.0% or above. The Company achieved revenue growth of 4.3%, as adjusted, taking into account foreign exchange rates. Although the Company did not achieve its revenue growth goal in its entirety, the Compensation Committee elected to award one-half of this portion of each named executive officer’s award (i.e., 15% of his or her base salary) in light of revenue growth, taking into account foreign exchange rates, in a difficult economic environment.

 

  40% of his or her base salary, if the Company achieved growth in other financially measured objectives, which for fiscal 2017 were improvement in (i) gross profit margin and (ii) capital adjusted net earnings. For fiscal 2017, gross profit margin improved compared to fiscal 2016, however, capital adjusted net earnings decreased. Based on gross profit margin improvement, the Compensation Committee elected to award one-fourth of this portion of each named executive officer’s award (i.e., 10% of his or her base salary); and

 

  40% of his or her base salary, in the discretion of the Chief Executive Officer, based upon the achievement of non-financially measured management objectives, which were the Company’s overall return to stockholders versus both the market and the Company’s peers, and such named executive officer’s involvement in the Company’s merger and acquisition transactions in fiscal 2017 and significant restructuring action completed in fiscal 2017. Each named executive earned a portion of his or her award based upon achievement of applicable individual objectives.

 

* For a description of EBIT, including why we consider EBIT and a reconciliation of EBIT to income (loss) before income taxes, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report to Stockholders, which can be found on our website at www.rpminc.com.

As a result, Messrs. Sullivan, Rice, Gordon, Moore and Ms. Kastner were awarded incentive compensation equal to approximately 75%, 75%, 95%, 95% and 61% of their respective base salaries.

Equity Compensation

We use equity compensation to align our named executive officers’ interests with those of our stockholders and to attract and retain high-caliber executives through recognition of anticipated future performance. Under our 2014 Omnibus Plan, we can grant a variety of stock-based awards, including awards of restricted stock and stock appreciation rights. After reviewing executive compensation practices against our defined comparative framework, including reviewing equity awards for similarly situated officers at companies in the diversified chemicals and specialty chemicals industries which fall within a reasonable size range (in terms of sales) and operate businesses similar to that of the Company, our Chief Executive Officer and our President and Chief Operating Officer make annual recommendations to the Compensation Committee of the type and amount of equity awards for the Chief Executive Officer, the President and Chief Operating Officer, and the other executive officers. In determining the equity incentive compensation component of Chief Executive Officer compensation, the Compensation Committee considers, in addition to the factors used to determine salary and cash incentive compensation:

 

  the value of similar incentive awards to chief executive officers in our peer group and other similar companies, and

 

  awards given to the Chief Executive Officer in past years.

In determining the equity incentive compensation of the other executive officers, the Compensation Committee reviews and approves a mix of business plan goals, with a significant amount of emphasis placed on the compensation recommendations of our Chief Executive Officer and our President and Chief Operating Officer. After receiving the recommendations of our Chief Executive Officer and our President and Chief Operating Officer, the Compensation Committee meets without our Chief Executive Officer and our President and Chief Operating Officer present to consider their recommendations. The Compensation Committee must approve any recommended equity grants before they can be made.

 

 

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