SEC Document


Table of Contents

 

EXECUTIVE COMPENSATION (CONTINUED)

 

 

awards is to provide an added incentive to key officers to improve the long-term performance of the Company.

The PCRS awards were made contingent upon the level of attainment of performance goals for the three-year performance period from June 1, 2015 ending May 31, 2018. Vesting of 67% of the PCRS relates to an increase in EBIT for the period, and vesting of the remaining 33% relates to an increase in EBIT margin for the period. Actual results will be adjusted for the exclusion of restructuring and other similar unusual charges or credits that are not central to the operations of the Company as shown on the Company’s consolidated financial statements as audited by the Company’s independent registered public accounting firm.

With respect to that portion of the PCRS that may vest based upon achievement of improvement in EBIT, if the increase in EBIT is less than 75% of the planned increase in EBIT, then the performance goals are not achieved with respect to any of that portion of the PCRS. If the increase in EBIT is 75% to 100% of the planned increase in EBIT, then the performance goals are achieved with respect to a pro rata amount of that portion of the PCRS. If the increase in EBIT is more than 100% of the planned increase in EBIT, then the performance goals are achieved with respect to all of that portion of the PCRS.

With respect to that portion of the PCRS that may vest based upon achievement of improvement in EBIT margin, if EBIT margin does not increase, then the performance goals are not achieved with respect to any of that portion of the PCRS. If EBIT margin increases, then that portion of the PCRS will vest in a pro rata amount based on the percentage of the EBIT margin performance goal achieved. If the increase in EBIT margin is more than 100% of the planned increase in EBIT margin, then the performance goals are achieved with respect to all of that portion of the PCRS.

The Compensation Committee set the performance goals related to the PCRS awards at levels it believed to be achievable but would require the Company to meaningfully grow earnings.

Certain Fiscal 2018 Compensation Determinations

2018 PERS. In July 2017, the Compensation Committee determined that the performance goals for fiscal 2018 PERS will be (i) increase in planned EBIT and (ii) improvement in capital adjusted net earnings. For fiscal 2018 PERS awards, 67% of each named executive officer’s PERS award will be based upon achievement of increase in planned EBIT goals, and 33% of each named executive officer’s PERS award will be based upon achievement of improvement in capital adjusted net earnings. By contrast, fiscal 2017 PERS awards

were based upon achievement of increase in planned EBIT alone. The Compensation Committee will determine whether and to what extent the 2018 PERS were achieved at its meeting in July 2018.

Timing of Equity Grants

Equity grants to the named executive officers are made in July at regularly scheduled meetings of the Compensation Committee. Board and Compensation Committee meetings are generally scheduled at least a year in advance. Scheduling decisions are made without regard to anticipated earnings or other major announcements by the Company.

Minimum Stock Ownership Guidelines

The Company adopted minimum stock ownership guidelines for its executive officers and Directors in July 2012. Under the stock ownership guidelines certain executive officers are required to maintain the following minimum equity stakes in the Company:

 

  for the Company’s Chief Executive Officer, Common Stock equivalent to five times annual base salary;

 

  for the Company’s President and Chief Operating Officer, Common Stock equivalent to four times annual base salary; and

 

  for those other executive officers of the Company who report directly to the Chief Executive Officer, Common Stock equivalent to three times annual base salary.

Executives are expected to achieve targets within five years of the later of the date of the adoption of the minimum stock ownership guidelines or the date of assuming their positions. Each of the Company’s executive officers met the minimum stock ownership guidelines as of May 31, 2017.

Employment Agreements and Related Arrangements

We are a party to the following employment agreements with our named executive officers, each of which has been in effect since December 31, 2008:

 

  Frank C. Sullivan. Pursuant to an employment agreement whereby Frank C. Sullivan serves as our Chairman and Chief Executive Officer, Frank C. Sullivan is entitled to an annual base salary of not less than $970,000 effective as of June 1, 2017.

 

  Ronald A. Rice. Pursuant to an employment agreement whereby Mr. Rice serves as our President and Chief Operating Officer, Mr. Rice is entitled to an annual base salary of not less than $730,000 effective as of June 1, 2017.

 

 

Russell L. Gordon. Pursuant to an employment agreement that the Company had entered into with Mr. Gordon prior

 

 

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