SEC Document


Table of Contents

 

EXECUTIVE COMPENSATION (CONTINUED)

 

 

The Compensation Committee uses the various equity incentive awards available to it under the 2014 Omnibus Plan to retain executives and other key employees and achieve the following additional goals:

 

  to reward past performance;

 

  to incentivize future performance (both short-term and long-term);

 

  to align executives’ long-term interest with that of the stockholders; and

 

  to enhance the longer-term performance and profitability of the Company.

The Compensation Committee’s current intention is to achieve these goals by making annual awards to the Company’s executive officers and other key employees, using a combination of restricted stock and stock-settled stock appreciation rights.

Performance Earned Restricted Stock (PERS). The Compensation Committee currently awards Performance Earned Restricted Stock, or PERS, under the 2014 Omnibus Plan. The threshold and maximum number of and performance goals for the award of PERS for a given fiscal year are set in July of that year. The determination of whether and to what extent the PERS have been achieved for a fiscal year is made at the July meeting of the Compensation Committee following the close of that fiscal year. Based on that determination, the actual grants, if any, with respect to a fiscal year are made at that same meeting. With respect to fiscal 2017, the maximum number and performance goals were set in July 2016 and the Compensation Committee determined whether and to what extent the PERS were achieved at its meeting in July 2017.

The percentage of shares with respect to which the performance goal has been achieved is determined by reference to the percentage increase of planned EBIT which is attained. In making the determination of whether the planned increase has been attained, the actual fiscal year results are adjusted for the exclusion of restructuring and other similar charges or credits that are not central to the Company’s operations as shown on the Company’s financial statements as certified by the Company’s independent registered public accounting firm. If less than 75% of the planned increase is attained, then the performance goal will not be achieved with respect to any shares. If 75% to 100% of the planned increase is attained, then the performance goal will be achieved with respect to an equivalent percentage of shares. For example, if 91% of the planned increase is attained, then the performance goal will be achieved with respect to a

maximum amount of 91% of the shares. The percentage of the planned increase attained will be rounded down to the closest whole number (e.g., 85.5% would be rounded down to 85%). If more than 100% of the planned increase is attained, then the performance goal will be achieved with respect to 100% of the shares.

In July 2016, pursuant to the 2014 Omnibus Plan, the Compensation Committee approved a contingent award of PERS to the Covered Employees of up to 125,000 shares (including 60,000 shares for the Chief Executive Officer) to be based on the level of attainment of fiscal 2017 performance goals related to an increase in planned EBIT. In July 2016, the Compensation Committee established a 7.6% increase in adjusted EBIT over fiscal 2016 levels as the target for purposes of determining the amount of PERS awards earned by the named executive officers with respect to fiscal 2017. Adjusted EBIT for fiscal 2017 compared to fiscal 2016 was below goal. As a result, the Compensation Committee did not award any of these PERS to the Covered Employees and Mr. Gordon.

Stock Appreciation Rights (SARs). In July 2017, pursuant to the 2014 Omnibus Plan, the Compensation Committee awarded SARs totaling 390,000 shares to the executive officers. The SARs awards granted to the named executive officers in July 2017 are set forth below in the Grants of Plan-Based Awards for Fiscal 2017 table. The value of SARs is one component of the named executive officers’ long term incentive compensation intended to maintain such compensation competitive with the market median.

Supplemental Executive Retirement Plan (SERP) Restricted Stock. The RPM International Inc. 2007 Restricted Stock Plan was previously established to provide for supplemental retirement benefits to officers and other key employees of the Company designated by the Board of Directors whose retirement plan benefits may be limited under applicable law and the Internal Revenue Code. During fiscal 2017, the Compensation Committee determined that there were insufficient shares available under the 2007 Restricted Stock Plan for future SERP grants, and that such SERP grants will instead be awarded under the 2014 Omnibus Plan. In July 2016, the Compensation Committee awarded 20,175 shares of restricted stock to the executive officers under a combination of the 2007 Restricted Stock Plan and the 2014 Omnibus Plan.

Performance Contingent Restricted Stock (PCRS).

In July 2015, the Compensation Committee approved contingent awards of PCRS to Messrs. Sullivan, Rice, Gordon, Moore and Ms. Kastner, of up to 168,000 shares. Awarded pursuant to the 2014 Omnibus Plan, the purpose of the PCRS

 

 

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