Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
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Definitive Proxy Statement |
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Soliciting Material under §240.14a-12 |
USG CORPORATION |
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Table of Contents
Table of Contents
USG Corporation
550 West Adams Street
Chicago, Illinois 60661
Founded in 1902
[______],
2017
Dear Fellow Stockholder:
It is a pleasure to invite you to the 2017
USG Corporation annual meeting of stockholders. The meeting will be held at 9:00
a.m., Chicago time, on Wednesday, May 10, 2017 at our corporate headquarters
located at 550 West Adams Street, Chicago, Illinois 60661-3676. The attached
Notice of Annual Meeting of Stockholders and Proxy Statement discuss the items
scheduled for a vote by stockholders at the meeting.
Securities and Exchange Commission rules
allow companies to furnish proxy materials to their stockholders over the
Internet. As a result, most of our stockholders will receive in the mail a
notice regarding availability of the proxy materials for the annual meeting on the Internet instead of paper copies of
those materials. The notice contains instructions on how to access the proxy
materials over the Internet and instructions on how stockholders can receive
paper copies of the proxy materials, including a proxy or voting instruction
form. This process expedites stockholders receipt of proxy materials, lowers
the cost of our annual meeting and helps to conserve natural
resources.
It is important that your shares be
represented at the annual meeting, whether or not you plan to attend the
meeting. Please vote your shares over the Internet or by telephone. If you
received paper copies of the proxy materials by mail, you may also vote by mail
by following the instructions on the proxy or voting instruction form you
received. If you hold shares through a broker (i.e., in street name), you have
the right to direct your broker how to vote your shares. Brokers may not vote your shares on any matter other than the
ratification of the appointment of our auditors, in the absence of specific
voting instructions from you. Please contact your broker directly if you have
questions about how to provide such instructions.
Please vote your shares as soon as
possible. This is your annual meeting, and your participation is
important.
Sincerely,
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Jennifer F.
Scanlon President and Chief Executive Officer |
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Steven F.
Leer Non-Executive Chairman of the
Board |
Table of Contents
550 West Adams Street
Chicago,
Illinois 60661-3676
NOTICE OF 2017 ANNUAL MEETING OF
STOCKHOLDERS
When:
Wednesday, May 10, 2017 at 9:00 a.m., Chicago Time
Where:
USG Corporate Headquarters
550 West Adams Street,
Chicago, Illinois
60661-3676
Items of Business:
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1. |
to elect three directors for a
three-year term; |
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2. |
to ratify the Audit Committees
appointment of Deloitte & Touche LLP as our independent registered
public accountants for the fiscal year ending December 31,
2017; |
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3. |
to approve an amendment to our
Restated Certificate of Incorporation, or the Committee Amendment, to
remove the requirement that we maintain a Finance Committee, in order to
make our governance structure more efficient and flexible; |
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4. |
to approve, by advisory vote, the
compensation of our named executive officers; |
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5. |
to recommend, by advisory vote,
the frequency of future votes to approve the compensation of our named
executive officers; and |
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6. |
to transact any other business
that may properly come before the meeting or any adjournment or
postponement thereof. |
Who Can Vote:
Only stockholders of record at the close
of business on March 13, 2017 will be entitled to vote at the annual
meeting.
Brokers may not
vote your shares on any of the matters being presented at the annual meeting,
other than the ratification of the appointment of our independent auditor, in
the absence of specific voting instructions from you. Please contact your broker
directly if you have questions about how to provide such instructions. Please
vote your shares promptly by using the Internet or the telephone. If you
received a paper copy of a proxy or voting instruction form for the annual
meeting by mail, you may submit that form by completing, signing, dating and
returning it in the pre-addressed envelope provided.
Even if you plan to attend the meeting,
please vote as soon as possible using one of the following methods:
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By Telephone: In the U.S. or Canada, you
can vote your shares toll-free by calling 1-800-690-6903. |
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By Internet: You can vote
your shares online at www.proxyvote.com |
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By Mail: You can vote by
mail by completing, dating, and signing your proxy card or voting
instruction form and returning it in the postage-paid
envelope. |
Table of Contents
Meeting Admissions:
An admission ticket (or other proof of
stock ownership) and a form of photo identification will be required for
admission to the annual meeting. In addition, if you are not a stockholder of
record but hold shares through a broker, bank or other nominee (i.e., in street
name), you will be required to provide proof of beneficial ownership as of the
Record Date. See Annual Meeting Information beginning on page 71 for
details.
Date of Mailing:
This proxy statement and the accompanying
proxy were first made available to our stockholders on or about [______],
2017.
Important Notice Regarding the
Availability of the Proxy Materials for the Stockholder Meeting to be held on
May 10,
2017
This proxy statement and our 2016
annual report on Form 10-K are available at www.proxyvote.com.
By order of the Board of
Directors,
Michelle
M. Warner
Senior Vice President, General
Counsel
and Corporate Secretary
[______], 2017
Table of Contents
Summary of
2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
SUMMARY OF 2017 PROXY
STATEMENT |
This summary highlights selected
information in this Proxy Statement and does not contain all of the information
that you should consider in deciding how to vote. Please read the complete proxy
statement carefully before voting.
ANNUAL MEETING
INFORMATION
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Time and Date |
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Location |
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Record Date |
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9:00 a.m., Chicago time, on |
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USG Corporation Headquarters |
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March 13, 2017 |
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Wednesday, May 10, 2017 |
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550 West Adams Street |
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Chicago, Illinois 60661-3676 |
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AGENDA AND VOTING
RECOMMENDATIONS
Proposal |
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Board Recommendation |
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Page |
Election of Three Directors |
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FOR each nominee |
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12 |
Ratification of the
appointment of Deloitte & Touche LLP as our independent |
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registered public accountants for 2017 |
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FOR |
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30 |
Approval of the Committee Amendment |
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FOR |
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Say-on-Pay: Advisory vote on compensation of our named
executive officers |
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FOR |
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35 |
Say-on-Frequency: Advisory
vote on frequency of future advisory votes on |
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compensation of our named executive officers |
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EVERY YEAR |
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66 |
BUSINESS
HIGHLIGHTS
Our Company produced excellent financial and operating results in 2016 that position us well for 2017 and beyond.
The annual highlights include:
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Retiring $1.1 billion in debt
and achieved a leverage ratio within our
target range |
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Completing the disposition of
our distribution business, L&W Supply,
for $675 million, allowing us to focus on
core manufacturing operations |
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Expanding operating margins in
each of our segments |
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Generating $49 million in
equity method income for us by USG Boral
Building Products, or UBBP, our 50/50
strategic joint ventures with Boral Limited
that operate in Asia, Australasia and the Middle East |
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Launching our multi-year
efforts to reinvest in our business through
advanced manufacturing |
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Growing our glass-mat
portfolio and launched a new line of high
performance ceilings and several new
flooring products |
Table of Contents
Summary of
2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
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PROPOSAL 1 |
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Election of
Directors |
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The Board recommends a vote
FOR the election of each of the nominees for director. |
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See page 14 for further information
about our director nominees. |
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Name |
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Director Since |
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Independent |
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Position |
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Other
Public Directorships |
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USG Board
Committees |
MATTHEW
CARTER, JR. |
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September 2012 |
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✓ |
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Former President and Chief
Executive Officer of Inteliquent, Inc. |
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None |
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Compensation
and Organization Governance |
RICHARD P.
LAVIN |
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November 2009 |
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✓ |
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Former President and Chief
Executive Officer of Commercial Vehicle Group, Inc.; Former Group
President of Caterpillar, Inc. |
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ITT Corporation and Allison
Transmission Holdings, Inc. |
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Compensation and Organization
(Chair) Finance |
JENNIFER F.
SCANLON |
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September 2016 |
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President and Chief Executive
Officer of USG Corporation |
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None |
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None |
RECENT BOARD
DEVELOPMENTS
New
Chairman |
● Steven F. Leer, formerly our Lead Director, was
appointed Non-Executive Chairman of the Board in November
2016. |
New Director |
● Ms. Scanlon was added to our Companys Board in
September 2016 in connection with her appointment as Chief Executive
Officer-Elect of our Company in advance of the retirement of Mr. Metcalf,
our former Chairman, President and Chief Executive
Officer. |
Table of Contents
Summary of
2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
GOVERNANCE
HIGHLIGHTS
Our Company is committed to good corporate
governance, which promotes the long-term interests of stockholders, strengthens
Board and management accountability and helps build public trust.
Independence |
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Eight of our nine
directors are independent |
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Our Chairman is an independent
director |
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Our CEO is the only management
director |
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All of our Board committees are comprised of
only independent directors and have the ability to hire third-party
advisors |
Executive Sessions |
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The independent directors regularly meet in
executive sessions |
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The Non-Executive Chairman presides at
executive sessions of the independent directors |
Board Oversight of Risk Management |
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Our Audit Committee annually reviews our
guidelines and policies that govern the process by which we assess and
manage our exposure to risk |
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Our Compensation and Organization Committee
reviews the annual compensation risk assessment and retains an independent
compensation consultant |
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We have recoupment or clawback provisions
to recover certain executive pay |
Stock
Ownership Requirements |
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Our non-employee directors and executives
are subject to minimum stock ownership requirements designed to align
their interests with those of stockholders |
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PROPOSAL 2 |
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Ratification of
appointment of independent registered public accountants for
2017 |
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The Board recommends a vote
FOR the ratification of the appointment of Deloitte & Touche LLP as
our independent registered public accountants for 2017. |
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See page 30 for further
information. |
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In accordance with its charter, the Audit
Committee has appointed Deloitte & Touche LLP as our independent registered
public accountants for 2017. The Audit Committee requests that stockholders
ratify this appointment. If stockholders do not ratify the appointment, the
Audit Committee will consider whether it should appoint another independent
registered public accounting firm. Deloitte & Touche LLP has been examining
our financial statements since 2002.
Table of Contents
Summary of
2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
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PROPOSAL 3 |
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Approval of the
Committee Amendment |
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The Board recommends a vote
FOR the approval of the Committee Amendment. |
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See page 33 for further
information. |
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Due to historical reasons, our Restated
Certificate of Incorporation requires the Board to maintain a Finance Committee. The Board has determined that it would like
the flexibility to eliminate the Finance Committee in the future or to have it
meet on an ad-hoc basis as necessary and is requesting that stockholders approve
an amendment to our Restated Certificate of Incorporation allowing it this
flexibility. Because certain matters currently require the separate review or
approval of the Finance Committee in addition to the approval of the Board,
elimination of the mandatory nature of the Finance Committee could simplify our
governance structure and provide for a more efficient and flexible
organizational decision-making process. If eliminated, many responsibilities of
the Finance Committee would be assumed by the full Board, while the remainder
would be assumed by other committees of the Board.
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PROPOSAL 4 |
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Say-on-Pay:
Advisory vote regarding the compensation of our named executive
officers |
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The Board recommends a vote
FOR the advisory vote approving the compensation of our named executive
officers. |
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See page 35 for further
information. |
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We are asking our stockholders to approve,
on an advisory basis, the compensation of our named executive officers
(say-on-pay) as described in the Compensation Discussion and Analysis section
beginning on page 36 and the Compensation Tables section beginning on page 50.
Our compensation philosophy is designed to attract, motivate, engage and retain
talented executives and align their interests with those of
stockholders.
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PROPOSAL 5 |
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Say-on-Frequency:
Advisory vote regarding frequency of future advisory votes on the
compensation of our named executive officers |
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The Board recommends a vote to
conduct future advisory votes on the compensation of our named executive
officers EVERY
YEAR. |
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See page 66 for further
information. |
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We are asking our stockholders to approve,
on an advisory basis, the frequency of our future stockholder say-on-pay
advisory votes. This advisory vote is commonly referred to as a
say-on-frequency vote. Under this proposal, our stockholders may indicate
whether they would prefer to have an advisory vote on executive compensation
every year, every two years, or every three years, or may abstain from voting on
this proposal. The Board recommends a vote to conduct future advisory votes on
the compensation of our named executive officers every year.
Table of
Contents
Summary of
2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
EXECUTIVE COMPENSATION HIGHLIGHTS
Our executive
compensation program is designed to attract, motivate, engage and retain
talented executives and align their interests with those of stockholders. We use
a combination of base salary, annual and long-term incentive awards, retirement
and other benefits and limited perquisites to link executive pay with our
financial and operating objectives. Our compensation program for executive
officers, including our named executive officers, drives the achievement of
operating and financial objectives while building the long-term value of our
enterprise. Annual incentive awards for our named executive officers in 2016,
other than Mr. Metcalf, our former Chairman, President and Chief Executive
Officer, ranged from 176% to 187% of target due to our exceeding the adjusted
net earnings and Focus Target thresholds, as discussed in the Compensation
Discussion and Analysis section beginning on page 36. While our operational
performance in 2016 was very strong as evidenced by the annual incentive awards,
our stock performance over the most recent vesting period was below target and
as a result the market share units granted in 2014 (as measured by our stock
price) vested at 88% of target and the
performance shares granted in 2014 (as measured by our total stockholder return
compared to certain other companies) were forfeited.
Our executive
compensation program places the greatest emphasis on performance-based
incentives as shown below. In September 2016, we announced that Mr. Metcalf had
decided to retire from his position as President and Chief Executive Officer and
resign as Chairman of the Board, effective October 31, 2016. In connection with
Mr. Metcalfs retirement and in accordance with our management succession plan,
Ms. Scanlon became our Companys President and Chief Executive Officer,
effective November 1, 2016. Accordingly, the 2016 target pay mix shown below for
Ms. Scanlon reflects compensation for only two months out of the year as
President and Chief Executive Officer in addition to the ten months prior to her
promotion. In February 2017, the Board increased Ms. Scanlons base salary and
also granted her a long-term equity award which resulted in the portion of Ms.
Scanlons compensation for 2017 that is performance-based to be increased, in
accordance with its historical philosophy of having a substantial portion of the
President and Chief Executive Officers compensation at risk.
SCANLON 2016
TARGET PAY MIX(1) |
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Base Salary
29% |
Annual Incentive 23% |
Long-Term Incentive 48% |
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71% Performance
Based |
SCANLON 2017 TARGET PAY MIX |
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Base Salary 16% |
Annual Incentive
17% |
Long-Term Incentive
67% |
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84% Performance
Based |
OTHER NEOS AVERAGE 2016 TARGET PAY
MIX(1)(2) |
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Base Salary 30% |
Annual Incentive 20% |
Long-Term Incentive 50% |
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70% Performance
Based |
(1) |
Excluding any one-time special grants. |
(2) |
Excludes Mr. Metcalf. |
Table of
Contents
Table of Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
BOARD OF DIRECTORS AND
CORPORATE GOVERNANCE |
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PROPOSAL 1 |
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Election of
Directors |
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The Board recommends a vote
FOR the election of each of the nominees for
director. |
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See page 14 for further information
about our director nominees. |
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Our Board currently consists of nine
directors divided into three classes, with each class elected for a three-year
term. Three nominees comprise the class of directors to be elected at the annual
meeting. The other two classes will be elected in 2018 and 2019.
The three
candidates nominated by the Board for election as directors at the annual
meeting are identified below. If any of those nominees becomes unavailable prior
to the annual meeting, the Board will (i) reduce
the size of the Board to eliminate that position, (ii) leave the position vacant
until a later date, or (iii) nominate a candidate in place of the unavailable
nominee, in which case all shares represented by proxies received by the Board
will be voted for election of the substitute nominee.
BOARD OF
DIRECTORS
The Governance
Committee believes that the Board, as currently constituted, is well-balanced
and that it fully and effectively addresses our Companys needs. As evidenced by
the director biographical information provided below, our directors have
significant experience in chief executive or other senior level operating,
financial, and international management positions. In addition, a majority of
our directors have experience in cyclical businesses, which we believe will help
the Board assist in managements development and implementation of our growth
strategies. These directors also have extensive familiarity with us and our
industry, which provides them with a longer-term perspective about strategic,
operational and financial issues associated with our business.
Seven of our nine directors currently serve as a director of
other public companies, which provides them with diverse experiences that can
enhance their contribution to our Board governance practices.
Set forth below
is information regarding the nominees for election as directors and information
regarding the directors in each class continuing in office after the annual
meeting. Also discussed below are specific experience, qualifications,
attributes and skills of our current directors considered by the Governance
Committee as part of its review of our Boards membership and in connection with
its nomination of the candidates for election to the Board at the annual
meeting.
Table of
Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
BOARD OF DIRECTORS
Age |
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≤ 50:1 |
51 - 60:
4 |
≥
61:4 |
Tenure |
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0 - 4 years:
3 |
5 - 7 years:
4 |
>8 years:
2 |
Gender and Ethnic
Diversity |
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Minorities:
3 |
Women:
2 |
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COLLECTIVE SKILLS
MATRIX
Table of
Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
NOMINEES
FOR ELECTION TO THE BOARD OF DIRECTORS
The directors listed below have been
nominated for re-election to the Board for a three-year term expiring in
2020.
The Board
recommends a vote FOR the election of each of the nominees for
director.
MATTHEW
CARTER JR. |
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Former President and Chief Executive
Officer of Inteliquent, Inc. |
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Age:
56 Director Since: September 2012 USG Committees: Compensation and Organization and Governance Other Public Directorships:
None Other Affiliations: Trustee of the Gould Academy and the Bishops
School |
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Qualifications and
Experience:
Mr. Carter served as President and
Chief Executive Officer and a director of Inteliquent, Inc., a
publicly-traded provider of voice telecommunications services, from June
2015 until February 2017 when Inteliquent, Inc. was acquired. He served as
President of the Sprint Enterprise Solutions business unit of Sprint
Corporation, a publicly-traded telecommunications company, from September
2013 until January 2015 and as President, Sprint Global Wholesale &
Emerging Solutions at Sprint Nextel Corporation prior thereto. He is a
former director of Apollo Education Group, Inc. and Inteliquent, Inc. and
has significant marketing, technology and international experience,
including management oversight for all of Inteliquent, Inc.s
operations. |
RICHARD P.
LAVIN |
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Former President and Chief Executive
Officer of Commercial Vehicle Group, Inc. and Former Group President of
Caterpillar, Inc. |
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Age:
65 Director Since: November 2009 USG Committees: Compensation and Organization (Chair) and Finance Other Public Directorships:
ITT Corporation and Allison
Transmission Holdings, Inc. Other Affiliations: None |
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Qualifications and
Experience:
Mr. Lavin served as President, Chief
Executive Officer and a director of Commercial Vehicle Group, Inc., a
publicly-traded supplier of cab-related products and systems for the
global commercial vehicle market, from May 2013 until November 2015. He
had previously served as Group President of Caterpillar Inc., a
publicly-traded manufacturer of construction and mining equipment, diesel
and natural gas engines, industrial gas turbines and diesel-electric
locomotives, until his retirement in December 2012, after having worked
for Caterpillar for nearly 29 years. These positions provided Mr. Lavin
with experience managing cyclical, global manufacturing businesses, and he
also has a diverse legal and human resources
background. |
Table of
Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
JENNIFER
F. SCANLON |
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President and Chief Executive
Officer of USG Corporation |
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Age:
50 Director Since: September 2016 USG Committees: None Other
Public Directorships: None
Other Affiliations:
Director of the
Chicago Council on Global Affairs and Shore Community Services,
Inc. |
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Qualifications and
Experience:
Ms. Scanlon has served as our
President and Chief Executive Officer since November 2016. Prior thereto
she held a variety of positions at USG, including Executive Vice President
beginning in March 2016 and President, International beginning in
September 2010. She also served as the chairman of the board of USG Boral
Building Products from its inception in February 2014 until October 2016
and President of L&W Supply Corporation from July 2015 until its sale
to ABC Supply in October 2016. Ms. Scanlon has extensive international
experience from her leadership of USGs international joint ventures and
broad operational and strategic experience from her previous assignments
at USG and with a management consulting firm that specialized in
increasing profits through operational
improvement. |
DIRECTORS CONTINUING IN OFFICE
The following
directors are continuing in office for terms expiring in 2018:
JOSE
ARMARIO |
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Retired Executive Vice President of
Worldwide Supply Chain, Development and Franchising of McDonalds
Corporation |
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Age:
57 Director Since: January 2007 USG Committees: Audit
and Compensation and Organization Other Public Directorships: Avon Products, Inc. Other Affiliations: Member of the Presidents Council of the
University of Miami and the Governing Council of Advocate Good Samaritan
Hospital, and Director for Receptions for Research: The Greg Olsen
Foundation |
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Qualifications and
Experience:
Mr.
Armario retired as Executive Vice President of Worldwide Supply Chain,
Development, and Franchising of McDonalds Corporation, a publicly-traded
restaurant operator and franchisor, in October 2015, after having held
that position since August 2011. Prior thereto he served as Group
President, McDonalds Canada and Latin America. He has extensive global
consumer products marketing, branding, supply chain and Latin American
markets expertise. |
Table of
Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
GRETCHEN R.
HAGGERTY |
|
|
|
|
Retired Executive Vice President and Chief
Financial Officer of United States Steel
Corporation |
|
Age:
61 Director Since: May 2011 USG
Committees: Audit and
Finance Other Public
Directorships: Teleflex Incorporated
Other Affiliations:
Director of the Strategic Investment
Fund and the United Way of Southwestern Pennsylvania |
|
Qualifications and
Experience:
Ms. Haggerty retired as the
Executive Vice President and Chief Financial Officer of United States
Steel Corporation, a publicly-traded integrated steel producer, in August
2013, after having held that position for more than ten years. In addition
to her financial expertise she also has substantial international and
cyclical business experience. |
WILLIAM H.
HERNANDEZ |
|
|
|
|
Retired Senior Vice President, Finance and
Chief Financial Officer of PPG Industries, Inc. |
|
Age:
68 Director Since: September 2009 USG Committees: Audit
(Chair) and Finance Other Public Directorships: Albemarle Corporation, Black Box Corporation and Northrop Grumman Corporation
Other Affiliations: Director of the Keystone chapter of the National Association of Accountants and Director of the Ligonier Camp & Conference Center
|
|
Qualifications and
Experience:
Mr. Hernandez retired as Senior Vice
President, Finance and Chief Financial Officer of PPG Industries, Inc., a
publicly-traded manufacturer of coatings, chemical and industrial
products, specialty materials and glass products, in 2009, after having
served as Chief Financial Officer for more than 15 years. He is a former
director of Eastman Kodak Company and has significant financial and
cyclical business experience. |
The following directors are continuing in
office for terms expiring in 2019:
THOMAS A.
BURKE |
|
|
|
|
President and Chief Executive Officer of Modine
Manufacturing Company |
|
Age:
59 Director Since: September 2013 USG Committees: Audit and
Governance Other
Public Directorships: Modine
Manufacturing Company Other Affiliations: Director of the National Association of Manufacturers and Chairman
of the Racine County Workforce Development Board |
|
Qualifications and
Experience:
Mr. Burke has been President and
Chief Executive Officer of Modine Manufacturing Company, a publicly-traded
manufacturer of thermal management systems and components, since April
2008. He has experience managing cyclical businesses and international
operations and has valuable insights regarding the manufacturing industry
from his service on the board of the National Association of
Manufacturers. |
Table of Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
BRIAN A.
KENNEY |
|
|
|
|
Chairman, President and Chief
Executive Officer of GATX Corporation |
|
Age: 57 Director
Since: February 2011 USG Committees: Finance (Chair) and Governance Other Public
Directorships: GATX
Corporation Other
Affiliations: Member of the Board of
Trustees of the Shedd Aquarium in Chicago |
|
Qualifications and
Experience:
Mr. Kenney is Chairman, President and Chief Executive
Officer of GATX Corporation, a publicly-traded global railcar lessor, and
has held this position since 2005. During his tenure, he has obtained
extensive strategic, operational, financial and international investment
experience and corporate governance insights. The similarity of the
cyclical nature of our business and GATX Corporations business provides
Mr. Kenney with an understanding of the challenges that volatile economic
conditions present for our
business. |
STEVEN F. LEER,
Non-Executive Chairman |
|
|
|
|
Retired Chairman and Chief Executive
Officer of Arch Coal, Inc. |
|
Age: 64 Director
Since: June 2005 USG Committees: Governance (Chair) and Compensation and
Organization Other
Public Directorships: Cenovus Energy
Inc. and Norfolk Southern Corporation Other Affiliations: Director of Parsons Corporation |
|
Qualifications and
Experience:
Mr. Leer retired as Chairman of Arch
Coal, Inc., a publicly-traded coal producing company, in 2014 after having
served in that position since April 2006. He was also the Chief Executive
Officer of Arch Coal, Inc. until April 2012. He is a former director of
the Greater St. Louis Area Boy Scouts of America and the National
Association of Manufacturers and a former member of the Board of Regents
of Washington University in St. Louis. Mr. Leer provides corporate
governance insights from his service as Chairman of Arch Coal, Inc. and as
a director of other public companies and particular insights regarding
business conditions and developments in North America from his service on
the boards of Cenovus Energy Inc., Norfolk Southern Corporation and
Parsons Corporation. |
Table of Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
NOMINATION PROCESS AND CRITERIA FOR BOARD
MEMBERSHIP
The Governance Committee recommends to the
Board director candidates for nomination and election at the annual meeting or
for appointment to fill vacancies. In recognition of the fact that the selection
of qualified directors is complex and crucial to our long-term success, the
Governance Committee annually reviews with the Board the skills and
characteristics required of our directors, considering current Board composition
and the current needs of our Company. Our process for reviewing and selecting
director nominees involves seeking out a diverse group of candidates who possess
the background, skills and expertise to make a significant contribution to the
Board, our Company and our stockholders. Desired qualities for our directors,
including those recommended for nomination by our stockholders, include
high-level leadership experience in business or administrative activities,
breadth of knowledge about issues affecting our Company, ability and willingness
to contribute special competencies to Board activities and personal attributes
such as integrity, willingness to apply sound and independent business judgment
and assume broad fiduciary responsibility and awareness of a directors vital
contribution to our corporate image. Additional search criteria may be
determined by the Governance Committee. Our Corporate Governance Guidelines
provide that candidates for Board membership will be considered without regard
to race, color, religion, gender, ancestry, national origin, sexual orientation
or disability. When seeking director candidates, the Governance Committee
considers the subject matter expertise and geographic experience of existing
Board members to determine whether a candidate
with a particular expertise or experience set would be desirable. The Governance
Committee seeks to have a mix of directors with experience in one or more areas
relevant to our businesses, including operations, manufacturing, marketing,
finance, human resources, engineering, technology and innovation and
international, as well as experience with cyclical businesses. We do not have a
formal policy with regard to the consideration of diversity in identifying
directors. However, as part of our commitment to diversity as a core value and
in our efforts to attract and retain a diverse workforce as well as to enhance
our relationship with an increasingly diverse customer and employee base, the
Governance Committee may also decide to seek a qualified candidate who is female
or adds to the ethnic diversity of the Board.
Generally, to fill a vacancy or to add an
additional director, the Governance Committee retains an executive search firm
to assist in identifying and recruiting appropriate candidates. Any director
candidate selected by this process or as a result of a stockholder
recommendation is expected to meet with a number of directors, including the
chair of the Governance Committee, prior to any decision to nominate the
candidate for election to the Board.
Our By-laws and Corporate Governance
Guidelines provide that no non-employee director may serve on the Board beyond
the first annual meeting of stockholders following the directors
72nd birthday, unless the Board determines otherwise.
STOCKHOLDER NOMINEE
RECOMMENDATIONS
The Governance Committee considers
director nominee recommendations submitted by our stockholders. Director nominee
recommendations from stockholders must be in writing and include a brief account
of the nominees business experience during the past five years, including
principal occupations and employment during that period and the name and
principal business of any corporation or organization of which the nominee is a
director. Stockholder director nominee recommendations should be sent to the
Governance Committee, USG Board of Directors, c/o Corporate Secretary, 550 West
Adams Street, Chicago, Illinois 60661-3676.
Recommendations may be submitted at any time, but will not be considered by the
Governance Committee in connection with an annual meeting unless received on or
before the date prior to the annual meeting determined as provided in our
By-laws. The director nominee recommendation submission deadline for the 2018
annual meeting of stockholders is described under the heading Deadline for
Stockholder Proposals on page 70 of this proxy statement.
Table of Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
DIRECTOR INDEPENDENCE
The Board has determined that each of our
directors, except Ms. Scanlon, our President and Chief Executive Officer, is
independent as defined by our By-laws and Corporate Governance Guidelines and
the NYSE listing standards. Our Corporate Governance Guidelines provide that at
least 80% of our directors should be independent in accordance with the
standards of the NYSE and our By-laws. The listing standards of the NYSE also
require that a majority of our directors and all members of our Audit,
Compensation and Organization and Governance Committees be independent. A
director is considered independent only if the Board determines that he or she
has no direct or indirect material relationship with our Company. Our By-laws
further provide that members of legal, accounting or auditing firms providing
services to us are not independent.
The Board makes this determination
annually based upon information provided by each of our directors and
the recommendation of the Governance Committee.
In making the most recent determination, the Board considered the following
transactions, relationships and arrangements involving the directors:
|
Mr. Carter was an
executive officer and a director of Inteliquent, Inc., which agreed, prior
to the time Mr. Carter was associated with Inteliquent, to sublease office
space from us; |
|
Ms. Haggertys brother is a partner
at a firm used by UBBP for tax compliance services; |
|
Mr. Hernandez is a director of a
corporation from which we purchase communication
equipment; |
|
Mr. Kenney is an executive officer
and a director of GATX Corporation, from which we lease
railcars; |
|
Mr. Lavin is a director of a
corporation from which we purchase equipment; and |
|
Mr. Leer is a director of a
corporation from which we purchase rail transportation
services. |
ROLE AND RESPONSIBILITIES OF OUR
BOARD
The Board acts as the ultimate
decision-making body of our Company and advises and oversees management, who are
responsible for the day-to-day operations and management of our Company. In
carrying out its responsibilities, the Board reviews and assesses our Companys
long-term strategy and its strategic, competitive and financial performance.
In 2016, the Board oversaw the sale of
L&W Supply and the redemption of $1.1 billion in debt. These activities, as
well as our Companys operating performance, laid the foundation for return of
capital to stockholders in the form of a $250 million share repurchase program,
as announced in February 2017. In addition, in 2016 the Board oversaw the
transition of the Chairman and the President and Chief Executive Officer
positions with Mr. Metcalfs retirement on October 31, 2016.
BOARD LEADERSHIP
Our Corporate Governance Guidelines
provide that the matter of whether the Chairman and Chief Executive Officer
positions should be separate is one to be considered when a new Chief Executive
Officer is selected, unless the Board believes consideration of the matter is
warranted at another time based on then-existing circumstances. In connection
with Mr. Metcalfs retirement as Chairman, President and Chief Executive Officer
on October 31, 2016, the Governance Committee and the Board discussed board
leadership alternatives before deciding to separate the Chairman and Chief
Executive Officer roles and appoint Ms. Scanlon as our President and Chief
Executive Officer and Mr. Leer as our Non-Executive Chairman of the Board. The
Board determined that it was appropriate to separate these roles at this time in
order to allow Ms. Scanlon to focus primarily on
her new responsibilities as President and Chief Executive Officer while also
providing the benefit of independent leadership to enhance the effectiveness of
the Boards oversight role. Our Chief Executive Officer is responsible for
day-to-day leadership and for setting the strategic direction of the Company,
while the Non-Executive Chairman of the Board presides over Board meetings,
including non-management and executive sessions. Mr. Leers tenure as Lead
Director of the Board from 2012 until his appointment as Non-Executive Chairman,
as well as his experience serving as Chairman of other publicly-traded
companies, also provides him with the experience and expertise to be the person
who generally leads discussions of matters considered by the Board.
Table of Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
COMMITTEES OF THE BOARD OF
DIRECTORS
The following table indicates the current
members of each of the Boards four standing committees:
Name |
|
Audit |
|
Compensation
and Organization |
|
Finance |
|
Governance |
Jose
Armario |
|
|
|
|
|
|
|
|
Thomas A.
Burke |
|
|
|
|
|
|
|
|
Matthew Carter
Jr. |
|
|
|
|
|
|
|
|
Gretchen R.
Haggerty |
|
|
|
|
|
|
|
|
William H.
Hernandez |
|
|
|
|
|
|
|
|
Brian A.
Kenney |
|
|
|
|
|
|
|
|
Richard P.
Lavin |
|
|
|
|
|
|
|
|
Steven F.
Leer |
|
|
|
|
|
|
|
|
|
Chairperson |
|
Member |
Each committee meets periodically
throughout the year, reports its actions and recommendations to the Board,
receives reports from management, annually evaluates its performance and has the
authority to retain outside advisors at its discretion. Each committee has a
charter that requires its members to be independent as defined in the NYSE listing standards and our By-laws and Corporate
Governance Guidelines. The primary responsibilities of each committee are
summarized below and set forth in more detail in each committees written
charter, which can be found on our Companys website at www.usg.com.
AUDIT COMMITTEE
|
|
|
|
|
Independent Committee Members:
William H. Hernandez Jose Armario Thomas A.
Burke Gretchen R. Haggerty
6 meetings in 2016 |
Audit Committee Roles and
Responsibilities:
Assist the Board in monitoring the integrity of our
financial statements, our compliance with financial reporting and related
legal and statutory requirements and the independence and performance of
our internal and external auditors.
Review our risk assessment and risk management
policies.
Select and employ a firm of independent registered
public accountants to audit our financial statements and internal control
over financial reporting each year, which firm is ultimately accountable
to the Audit Committee and the Board.
The Board has determined that each
member of the Audit Committee is an audit committee financial expert as
defined by the rules of the Securities and Exchange
Commission. |
|
|
|
|
|
Table of Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
COMPENSATION AND ORGANIZATION
COMMITTEE
|
|
|
|
|
Independent Committee Members:
Richard P. Lavin Jose Armario Matthew
Carter, Jr. Steven F. Leer
8 meetings in 2016 |
Compensation and Organization
Committee Roles and Responsibilities:
Review and make recommendations to the Board regarding
management organization, succession and development programs.
Review and approve, or recommend for approval, the
election of corporate officers and their salaries, incentive compensation
and bonus awards.
Make the decisions required by a committee of the Board
under all stock and deferred stock plans.
Approve and report to the Board changes in salary ranges
for all other major position categories and, as outlined in its charter,
changes in our retirement, group insurance, investment, management
incentive compensation and bonus and other benefit plans.
Review, and report to the
Board regarding, activities with respect to employee safety and
occupational health, diversity and equal employment opportunity and
corporate contributions.
The Board has determined that each
member of the Compensation and Organization Committee is an outside
director as defined by the Internal Revenue Code. |
|
|
|
|
|
GOVERNANCE COMMITTEE
|
|
|
|
|
Independent Committee Members:
Steven F. Leer Thomas A. Burke Matthew
Carter, Jr. Brian A. Kenney
4 meetings in 2016 |
Governance Committee Roles and
Responsibilities:
Make recommendations to the Board concerning the size
and composition of the Board and its committees.
Recommend nominees for election or reelection as
directors.
Consider other matters pertaining to Board membership,
such as the retirement policy and compensation of non-employee
directors.
Evaluate Board performance
and assess the adequacy of, and compliance with, our Corporate Governance
Guidelines and Code of Business Conduct.
|
|
|
|
|
|
Table of Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
FINANCE COMMITTEE
|
|
|
|
|
Independent Committee Members:
Brian A. Kenney Gretchen R.
Haggerty William H. Hernandez Richard P. Lavin
4 meetings in 2016 |
Finance Committee Roles and
Responsibilities:
Provide review and oversight of, and make
recommendations to the Board regarding, material financing requirements
and funding programs, including debt issuances and repurchases, dividend
policy and acquisitions, divestitures and significant transactions
affecting our capital structure or ownership.
Review, and make recommendations to the Board regarding, the funding of our
qualified retirement plans in excess of minimum amounts required by law and
authorize necessary or desirable changes in actuarial assumptions for funding those
retirement plans.
As discussed under Proposal 3
Approval of Committee Amendment on page 33 of this proxy statement, our
Restated Certificate of Incorporation currently requires that we maintain
a Finance Committee. If the Committee Amendment is approved by our
stockholders, the Board will have the flexibility to eliminate the Finance
Committee, in order to make our governance structure more efficient and
flexible. If eliminated, many responsibilities of the Finance Committee
would be assumed by the full Board, while the remainder would be assumed
by other committees of the Board. |
|
|
|
|
|
RISK OVERSIGHT
The Audit Committees responsibilities
include discussing our risk assessment and risk management policies. This
discussion takes place at least once each year as part of our review of our
enterprise risk management (ERM) program. That review includes discussion of
management delegations of responsibility for the principal financial,
governance, legal and operational risk exposures identified as part of our ERM
program and delegations of responsibility for oversight of those risks to Board
committees and/or the full Board. The Board committees consider risks related to
matters within the scope of their responsibilities as part of their regular
meeting agendas, and the committee chairs report to the full Board regarding
matters considered by their committees following each committee meeting.
Management also formally reviews strategic risks with the full Board at least
once each year, typically as part of our strategic planning review with the
Board. The Board also reviews individual risks as they relate to specific issues
presented to the Board throughout the year.
In early 2017 management updated and
reviewed with the Compensation and Organization Committee a risk assessment of
our compensation policies and practices for all employees, including our
executive officers. As part of its assessment, management reviewed our
compensation programs for certain design features that commentators have
identified as having the potential to encourage excessive risk-taking, including
too much focus on equity awards, total compensation opportunity that is overly
weighted toward annual incentives, highly leveraged payout curves and uncapped
payouts, unreasonable goals or thresholds and steep payout cliffs at certain
performance levels that may encourage short-term business decisions to meet
payout thresholds.
In its assessment, management noted
several design features of our compensation programs that reduce the likelihood
of excessive risk-taking, including:
|
the program design for executive
officers and other senior managers provides a balanced mix of cash and
equity awards, annual and long-term incentives and operating and financial
performance metrics that promote a focus on long-term performance without
undue emphasis on short-term results; |
|
maximum payout levels under most of
our annual incentive programs are capped at 200% of target, or
par; |
|
our annual incentive program
performance targets for business unit heads include non-business unit
targets in order help incentivize business unit head participants to
properly consider our overall corporate performance when making
decisions; |
|
the Compensation and Organization
Committee has downward discretion over annual incentive program payouts;
|
|
the annual incentive program for our
executive officers, and the agreements evidencing their equity awards for
2017 and the eight prior years, allow the Board to clawback payments
made to them under certain circumstances; |
|
we use market share units in our
long-term incentive plan because they may retain some value in a depressed
market so that their holders are less likely to take action intended to
keep options in the money; |
Table of Contents
Summary of 2017 Proxy
Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
|
our equity awards generally are
granted on an annual basis with long-term, overlapping vesting periods to
motivate award holders to focus on sustained stock price appreciation; and
|
|
the stock ownership requirements for
our executive officers and other senior managers align the interests of
the holders of those awards with the interests of our stockholders.
|
Based on its assessment, management
concluded that our compensation programs promote value creation, do not
encourage excessive risk and are not reasonably likely to have a material
adverse effect on us. The Compensation and Organization Committee and its
consultant concurred with that conclusion based on managements review of its
assessment with them.
STRATEGY
At its regularly-scheduled meeting in September of each year, our
full Board reviews our Companys near- and long-term strategies in detail. The
meeting includes presentations by and discussions with senior management
regarding strategic initiatives for each business unit. The Board remains
involved in strategic planning throughout the year, engaging with management to
review progress of and challenges to our Companys strategies, and to approve
specific initiatives. In 2016, our Board and Committees devoted significant
additional time throughout the year to review and
discuss the sale of L&W Supply and the repayment of $1.1 billion of debt.
Individual Board committees also consider strategic matters that fall within
their areas of focus and report to the full Board at regularly scheduled
meetings. Our independent directors also met in executive sessions without
management present at each regularly scheduled Board meeting in 2016, during
which strategy was discussed as needed.
STOCKHOLDER ENGAGEMENT
We conduct extensive investor outreach
throughout the year. These efforts help ensure that management and the Board
understand and consider the issues that matter most to our stockholders and
allow us to effectively address them. Management regularly attends investor
conferences and holds one-on-one meetings and
calls with investors, and also has the opportunity to directly interact with
investors and analysts during our quarterly earnings conference
calls.
COMMUNICATIONS WITH DIRECTORS
Stockholders and other interested parties
may send communications to our directors as a group or individually by
addressing them to the director(s) at USG Corporation, c/o Corporate Secretary,
550 West Adams Street, Chicago, IL 60661-3676. Stockholder communications will
be reviewed by the Corporate Secretary for
relevance to our business and then forwarded to the intended director(s), as
appropriate. As a matter of policy, all directors are expected to attend the
annual meeting. All of our directors serving at the time attended the 2016
annual meeting, other than one director who had a previously scheduled
commitment.
BOARD OF DIRECTORS
PROCESSES
CORPORATE GOVERNANCE DOCUMENTS
Our By-laws, Corporate Governance
Guidelines and Code of Business Conduct, and the charters of our Board
committees, are posted on our website www.usg.com. The information on our
website is not, and will not be deemed to be, a
part of this proxy statement or incorporated into any of our other filings with
the Securities and Exchange Commission except where we expressly incorporate
such information.
MEETINGS OF THE BOARD OF
DIRECTORS
The Board held eight meetings, and its
committees held a total of 22 meetings, during 2016. Each director attended at
least 75% of the meetings of the Board and the committees on which he or she
served and that he or she was required to attend.
Two executive sessions of the Board are
required to be held annually by our Corporate Governance Guidelines. The Board
met in executive session at each of its six regularly scheduled
meetings.
Table of Contents
Summary of
2017 Proxy Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
BOARD
SELF-EVALUATIONS
We are committed to maintaining an
effective Board that represents the best interests of our Company and our
stockholders. In order to assess the effectiveness of the Board and its
committees, each director annually completes a survey in which he or she
provides suggestions and feedback to the Governance Committee and the Board.
This process allows directors to provide anonymous input on, among other things, Board education topics, planning
and oversight, Board structure and operation, the Boards relationship with
management and Committee structure and operations. The Governance Committee, as
well as the full Board, discuss these results in executive session and uses them
to address areas where the Board feels it can improve.
DIRECTOR ORIENTATION AND
CONTINUING EDUCATION
Our orientation programs familiarize new
directors with our Companys businesses, strategies, and policies, and assist
new directors in developing the skills and knowledge required for their service
on the Board. Throughout the year we also present educational sessions to the
Board and its committees to assist our directors
in deepening their knowledge of our Company and maintaining skills and knowledge
necessary or appropriate for the performance of their responsibilities. These
programs include internally-developed materials and presentations as well as
programs presented by third parties.
MANAGEMENT SUCCESSION
PLANNING
The Compensation and Organization
Committee has primary responsibility for helping the Board develop and evaluate
potential candidates for executive positions and for overseeing the development
of management succession plans. The Compensation and Organization Committee
reviews its succession plan with the Board at least annually, addressing both a
long-term plan and the possibility of an emergency situation. In conducting
these reviews, the Board considers, among other factors, our overall business
strategy, organizational and operational needs, leadership and management
potential and competitive challenges. These
reviews provide the Compensation and Organization Committee and other Board
members with information regarding the performance and potential of our
management team that can be taken into account when executive compensation
decisions are made. Potential leaders are exposed and visible to Board members
through formal presentations and informal events. The Compensation and
Organization Committee is also regularly updated on key talent indicators for
the overall workforce, including diversity, recruiting and development
programs.
DIRECTOR
COMPENSATION
The Governance Committee is charged with
annually reviewing and making recommendations to the Board regarding director
compensation. In making its recommendations, the Governance Committee considers
the significant time committed by our directors to the performance of their
duties as directors, the high-level leadership experience and special
competencies our directors contribute to our Company, third party data, the
director compensation practices of a comparator group of companies, our Companys performance and ways in which to further
align our Boards interests with those of our stockholders. Ms. Scanlon, our
President and Chief Executive Officer, and Mr. Metcalf, our former Chairman,
President and Chief Executive Officer, did not receive compensation from us for
their service as directors. Their compensation is shown in the Summary
Compensation Table on page 50 of this proxy statement.
CASH
COMPENSATION
We pay our non-employee directors an
annual cash retainer of $80,000, payable quarterly. In 2016, we paid additional
cash retainers of $20,000 to the chair of our Audit Committee, $15,000 to the
chair of our Compensation and Organization Committee, $10,000 to the chairs of
our Finance and Governance Committees and $20,000 to Mr. Leer for his service as
the Boards Lead Director, in each case payable in equal quarterly installments. We also reimburse non-employee directors for
out-of-pocket expenses they incur in connection with attending meetings and
other Company activities.
Effective for 2017, Mr. Leer will receive an annual
cash retainer of $125,000, payable quarterly, for his service as Non-Executive
Chairman.
Table of Contents
Summary of
2017 Proxy Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
ANNUAL
GRANT
On December 31, 2016, each of our
non-employee directors received an annual grant of $120,000 payable in shares of
our common stock.
DEFERRAL OF
COMPENSATION
Directors have the option to defer all or
a part of their compensation in the form of deferred stock units that will
increase or decrease in value in direct proportion to the market value of our
common stock and will be paid in cash or shares of common stock, at the
directors option, following termination of Board service, except that
deferred stock units earned prior to January 1, 2008
will only be paid in cash. The amounts in the Fees Earned or Paid in Cash column
of the 2016 Director Compensation table include the amounts of compensation
deferred by our directors into deferred stock units as described in footnote 1
to the table.
2016 DIRECTOR
COMPENSATION
The table below reflects the compensation
we paid to our non-employee directors for 2016.
Name |
|
Fees Earned or Paid in Cash
($)(1) |
|
Stock Awards ($)(1)(2) |
|
All Other Compensation ($)(3) |
|
Total ($) |
Jose Armario |
|
$80,000 |
|
$120,000 |
|
$2,000 |
|
$202,000 |
Thomas A. Burke |
|
80,000 |
|
120,000 |
|
|
|
200,000 |
Matthew Carter Jr. |
|
80,000 |
|
120,000 |
|
|
|
200,000 |
Gretchen R. Haggerty |
|
80,000 |
|
120,014 |
|
|
|
200,014 |
William H. Hernandez |
|
100,000 |
|
120,000 |
|
|
|
220,000 |
Brian A. Kenney |
|
90,000 |
|
120,014 |
|
|
|
210,014 |
Richard P. Lavin |
|
95,000 |
|
120,014 |
|
|
|
215,014 |
Steven F. Leer |
|
110,000 |
|
120,000 |
|
50 |
|
230,050 |
(1) |
|
Mr. Armario deferred his annual
cash retainer into 3,027.2197 deferred stock units and Mr. Leer deferred
80% of his annual cash retainer into 3,329.9417 deferred stock units, in
each case pursuant to our Non-Employee Director Compensation Program.
Messrs. Armario, Burke, Carter, Hernandez and Leer each deferred his
annual stock grant into 4,114.5208 deferred stock units pursuant to the
terms of our Non-Employee Director Compensation Program. Directors hold
the number of deferred stock units shown in the Security Ownership of
Directors and Executive Officers table on page 68 of this proxy statement.
These deferred stock units are classified as liability awards for
accounting purposes. The balances of liability awards are adjusted over
the course of the year to reflect changes in the market value of our
stock. The net impact of this accounting treatment in 2016 was to increase
award balances by the following amounts: Mr. Armario, $332,827; Mr. Burke
$41,096, Mr. Carter, $57,458; Mr. Hernandez, $89,862; and Mr. Leer,
$374,895. |
(2) |
|
Each of Ms. Haggerty and Messrs. Kenney and Lavin
received his or her annual stock grant in shares of our common stock. They
were each issued 4,115 shares based on the average of the high and low
sales prices of a share of our common stock on December 30, 2016, the last
trading day of the year. The amounts in this column for Ms. Haggerty and
Messrs. Kenney and Lavin reflect the aggregate grant date fair value of
the shares issued to them computed in accordance with FASB ASC Topic
718. |
(3) |
|
Reflects matching
contributions under the USG Foundation matching gift program. This program
is generally available to our U.S. employees and to our directors. The USG
Foundation matches up to 50% of donations made to eligible charitable
organizations up to a maximum of $2,500 in matches per year for each
individual. The amounts shown reflect matches for gifts that were made in
2015 but, due to administrative processing time, were paid by the USG
Foundation in 2016. |
|
Table of Contents
Summary of
2017 Proxy Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
STOCKHOLDER RIGHTS
PLAN AND TRANSFER RESTRICTIONS IN OUR RESTATED CERTIFICATE OF
INCORPORATION
RIGHTS
PLAN
We have a stockholder rights plan that is
intended to protect our substantial net operating losses, or NOL, carryforwards
and related tax benefits. Under federal tax laws, we generally can use our NOLs
and certain related tax credits to reduce ordinary income tax paid in our prior
two tax years or on our future taxable income for up to 20 years, when they
expire for such purposes. As of December 31, 2016, we had federal NOL
carryforwards of approximately $923 million.
Our ability to use our NOLs could be
substantially limited if we experience an ownership change, as defined under
Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, and
the rights plan has been designed to help prevent such an ownership change.
Under Section 382 of the Code, an ownership change occurs if, over a rolling
three-year period, there has been an aggregate increase of 50 percentage points
or more in the percentage of our common stock owned by one or more of our
5-percent stockholders (as determined under Section 382 of the Code). The
rights plan provides that if any person becomes the beneficial owner (as defined
in the Code) of 4.9% or more of our common stock, stockholders other than the
triggering stockholder will have the right to purchase additional shares of our
common stock at half the market price, thereby diluting the triggering
stockholder; provided that stockholders whose beneficial ownership, as defined
in Section 382 of the Code, exceeded 4.9% of our common stock outstanding on
February 11, 2015 will not be deemed to have triggered the rights plan, so long
as they do not thereafter acquire beneficial ownership of additional common
stock other than in certain specified exempt transactions.
The rights will expire at the close of
business on May 31, 2019, unless earlier redeemed or exchanged. The Board has
the power to accelerate or extend the expiration date of the rights. The NOL
protective provisions of the rights plan described above will be effective until
the earliest of the close of business on (i) May 31, 2019, (ii) the date on
which the Board determines that these provisions are no longer necessary for the
protection of certain tax benefits because of the repeal of Section 382 of the
Code, (iii) the first day of a taxable year as to which the Board determines
that no tax benefits may be carried forward, or (iv) such other date as the
Board determines that these provisions are no longer necessary for the
preservation of tax benefits, which period is referred to as the Special Period.
After the end of the Special Period, the triggering threshold for the rights
issued pursuant to the rights plan will revert to 15% of our outstanding common
stock and the definition of beneficial owner will revert to definitions that
do not track Section 382 of the Code. At our 2016 annual meeting our
stockholders ratified, on an advisory basis, the extension of the term of the
rights plan and the NOL protective provisions described above.
A Board committee composed solely of
independent directors reviews the rights plan at least once every three years to
determine whether to modify the rights plan in light of all relevant factors.
This review was most recently conducted in November 2015. The next review is
required by the end of 2018.
RESTATED CERTIFICATE OF
INCORPORATION
Our Restated Certificate of Incorporation
also restricts certain transfers of our common stock and includes provisions
intended to further protect the tax benefits of our NOL carryforwards. Subject
to certain limited exceptions, these transfer restrictions restrict any person
from transferring our common stock (or any interest in our common stock) if the
transfer would result in a stockholder (or several stockholders, in the
aggregate, who hold their stock as a group under Section 382 of the Code)
owning 4.9% or more of our common stock. Any direct or indirect transfer
attempted in violation of these transfer restrictions would be void as of the
date of the prohibited transfer as to the purported transferee, and the
purported transferee would not be recognized as the owner of the shares
attempted to be owned in violation of the
transfer restrictions for any purpose, including for purposes of voting and
receiving dividends or other distributions in respect of that common stock, or
in the case of options, receiving our common stock in respect of their exercise.
These transfer restrictions are effective until the earliest of (i) the close of
business on May 31, 2019, (ii) the repeal of Section 382 of the Code if the
Board determines that these restrictions are no longer necessary or desirable
for the preservation of tax benefits, (iii) the close of business on the first
day of a taxable year as to which the Board determines that no tax benefits may
be carried forward, or (iv) such other date as determined by the Board pursuant
to the provisions described above.
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2017 Proxy Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
TREATMENT OF BERKSHIRE
HATHAWAY
Pursuant to a Shareholders Agreement
reached in 2006, Berkshire Hathaway and certain of its affiliates may acquire
beneficial ownership of up to 50% of our voting stock on a fully-diluted basis
without triggering the ownership thresholds in our Restated Certificate of
Incorporation or the rights plan, and may acquire beneficial ownership of more
than 50% of our voting stock on a fully-diluted
basis without triggering the ownership thresholds in our Restated Certificate of
Incorporation or the rights plan through an offer to purchase all of our common
stock that remains open for at least 60 days, in each case subject to specified
exceptions.
TRANSACTIONS WITH
RELATED PERSONS
RELATED-PARTY TRANSACTIONS
POLICY
In connection with our businesses, we
enter into thousands of transactions every year involving thousands of
customers. In order to conduct our business, we also procure goods and services
from thousands of vendors. Some of those customers and vendors may be affiliated
with members of our Board or our 5% stockholders. We believe that all such sales
and procurement transactions have been conducted on an arms length basis and
involved terms no less favorable to us than those that we believe we would have
obtained in the absence of such affiliation. It is our managements policy to
bring to the attention of our Governance Committee any transaction with a
related party, even if the transaction arises in the ordinary course of
business, if the terms of the transaction would be less favorable to us than
those to which we would agree to in normal commercial circumstances.
Our Code of
Business Conduct further provides that all of our employees, including our
executive officers, and our directors, must avoid conflicts of interest -
situations where their personal interest may be inconsistent with our interest
and may interfere (or appear to interfere) with the employees or directors
objectivity in making business decisions on our behalf. A conflict of interest
may exist, for example, when an employee, officer or director (or one of their
family members) has a financial interest in a company with which we do business
or if an employee, officer or director in a position to influence business
dealings with a company (a) has a direct or indirect interest in that company
that would reasonably be viewed as significant to that person and (b) the amount
of business done between us and that company is significant.
All of our employees and directors are
required to report conflicts of interest so that we may address the situation
properly. After disclosure, some conflicts of interest can be resolved through
implementing appropriate controls for our protection. Where an appropriately
disclosed conflict of interest is minor and not likely to adversely impact us,
we may consent to the activity. In other cases where appropriate controls are
not feasible, the person involved will be requested not to enter into, or to
discontinue, the relevant transaction or relationship.
EXECUTIVE OFFICERS AND OTHER
EMPLOYEES
All of our executive officers and other
salaried employees are required to disclose actual or potential conflicts of
interest in which they may be personally involved in an annual certification
reviewed by our Internal Audit and Legal Departments. In addition, all of our
executive officers are required to disclose actual or potential conflicts of
interest by quarterly certifications. Employees who complete these
certifications are also required to promptly report in writing to the Internal
Audit Department any conflict of interest situations that arise during the
period between certifications.
Conflict of interest situations reported
by employees are addressed by our Business Ethics Committee made up of
representatives from our Internal Audit, Legal and Human Resources Departments,
and, where appropriate, by senior management. If the conflict of interest
involves one of our executive officers, the situation will be addressed by our
Board or the Audit Committee. Quarterly reports of employee conflicts of
interest and the resolution of them are provided to our Disclosure Committee and
Chief Executive Officer in accordance with our disclosure controls and
procedures.
DIRECTORS
We recognize that directors may be
connected with other organizations with which we have business dealings from
time to time. Under our Corporate Governance Guidelines, it is the
responsibility of each director to advise the Chairman of the Board and the
Governance Committee of the Board, through its chair, of any affiliation with
public or privately held businesses or enterprises that may create a potential
conflict of interest, potential embarrassment to us, or possible inconsistency
with our policies or values. Directors are also to advise the Chairman of the
Board and the Governance Committee in advance of accepting an invitation to
serve on the board of another public or for-profit, private company.
We annually solicit information from our
directors in order to monitor potential conflicts of interest. In accordance
with our Corporate Governance Guidelines, any actual
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of Directors and Corporate Governance |
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Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
or potential conflict of interest
involving a director will be investigated by the Governance Committee, with
management assistance as requested, to determine whether the affiliation or
transaction reported impairs the directors independence and whether it is
likely to adversely impact us. If the Governance Committee determines that the
directors independence would be impaired, or the affiliation or transaction
would likely impact us adversely, the director would generally be asked not to
enter into, or to discontinue, the reported relationship or to resign from the
Board. In other circumstances, the Governance Committee will generally determine
what, if any, controls, reporting and/or monitoring procedures are appropriate
for our protection as a condition for approving the reported relationship or
transaction. Relationships that give rise to potential conflicts of interest are
generally not considered to adversely impact us if they are not required to
be disclosed pursuant to Item 404(a) of the
Securities and Exchange Commissions Regulation S-K because of the following
factors:
|
the amount involved in the
transaction is less than $120,000; |
|
the directors only relationship to
the other party involved in the transaction is as a
director; |
|
the directors interest arises
solely from the ownership of our stock and all holders of our stock
received the same benefit on a pro rata basis; |
|
the transaction involves rates or
charges determined by competitive bids; or |
|
the transaction involves the
rendering of services as a common or contract carrier, or public utility,
at rates or charges fixed in conformity with law or governmental
authority. |
For additional information regarding our
transactions with companies of which certain of our non-employee directors are
affiliated, see Director Independence above.
AGREEMENTS WITH BERKSHIRE
HATHAWAY
SHAREHOLDERS AGREEMENT
Berkshire Hathaway beneficially owns
approximately 30% of our common stock. In connection with the equity commitment
agreement we entered into with Berkshire Hathaway in January 2006, we entered
into a Shareholders Agreement pursuant to which Berkshire Hathaway agreed that
during the time that it owns our equity securities, it will be exempted from our
stockholder rights plans, including our rights plan and the transfer
restrictions in our Restated Certificate of Incorporation, except that such
plans may require that Berkshire Hathaway does not acquire (although it may
continue to hold) beneficial ownership of more than 50% of our voting
securities, on a fully-diluted basis, other than pursuant to an offer to acquire
all shares of our common stock that is open for at least 60 calendar days. The
Shareholders Agreement was approved by our Board.
REGISTRATION RIGHTS
AGREEMENT
In November 2008, we issued $300 million
aggregate principal amount of 10% Contingent Convertible Senior Notes due 2018
to affiliates of Berkshire Hathaway. The notes were called for redemption in
November 2013 and March 2014 and we issued an aggregate of 26,315,790 shares of
common stock to affiliates of Berkshire Hathaway.
In connection with the 2008 issuance of
notes, we entered into a registration rights agreement with Berkshire Hathaway.
Under the registration rights agreement, we granted Berkshire Hathaway demand
and piggyback registration rights with respect to all of the shares of common
stock held by it and specified affiliates from time to time. The registration
rights agreement entitles Berkshire Hathaway to make three demands for
registration of all or part of the common stock held by it and its affiliates,
subject to certain conditions and exceptions. The registration rights agreement
also provides that, subject to certain conditions and exceptions, if we propose
to file a registration statement under the Securities Act of 1933, as amended,
with respect to an offering of securities on a form that would permit
registration of the shares of common stock that are held by Berkshire Hathaway
or the specified affiliates, then we will offer Berkshire Hathaway and its
specified affiliates the opportunity to register all or part of its shares of
common stock on the terms and conditions set forth in the registration rights
agreement. The registration rights agreement and the notices of redemption
issued with respect to the notes in November 2013 and March 2014 were approved
by our Board.
Table of Contents
Summary of
2017 Proxy Statement |
Board
of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
TRANSACTIONS WITH
PRINCIPAL STOCKHOLDERS
We purchase products, principally
fiberglass and insulation, and services, including pipeline services and
insurance services, and lease equipment from subsidiaries of Berkshire Hathaway
in the ordinary course of our business. The aggregate amount of those purchases
and lease transactions in 2016 was approximately $38.3 million. In addition, we
sell building products to subsidiaries of Berkshire Hathaway. The aggregate
amount of these sales in 2016 was $15.4 million.
We purchase products in the ordinary
course of business, principally insulation, from affiliates of Gebr. Knauf,
which beneficially owns approximately 10% of our common stock. Those purchases
aggregated approximately $1.9 million in 2016. We sold approximately $1.7
million of products to affiliates of Gebr. Knauf in 2016.
In September 2015, we and our indirect
wholly-owned subsidiary, USG Ventures-Europe GmbH, entered into an Interest and
Share Purchase Agreement (ISPA) with Knauf Aquapanel GmbH, an affiliate of
Gebr. Knauf, pursuant to which USG Ventures-Europe GmbH sold to such affiliate
its 50% share of its interests in Knauf/USG Verwaltungs GmbH and Knauf/USG
Systems GmbH & Co. KG (collectively, the Knauf-USG Joint Venture) for a
total price of €48 million in cash. The Knauf-USG Joint Venture manufactured and
distributed Aquapanel® brand cement panels throughout Europe (excluding Turkey)
and all countries that were part of the former Soviet Union since 2001. The sale
was consummated in December 2015. Our Company recorded a $6 million net gain on
the disposition. The sale of our interests in the Knauf-USG Joint Venture was
approved by our Board.
In 2012, we and our wholly-owned
subsidiaries, USG Foreign Investments, Ltd. and USG (UK) Ltd. (collectively, the
Sellers), entered into a Share and Asset Purchase Agreement (SAPA) with
Knauf International GmbH and Knauf AMF Ceilings Ltd., affiliates of Gebr. Knauf,
pursuant to which the Sellers sold to such affiliates certain of their
wholly-owned European business operations. The sale was approved by our
Board.
There are continuing indemnification
obligations under the ISPA and SAPA pursuant to which we may be obligated to pay
money to, or entitled to receive money from, certain entities affiliated with
Gebr. Knauf.
We were named as defendants in lawsuits
relating to Chinese-made wallboard installed in homes primarily in the
southeastern United States in 2006 and 2007. Most of the lawsuits against us
related to wallboard manufactured by Knauf Plasterboard (Tianjin) Co., an
affiliate of Gebr. Knauf. Those lawsuits have been resolved, and we have reached
an agreement with Gebr. Knauf and their affiliates that limits our
responsibility for claims against us for homes to which we delivered Knauf
Plasterboard (Tianjin) Co. wallboard. In accordance with the agreement, an
affiliate of Gebr. Knauf will fund the costs of resolving the claims, excluding
legal fees. We estimate that our gross liability for resolving outstanding
claims relating to wallboard manufactured by Knauf Plasterboard (Tianjin) Co. is
approximately $385,000.
Table of Contents
Summary of
2017 Proxy Statement |
Board of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
|
|
|
|
|
PROPOSAL 2 |
|
Ratification of
appointment of independent registered public accountants for
2017 |
|
|
|
The Board recommends a vote
FOR the ratification of the appointment of Deloitte & Touche LLP as
our independent registered public accountants for 2017. |
|
|
|
|
|
|
|
|
|
The Audit Committee is responsible for selecting and employing a firm of
independent registered public accountants to audit our financial statements and
internal control over financial reporting each year. The Audit Committee has
appointed Deloitte & Touche LLP as our independent registered public
accountants for 2017. Deloitte & Touche LLP has been examining our financial
statements since 2002. The Audit Committee evaluates the performance of our
independent registered public accountants, including the senior audit engagement
team, each year and determines whether to reengage the current independent
registered public accountants or consider other audit firms. The members of the
Audit Committee believe that the continued retention of Deloitte & Touche LLP to serve as our independent registered
public accountants is in the best interests of our stockholders.
The Audit Committee is requesting that
stockholders ratify the appointment of Deloitte & Touche LLP. If
stockholders do not ratify the appointment, the Audit Committee will consider
whether it is appropriate to appoint another independent registered public
accountant. One or more representatives of Deloitte & Touche LLP will be
present at the annual meeting to respond to appropriate questions from
stockholders, and they will have the opportunity to make a statement if they
desire to do so.
The Board recommends a vote
FOR
the ratification of the appointment of Deloitte &
Touche LLP as our independent registered public accountants for
2017.
AUDIT COMMITTEE
REPORT
The Audit Committee assists the Board in
fulfilling its responsibilities for effective corporate governance by overseeing
our Companys accounting and financial reporting processes, the audits of our
Companys financial statements and internal control over financial reporting,
the qualifications and performance of our Companys independent registered
public accountants and the performance of our Companys internal auditor. The
Audit Committee relies on the expertise and knowledge of management, the
internal auditor and the independent registered public accountants in carrying
out its oversight responsibilities. Management has the primary responsibility
for the preparation, presentation and integrity of our Companys financial
statements and for maintaining an adequate system of disclosure controls and
procedures and maintaining effective internal control over financial reporting
for that purpose. Our Companys independent registered public accountant,
Deloitte & Touche LLP, is responsible for performing an independent audit of the financial statements and expressing an
opinion on the conformity of those financial statements with accounting
principles generally accepted in the United States. The independent registered
public accountants are also responsible for expressing an opinion on the
effectiveness of our Companys internal control over financial
reporting.
In fulfilling its oversight
responsibilities, the Audit Committee reviewed and discussed our Companys
audited financial statements with management, which review included a discussion
of the quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity and accuracy of
disclosures in our Companys financial statements. The Audit Committee discussed
with our Companys internal auditors and Deloitte & Touche LLP the overall
scope and plans for their respective audits. The Audit Committee met with the
internal auditors and Deloitte & Touche LLP, with and without
management
Table of Contents
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2017 Proxy Statement |
Board of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
present, to discuss the results of their
examinations, their evaluations of our Companys internal controls, and the
overall quality of our Companys financial reporting. The Audit Committee
further discussed with Deloitte & Touche LLP the matters required to be
discussed by Auditing Standard No. 1301, Communications with Audit Committees,
issued by the Public Company Accounting Oversight Board, and received the written
disclosures and the letter from Deloitte & Touche LLP required by applicable
requirements of the Public Company Accounting Oversight Board regarding Deloitte
& Touche LLPs communications with the Audit Committee concerning
independence, and discussed with Deloitte & Touche LLP its
independence.
Based on the review and discussions
referred to above, the Audit Committee recommended to the Board that our
Companys audited financial statements be included in its Annual Report on Form
10-K for the year ended December 31, 2016.
This report is submitted by the members
of the Audit Committee.
|
|
William H. Hernandez,
Chair |
Jose Armario |
|
|
|
|
Thomas A. Burke |
Gretchen R.
Haggerty |
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES
FEES
PAID
The following is a summary of the fees
billed to us by Deloitte & Touche LLP, the member firms of Deloitte Touche
Tohmatsu and their respective affiliates, or collectively Deloitte, for
professional services rendered for the years ended December 31, 2016 and
2015:
|
|
2016 |
|
2015 |
Fee
Category |
|
(thousands) |
Audit Fees |
|
$2,861 |
|
$2,740 |
Audit-Related Fees |
|
946 |
|
22 |
Tax Fees |
|
135 |
|
130 |
All Other Fees |
|
3 |
|
3 |
Total Fees |
|
$3,945 |
|
$2,895 |
Table of Contents
Summary of
2017 Proxy Statement |
Board of Directors and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
Audit
Fees: Consists of fees billed for
professional services rendered for the integrated audit of our consolidated
financial statements and internal controls over financial reporting, review of
the interim consolidated financial statements included in quarterly reports and
services that are normally provided by Deloitte in connection with statutory and
regulatory filings or engagements, including debt offerings.
Audit-Related
Fees: Consists of fees billed for
assurance and related services that are reasonably related to the performance of
the audit or review of our consolidated financial statements and are not
reported under Audit Fees. These services primarily include fees for audit
work in connection with the disposition of L&W Supply.
Tax
Fees: Consists of fees billed for
professional services related to tax compliance and other tax services. Fees for
assistance with U.S. tax compliance amounted to $100,000 in 2016 and $113,000 in
2015 and fees for assistance with international tax compliance amounted to
$12,000 in 2016 and $6,000 in 2015. Fees for other tax services, which primarily
included international tax planning, amounted to $23,000 in 2016 and $11,000 in
2015.
All Other
Fees: Consists of subscription fees of
$3,000 in 2016 and 2015 for Deloittes Accounting Research Tool.
PRE-APPROVAL OF
SERVICES
The Audit Committee has a policy for
pre-approval of all audit and non-audit services provided by our independent
registered public accountants. Each year, the Audit Committee reviews and
approves the independent registered public accountants plan for the ensuing
fiscal year outlining the scope of audit services to be performed for the year
and the proposed fees. If necessary, the Audit Committee will approve during the
year any changes in terms, conditions and fees resulting from changes in audit
scope or other matters. The Audit Committee also annually evaluates the
non-audit services for which management believes the independent registered
public accountants should be used and assesses whether the provision of such
services is consistent with appropriate principles of independence and such
other factors as the Audit Committee considers
relevant. Any services not pre-approved in the annual authorization must be
specifically pre-approved by the Audit Committee. The independent registered
public accountants are not authorized to provide any services that are
prohibited by Securities and Exchange Commission regulation or any other
applicable law or regulation. Additionally, the independent registered public
accountants are not allowed to provide any service to our Company under a
contingent fee arrangement. To ensure prompt handling of unexpected matters, the
Audit Committee delegates to its Chair the authority to amend or modify the list
of approved non-audit services and related fees. The Chair then reports any such
approval to the full Audit Committee.
Table of Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
FINANCE COMMITTEE
MATTERS |
|
|
|
|
|
PROPOSAL 3 |
|
Approval of
the Committee Amendment |
|
|
|
The Board recommends a vote FOR the approval of the Committee
Amendment. |
|
|
|
|
|
|
|
|
|
BACKGROUND AND
PURPOSE
Due to historical reasons outlined below,
our Restated Certificate of Incorporation requires the Board to maintain a
Finance Committee. The Board has determined that it would like the flexibility
to eliminate the Finance Committee in the future or to have it meet on an ad-hoc
basis as necessary and is requesting that stockholders approve an amendment to
our Restated Certificate of Incorporation allowing it this flexibility. Because
certain matters currently require the separate review or approval of the Finance
Committee in addition to the approval of the Board, elimination of the mandatory
nature of the Finance Committee could simplify our governance structure and
provide for a more efficient and flexible organizational decision-making
process. If eliminated, many responsibilities of the Finance Committee would be
assumed by the full Board, while the remainder would be assumed by other
committees of the Board.
The requirement that we maintain a Finance
Committee was added to our Restated Certificate of Incorporation pursuant to
arrangements that are no longer in effect. In connection with a restructuring of
our debt in 1993, we granted rights to certain of our security holders to
nominate members of our Board and the Finance Committee until June 22, 1997.
During that period, one of the members of the Finance Committee was to be
appointed by Water Street Corporate Recovery Fund I, L.P., or Water Street, and
one was to be appointed by a committee representing holders of our senior
subordinated debentures which were converted into common stock under the
restructuring plan. Our Restated Certificate of Incorporation was revised to
implement these selection procedures by requiring
that we maintain a Finance Committee that, until June 22, 1997, was required to
be comprised of four non-employee directors.
At the time of the 1993
restructuring, Water Street and its affiliates beneficially owned approximately
21% of our outstanding common stock. By 1996, Water Street had distributed its
holdings in our common stock to its partners and waived its right to
representation on the Board and Finance Committee.
Although the rights of Water Street and
the holders of the senior subordinated debentures to appoint directors and
members of the Finance Committee expired in 1997, the provision of our Restated
Certificate of Incorporation requiring us to maintain a Finance Committee
remains in effect. Further, we are not required by the Securities and Exchange
Commission or the NYSE to have a Finance Committee.
The Board has adopted resolutions
approving and declaring the advisability of amending our Restated Certificate of
Incorporation, or the Committee Amendment, to remove the requirement that we
maintain a Finance Committee as described below and as provided in Annex A to
this proxy statement, although the effectiveness of the Committee Amendment is
subject to adoption by stockholders holding 80% of our outstanding shares of
common stock as of the record date. At our 2016 annual meeting, stockholders
holding 79.87% of our outstanding shares of stock voted in favor of this
proposal.
Table of Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
DESCRIPTION OF THE
COMMITTEE AMENDMENT
The following description of the Committee
Amendment is qualified in its entirety by reference to the full text of the
Committee Amendment, which is contained in a proposed amendment to Article
Seventh of our Restated Certificate of Incorporation and can be found in Annex A
to this proxy statement.
The Committee Amendment will amend Article
Seventh of our Restated Certificate of Incorporation by deleting the following
provision:
Notwithstanding the foregoing paragraph,
the corporation shall maintain a Finance Committee, which shall have the power
to review all of the corporations significant financial matters, including, but
not limited to, strategies, policies or transactions, contemplated by the
corporation. Without limiting the foregoing, the Finance Committee shall provide
review and oversight of and make recommendations to the board of directors on
the corporations financing requirements and programs to obtain funds; relations
with banks, bondholders and other creditors; forecasting procedures on revenues,
expenses, earnings, and cash flow; operating and capital expenditure budgets;
dividend policy; the adoption of any compensation plan for key employees which
contemplates the issuance of stock of the corporation or which is a significant
cash compensation plan (other than an annual cash
bonus plan consistent with past practice); and acquisitions, divestitures and
significant transactions affecting the corporations capital structure or
ownership. The Finance Committee shall confer with the Pension Committee
established under the corporations retirement plan and report periodically to
the board of directors on the funding of qualified pension plans of the
corporation and its subsidiaries and the investment performance of plan funds
and, on behalf of the board of directors, authorize necessary or desirable
changes in actuarial assumptions for funding the plans. The Finance Committee
shall consider such other matters as may be referred to it from time to time by
the board of directors and shall at all times prior to June 22, 1997 be composed
of four members of the board of directors who are not officers or employees of
the corporation. Any actions by the Finance Committee shall be by a majority
vote of at least 3 of its members. Prior to June 22 1997, (i) the scope and
power of review of the Finance Committee as set forth herein shall not in any
way be limited or reduced and (ii) the composition, existence and function of
the Finance Committee as set forth herein shall not be altered or diminished, in
either such case without the unanimous consent of all directors then in
office.
All other provisions of Article Seventh
will remain in effect.
REQUIRED
VOTE
Approval of the Committee Amendment
requires a for vote by 80% of the outstanding shares of our common stock as of
the record date. The Committee Amendment, if adopted, would become effective
upon the filing of a Certificate of Amendment to
our Restated Certificate of Incorporation with the Secretary of State of the
State of Delaware, which we expect to do as soon as practicable after the
Committee Amendment is adopted.
The Board recommends a vote
FOR
the approval of the Committee
Amendment.
Table of Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance
Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
COMPENSATION OF EXECUTIVE
OFFICERS |
|
|
|
|
|
PROPOSAL 4 |
|
Say-on-Pay:
Advisory vote regarding the compensation of our named executive
officers |
|
|
|
The Board recommends a vote FOR the advisory vote approving the
compensation of our named executive officers. |
|
|
|
See page 36 for further information
about our executive compensation program. |
|
|
|
|
|
We are asking stockholders to approve an
advisory resolution on the compensation of our named executive officers as
reported in this proxy statement. Our compensation philosophy is designed to
attract, motivate, engage and retain talented executives and align their
interests with those of stockholders. Our compensation program ties pay to
performance by ensuring that a significant portion of compensation is
performance-based and at risk. For example, in 2016, 71% of the target total
compensation for Ms. Scanlon, our President and Chief Executive Officer, was
performance-based and not guaranteed, and 48% was in the form of long-term
equity compensation. For 2017, the percentage of Ms. Scanlons target total
compensation that is performance-based was increased to 84%, with 67% in the
form of long-term equity compensation.
We urge stockholders to read the
Compensation Discussion and Analysis section of this proxy statement, which
describes in more detail how our executive compensation policies and program
operate and are designed to achieve our compensation philosophy, as well as the
Summary Compensation Table and related compensation tables and narrative on
pages 50 through 65 of this proxy statement, which provide detailed information
on the compensation of our named executive officers.
At our annual meeting of stockholders held
in May 2014, our stockholders approved the compensation of our named executive
officers with more than 98% of the votes cast in favor of the proposal.
Consistent with our stockholders support, our
Compensation and Organization Committee and our Board decided not to make any
significant changes to our executive compensation program in response to such
vote.
We believe that our compensation programs
and policies are appropriate and effective in implementing our
pay-for-performance compensation philosophy and objective and in achieving our
goals, and that they are aligned with stockholder interests and worthy of
continued stockholder support. Our compensation programs and policies have
resulted in compensation that reflects our financial results and other
performance, as described in the Compensation Discussion and
Analysis.
We are asking stockholders to approve the
following advisory resolution at the annual meeting:
RESOLVED, that the stockholders of USG Corporation
(USG) approve, on an advisory basis, the compensation of USGs named executive
officers set forth in the Compensation Discussion and Analysis, the Summary
Compensation Table and the related compensation tables and narrative in the
Proxy Statement for USGs 2017 Annual Meeting of Stockholders.
This advisory resolution, commonly
referred to as a say-on-pay resolution, is non-binding on the Board. Although
non-binding, the Board and the Compensation and Organization Committee will
carefully review and consider the voting results when evaluating our executive
compensation program.
The Board recommends a vote
FOR
the advisory vote approving the compensation of our
named executive officers.
Table of Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance
Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
COMPENSATION
DISCUSSION AND ANALYSIS
EXECUTIVE
SUMMARY
Our Compensation Discussion and Analysis
describes our executive compensation philosophy and programs which are governed
by the Compensation and Organization Committee of our Board, or the Committee.
It includes 2016 total compensation for our named executive officers listed
below:
Named Executive Officer |
Title |
Jennifer F. Scanlon(1) |
President and Chief Executive Officer |
Matthew F. Hilzinger |
Executive Vice President and Chief Financial
Officer |
Brian J. Cook |
Executive Vice President and Chief Administrative
Officer |
Dominic A. Dannessa |
Executive Vice President, Chief Operations and Innovation
Officer |
Michelle M. Warner |
Senior Vice President, General Counsel and Corporate
Secretary |
James S. Metcalf(2) |
Former Chairman, President and Chief Executive
Officer |
(1) |
|
Ms. Scanlon was
appointed President and Chief Executive Officer effective November 1,
2016. |
(2) |
|
Mr. Metcalf retired
from our Company effective October 31,
2016. |
2016 CEO TRANSITION
In September 2016, we announced that Mr.
Metcalf had decided to retire from his position as President and Chief Executive
Officer and resign as Chairman of the Board, effective October 31, 2016. In
connection with Mr. Metcalfs retirement and in accordance with our management
succession plan, we also announced that the Board appointed Ms. Scanlon to
become our Companys President and Chief Executive Officer, effective November
1, 2016. Ms. Scanlon was also elected to the Board at the time of the
announcement. Prior to that time, Ms. Scanlon served as our Executive Vice
President, President, International and President of L&W Supply.
In connection with her promotion, the
Board increased Ms. Scanlons compensation for the remainder of 2016 as
described below but deferred considerations about her continuing compensation
until the annual compensation review completed in February 2017. Accordingly,
this Compensation Discussion and Analysis includes discussion of the
compensation of Ms. Scanlon before and after her promotion, as well as the
compensation of Mr. Metcalf prior to his retirement.
COMPENSATION PHILOSOPHY AND
OBJECTIVES
Our executive compensation program is
designed to attract, motivate, engage and retain talented executives. Our
program achieves those goals by providing a competitive total compensation
package that:
|
Aligns managements
interests with those of our stockholders by
using equity-based long-term incentive awards, including awards that vest
only upon the achievement of performance objectives, maintaining stock
ownership guidelines and restricting hedging activity. |
|
Motivates management to
achieve our strategic growth and annual
operating objectives through compensation programs that reward performance. The majority of the targeted compensation opportunity for our named executive officers is variable based on achievement of an adjusted net earnings target, annual operating and financial targets, our stock price performance and total stockholder return. |
|
Attracts and retains
talented managers by ensuring that compensation opportunity is competitive in relation to similar positions in similar
organizations. In setting compensation
opportunity for our executive officers, we use the
median level of compensation opportunity for a
comparator group of companies as the reference
point. We generally seek to set the target
compensation opportunity for an individual
executive officer around this median level based
on the executive officers performance, experience
and skill. We also adjust compensation levels
based on internal equity to appropriately reward
the contributions of our executives and to
facilitate succession planning. |
Table of Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance
Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
Our executive compensation program places the greatest emphasis on performance-based
incentives as shown below. The 2016 target pay mix shown below for Ms. Scanlon reflects compensation for only two months
out of the year as President and Chief Executive Officer in addition to the ten months prior to her promotion. In February
2017, the Board increased Ms. Scanlons base salary and also granted her a long-term
equity award which resulted in the portion of Ms. Scanlons compensation for 2017 that is performance-based to be
increased, in accordance with its historical philosophy of having a substantial portion of the President and Chief
Executive Officers compensation at risk.
SCANLON 2016
TARGET PAY MIX(1) |
|
|
|
|
|
Base Salary
29% |
Annual Incentive 23% |
Long-Term Incentive 48% |
|
|
|
|
|
71% Performance Based |
SCANLON 2017 TARGET PAY MIX |
|
|
|
Base Salary 16% |
Annual Incentive
17% |
Long-Term Incentive
67% |
|
|
|
|
|
84% Performance
Based |
OTHER NEOS AVERAGE 2016 TARGET PAY
MIX(1)(2) |
|
Base Salary 30% |
Annual Incentive 20% |
Long-Term Incentive 50% |
|
|
|
|
|
70% Performance
Based |
(1) |
|
Excluding any one-time special grants. |
(2) |
|
Excludes Mr.
Metcalf. |
2016 PERFORMANCE AND EXECUTIVE
COMPENSATION
Our Company produced excellent financial and operating results in 2016 that position us well for 2017 and beyond.
The annual highlights include:
|
Retiring $1.1 billion in debt
and achieved a leverage ratio within our target range |
|
Completing the disposition of
our distribution business, L&W Supply, for $675 million, allowing us
to focus on core manufacturing operations |
|
Expanding operating margins in
each of our segments |
|
Generating $49
million in equity method income for us by
USG Boral Building Products, or UBBP, our
50/50 strategic joint ventures with Boral Limited that operate in Asia, Australasia and the Middle East |
|
Launching our
multi-year efforts to reinvest in our business through advanced manufacturing |
|
Growing our
glass-mat portfolio and launched a new line
of high performance ceilings and several new flooring products |
Table of Contents
Summary of
2017
Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
ELEMENTS OF 2016
COMPENSATION
|
|
Base Salary In 2016, we increased
salaries for our named executive officers, as well as all other salaried
employees, to maintain market competitiveness and to account for our named
executive officers expanded responsibilities, individual
performance, internal equity and/or retention considerations. |
|
|
|
|
|
Annual Incentive Awards 50% of the
annual incentive award opportunity is based on the achievement of the
adjusted net earnings goal for 2016 set by the Committee. The balance of
the award opportunity is based on the achievement of annual operating and
financial objectives, or Focus Targets. Annual incentive awards for the
named executive officers entitled to receive an award in 2016 ranged from
176% to 187% of target due to our exceeding the adjusted net earnings and
Focus Target thresholds, as discussed below. |
|
|
|
|
|
Long-Term Incentive Awards Annual
equity awards granted in 2016 were comprised of market share units and
performance shares. These awards align managements interests with those
of our stockholders because the vesting of the awards is contingent on our
performance, as discussed below. In addition to the annual long-term
incentive awards granted to all participants, two executives who received
promotions or joined our Company in 2016 were awarded one-time special
grants consisting of time-based restricted stock units. While our
operational performance in 2016 was excellent as reflected in the annual
incentive award payments, our stock performance over the most recent
vesting period (2014 -2016) did not meet the target performance criteria
in our 2016 Long Term Incentive Plan. As a result, the performance shares
granted in 2014 to our senior managers, which vest based on our total
stockholder return compared to other companies in the Dow Jones U.S.
Construction and Materials Index, or the Index, were completely forfeited
in February 2017. The market share units granted in 2014, which vest based
on the movement of our stock price, vested at 88% of the target
award. |
COMPENSATION GOVERNANCE
Our executive compensation practices
include governance features that align the program with stockholder interests
and encourage management not to take excessive risks, including:
|
the Committee is comprised solely of
independent directors with whom stockholders may communicate as discussed
under Communications with Directors on page 23 of this proxy
statement; |
|
the Committee retained Willis Towers
Watson as its independent compensation consultant; |
|
the Committee has reviewed
compensation-related risk with management and Willis Towers Watson and
concurs with managements conclusion that our compensation programs do not
create risks that are reasonably likely to have a material adverse effect
on us; |
|
long-term incentive awards granted
since 2013 are subject to double-trigger vesting upon a change in control,
as discussed below; |
|
all Employment and Change in Control
Severance Agreements entered into since 2012 do not contain provisions
providing for excise tax gross-ups or additional service and age credits
under our retirement plans; |
|
compensation recoupment, or
clawback, provisions that allow our Board to recoup incentive
compensation paid to an executive officer under certain circumstances, as
described on page 49 of this proxy statement; |
|
a limit on the payout under our
annual Management Incentive Program, or MIP, to a maximum of two times the
par, or target, incentive award; |
|
an annual long-term incentive award
program that is 100% performance-based consisting of (i) market share
units that are earned based on our stock price performance over a
three-year period, and (ii) performance share awards that are earned based
on a comparison of our total stockholder return over a three-year period
to the total stockholder return for the companies in the Index;
|
|
a prohibition on our executive
officers engaging in speculative transactions involving our securities,
including participating in hedging activities or buying or selling puts or
calls and short sales; and |
|
stock ownership guidelines for our
non-employee directors, executive officers and other senior managers, as
described on page 67 of this proxy
statement. |
Table of
Contents
Summary of
2017
Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
SETTING
COMPENSATION LEVELS ANNUAL REVIEW
The Committee sets the level of each
element of compensation for our executive officers in February, or upon a
promotion. As part of this process, the Committee considers market
competitiveness, individual and company performance for the prior year, internal
equity and succession plans.
MARKET COMPETITIVENESS
Since 2003, management has engaged Aon
Hewitt to conduct an annual Executive Compensation Competitive Review to compare
compensation opportunity for our executive officers to the compensation
opportunity provided for similar positions by 20-25 industrial and/or
Chicago-based companies. Each executive officers position, including the Chief
Executive Officer, is compared to positions with similar responsibilities or at
an equivalent level in this comparator group. If there is no comparable position
in the comparator group, the Committee generally sets compensation opportunity
for the executive officer based on internal equity or general industry
data.
The review provides the Committee with
market information that enables it to evaluate total compensation opportunity,
the mix of fixed and performance-based compensation elements and how total
compensation is divided between the various elements. The Committee uses that
information to evaluate recommendations made by management with respect to
compensation of our executive officers other than the Chief Executive Officer,
and to develop its own recommendations with respect to the compensation of the
Chief Executive Officer.
We select our comparator companies from
among those for which data is available in Aon Hewitts Total Compensation
Measurement database, based on their similarity to our Company in terms of
industry, annual revenue, complexity of operations, business cyclicality and
geographic location. They are the types of companies with which we compete for
talent. For 2016, Foster Wheeler was removed because it was acquired by another
company and Kennametal Inc. was removed because it was no longer included in the
database. Donaldson Company, Inc., Packaging Corporation of America and
Owens-Illinois, Inc. were added to ensure sufficient sample size and position us
relatively near the median of the comparator group. We also took into
consideration the companies included in the comparator groups used by outside
proxy advisory firms. Our comparator group for 2016 was therefore comprised
of:
A.O. Smith
Corporation |
Fortune Brands Home &
Security, Inc. |
Owens-Illinois,
Inc. |
Armstrong World Industries, Inc. |
Lennox International, Inc. |
Packaging Corporation of America |
Ball Corporation |
Martin Marietta Materials, Inc. |
The Sherwin-Williams Company |
Boise Cascade Company |
Masco Corporation |
The Valspar Corporation |
BorgWarner, Inc. |
MeadWestvaco Corporation |
Vulcan Materials Company |
Brunswick Corporation |
Mohawk Industries, Inc. |
W.W. Grainger, Inc. |
Donaldson Company, Inc. |
Mueller Water Products, Inc. |
|
Dover Corporation |
Owens Corning |
|
We have designed our executive
compensation packages to be market competitive in total. Our objective is to
provide executive officers with a targeted total compensation opportunity
generally around the median of the comparator group for their individual
positions. Median compensation data for our comparator group is derived by using
regression analysis to size adjust comparator group data. For 2016, the
comparator group data was size adjusted to a revenue of $4.836 billion, which
approximated what our 2015 annual revenues would have been at the time the
analysis was completed if we had included 50% of UBBP revenues, and all of the
revenue of L&W Supply, as we had not sold it at the time the analysis was
conducted.
Total compensation opportunity for each
executive officer is set based on performance, experience, skill and internal
equity. In circumstances where the scope of one of
our executives position differs significantly from the scope of responsibility
of similarly titled positions in the comparator group companies, the Committee
may set the targeted compensation opportunity for that executive outside the
median range. Executives who are new in a position may be below the median for
one or more elements of compensation. To reward extraordinary accomplishments,
to promote retention and succession planning objectives and/or to maintain
internal equity, we may pay an element of compensation in excess of the median.
The Committee is comfortable with setting one or more elements of an executives
compensation opportunity outside the median because the Committee is primarily
concerned with the competitiveness of our executive officers total compensation
opportunity as opposed to the opportunity represented by any one individual
element of compensation.
Table of
Contents
Summary of
2017
Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
Total target net compensation base
salary, target annual incentive opportunity and the grant date value of
long-term incentive awards for each of our named executive officers for 2016
was set as follows:
Named Executive Officer |
Percentage of 2015
Median |
Ms. Scanlon |
96% |
(1) |
Mr. Hilzinger |
107% |
|
Mr. Cook |
109% |
|
Mr. Dannessa |
124% |
|
Ms. Warner |
95% |
|
Mr. Metcalf |
113% |
|
(1) |
Determined prior to Ms.
Scanlons appointment as President and Chief Executive
Officer. |
PERFORMANCE
The Committee makes recommendations to the
Board regarding the Chief Executive Officers compensation. The Chief Executive
Officer assesses the performance of the other executive officers and summarizes
the results for the Committee when making his or her compensation
recommendations to the Committee. The Committees determination of our executive
officers compensation adjustments is based on its assessment of each executive
officers contribution to our overall financial results for the year and to the
accomplishment of our annual operating and financial objectives as well as
internal equity.
INTERNAL EQUITY AND SUCCESSION
PLANNING
The Committee also considers the level of
compensation opportunity of executive officers based on its judgment of the
relative importance of the responsibilities of each executive officer position
to our Company and each executive officers
contribution to corporate results. In addition, adjustments may be made to
further our succession planning philosophy of developing and promoting talent
from within our Company. The Chief Executive Officers compensation opportunity
has historically been significantly higher than that of our other named
executive officers based on our philosophy of paying market competitive
compensation and reflects his or her broader accountability and the greater
percentage of his or her total compensation that is performance-based. We do not
set the compensation level of our executive officers as a multiple of the
compensation of any other employee or group of employees.
CONSIDERATION OF
ADVISORY VOTE ON COMPENSATION
At our annual meeting held in May 2014,
our stockholders approved the compensation of our named executive officers with
more than 98% of the votes cast in favor of the proposal. Consistent with our
stockholders' support, the Committee and our Board decided not to make any
significant changes to our executive compensation program in response to such vote. This year, the Board is recommending
that we hold an advisory vote regarding the compensation of our named executive
officers every year, as opposed to every three years, as discussed further on
page 66 of this proxy statement.
ELEMENTS OF TOTAL
COMPENSATION
Our compensation program consists of the
following elements:
|
base salary; |
|
annual incentive; |
|
long-term incentive;
and |
|
benefits and
perquisites. |
BASE SALARY
The starting point for determining base salaries for our executive officers is the
annual Aon Hewitt Executive Compensation Competitive Review. Individual salaries for our
named executive officers in 2016 ranged between approximately 94% and 112% of the median for the comparator group. Factors
that warrant paying above the median include: individual performance, as assessed by the Chief Executive Officer (or in the
case of the Chief Executive Officer, the Committee and Board), experience, skills, internal equity and retention
considerations.
Table of
Contents
Summary of
2017
Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
The Committee approved salary increases
for 2016 for all salaried employees, including the following increases for our
named executive officers:
Named Executive
Officer |
Percentage Increase |
|
Ms. Scanlon |
10.6% |
(1) |
Mr. Hilzinger |
4.3% |
|
Mr. Cook |
5.7% |
|
Mr. Dannessa |
11.1% |
|
Ms. Warner |
N/A |
(2) |
Mr. Metcalf |
2.9% |
|
(1) |
|
The increase shown was
approved in February 2016, prior to Ms. Scanlons promotion to President
and Chief Executive Officer. In connection with that promotion, the
Committee approved an additional 88.9% increase of her salary to $850,000,
effective November 1, 2016. |
(2) |
|
Ms. Warner joined our Company
in January 2016. |
ANNUAL INCENTIVE
Our MIP provides a variable reward
opportunity based on adjusted net earnings and the achievement of operating and
financial objectives derived from our annual operating plan. We pay annual
incentive awards in the first quarter of the year following the year in which
they are earned.
The target annual incentive opportunity
for participants in the MIP is expressed as a percentage of base salary. For
2016, the target annual incentive opportunity for named executive officers
ranged from 65% of base salary to 120% of base salary for Mr. Metcalf. The
amount of the target annual incentive opportunity for each of our named
executive officers for 2016 is indicated under the heading Estimated Possible
Payouts Under Non-Equity Incentive Plan Awards in the 2016 Grants of Plan-Based
Awards Table on page 52 of this proxy statement.
Ms. Scanlons annual incentive opportunity
under the MIP for 2016 was 70% of base salary for the ten months of the year she
served as Executive Vice President, President, International and President of
L&W Supply and 100% of base salary for the two months she served as
President and Chief Executive Officer. Our Chief Executive Officers annual
incentive opportunity is higher than the opportunity for our other executive
officers in 2016 in recognition of the broader
scope of his or her responsibilities and impact on corporate performance, and
based on market data regarding compensation of chief executive officers of the
companies in our comparator group.
For 2016, the annual incentive award
opportunity was comprised of the following segments: adjusted net earnings and
annual operating and financial objectives, or Focus Targets. These are designed
to provide an incentive to maximize earnings and pursue operational excellence.
Following the sale of L&W Supply on October 31, 2016, the Committee
exercised discretion to adjust the minimum, target and maximum amounts for
adjusted net earnings and the Focus Targets for consolidated and L&W Supply
adjusted operating margins, selling and administrative expenses and cash
conversion cycle to include the L&W Supply plan for only the first ten
months of 2016, and thereby reduced annual incentives from the amounts that
would have been earned without such adjustments. On an individual basis, the
payouts ranged from 176% to 187% of par for our named executive officers other
than Mr. Metcalf, who did not receive an award under the MIP because he retired
effective October 31, 2016.
Table of
Contents
Summary of
2017
Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
Management Incentive Plan
Components
Segment |
|
Objective |
|
Features |
Adjusted Net Earnings(1) |
|
Align managements interests with
stockholders and motivate management to increase our
profitability |
|
● |
Weight |
|
50% |
|
|
|
● |
2016 Target |
|
$241 million(2) |
|
|
|
● |
2016 Minimum |
|
$207 million |
|
|
|
● |
2016 Maximum |
|
$271 million |
|
|
|
● |
2016 Performance |
|
$295 million(3) |
|
|
|
● |
2016 Payout Earned % of Par |
|
200% |
Focus
Targets |
|
Motivate management to
achieve annual operating objectives |
|
● |
Weight |
|
50% |
|
|
|
● |
Payout Range |
|
0% to 200% |
|
|
|
● |
2016 Average NEO Payout Earned % of
Par(4) |
|
167% |
(1) |
|
Straight-line interpolation is
used to determine values between performance thresholds. |
(2) |
|
In setting the amounts for
2016, the Committee took into account our projected U.S. tax expense in
2016 following the reversal of a tax valuation allowance of $731 million
in 2015, and neutralized the amounts for foreign currency and incentive
plan expense above or below planned amounts. |
(3) |
|
For 2016, net earnings as
reported were $510 million and were adjusted to exclude the following
nonrecurring and non-operational events: gain on the sale of L&W
Supply; pension settlement charges, disposition expenses, L&W Supply
retention incentives and the cost to exit commercial office space, each of
which related to the sale of L&W Supply; loss on extinguishment of
debt; long-lived asset impairment charges; a supplemental executive
retirement plan settlement for our former chief executive officer; gains
related to sales of non-core assets or other non-recurring gains or
losses; a legal settlement; and neutralization for foreign currency and
incentive plan expense above or below planned amounts. |
(4) |
|
Excludes Mr. Metcalf, who did
not receive an award under the MIP because he retired effective October
31, 2016. |
To support our 2016 operating objectives
we introduced consolidated adjusted operating margin, L&W Supply adjusted
operating margin and cash conversion cycle as new Focus Targets for our named
executive officers for 2016. The adjusted operating margin Focus Targets promote
increased profitability along with cost containment. The cash conversion cycle
Focus Target promotes efficient use of resources and cash generation.
We believe these Focus Targets were
effective because during 2016 we increased our operating profit by 11% and
expanded operating margins in each of our segments, while significantly reducing
our cash conversion cycle. The charts below outline the specific Focus Targets
chosen by the Committee for each of our named executive officers.
Measure |
|
Minimum |
|
Target |
|
Maximum |
|
2016 Performance |
|
Payout Earned % of
Par |
Adjusted Operating Margins |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated(1) |
|
11.3 |
% |
|
13.1 |
% |
|
14.8 |
% |
|
14.1 |
% |
|
157% |
L&W
Supply(2) |
|
2.1 |
% |
|
3.0 |
% |
|
3.9 |
% |
|
3.9 |
% |
|
200% |
UBBP Adjusted Equity Income ($ in millions)(3) |
|
$45 |
|
|
$55 |
|
|
$65 |
|
|
$58 |
|
|
133% |
U.S. Wallboard Cost |
|
|
|
|
|
|
|
(4) |
|
|
|
|
|
115% |
Selling and Administrative Expense ($ in
millions)(5) |
|
<$297 |
|
|
$292 |
|
|
$287 |
|
|
$287 |
|
|
185% |
Cash Conversion Cycle (Days/Cycle; First ten months of
2016)(6) |
|
46 |
|
|
45 |
|
|
44 |
|
|
43 |
|
|
200% |
Cash Conversion Cycle (Days/Cycle; Last two months of
2016)(6) |
|
33 |
|
|
32 |
|
|
31 |
|
|
26 |
|
|
200% |
(1) |
Consolidated operating margin
(consolidated operating profit divided by consolidated net sales) was
13.1% in 2016. To calculate adjusted operating margin, operating profit
was adjusted to include equity income from UBBP and exclude the following
nonrecurring and non-operational events: pension settlement charges,
L&W Supply retention incentives and the cost to exit commercial office
space, each of which related to the sale of L&W Supply; long-lived
asset impairment charges; a supplemental executive retirement plan
settlement for our former chief executive officer; gains related to sales
of non-core assets; a legal settlement; and neutralization for foreign
currency and incentive plan expense above or below planned amounts. Net
sales were adjusted to include sales from L&W Supply for the first 10
months of 2016, prior to the sale of L&W Supply, and exclude the
following nonrecurring and non-operational events: a prior-year rebate
adjustment, a litigation accrual and neutralization for foreign
currency. |
Table of
Contents
Summary of
2017
Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
(2) |
|
Operating margin for the
L&W Supply segment (L&W Supply operating profit divided by L&W
Supply net sales) was 2.7% for the first 10 months of 2016, prior to the
sale of L&W Supply. To calculate adjusted operating margins for
L&W Supply, L&W Supply operating profit was adjusted to exclude
transaction costs, retention incentives and neutralization for incentive plan expense above
or below planned amounts. |
(3) |
|
Equity income from UBBP was
$49 million for 2016 and was adjusted to exclude our Companys share of
long-lived asset impairment charges and neutralization for foreign
currency. |
(4) |
|
We do not publicly disclose
U.S. Wallboard Cost because that information constitutes confidential
commercial and financial information, the disclosure of which would cause
us competitive harm. The target level for this Focus Target was set at a
challenging, but achievable, level. |
(5) |
|
Selling and administrative
expense was $304 million for 2016 and was adjusted to include SG&A
from L&W Supply for the first 10 months of 2016, prior to the sale of
L&W Supply, and exclude the following nonrecurring and non-operational
events: pension settlement charges, L&W Supply retention incentives
and the cost to exit commercial office space, each of which related to the
sale of L&W Supply; a supplemental executive retirement plan
settlement for our former chief executive officer; a legal settlement; and
neutralization for foreign currency and incentive plan expense above or
below planned amounts. |
(6) |
|
Cash conversion cycle was
adjusted to exclude the following nonrecurring and non-operational events:
gains related to sales of non-core assets or other non-recurring gains or
losses; long-lived asset impairment charges; pension settlement charges
related to the sale of L&W Supply; and neutralization for foreign
currency and incentive plan expense above or below planned
amounts. |
For 2016, the named executive officers
were assigned the following Focus Targets with the weightings indicated below:
|
|
Consolidated Adjusted Operating Margin |
|
L&W
Supply Adjusted Operating Margin |
|
UBBP
Adjusted Equity Income |
|
U.S. Wallboard Cost |
|
SG&A |
|
Cash Conversion Cycle |
Ms.
Scanlon(1) |
|
|
|
|
20 |
% |
|
20% |
|
|
|
|
|
|
|
10% |
Mr.
Hilzinger |
|
20 |
% |
|
|
|
|
10% |
|
|
|
|
10 |
% |
|
10% |
Mr.
Cook |
|
20 |
% |
|
|
|
|
10% |
|
|
|
|
10 |
% |
|
10% |
Mr.
Dannessa |
|
20 |
% |
|
|
|
|
10% |
|
10 |
% |
|
|
|
|
10% |
Ms.
Warner |
|
20 |
% |
|
|
|
|
10% |
|
|
|
|
10 |
% |
|
10% |
Mr.
Metcalf |
|
30 |
% |
|
|
|
|
10% |
|
|
|
|
10 |
% |
|
|
(1) |
For 2016, the amount of Ms.
Scanlons annual incentive award was determined using the focus targets
established in February 2016, prior to her appointment as President and
Chief Executive Officer. |
LONG-TERM INCENTIVE
At our annual meeting in 2016 our
stockholders approved a new equity-based incentive-compensation plan, the USG
Corporation 2016 Long-Term Incentive Plan. Prior thereto grants were made under
the USG Corporation Long-Term Incentive Plan, and we refer to the two plans
collectively as the LTIP. The purpose of the LTIP is to motivate management to
build the value of the enterprise, to align managements interests with those of
our stockholders and to provide a competitive compensation opportunity that
enables us to attract and retain talented employees.
For 2016, the annual awards consisted of
market share units, or MSUs, and performance shares. These awards are
performance based or at risk, based on both our absolute stock performance
with MSUs (as measured by our stock price) and relative stock performance with
performance shares (as measured by our total stockholder return compared to
other companies in the Index). We believe combining elements of both absolute
stock performance and relative stock performance provides the best incentive for
management to increase stockholder value. The
LTIP also provides for the use of stock options, stock appreciation rights,
restricted stock units, or RSUs, restricted stock, performance units and other
stock and cash awards.
At their regularly scheduled meetings in
February 2016, the Committee and Board approved annual awards for 2016. For
executive officers, 75% of the grant date value of the total award was provided
in the form of MSUs and the remaining 25% was provided in the form of
performance shares.
Market Share
Units
MSUs are stock units earned
based on the stock market performance of our common stock as measured over a
three-year period. The actual number of shares of common stock to be issued can
range from zero to 150% of the number of MSUs awarded based on the percentage
change in the price of our common stock over the three-year vesting period. If
the stock price increases during the vesting period, both the value and number
of shares that vest increase. If the stock price declines, both the value and
number of units that are eligible to vest will be reduced.
Table of
Contents
Summary of
2017
Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
We believe MSUs provide a strong incentive
for our participants to achieve results that increase value for our
stockholders. A 10% increase in the stock price is required to earn even a
target number of MSUs. A decrease of more than 50% in Market Value of our common
stock, as defined below, over the vesting period results in the forfeiture of
the MSUs.
MSUs granted in 2016 will be earned on
December 31, 2018 according to the schedule below. On the Start Date, as defined
below, the Market Value of the MSUs granted in
2016 was $20.37. In general, earning MSUs requires continued employment through
the measurement dates. In the case of termination of employment due to death,
disability or retirement during the performance period, vesting will be
pro-rated based on the number of full months employed during 2016 in accordance
with the MSU award agreements at the end of the performance period. The MSUs
will vest upon a change in control in most circumstances only if there is also a
related loss of employment or diminution of duties.
Performance of Market Value on End Date compared to
the Start Date |
Percentage of Target Shares Earned
on December 31, 2018(1) |
More than 50% decrease in Market Value |
0% |
50% decrease in Market Value |
50% |
No change in Market Value |
92% |
10% increase in Market Value |
100% |
50% or more increase in Market Value |
150% |
(1) |
Straight-line interpolation is
used to determine values between performance
thresholds. |
Market Value of our common stock is
determined on the applicable date as set forth below:
|
|
Start Date (Grant on February 10,
2016) |
|
End Date January 2019 |
Market Value measurement methodology on
applicable dates |
|
Average of the closing prices of our common
stock over the first 15 trading days in January 2016 |
|
Average of the closing prices of our common
stock over the first 15 trading days in January
2019 |
As an example, if an employee is granted
100 target MSUs, and the average of the closing prices of our common stock for
the first 15 trading days in January 2016 (the Start Date) is $25, with the
average of the closing prices of our common stock for the first 15 trading days
in January 2019 (the End Date) remaining $25 (a scenario where the Market
Value does not change), then the employee would receive 92% of the target
shares, or 92 shares of common stock worth $2,300 on the End Date. If the Start
Date price is $25 and the End Date stock price increases to $37.50 (a 50%
increase in Market Value), then the employee would receive 150% of the target
shares, or 150 shares of common stock worth $5,625 on the End Date. However, if
the End Price decreases to $12.50 (a 50% decrease in Market Value), then the
employee would receive 50 shares of common stock worth $625 on the End Date. An
ending stock price below $12.50 would result in no shares vesting.
The MSUs
awarded in February 2014 were earned as of December 31, 2016 and resulted in
payout percentage of 88%, with the Market Value comparing the closing prices of
our common stock for the first 15 trading days in January 2014 (resulting in a
beginning Market Value of $30.63) to the average of the closing prices of our
common stock during the first 15 trading days in January 2017 (resulting in an
ending Market Value of $29.20).
Performance
Shares
Performance shares are earned
based on a comparison of our total stockholder return over a three-year vesting
period to the total stockholder return for the companies in the Index. The
actual number of shares of common stock to be issued can range from zero to 200%
of the number of performance shares awarded. Adjustments may be made to the
Index to reflect changes in the companies included in the Index during the
vesting period. We use this Index because it is comprised of companies that
participate in similar markets as our operating businesses and, therefore,
provides an appropriate benchmark to measure the relative performance of our
stock. We also use this Index in the performance graph included in our annual
report on Form 10-K.
Vesting will be pro-rated based on the
number of full months employed during the performance period in the event of
death, disability or retirement, and pro-rated awards will be paid at the end of
the three-year performance period. The performance shares will vest upon a
change in control in most circumstances only if there is also a related loss of
employment or diminution of duties.
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
Total USG Stockholder Return Relative to
Index |
|
Percent of Award
Earned(1) |
Below 35th percentile |
|
0% |
35th percentile |
|
35% |
50th percentile |
|
100% |
75th percentile |
|
150% |
90th percentile or above |
|
200% |
(1) |
|
Straight-line
interpolation is used to determine values between vesting
tiers. |
The performance shares granted in February
2014 vested at 0% of target due to our Companys stockholder return relative to
the Index performing at the 20th percentile during the three-year period ending
December 31, 2016.
Special
Awards
During 2016, the Committee and
Board also approved special awards of:
|
15,000 RSUs to Ms. Warner in connection with the compensation package given to her
upon her hiring; and |
|
40,000 RSUs to Ms. Scanlon in
recognition of her substantial increase in responsibilities upon promotion to President
and Chief Executive Officer. |
Ms. Warners RSUs vest on the fourth
anniversary of her date of hire. Ms. Scanlons RSUs vest one-half on the second
anniversary of the grant date and one-half on the fourth anniversary of the
grant date. The RSUs may vest earlier in the event of death or disability. The
RSUs will vest upon a change in control in most circumstances only if there is
also a related loss of employment or diminution of duties.
BENEFITS AND PERQUISITES
Broad-Based Retirement, Health and
Welfare Benefits
We provide a
comprehensive health and welfare package to all of our full-time employees. Our
executive officers are eligible to participate in these plans on the same basis
as other eligible employees. The package includes the following benefits:
|
|
|
|
|
Medical, Dental and Vision
Plans |
All participants contribute a
portion of the cost of the coverage for the medical, dental and vision
plans. We do not provide any supplemental medical coverage or subsidy to
any executive officer. Employees hired prior to January 1, 2002 are
eligible for retiree medical subsidies. |
|
|
|
|
|
|
|
|
|
|
USG Corporation Investment Plan (401(k) Plan) |
This qualified defined contribution
plan allows employees to invest up to 75% of salary and annual incentive
awards (subject to the maximum level of contribution set by the Internal
Revenue Service) in twelve target date funds or ten core investment
alternatives. Employees can contribute on a pre-tax basis and/or a Roth
after-tax basis. We match employee contributions $0.25 per dollar on the
first 6% of employee pay contributed. Effective April 1, 2017, we will
match employee contributions $0.40 per dollar on the first 6% of employee
pay contributed. |
|
|
|
|
|
|
|
|
|
|
USG Corporation Retirement
Plan |
For employees hired before January
1, 2011, this qualified defined benefit plan provides a pension benefit
based on the participants years of credited service in the plan and the
participants final average pay. The plan requires participants to
contribute 2% of pensionable earnings toward benefits. Participants can
elect early retirement, with the benefit reduced 5% for each year earlier
than age 65 at retirement. Participants who have a combined number of
years of age and service equaling 90 can retire at age 62 without a
reduction in the benefit or can retire earlier than age 62 with a 3%
reduction per year. We amended the plan to replace the final average pay
formula with a cash balance formula for employees hired after December 31,
2010. The cash balance pension benefit is based on the participants years
of credited service in the plan and the participants age. Mr. Hilzinger
and Ms. Warner participate in the cash balance formula. |
|
|
|
|
|
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
We also provide the following plans for
our more highly compensated employees, including our executive officers, that
provide benefits to supplement those provided under our Investment Plan and
Retirement Plan:
|
|
|
|
|
Supplemental Retirement Plan |
In 2017, approximately 57 employees,
including our executive officers, participate in the USG Corporation
Supplemental Retirement Plan. This plan restores the benefits which
otherwise would be delivered under the USG Corporation Retirement Plan but
for the limits on pensionable compensation set by the Internal Revenue
Service. The provisions of this plan mirror those of the Retirement Plan,
including benefit formulas, definition of final average pay (without
Internal Revenue Service limits) and the requirement for the contribution
of 2% of pensionable earnings. Further information regarding our
retirement plans and the present value of the qualified and supplemental
pension benefits for our named executive officers appears under the
heading 2016 Pension Benefits Table beginning on page 57 of this proxy
statement. |
|
|
|
|
|
|
|
|
|
|
Deferred Compensation Plan |
In 2017, approximately 41 employees,
including one of our named executive officers, participate in the USG
Corporation Deferred Compensation Plan. Due to the contribution limits set
by the Internal Revenue Service applicable to the USG Corporation
Investment Plan, this nonqualified plan is designed to allow highly
compensated employees the opportunity to defer compensation (and thus
current income tax) generally until after termination of employment with
our Company. We do not match deferred amounts. Those amounts are invested
as directed by the participant into investment options that are similar to
those of the USG Corporation Investment Plan. We are obligated to pay the
deferred amounts, plus or minus any accumulated earnings or losses on
those amounts, to the participants following the termination of the
deferral period. Further information regarding the deferred compensation
plan for our named executive officers appears under the heading 2016
Nonqualified Deferred Compensation Table on page 60 of this proxy
statement. |
|
|
|
|
|
|
|
|
|
|
Perquisites and Other Benefits |
We make certain perquisites and
other benefits available to our executive officers as part of providing
them a competitive total compensation package and to facilitate their
attention to the demands of our business. Executive officers are offered a
company automobile and office parking, partial reimbursement for financial
planning services, personal liability insurance and executive death
benefit coverage, an annual medical examination, and on a limited basis,
membership in luncheon clubs. The value of these benefits is described in
more detail in the table titled Supplemental Table on page 51 of this
proxy statement. |
|
|
|
|
|
EMPLOYMENT SECURITY AND
POTENTIAL POST-EMPLOYMENT PAYMENTS
We provide all of our named executive
officers with two employment security arrangements an employment agreement and
a change-in-control severance agreement.
EMPLOYMENT AGREEMENTS
We provide employment agreements to assist
in attracting and retaining executives, to protect our assets and intellectual
property and to reduce the potential for litigation related to termination of
employment. By setting the terms for the involuntary termination of an executive
officer in advance of the termination, these agreements facilitate the Boards
and the Chief Executive Officers ability to effectuate smooth transitions in
the executive team. The employment agreements
generally provide named executive officers with two years of salary and bonus
and lump sum payments equal to the cost of continued medical benefits for 18
months and, except for Mr. Hilzingers agreement and any executive officers
appointed thereafter, including Ms. Warner, the present value of providing an
additional two years of service and two years of age credit under our retirement
plans. The agreements provide these benefits only upon an involuntary
termination of the named executive officers employment without cause. These
agreements renew for successive one-year terms effective January 1 of each year
unless 120 days notice of termination is provided before expiration of the
current term.
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
We believe that the level of benefits
provided by our agreements is in line with market practice for those companies
that use employment agreements. Consistent with our paying two years
compensation as severance, the agreements include a requirement that after
termination of employment, the executive officer will not compete with us for
two years or solicit our employees for three years. Executive officers are
required to sign a release waiving potential claims against us before any
payments are made.
CHANGE-IN-CONTROL SEVERANCE
AGREEMENTS
We provide change-in-control severance
agreements to promote neutrality of our named executive officers during
potential change in control transactions so they will make the best decision for
our stockholders, to retain the executive team, to protect our intellectual
property and to reduce the potential for litigation related to termination of
employment. The agreements in effect for our named executive officers provide
two years (three years for Mr. Cook) of salary and bonus and lump sum payments
equal to the cost of continued medical benefits for 18 months and the present
value of providing an additional three years of service and three years of age
credit (for Mr. Cook) or an additional two years of service and two years of age
credit (for Ms. Scanlon and Mr. Dannessa) under our retirement plans. Mr.
Hilzingers and Ms. Warners agreements do not provide for any payment for
additional service or age credit.
The agreements provide these benefits only
in the event that there is both a change in control and an involuntary
termination of the named executive officers employment by our Company without
cause or by the executive for good reason. The definition of change in
control is generally the same as the LTIP plan that was approved by our
stockholders in 2016. Good reason includes, among other things, a reduction in salary or a material diminution in duties,
responsibilities or total compensation. The agreements, other than Mr.
Hilzingers and Ms. Warners, include an excise tax gross up provision. If the
total amounts payable to the executive officer would constitute a parachute
payment resulting in the imposition of an excise tax, the payment will be
reduced to the extent necessary to avoid being a parachute payment, unless the
reduction would be more than 10% of the total amounts payable. In that case, the
payment will be increased to provide the executive officer a net after tax
amount equal to the value of the excise tax imposed. Mr. Hilzingers and Ms.
Warners agreement includes an alternative cap provision which provides that
if the total amounts payable would constitute a parachute payment resulting in
the imposition of an excise tax, the payment will be reduced to the extent
necessary to avoid being a parachute payment, unless Mr. Hilzinger or Ms.
Warner, as applicable, would receive a better after-tax benefit if the payment
were not reduced and he or she paid the resulting excise tax
directly.
As with our employment agreements, we
believe that the level of benefits provided by our change-in-control severance
agreements is also in line with market practice for organizations that use
change-in-control agreements. In consideration of our paying severance
compensation, these agreements include a requirement that after termination of
employment, the named executive officer will not compete with us for one year or
solicit our employees for two years (three years for Mr. Cook). Executive
officers are required to sign a release waiving potential claims against us
before any payments are made under these agreements. Further information
regarding the benefits our current named executive officers could receive under
these agreements is provided in the tables titled Potential Payments Upon
Termination or Change in Control beginning on page 60 of this proxy
statement.
OTHER COMPENSATION
PRACTICES, POLICIES AND INFORMATION
COMMITTEE POSITION ON INCENTIVES AND
EXCESSIVE RISK
The Committee believes that the design of
our annual compensation programs, which balances salary, short-term incentives
and long-term incentives, does not encourage management to take excessive risks
to maximize earnings or meet performance objectives in a single year at the
expense of our long-term objectives.
The annual incentive program has a mix of
financial and operating objectives, a limitation on the amount of payments and a
clawback feature described on page 49 of this proxy statement. The LTIP, as
well as our prior long-term incentive plan, use a variety of equity compensation awards (market share units, performance shares
and restricted stock units) that have extended vesting periods and provide
different incentives. Awards also include a clawback feature and, since 2013,
a double-trigger vesting provision. Together with our stock ownership guidelines
and a prohibition on hedging and speculative transactions involving our
securities, this balanced array of incentives encourages management to achieve
both short-term operating and financial and long-term strategic objectives
identified by the Committee as being important. The Committee and its consultant
annually review a risk assessment of our compensation programs, and they believe
that these programs do not create risks that are reasonably likely to have a
material adverse effect on us.
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
MANAGEMENTS ROLE IN
COMPENSATION
Our Human Resources Department is
responsible for the administration of our executive compensation, benefits and
related programs. The Executive Vice President and Chief Administrative Officer
is accountable for making proposals to the Committee for changes in compensation
and benefit programs at the request of either management or the Committee and is
the primary management contact for the chair of the Committee.
Our President and
Chief Executive Officer, Executive Vice President and Chief Administrative
Officer and Senior Vice President, Human Resources usually attend Committee
meetings to present matters for consideration by the Committee and to answer
questions regarding those matters. Other executive officers and senior managers
may attend meetings at the request of either management or the Committee to
provide information and answer questions relevant to the Committees
consideration of matters presented to it.
The Chief Executive Officer recommends to
the Committee any changes in compensation for executive officers (other than
herself) based on her assessment of each individuals performance, contribution
to our results and potential for future contributions to our success. The
Committee meets in executive session without any members of management present
to review the performance and compensation of the Chief Executive Officer, to
evaluate compensation proposals made by management and to make decisions with
respect to those proposals.
Once each year management provides the
Committee with an overview of all compensation and benefit plans pertaining to
executive officers, including the purpose and cost of the programs and the value
delivered to the participants by the programs. The Committee uses this
information when evaluating subsequent compensation proposals by management and
in developing its own proposals for changes to executive officer compensation.
The Chief Executive Officer and the Executive Vice President and Chief
Administrative Officer also lead an annual review for the Board of our
management succession plans. This review provides the Committee and other Board
members with information regarding the performance and potential of our
management team that can be taken into account when executive compensation
decisions are made.
COMPENSATION CONSULTANTS
The Committee has retained Willis Towers
Watson as a compensation consultant to provide the Committee with an independent
review of our executive compensation program. Willis Towers Watson was selected
by the Committee and works under the direction of the chair of the Committee.
The Committee has assessed the independence of Willis Towers Watson and did not
identify any conflict of interest that would
prevent Willis Towers Watson from independently representing the
Committee.
Willis Towers Watsons primary role is to provide an
independent analysis of competitive market data and to assist the Committee in evaluating compensation proposals made by
management, including recommendations for named executive officer compensation made by our Chief Executive Officer. Willis
Towers Watson also assists the Committee in developing the compensation package for our Chief Executive Officer, advises
regarding potential program design changes and reviews incentive plan goals and awards earned under such plans. At the direction
of the chair of the Committee, Willis Towers Watson may meet with management and/or managements consultant to review
managements proposals prior to the Committees review. A representative of Willis Towers Watson attended all the
Committee meetings held in 2016. Willis Towers Watsons fees for its services provided to the Committee in 2016 were
$39,683. Our Company pays Willis Towers Watsons fees for consulting services provided to the Committee after approval
of those fees by the chair of the Committee.
Willis Towers Watson provided services to
management during 2016 to advise regarding broad-based benefit plans, to provide
retiree benefits services and to provide non-customized surveys regarding
compensation of non-officer salaried employees. Its fees for those services were
$89,812.
Management also uses consultants to
provide analysis and advice with respect to executive compensation programs and
practices. Managements primary advisor for compensation-related matters is
Exequity, LLP. Exequity assists management in analyzing competitive market
practices and benchmark data and in developing proposals for review by the
Committee. It does not provide any services to our Company other than executive
compensation consulting. Management also contracts with Aon Hewitt to conduct an
annual competitive review of our executive compensation pay practices compared
to those of a comparator group of companies. The study assists management in
comparing compensation levels for our executive officers to compensation levels
of the comparator group. Aon Hewitt does not assist management in formulating
proposals for compensation changes for executive officers. Aon Hewitt provides
other services to us related to the administration of our retirement, health and
welfare benefit plans.
SECURITIES TRADING
POLICY
Our Securities Trading Policy provides
that our non-employee directors, executive officers and other senior managers
are prohibited from engaging in any speculative transactions involving our
securities, including (a) buying or selling puts or calls, (b) short sales or
(c) margin purchases of our securities. They are also
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
prohibited from purchasing
or using financial instruments that are designed to hedge or offset any decrease
in the market value of our securities.
CLAWBACK OF AWARDS
Our LTIP and the agreements evidencing
equity awards provide that if the Committee determines that any fraud or
intentional misconduct by an executive officer was a significant contributing
factor to our Company having to restate all or a portion of its financial
statements, the executive officer must return to us any outstanding equity
awards or common stock paid out pursuant to the agreement. If the executive
officer disposed of any equity award or common stock, he or she must pay to us
in cash the value of the equity award or common stock on the date they were paid
out. In addition, our annual incentive program for our executive officers allows
us to recoup excess incentive compensation paid to an executive officer if our
financial statements are restated due to fraud or intentional wrongdoing of the
executive officer.
TAX AND ACCOUNTING
IMPLICATIONS
Management and the Committee reviewed and
considered the deductibility of payments under our executive compensation
program under Internal Revenue Code Section 162(m) and the regulations
promulgated thereunder, which generally limit deductibility of compensation to
$1 million for certain employees. However, the $1 million limit does not apply
to performance-based compensation that is paid pursuant to stockholder-approved
plans and is approved by directors who qualify as outside directors within the
meaning of Internal Revenue Code Section 162(m).
The Committee generally structures and
administers executive compensation plans and arrangements so that they will not
be subject to the 162(m) deduction limit. However, to maintain flexibility in
structuring appropriate compensation programs in the interest of stockholders,
the Committee may from time to time approve payments that cannot be deducted.
For example, RSU awards made to certain employees may not be deductible for
federal income tax purposes, depending on the amount and type of other
compensation these employees receive.
Management and the Committee reviewed all
executive compensation programs and arrangements under Internal Revenue Code
Section 409A related to the deferral of compensation, and the current and future
year accounting impact of the LTIP awards when it considered and approved those
awards.
COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The Compensation and Organization
Committee is made up of independent directors of our Company who have never
served as executive officers or employees of our Company. During 2016, none of
our executive officers served on the compensation committee (or its equivalent)
or board of directors of another entity whose executive officer served on our
Compensation and Organization Committee.
COMPENSATION AND ORGANIZATION COMMITTEE
REPORT
Our Companys Compensation and
Organization Committee has reviewed and discussed the Compensation Discussion
and Analysis section with our management. Based on that review and discussion, the Compensation and Organization Committee
recommended to the Board that the Compensation
Discussion and Analysis be included in this proxy statement.
This report is submitted by the members
of the Compensation and Organization Committee.
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
COMPENSATION
TABLES
2016 SUMMARY COMPENSATION
TABLE
The Summary Compensation Table below
reflects total compensation earned by or paid to our principal executive and
financial officers and our other most highly compensated executive officers for
the last three years.
Information is provided for Ms. Scanlon,
Mr. Cook and Ms. Warner only for the year(s) during which he or she was a named
executive officer.
Name and Principal Position |
|
Year |
|
Salary ($) |
|
Stock Awards ($)(2) |
|
Non-Equity Incentive
Plan Compensation ($)(3) |
|
Change in Pension Value
and Nonqualified Deferred Compensation Earnings ($)(4) |
|
All
Other Compensation ($)(5) |
|
Total ($) |
Jennifer F. Scanlon, |
|
2016 |
|
$509,500 |
|
$1,944,076 |
|
$754,175 |
|
$231,023 |
|
$30,275 |
|
$3,469,049 |
President and Chief Executive
Officer(1) |
|
2015 |
|
404,417 |
|
1,021,538 |
|
233,211 |
|
212,942 |
|
32,316 |
|
1,904,424 |
Matthew F. Hilzinger, |
|
2016 |
|
600,833 |
|
1,461,019 |
|
831,270 |
|
82,054 |
|
33,493 |
|
3,008,669 |
Executive Vice President |
|
2015 |
|
576,167 |
|
1,243,295 |
|
528,525 |
|
56,092 |
|
38,241 |
|
2,442,320 |
and Chief Financial Officer |
|
2014 |
|
554,292 |
|
1,137,879 |
|
320,832 |
|
82,372 |
|
40,644 |
|
2,136,019 |
Brian J. Cook, |
|
2016 |
|
421,167 |
|
618,116 |
|
506,090 |
|
546,864 |
|
44,692 |
|
2,136,929 |
Executive Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief Administrative Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominic A. Dannessa, |
|
2016 |
|
442,500 |
|
842,904 |
|
515,385 |
|
582,035 |
|
34,427 |
|
2,417,251 |
Executive Vice President, |
|
2015 |
|
402,500 |
|
1,021,538 |
|
248,589 |
|
670,702 |
|
36,858 |
|
2,380,187 |
Chief Operations and Innovation Officer |
|
2014 |
|
383,240 |
|
816,957 |
|
179,244 |
|
1,334,214 |
|
50,882 |
|
2,764,537 |
Michelle M. Warner, |
|
2016 |
|
450,000 |
|
1,069,616 |
|
577,080 |
|
24,051 |
|
45,601 |
|
2,166,348 |
Senior Vice President, General Counsel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Corporate Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James S. Metcalf, |
|
2016 |
|
870,000 |
|
6,181,197 |
|
|
|
1,682,860 |
|
56,091 |
|
8,790,148 |
Former Chairman,
President and Chief Executive Officer(1) |
|
2015 |
|
1,011,667 |
|
5,180,422 |
|
1,487,160 |
|
2,050,152 |
|
68,318 |
|
9,797,719 |
|
2014 |
|
964,167 |
|
5,251,740 |
|
856,704 |
|
4,890,717 |
|
77,337 |
|
12,040,665 |
(1) |
|
Ms. Scanlon served as
Executive Vice President, President, International and President of
L&W Supply until November 1, 2016, when she was promoted to President
and Chief Executive Officer, following Mr. Metcalfs retirement on October
31, 2016. |
(2) |
|
The amounts shown in this
column reflect the aggregate grant date fair values computed in accordance
with FASB ASC Topic 718 for MSUs and performance shares granted under our
LTIP and, for Ms. Scanlon and Ms. Warner in 2016, include the value of
special awards of RSUs granted upon her promotion to President and Chief
Executive Officer or joining our Company, respectively. However, for
purposes of this table, estimates of forfeitures have been removed. A
Monte Carlo simulation has been chosen for both the MSU and performance
share valuations. The assumptions used in valuing the MSUs and performance
shares are described in Note 10 to our consolidated financial statements
included in our 2016 Annual Report on Form 10-K filed with the Securities
and Exchange Commission on February 8, 2017. The grant date fair value for
each RSU is equal to the closing market price of our common stock on the
date of grant. Expense is recognized over the period from the grant date
to the end of the performance or vesting period. Awards under the LTIP are
described further under Long-Term Incentive in the Compensation
Discussion and Analysis beginning on page 43 of this proxy
statement. |
(3) |
|
The amounts shown in this
column include payments under our annual Management Incentive Program, or
MIP, for services performed in the year indicated. Mr. Metcalf did not
receive an award under the MIP because he retired effective October 31,
2016. |
(4) |
|
The amounts in this column
reflect the aggregate change in the actuarial present value of accumulated
benefits under our defined benefit pension plans from December 31, 2015
through December 31, 2016, the plan measurement dates used for financial
statement reporting purposes. The named executive officers had no
above-market or preferential earnings on deferred
compensation. |
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
(5) |
|
The amounts in this column
reflect all other compensation for 2016 that could not properly be
reported in any other column. Details regarding all other compensation
components are provided in the supplemental table below. Several of the
benefits listed in the table result in imputed income to the named
executive officer. In the case of company-provided automobiles, the
amounts shown reflect the cost attributed to personal use of the vehicle
by the named executive officer, including the cost of lease payments,
fuel, insurance, license and title, maintenance and repairs, less any gain
we realized upon sale of the vehicle. All other items are valued at actual
cost. We also provide additional executive death and disability benefit
coverage to our executive officers on a self-insured basis. There is a
small incremental cost to us for providing this additional coverage. From
time to time, executive officers may use our tickets to sporting venues
for personal use. We believe there is no incremental cost associated with
our executive officers using our tickets to sporting venues for personal
use because the tickets are purchased in advance for the entire season
with the intention that they be used for business purposes, they cannot be
returned for a refund if they are unused and use for personal purposes
occurs only if the tickets have not been reserved for use for a business
purpose. No value is attributed in the 2016 Summary Compensation Table to
personal benefits for which we incur no incremental
cost. |
SUPPLEMENTAL TABLE
Item |
|
Jennifer F. Scanlon |
|
Matthew F. Hilzinger |
|
Brian J. Cook |
|
Dominic A. Dannessa |
|
Michelle M. Warner |
|
James S. Metcalf |
Financial Planning Services |
|
|
|
$8,868 |
|
$15,298 |
|
$7,920 |
|
$9,600 |
|
$15,519 |
Personal Liability Insurance |
|
$557 |
|
557 |
|
$557 |
|
557 |
|
557 |
|
557 |
Executive Death and Disability Coverage |
|
570 |
|
464 |
|
386 |
|
397 |
|
397 |
|
643 |
Executive Health Program |
|
4,755 |
|
|
|
|
|
1,723 |
|
4,449 |
|
5,219 |
Luncheon Club |
|
|
|
|
|
3,552 |
|
2,856 |
|
|
|
6,167 |
Company Automobile (personal use) |
|
16,218 |
|
15,429 |
|
16,724 |
|
12,799 |
|
22,773 |
|
19,811 |
Parking |
|
4,200 |
|
4,200 |
|
4,200 |
|
4,200 |
|
3,850 |
|
4,200 |
Investment Plan Matching Contributions |
|
3,975 |
|
3,975 |
|
3,975 |
|
3,975 |
|
3,975 |
|
3,975 |
Total |
|
$30,275 |
|
$33,493 |
|
$44,692 |
|
$34,427 |
|
$45,601 |
|
$56,091 |
The employment agreements entered into
with each of our named executive officers are described under Employment
Agreements in the Compensation Discussion and Analysis beginning on page 46 of
this proxy statement.
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
2016 GRANTS OF PLAN-BASED
AWARDS TABLE
The 2016 Grants of Plan-Based Awards Table
below reflects equity and non-equity incentive plan awards made to each of the
named executive officers during 2016. Equity awards include market share units
(MSUs), performance shares (PS) and restricted stock units (RSUs).
Name |
|
Award Type |
|
Grant Date(1) |
|
Estimated Possible
Payouts Under Non-Equity Incentive
Plan Awards(2) |
|
Estimated Future Payouts Under
Equity Incentive Plan Awards(3)(4) |
|
Stock Awards: Number of Shares
of Stock or Units (#)(5) |
|
Grant Date Fair Value of Stock
and Stock Option Awards ($)(6) |
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
Threshold (#) |
|
Target (#) |
|
Maximum (#) |
Jennifer F. Scanlon |
|
MSU |
|
02/10/2016 |
|
|
|
|
|
|
|
17,476 |
|
34,951 |
|
52,427 |
|
|
|
$684,690 |
|
|
PS |
|
02/10/2016 |
|
|
|
|
|
|
|
4,448 |
|
12,824 |
|
25,648 |
|
|
|
270,586 |
|
|
MIP |
|
|
|
|
|
$404,167 |
|
$808,334 |
|
|
|
|
|
|
|
|
|
|
|
|
RSU |
|
11/01/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
988,800 |
Matthew F. Hilzinger |
|
MSU |
|
02/10/2016 |
|
|
|
|
|
|
|
26,727 |
|
53,454 |
|
80,181 |
|
|
|
1,047,164 |
|
|
PS |
|
02/10/2016 |
|
|
|
|
|
|
|
6,865 |
|
19,614 |
|
39,228 |
|
|
|
413,855 |
|
|
MIP |
|
|
|
|
|
453,750 |
|
907,500 |
|
|
|
|
|
|
|
|
|
|
Brian J. Cook |
|
MSU |
|
02/10/2016 |
|
|
|
|
|
|
|
11,308 |
|
22,615 |
|
33,923 |
|
|
|
443,028 |
|
|
PS |
|
02/10/2016 |
|
|
|
|
|
|
|
2,904 |
|
8,298 |
|
16,596 |
|
|
|
175,088 |
|
|
MIP |
|
|
|
|
|
276,250 |
|
522,500 |
|
|
|
|
|
|
|
|
|
|
Dominic A. Dannessa |
|
MSU |
|
02/10/2016 |
|
|
|
|
|
|
|
15,420 |
|
30,839 |
|
46,259 |
|
|
|
604,136 |
|
|
PS |
|
02/10/2016 |
|
|
|
|
|
|
|
3,961 |
|
11,316 |
|
22,632 |
|
|
|
238,768 |
|
|
MIP |
|
|
|
|
|
292,500 |
|
585,000 |
|
|
|
|
|
|
|
|
|
|
Michelle M. Warner |
|
MSU |
|
02/10/2016 |
|
|
|
|
|
|
|
12,850 |
|
25,699 |
|
38,549 |
|
|
|
503,443 |
|
|
PS |
|
02/10/2016 |
|
|
|
|
|
|
|
3,301 |
|
9,430 |
|
18,860 |
|
|
|
198,973 |
|
|
MIP |
|
|
|
|
|
315,000 |
|
630,000 |
|
|
|
|
|
|
|
|
|
|
|
|
RSU |
|
01/04/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
367,200 |
James S. Metcalf |
|
MSU |
|
02/10/2016 |
|
|
|
|
|
|
|
113,076 |
|
226,151 |
|
339,227 |
|
|
|
4,430,298 |
|
|
PS |
|
02/10/2016 |
|
|
|
|
|
|
|
29,043 |
|
82,981 |
|
165,962 |
|
|
|
1,750,899 |
|
|
MIP |
|
|
|
|
|
1,260,000 |
|
2,520,000 |
|
|
|
|
|
|
|
|
|
|
(1) |
|
The grant date is the date on
which the equity awards were approved by our Board, except for (a) Ms.
Scanlons special grant of RSUs, which was approved by the Board on
October 14, 2016, with a grant date of November 1, 2016, in connection
with her promotion to President and Chief Executive Officer, and (b) Ms.
Warners special grant of RSUs, which was approved by the Board on October
28, 2015, with a grant date of January 4, 2016, upon her hiring by our
Company. |
(2) |
|
The amounts in the Target
column reflect the par amounts payable under the 2016 MIP. The 2016 MIP is
described under Annual Incentive in the Compensation Discussion and
Analysis beginning on page 41 of this proxy statement. There was no
threshold-level payout under the 2016 MIP. The maximum payout under the
2016 MIP was 200% of par. Total payments to any one individual under the
2016 MIP may not exceed $4 million. Ms. Scanlons annual incentive
opportunity under the MIP for 2016 was 70% of base salary for the ten
months of the year she served as Executive Vice President, President,
International and President of L&W Supply and 100% of base salary for
the two months she served as President and Chief Executive Officer. Mr.
Metcalf did not receive an award under the MIP for 2016 because he retired
effective October 31, 2016. |
(3) |
|
MSUs were granted to each
named executive officer under our LTIP. The amount of common stock to be
issued in respect of the MSUs can range from zero to 150% of target based
on the percentage change in the price of our common stock over the
applicable vesting period. The MSUs will generally vest on December 31,
2018, with a 10% appreciation in the Market Value (as defined above in the
Compensation Discussion and Analysis) of our common stock required for
vesting of the target number of shares of common stock. With respect to
the MSUs, the amounts in the Threshold column reflect the amount of common
stock to be awarded upon a 50% decrease in Market Value, the Target column
reflects the amount of common stock to be awarded
upon |
Table of Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
|
|
achievement of a 10%
appreciation in the Market Value, and the amounts in the Maximum column
reflect the amount of common stock to be awarded upon a 50% or more
increase in Market Value. In the case of termination of employment due to
death, disability or retirement during the performance period, vesting
will be pro-rated based on the number of full months employed during 2016
in accordance with the MSU award agreements at the end of the performance
period. The MSUs will vest upon a change in control in most circumstances
only if there is also a related loss of employment or diminution of
duties. Each MSU earned will be settled in common stock. |
(4) |
|
Performance shares were
granted to each named executive officer under our LTIP. With respect to
the performance shares, the amounts in the Target column reflect the
number awarded to the named executive officers on the grant date. The
performance shares generally vest after a three-year performance period
ending December 31, 2018 based on our total stockholder return relative to
the total stockholder return of the companies in the Dow Jones U.S.
Construction and Materials Index for the performance period, with
adjustments to the Index to reflect changes in the companies included in
the Index for the performance period. The number of performance shares
earned will vary from zero to 200% of the number of performance shares
awarded depending on that relative performance. The amounts in the
Threshold column reflect the number of performance shares that will vest
if our total stockholder return is at the 35th percentile of the total
stockholder return of the Index companies, and the amounts in the Maximum
column reflect the number of performance shares that will vest if our
total stockholder return is at or above the 90th percentile of the total
stockholder return of those companies. Vesting will be pro-rated based on
the number of full months employed during the performance period in the
case of death, disability or retirement, and pro-rated awards will be paid
at the end of the three-year performance period. The performance shares
will vest upon a change in control in most circumstances only if there is
also a related loss of employment or diminution of duties. Each
performance share earned will be settled in a share of our common
stock. |
(5) |
|
The amount in this column
reflects the number of RSUs awarded to Ms. Scanlon and Ms. Warner on the
applicable grant date. Ms. Scanlons RSUs will vest 50% on November 1,
2018 and 50% on November 1, 2020, and Ms. Warners RSUs will vest on
January 4, 2020. The RSUs may vest earlier in the event of death or
disability. The RSUs will vest upon a change in control in most
circumstances only if there is also a related loss of employment or
diminution of duties. |
(6) |
|
The amounts in this column
reflect the aggregate grant date fair value of the equity awards granted
computed in accordance with FASB ASC Topic 718, and exclude the effect of
estimated forfeitures. The assumptions used in valuing the MSUs and
performance shares are described in Note 10 to our consolidated financial
statements included in our 2016 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on February 8, 2017. The RSU awards
portion is calculated using the closing stock price on the date of grant
multiplied by the number of shares underlying the units. We did not grant
any stock options in 2016. |
Table of
Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
2016 OUTSTANDING EQUITY
AWARDS AT FISCAL YEAR-END TABLE
The 2016 Outstanding Equity Awards At
Fiscal Year-End Table below reflects options and other equity awards held by
each of the named executive officers at December 31, 2016. Other equity awards
include market share units (MSUs), performance shares (PS) and restricted stock
units (RSUs).
|
|
Option
Awards |
|
Stock
Awards |
Name |
|
Number
of Securities Underlying Unexercised Options
(#) Exercisable(1) |
|
Number
of Securities Underlying Unexercised Options
(#) Unexercisable(1) |
|
Equity Incentive Plan
Awards: Number of Securities Underlying Unexercised
Unearned Options (#) |
|
Option Exercise Price ($) |
|
Option Expiration Date |
|
Stock Award Type and Year
of Award |
|
Number of Shares or Units of
Stock That Have Not Vested (#)(2) |
|
Market Value of Shares or Units
of Stock That Have
Not Vested ($)(3) |
|
Equity Incentive Plan Awards: Number
of Unearned Shares, Units or Other Rights That Have
Not Vested (#)(4) |
|
Equity Incentive Plan Awards: Market or Payout Value
of Unearned Shares, Units
or Other Rights That
Have Not Vested ($)(5) |
Jennifer F. Scanlon |
|
2,330 |
|
|
|
|
|
49.61 |
|
3/23/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
6,045 |
|
|
|
|
|
34.67 |
|
2/13/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
11,786 |
|
|
|
|
|
6.86 |
|
2/11/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
9,715 |
|
|
|
|
|
11.98 |
|
2/10/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
12,215 |
|
|
|
|
|
18.99 |
|
2/09/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
19,504 |
|
|
|
|
|
14.76 |
|
2/08/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
2,500 |
|
72,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2015 |
|
|
|
|
|
16,746 |
|
483,624 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2015 |
|
|
|
|
|
2,535 |
|
73,211 |
|
|
|
|
|
|
|
|
|
|
|
|
RSU 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
10,000 |
|
288,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2016 |
|
|
|
|
|
52,427 |
|
1,514,092 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2016 |
|
|
|
|
|
19,236 |
|
555,536 |
|
|
|
|
|
|
|
|
|
|
|
|
RSU 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
40,000 |
|
1,155,200 |
|
|
|
|
Matthew F. Hilzinger |
|
102,816 |
|
|
|
|
|
16.80 |
|
4/16/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2015 |
|
|
|
|
|
28,708 |
|
829,087 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2015 |
|
|
|
|
|
4,346 |
|
125,512 |
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2016 |
|
|
|
|
|
80,181 |
|
2,315,627 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2016 |
|
|
|
|
|
29,421 |
|
849,678 |
Table of
Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
|
|
Option
Awards |
|
Stock
Awards |
Name |
|
Number
of Securities Underlying Unexercised Options
(#) Exercisable(1) |
|
Number
of Securities Underlying Unexercised Options
(#) Unexercisable(1) |
|
Equity Incentive Plan Awards: Number
of Securities Underlying Unexercised Unearned Options
(#) |
|
Option Exercise Price ($) |
|
Option Expiration Date |
|
Stock Award Type and Year
of Award |
|
Number of Shares or Units of Stock That
Have Not Vested (#)(2) |
|
Market Value of Shares or Units of Stock That
Have Not Vested ($)(3) |
|
Equity Incentive Plan Awards: Number
of Unearned Shares, Units or Other Rights That Have
Not Vested (#)(4) |
|
Equity Incentive Plan Awards: Market or Payout Value
of Unearned Shares, Units
or Other Rights That
Have Not Vested ($)(5) |
Brian J. Cook |
|
9,700 |
|
|
|
|
|
49.61 |
|
3/23/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
16,620 |
|
|
|
|
|
34.67 |
|
2/13/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
24,288 |
|
|
|
|
|
11.98 |
|
2/10/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
17,559 |
|
|
|
|
|
18.99 |
|
2/09/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
19,504 |
|
|
|
|
|
14.76 |
|
2/08/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2015 |
|
|
|
|
|
11,962 |
|
345,463 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2015 |
|
|
|
|
|
1,811 |
|
52,302 |
|
|
|
|
|
|
|
|
|
|
|
|
RSU 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
10,000 |
|
288,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2016 |
|
|
|
|
|
33,923 |
|
979,696 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2016 |
|
|
|
|
|
12,447 |
|
359,469 |
Dominic A. Dannessa |
|
5,820 |
|
|
|
|
|
49.61 |
|
3/23/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
12,085 |
|
|
|
|
|
34.67 |
|
2/13/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
28,571 |
|
|
|
|
|
6.86 |
|
2/11/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
19,430 |
|
|
|
|
|
11.98 |
|
2/10/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
12,215 |
|
|
|
|
|
18.99 |
|
2/09/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
19,504 |
|
|
|
|
|
14.76 |
|
2/08/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2015 |
|
|
|
|
|
16,746 |
|
483,624 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2015 |
|
|
|
|
|
2,535 |
|
73,211 |
|
|
|
|
|
|
|
|
|
|
|
|
RSU 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
10,000 |
|
288,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2016 |
|
|
|
|
|
46,259 |
|
1,335,960 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2016 |
|
|
|
|
|
16,974 |
|
490,209 |
Michelle M. Warner |
|
|
|
|
|
|
|
|
|
|
|
RSU 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special |
|
15,000 |
|
433,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2016 |
|
|
|
|
|
38,549 |
|
1,113,295 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2016 |
|
|
|
|
|
14,145 |
|
408,508 |
Table of
Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
|
|
Option
Awards |
|
Stock
Awards |
Name |
|
Number
of Securities Underlying Unexercised Options
(#) Exercisable(1) |
|
Number
of Securities Underlying Unexercised Options
(#) Unexercisable(1) |
|
Equity Incentive Plan
Awards: Number of Securities Underlying Unexercised
Unearned Options (#) |
|
Option Exercise Price ($) |
|
Option Expiration Date |
|
Stock Award Type and Year
of Award |
|
Number of Shares or Units of
Stock That Have Not Vested (#)(2) |
|
Market Value of Shares or Units
of Stock That Have
Not Vested ($)(3) |
|
Equity Incentive Plan Awards: Number
of Unearned Shares, Units or Other Rights That Have
Not Vested (#)(4) |
|
Equity Incentive Plan Awards: Market or Payout Value
of Unearned Shares, Units
or Other Rights That
Have Not Vested ($)(5) |
James S. Metcalf |
|
14,553 |
|
|
|
|
|
49.61 |
|
3/23/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
25,680 |
|
|
|
|
|
34.67 |
|
2/13/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
39,978 |
|
|
|
|
|
6.86 |
|
2/11/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
44,386 |
|
|
|
|
|
11.98 |
|
2/10/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
38,630 |
|
|
|
|
|
18.99 |
|
2/09/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
86,014 |
|
|
|
|
|
14.76 |
|
10/31/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2015 |
|
|
|
|
|
119,617 |
|
3,454,539 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2015 |
|
|
|
|
|
11,382 |
|
328,712 |
|
|
|
|
|
|
|
|
|
|
|
|
MSU 2016 |
|
|
|
|
|
282,689 |
|
8,164,058 |
|
|
|
|
|
|
|
|
|
|
|
|
PS 2016 |
|
|
|
|
|
35,564 |
|
1,027,088 |
(1) |
|
Options with an expiration
date in 2017 became 25% vested on March 23rd of each year from 2008
through 2011. Options with an expiration date in 2018 became 25% vested on
February 13th of each year from 2009 through 2012. Options with an
expiration date in 2019 became 25% vested on February 11th of each year
from 2010 through 2013. Options with an expiration date in 2020 became 25%
vested on February 10th of each year from 2011 through 2014. Options with
an expiration date in 2021 became 25% vested on February 9th of each year
from 2012 through 2015. Options with an expiration date of 2022 became 25%
vested on February 8th of each year from 2013 through 2016, except for Mr.
Hilzingers options with an expiration date of 2022, which vested 25% on
April 16th of each year from 2013 through 2016. Mr. Metcalf has five years
from the date of his retirement to exercise vested options (but no later
than the expiration date). |
(2) |
|
The RSUs awarded in 2013 to
Ms. Scanlon vested 50% on October 1, 2015 and the remaining 50% will vest
on October 1, 2017. The RSUs awarded in 2015 to Ms. Scanlon and Mr.
Dannessa will vest 50% on September 1, 2017 and 50% on September 1, 2019.
The RSUs awarded in 2015 to Mr. Cook will vest on the earlier of (a) 50%
on September 1, 2017 and 50% on September 1, 2019 or (b) retirement. The
RSUs awarded in 2016 to Ms. Scanlon will vest 50% on November 1, 2018 and
50% on November 1, 2020. The RSUs awarded in 2016 to Ms. Warner will vest
on January 4, 2020. |
(3) |
|
The amounts in this column
represent the number of RSUs indicated in the Number of Shares or Units of
Stock That Have Not Vested column multiplied by the closing price of our
common stock on December 30, 2016, the last trading day of the
year. |
(4) |
|
The number of MSUs reflected
in this column is the number of shares that would be earned if the target
level of performance is achieved, as performance with respect to those
shares is tracking between the threshold and target levels. The MSUs
awarded in 2015 and 2016 will generally vest on December 31, 2017 and
December 31, 2018, respectively, with a 10% appreciation in the Market
Value of our common stock required for vesting of the target number of
shares. The amount of MSUs ultimately awarded may range from zero to 150%
of the target. With respect to the performance shares awarded in 2015 and
2016, the number of performance shares reflected in this column is the
number of shares that would be earned if the threshold level of
performance is achieved, as performance with respect to those shares is
tracking below the threshold level. To the extent earned, the performance
shares awarded in 2015 and 2016 will vest on December 31, 2017 and
December 31, 2018, respectively. Mr. Metcalfs market share units are
prorated based on the number of full months employed during the grant year
and paid at the end of the three-year period and his performance shares
are prorated based on the number of full months employed during the
performance period and paid at the end of the three-year
period. |
(5) |
|
The amounts in this column
represent the number of MSUs or performance shares indicated in the Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested column multiplied by the closing price of our common
stock on December 30, 2016, the last trading day of the
year. |
Table of
Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
2016 OPTION EXERCISES AND
STOCK VESTED TABLE
The 2016 Option Exercises and Stock Vested
Table below reflects stock options exercised by our named executive officers
during 2016 and RSU and MSU awards held by our named executive officers that
vested during 2016.
|
|
Option Awards(1) |
|
Stock Awards(1) |
Name |
|
Number of Shares Acquired on Exercise (#) |
|
Value Realized on Exercise ($)(2) |
|
Number of Shares Acquired on Vesting (#) |
|
Value Realized on
Vesting ($)(3) |
Jennifer F. Scanlon |
|
|
|
|
|
7,594 |
|
$146,008 |
Matthew F. Hilzinger |
|
|
|
|
|
25,258 |
|
623,520 |
Brian J. Cook |
|
|
|
|
|
7,594 |
|
146,008 |
Dominic A. Dannessa |
|
|
|
|
|
8,445 |
|
162,194 |
Michelle M. Warner |
|
|
|
|
|
|
|
|
James S. Metcalf |
|
20,044 |
|
$383,642 |
|
56,359 |
|
1,083,247 |
(1) |
|
No adjustments have been made
to reflect reductions required under any qualified domestic relations
order. |
(2) |
|
The amount in this column
represents the difference between the aggregate market value of the shares
of our common stock subject to the option on the exercise date and the
aggregate exercise price of the option. |
(3) |
|
The amounts in this column
represent the aggregate market value of the shares of our common stock
acquired on the dates the RSUs and MSUs
vested. |
2016 PENSION BENEFITS
TABLE
The 2016 Pension Benefits Table below
reflects the actuarial present value of the accumulated benefit of each of the
named executive officers under our Retirement Plan and Supplemental Retirement
Plan, or Plans, calculated using (i) the same discount rates we use for
calculations for financial reporting purposes (as of the December 31 measurement
date) and (ii) the Plans normal retirement age or, if earlier, the individuals
unreduced benefit age under the Plans.
The discount rates by Plan at each
measurement date are as follows:
|
December 31, 2016 measurement date: 4.11% for
the Retirement Plan and 3.62% for the Supplemental Retirement Plan; and
|
|
December 31, 2015 measurement date: 4.52% for
the Retirement Plan and 3.60% for the Supplemental Retirement
Plan. |
Table of
Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
Benefits payable under the Plans final
average pay formula are based on an employees years of service and compensation
during specified years of employment. Effective December 31, 2010, we amended
our Plans to replace the final average pay formula with a cash balance formula
for employees hired after that date. Benefits payable under the Plans cash
balance formula are pay credits based on an employees compensation, sum of age
and years of benefit service and interest.
Participants with a final average pay
formula benefit can elect early retirement, with their benefit reduced 5% for
each year earlier than age 65 at retirement, or 3% per year from age 62 if the
participant has a combined age and benefit service of 90 but has not reached age
62. Participants who have a combined number of years of age and service equaling
90 can retire at age 62 without a reduction in benefit. Based on projected years
of credited service, the unreduced benefit age is 62 for each of the named
executive officers, except for Mr. Hilzinger and Ms. Warner for whom the
unreduced benefit age does not apply because they are participants with a cash
balance formula. Messrs. Cook and Dannessa are currently eligible for early
retirement under the Plans.
The present values shown in the table
reflect postretirement mortality based on the 417e2016 mortality table but do
not include a factor for pre-retirement termination, mortality or disability.
The Internal Revenue Service requires use of the 417e2016 projected mortality
table to determine life expectancies used in the calculation of the lump sum
pension benefits payable under the Plans.
Benefits are assumed to be made payable in
a lump sum at the assumed retirement age. The Internal Revenue Service mandates
the use of specified lump sum yield curve interest rates based on the return of
investment grade corporate bonds over varying durations in calculating lump sum
payments. The mandated lump sum yield curve interest rates are 1.73% for less
than five years, 3.74% for five to 20 years and 4.65% for more than 20
years.
The final average pay formula under our
Plans provides an annual pension benefit equal to the greater of 1% of final
average earnings, multiplied by the number of years of benefit service, or 1.6%
of final average earnings multiplied by years of benefit service less 50% of the
social security benefit at age 65. Final average earnings are average
pensionable compensation (generally salary and annual incentive) for the 36
consecutive months of the last 180 months of service for which pensionable
compensation is the highest.
The cash balance formula under our Plans
provides a lump sum pension benefit equal to an employees accumulated cash
balance account. Pay credits from 3% to 10% of pensionable earnings each month
are allocated to the cash balance account. The pay credit percentage is
determined according to the employees age and years of benefit service as of
the last day of the month as shown in the table below. Mr. Hilzinger and Ms.
Warner are the only named executive officers with a cash balance
formula.
Sum of Age and Years of Benefit
Service |
Pay Credit Percentage |
Under 30 |
3% |
30 to 39 |
4% |
40 to 49 |
5% |
50 to 59 |
6% |
60 69 |
7% |
70 79 |
8% |
80 89 |
9% |
90 and over |
10% |
All participants in the Plans contribute
2% of their pensionable compensation to the Plans to fund a portion of their
benefit.
Table of
Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
Name |
|
Plan Name |
|
Number of Years of Credited
Service (#)(1) |
|
Present Value of
Accumulated Benefit ($)(2) |
|
Payments During Last Fiscal
Year ($)(3) |
Jennifer F. Scanlon |
|
USG Corporation |
|
|
|
|
|
|
|
|
Retirement Plan |
|
14.0 |
|
$410,392 |
|
|
|
|
USG
Corporation Supplemental Retirement Plan |
|
14.0 |
|
753,736 |
|
|
|
|
Total |
|
|
|
$1,164,128 |
|
|
Matthew F. Hilzinger |
|
USG Corporation |
|
|
|
|
|
|
|
|
Retirement Plan |
|
4.6 |
|
$78,915 |
|
|
|
|
USG Corporation Supplemental Retirement
Plan |
|
4.6 |
|
210,559 |
|
|
|
|
Total |
|
|
|
$289,474 |
|
|
Brian J. Cook |
|
USG Corporation |
|
|
|
|
|
|
|
|
Retirement Plan |
|
35.4 |
|
$1,724,063 |
|
|
|
|
USG Corporation Supplemental Retirement
Plan |
|
35.4 |
|
3,355,471 |
|
|
|
|
Total |
|
|
|
$5,079,534 |
|
|
Dominic A. Dannessa |
|
USG Corporation |
|
|
|
|
|
|
|
|
Retirement Plan |
|
38.6 |
|
$2,043,569 |
|
|
|
|
USG Corporation Supplemental Retirement
Plan |
|
38.6 |
|
3,376,821 |
|
|
|
|
Total |
|
|
|
$5,420,390 |
|
|
Michelle M. Warner |
|
USG Corporation |
|
|
|
|
|
|
|
|
Retirement Plan |
|
0.11 |
|
$12,258 |
|
|
|
|
USG Corporation Supplemental Retirement
Plan |
|
0.11 |
|
11,793 |
|
|
|
|
Total |
|
|
|
$24,051 |
|
|
James S. Metcalf |
|
USG Corporation |
|
|
|
|
|
|
|
|
Retirement Plan |
|
35.11 |
|
$1,722,153 |
|
$2,018,683 |
|
|
USG Corporation Supplemental Retirement
Plan |
|
35.11 |
|
14,943,439 |
|
2,357,276 |
|
|
Total |
|
|
|
$16,665,592 |
|
$4,375,959 |
(1) |
|
Represents the number of years
and months of service credited to the named executive officer under the
Plans, computed as of December 31, 2016, the pension plan measurement date
used for financial statement reporting purposes with respect to our
audited financial statements for 2016. |
(2) |
|
Computed as of December 31,
2016, the pension plan measurement date used for financial statement
reporting purposes with respect to our audited financial statements for
2016. No adjustments have been made to reflect reductions required under
any qualified domestic relations order. |
(3) |
|
Mr. Metcalf retired effective
October 31, 2016. Upon retirement he received a distribution of his
accrued benefit under the USG Corporation Retirement Plan and a partial
distribution of his accrued benefit under the USG Corporation Supplemental
Retirement Plan. In accordance with the requirements of Section 409A of
the Internal Revenue Code, he will receive the remaining balance of his
accrued benefit under the USG Corporation Supplemental Retirement Plan in
2017. |
Table of
Contents
Summary of
2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other Information |
2016 NONQUALIFIED DEFERRED
COMPENSATION TABLE
The USG
Corporation Deferred Compensation Plan is a nonqualified plan that allows
eligible employees to defer a portion of their base salary and annual incentive
compensation and is intended to be a top-hat plan described in Section 201(2)
of ERISA. A top-hat plan, as described in Sections 201, 301 and 401 of ERISA,
is an unfunded plan maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees.
The plan is exempt from the participation, vesting, funding and fiduciary
requirements of ERISA and is subject to simplified reporting and disclosure
requirements of ERISA. Amounts deferred under the plan are subject to the
requirements of Section 409A of the Internal Revenue Code and the plan will be
administered consistent with Section 409A. In general, Section 409A imposes
requirements as to the timing of elections relating to deferral and payment of
compensation deferred by participants under plans such as our deferred
compensation plan.
Under the
deferred compensation plan, eligible employees may defer up to 50% of their base
salary and 75% of their incentive award under our annual incentive program, generally until termination of their employment. The
employee is able to allocate deferred amounts into investment options which are
similar to the funds offered to participants in our Investment Plan. The
employee may change that allocation on a daily basis, subject to individual fund
manager restrictions.
We do not match
amounts deferred under this plan, and those amounts are not considered
pensionable earnings for the computation of benefits under our Retirement Plan.
Deferrals are considered pensionable earnings for the computation of benefits
under our Supplemental Retirement Plan. The deferred amounts, plus or minus any
accumulated earnings or losses on those amounts, are payable to the participants
following the termination of the deferral period.
Mr. Dannessa was
the only named executive officer to participate in the nonqualified deferred
compensation plan during 2016. The following table sets forth information
regarding his participation for 2016.
Name |
|
Executive Contributions in Last Fiscal Year
($) |
|
Registrant Contributions in Last Fiscal Year
($) |
|
Aggregate Earnings in Last Fiscal Year
($) |
|
Aggregate Withdrawals/ Distributions ($) |
|
Aggregate Balance at Last Fiscal Year End
($) |
Dominic A. Dannessa |
|
|
|
|
|
$5,301 |
(1) |
|
|
$273,303 |
(1) |
|
This amount is not reported in
the Summary Compensation Table. |
POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE IN CONTROL
The tables below
reflect the amount of compensation which is vested and also which would be paid
to each of our named executive officers, other than Mr. Metcalf, assuming the
various termination events occurred on December 31, 2016. The first column
details benefits and other payments which are already vested and therefore
payable in the event the named executive officer leaves for any reason,
including voluntary resignation or discharge for cause. The subsequent columns
show the total amount the executive would receive in each instance, including
the vested benefits shown in the first column. The amounts included in the
tables are estimates of the present value of the amounts that would be payable
to the executive officer upon various types of termination of employment. The
actual amounts to be paid upon a termination cannot be determined until the
event occurs.
VESTED BENEFITS
Each of the
following vested benefits would be due the named executive officers upon any
termination of employment as of the end of 2016 and are included in the tables
below:
|
2016 MIP awards; |
|
already-vested stock options and stock options
that would vest upon a retirement; |
|
RSUs that would vest upon a retirement; |
|
performance shares earned as of the end of
2016; |
|
MSUs earned as of the end of 2016; |
|
balances under the Investment Plan and USG
Corporation Deferred Compensation Plan; |
|
pension benefits under the USG Corporation
Retirement Plan and USG Corporation Supplemental Retirement Plan; |
|
retiree medical benefits; and |
|
death benefits under our Executive Death
Benefit Plan. |
Mr. Metcalf
served as Chairman, President and Chief Executive Officer until his retirement
effective October 31, 2016. Upon retirement, Mr. Metcalf was eligible to receive
his accrued vested benefits under the USG Corporation Retirement Plan, USG
Corporation Supplemental Retirement Plan and Investment Plan. As shown in the
2016 Pension Benefits Table above, Mr. Metcalf received a distribution of his
accrued benefit under the USG Corporation Retirement Plan and a partial
distribution
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation
of Executive Officers |
Securities Ownership |
Other
Information |
of his accrued
benefit under the USG Corporation Supplemental Retirement Plan in 2016. In
accordance with the requirements of Section 409A of the Internal Revenue Code,
he will receive the remaining balance of his accrued benefit under the USG
Corporation Supplemental Retirement Plan in 2017. The vesting of Mr. Metcalfs
market share units are prorated based on the number of full months employed
during the grant year and paid at the end of the three-year performance period
and his performance shares are prorated based on the number of full months
employed during the performance period and paid at the end of the three-year
performance period. Mr. Metcalf has five years from the date of his retirement
to exercise vested options (but no later than the expiration date).
SEVERANCE
PROTECTIONS
We provide
employment agreements and change-incontrol severance agreements to our named
executive officers. In the event of a termination of employment by us without
cause, the employment agreements generally provide for a lump sum severance
payment equal to the sum of (a) two times base salary plus current year target
annual incentive, (b) the cost of continued participation in benefit plans for
18 months and (c) except for Mr. Hilzingers and Ms. Warners agreements, the
present value of the additional retirement benefits the executive officer would
have been entitled to receive if he or she had an additional two years of age
and credited service under our Retirement Plan and Supplemental Retirement Plan,
as well as outplacement services for a period of at least six months. The
benefits under the employment agreements are subject to the named executive
officers signing a release waiving potential claims against us. The agreements
include a requirement that after termination of employment, the executive
officers will not compete with us for two years nor solicit our employees for
three years. For purposes of the employment agreements, cause generally
includes the executives (i) commission of a felony or fraud, (ii) engaging in
conduct that brings us into substantial public disgrace, (iii) commission of
gross negligence or gross misconduct with respect to our Company, (iv) failure
to follow the directives of the Board or Chief Executive Officer, (v) breach of
any employment policy or (vi) breach of the employment agreement.
In the event of
a termination of employment by us without cause or by the named executive
officer for Good Reason during the two years following a change in control,
the change-in-control agreements provide for a lump sum severance payment equal
to the sum of (a) two times (three times for Mr. Cook) the sum of the executive
officers base salary plus the greater of the executive officers target annual
incentive for the year in which the termination of employment occurs or the year
in which the change in control occurs, (b) an amount equal to the greater of the
executive officers pro rata target annual incentive award for the year in which
the termination of employment occurs or the year in which the change in control occurs, (c) the value of the executive
officers continued participation in our welfare benefit plans for 24 months (36
months for Mr. Cook) and (d) except for Mr. Hilzinger and Ms. Warner, the
present value of the additional retirement benefits the executive officer would
have been entitled to receive if he or she had an additional two years (three
years for Mr. Cook) of age and credited service under our Retirement Plan and
Supplemental Retirement Plan, as well as outplacement services for a period of
at least six months. In the event that any payments become subject to the excise
tax imposed under Internal Revenue Code Section 4999, the executives (other
than Mr. Hilzingers and Ms. Warners) benefits will be cut back to the maximum
amount payable without triggering such excise tax. However, in the event that
such cut back equals 10% or more of the benefits provided the executive, we will
provide a gross-up payment to the executive to cover all excise taxes and income
and employment taxes triggered by such gross-up payment to put the executive in
the same position as if no tax was imposed under Internal Revenue Code Section
4999. Mr. Hilzingers and Ms. Warners agreements include an alternative cap
provision which provides that if the total amounts payable would constitute a
parachute payment resulting in the imposition of an excise tax, the payment
will be reduced to the extent necessary to avoid being a parachute payment,
unless such named executive officer would receive a better after-tax benefit if
the payment were not reduced and he or she paid the resulting excise tax
directly. The benefits under the change-in-control agreements are subject to the
named executive officer signing a release waiving potential claims against us.
The agreements include a requirement that after termination of employment, the
executive officers will not compete with us for one year nor solicit our
employees for two years (three years for Mr. Cook). For purposes of the
change-in-control agreements, key terms are generally defined as
follows:
|
Change in Control
generally includes (i) the acquisition of 20% of the voting power of our
common stock, (ii) a change in a majority of the members of our Board,
(iii) the consummation of a reorganization, merger or consolidation, or
sale of all or substantially all of our assets or (iv) stockholder
approval of a complete liquidation of our Company; |
|
Cause generally
includes the executives (i) conviction of a crime in connection with the
executives duties with our Company, (ii) intentionally damaging our
property or (iii) intentionally disclosing our confidential information;
and |
|
Good Reason generally
includes (i) a material diminution in the executives duties and
responsibilities, (ii) a reduction in the executives base salary, target
incentive opportunities or benefits or (iii) a required
relocation. |
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation
of Executive Officers |
Securities Ownership |
Other
Information |
OTHER
BENEFIT PROTECTIONS
In addition to
the vested benefits and severance protections discussed above, the named
executive officers have other benefit protections that would be invoked upon
certain termination events. As is the case for stock options, RSUs and
performance shares granted to all employees prior to 2013, these awards vest
upon a change in control or upon a termination of employment due to death or
disability. Effective with the 2013 grants of MSUs, performance shares and RSUs,
our equity award agreements now provide for
vesting upon a change in control in most circumstances only if there is also a
related loss of employment or diminution of duties, commonly referred to as
double-trigger vesting. Finally, the named executive officers participate in our
Executive Death Benefit Plan which provides for death benefits, net of taxes,
equal to three times the executive officers base salary in the event of
termination due to death. Following retirement, the named executive officers are
entitled to ongoing death benefits equal to one times base salary.
JENNIFER F. SCANLON
Benefit Type |
|
Vested Benefits |
|
Death |
|
Disability |
|
Involuntary Termination without Cause |
|
Change
in Control Only |
|
Change in Control
and Involuntary Termination without Cause or
Good Reason |
Cash Severance |
|
|
|
|
|
|
|
$2,508,334 |
|
|
|
$2,508,334 |
Annual Bonus Payable for Fiscal 2016 |
|
$754,175 |
|
$754,175 |
|
$754,175 |
|
754,175 |
|
$754,175 |
|
754,175 |
Stock Options |
|
819,914 |
|
819,914 |
|
819,914 |
|
819,914 |
|
819,914 |
|
819,914 |
RSUs |
|
|
|
1,516,200 |
|
1,516,200 |
|
|
|
|
|
1,516,200 |
Performance Shares Payable for Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares granted
2015 and after |
|
|
|
|
|
|
|
|
|
|
|
|
(double trigger) |
|
|
|
|
|
|
|
|
|
|
|
641,302 |
MSUs Earned December 31, 2016 |
|
295,214 |
|
295,214 |
|
295,214 |
|
295,214 |
|
295,214 |
|
295,214 |
MSUs (other) |
|
|
|
|
|
|
|
|
|
|
|
1,997,702 |
Corporate Investment Plan |
|
468,487 |
|
468,487 |
|
468,487 |
|
468,487 |
|
468,487 |
|
486,487 |
Pension Benefit |
|
1,594,442 |
|
1,249,462 |
|
1,594,442 |
|
1,822,220 |
|
1,594,442 |
|
1,936,108 |
Retiree Medical Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
Welfare Benefit Continuation |
|
|
|
|
|
|
|
66,824 |
|
|
|
85,327 |
Death Benefits |
|
|
|
2,550,000 |
|
|
|
|
|
|
|
|
Excise Tax Gross-Up |
|
|
|
|
|
|
|
|
|
|
|
2,789,677 |
Total |
|
$3,932,232 |
|
$7,653,452 |
|
$5,448,432 |
|
$6,735,168 |
|
$3,932,232 |
|
$13,812,440 |
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation
of Executive Officers |
Securities Ownership |
Other
Information |
MATTHEW F.
HILZINGER
Benefit Type |
|
Vested Benefits |
|
Death |
|
Disability |
|
Involuntary Termination without Cause |
|
Change
in Control Only |
|
Change in Control
and Involuntary Termination without Cause or
Good Reason |
Cash Severance |
|
|
|
|
|
|
|
$2,117,500 |
|
|
|
$2,117,500 |
Annual Bonus Payable for Fiscal 2016 |
|
$831,270 |
|
$831,270 |
|
$831,270 |
|
831,270 |
|
$831,270 |
|
831,270 |
Stock Options |
|
1,242,017 |
|
1,242,017 |
|
1,242,017 |
|
1,242,017 |
|
1,242,017 |
|
1,242,017 |
RSUs |
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares Payable for Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares granted
2015 and after |
|
|
|
|
|
|
|
|
|
|
|
|
(double trigger) |
|
|
|
|
|
|
|
|
|
|
|
996,113 |
MSUs Earned December 31, 2016 |
|
479,722 |
|
479,722 |
|
479,722 |
|
479,722 |
|
479,722 |
|
479,722 |
MSUs (other) |
|
|
|
|
|
|
|
|
|
|
|
3,144,714 |
Corporate Investment Plan |
|
153,167 |
|
153,167 |
|
153,167 |
|
153,167 |
|
153,167 |
|
153,167 |
Pension Benefit |
|
281,923 |
|
281,923 |
|
281,923 |
|
281,923 |
|
281,923 |
|
281,923 |
Retiree Medical Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
Welfare Benefit Continuation |
|
|
|
|
|
|
|
73,457 |
|
|
|
91,674 |
Death Benefits |
|
|
|
1,815,000 |
|
|
|
|
|
|
|
|
Excise Tax Gross-Up/Forfeiture |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$2,988,099 |
|
$4,803,099 |
|
$2,988,099 |
|
$5,179,056 |
|
$2,988,099 |
|
$9,338,100 |
BRIAN J.
COOK
Benefit Type |
|
Vested Benefits |
|
Death |
|
Disability |
|
Involuntary Termination without Cause |
|
Change
in Control Only |
|
Change in Control
and Involuntary Termination without Cause or
Good Reason |
Cash Severance |
|
|
|
|
|
|
|
$1,402,500 |
|
|
|
$2,103,750 |
Annual Bonus Payable for Fiscal 2016 |
|
$506,090 |
|
$506,090 |
|
$506,090 |
|
506,090 |
|
$506,090 |
|
506,090 |
Stock Options |
|
859,522 |
|
859,522 |
|
859,522 |
|
859,522 |
|
859,522 |
|
859,522 |
RSUs |
|
|
|
288,800 |
|
288,800 |
|
|
|
|
|
288,800 |
Performance Shares Payable for Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares granted
2015 and after |
|
|
|
|
|
|
|
|
|
|
|
|
(double trigger) |
|
|
|
|
|
|
|
|
|
|
|
537,279 |
MSUs Earned December 31, 2016 |
|
246,011 |
|
246,011 |
|
246,011 |
|
246,011 |
|
246,011 |
|
246,011 |
MSUs (other) |
|
|
|
|
|
|
|
|
|
|
|
1,325,144 |
Corporate Investment Plan |
|
862,493 |
|
862,493 |
|
862,493 |
|
862,493 |
|
862,493 |
|
862,493 |
Pension Benefit |
|
5,814,622 |
|
3,502,965 |
|
5,814,622 |
|
6,547,729 |
|
5,814,622 |
|
6,913,228 |
Retiree Medical Benefits |
|
48,918 |
|
48,918 |
|
48,918 |
|
48,918 |
|
48,918 |
|
71,662 |
Welfare Benefit Continuation |
|
|
|
|
|
|
|
66,182 |
|
|
|
121,051 |
Death Benefits |
|
153,383 |
|
1,275,000 |
|
153,383 |
|
153,383 |
|
153,383 |
|
153,383 |
Excise Tax Gross-Up |
|
|
|
|
|
|
|
|
|
|
|
2,193,696 |
Total |
|
$8,491,039 |
|
$7,589,799 |
|
$8,779,839 |
|
$10,692,828 |
|
$8,491,039 |
|
$16,182,109 |
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation
of Executive Officers |
Securities Ownership |
Other
Information |
DOMINIC A.
DANNESSA
Benefit Type |
|
Vested Benefits |
|
Death |
|
Disability |
|
Involuntary Termination without Cause |
|
Change
in Control Only |
|
Change in Control
and Involuntary Termination without Cause or
Good Reason |
Cash Severance |
|
|
|
|
|
|
|
$1,485,000 |
|
|
|
$1,485,000 |
Annual Bonus Payable for Fiscal 2016 |
|
$515,385 |
|
$515,385 |
|
$515,385 |
|
515,385 |
|
$515,385 |
|
515,385 |
Stock Options |
|
1,353,703 |
|
1,353,703 |
|
1,353,703 |
|
1,353,703 |
|
1,353,703 |
|
1,353,703 |
RSUs |
|
|
|
288,800 |
|
288,800 |
|
|
|
|
|
288,800 |
Performance Shares Payable for Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares granted
2015 and after |
|
|
|
|
|
|
|
|
|
|
|
|
(double trigger) |
|
|
|
|
|
|
|
|
|
|
|
673,437 |
MSUs Earned December 31, 2016 |
|
344,416 |
|
344,416 |
|
344,416 |
|
344,416 |
|
344,416 |
|
344,416 |
MSUs (other) |
|
|
|
|
|
|
|
|
|
|
|
1,819,570 |
Corporate Investment Plan |
|
1,364,272 |
|
1,364,272 |
|
1,364,272 |
|
1,364,272 |
|
1,364,272 |
|
1,364,272 |
Pension Benefit |
|
5,851,792 |
|
3,354,133 |
|
5,851,792 |
|
6,395,618 |
|
5,851,792 |
|
6,553,534 |
Retiree Medical Benefits |
|
37,037 |
|
37,037 |
|
37,037 |
|
37,037 |
|
37,037 |
|
59,781 |
Welfare Benefit Continuation |
|
|
|
|
|
|
|
103,592 |
|
|
|
131,854 |
Death Benefits |
|
171,765 |
|
1,350,000 |
|
171,765 |
|
171,765 |
|
171,765 |
|
171,765 |
Excise Tax Gross-Up |
|
|
|
|
|
|
|
|
|
|
|
2,161,887 |
Total |
|
$9,638,370 |
|
$8,607,746 |
|
$9,927,170 |
|
$11,770,788 |
|
$9,638,370 |
|
$16,923,404 |
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation
of Executive Officers |
Securities Ownership |
Other
Information |
MICHELLE M.
WARNER
Benefit Type |
|
Vested Benefits |
|
Death |
|
Disability |
|
Involuntary Termination without Cause |
|
Change
in Control Only |
|
Change in Control
and Involuntary Termination without Cause or
Good Reason |
Cash Severance |
|
|
|
|
|
|
|
$1,530,000 |
|
|
|
$1,530,000 |
Annual Bonus Payable for Fiscal 2016 |
|
$577,080 |
|
$577,080 |
|
$577,080 |
|
577,080 |
|
$577,080 |
|
577,080 |
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
RSUs |
|
|
|
433,200 |
|
433,200 |
|
|
|
|
|
433,200 |
Performance Shares Payable for Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares granted
2015 and after |
|
|
|
|
|
|
|
|
|
|
|
|
(double trigger) |
|
|
|
|
|
|
|
|
|
|
|
52,299 |
MSUs Earned December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
MSUs (other) |
|
|
|
|
|
|
|
|
|
|
|
1,113,281 |
Corporate Investment Plan |
|
26,558 |
|
26,558 |
|
26,558 |
|
26,558 |
|
26,558 |
|
26,558 |
Pension Benefit |
|
8,156 |
|
8,156 |
|
8,156 |
|
8,156 |
|
8,156 |
|
8,156 |
Retiree Medical Benefits |
|
|
|
|
|
|
|
|
|
|
|
|
Welfare Benefit Continuation |
|
|
|
|
|
|
|
49,321 |
|
|
|
61,586 |
Death Benefits |
|
|
|
1,350,000 |
|
|
|
|
|
|
|
|
Excise Tax Gross-Up/Forfeiture |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$611,794 |
|
$2,394,994 |
|
$1,044,994 |
|
$2,191,115 |
|
$611,794 |
|
$3,802,160 |
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation
of Executive Officers |
Securities Ownership |
Other
Information |
|
|
|
|
|
PROPOSAL 5 |
|
Say-on-Frequency:
Advisory vote regarding frequency of future advisory votes on the
compensation of our named executive officers |
|
|
|
The Board recommends a
vote to conduct future advisory votes on the compensation of our named
executive officers EVERY YEAR. |
|
|
|
|
|
|
|
|
|
In addition to
providing stockholders with the opportunity to cast an advisory say-on-pay
vote on the compensation of our named executive officers, we are also asking
stockholders to approve an advisory vote as to the frequency with which
stockholders will have an opportunity to provide future advisory approval of our
executive compensation program. This advisory vote is commonly referred to as a
say-on-frequency vote. Under this proposal, our stockholders may indicate
whether they would prefer to have an advisory vote on executive compensation
every year, every two years, or every three years, or may abstain from voting on
this proposal.
Even though
our executive compensation program is designed to support long-term value
creation and does not change significantly from year to year, our Compensation
and Organization Committee reviews the program every year. An annual stockholder
vote will enable our stockholders to vote, on an
advisory basis, on the most recent executive compensation information that is
presented in our proxy statement, leading to more meaningful and timely
communication between our Company and our stockholders on the compensation of
our named executive officers. We therefore recommend that our stockholders
select a frequency of one year, or an annual vote.
Stockholders
are not voting to approve or disapprove the Boards recommendation. Although
this advisory vote on the frequency of future advisory votes on the compensation
of our named executive officers is non-binding, the Board and the Compensation
and Organization Committee will carefully review and consider the voting results
and take them into consideration in making a determination concerning the
frequency of future advisory votes on the compensation of our named executive
officers.
The Board recommends a vote to conduct
future advisory votes on the compensation of our named executive officers
EVERY YEAR.
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
STOCK
OWNERSHIP GUIDELINES
Our Board
adopted stock ownership guidelines to better align the interests of our
non-employee directors, executive officers and other senior managers with the
interests of our stockholders. The guidelines were set at the levels described
below to ensure our Board and management own meaningful levels of stock, taking
into account competitive market practice. We expect all participants to reach at least the minimum level of ownership for
their position level within five years after their appointment to that position.
All of our non-employee directors and named executive officers meet or exceed
their stock ownership guidelines or are expected to meet the guidelines within
the allowed timeframe.
EXECUTIVE OFFICERS
AND OTHER SENIOR MANAGERS
Our executive officers and other senior
managers are expected to own at a minimum a number of shares of our common stock
having a value equal to the lesser of (a) their salary multiple set forth below
or (b) the fixed number of shares set forth below:
Participant |
|
Minimum No. of Shares |
|
Multiple of Base
Salary |
President and Chief Executive Officer |
|
100,000 |
|
5X |
Executive Vice President |
|
35,000 |
|
4X |
Senior Vice President |
|
15,000 |
|
3X |
Vice President |
|
10,000 |
|
2X |
Director/Subsidiary VP |
|
3,500 |
|
1X |
Shares owned, shares held in the Investment Plan, unvested RSUs and
performance shares and MSUs that have vested count towards satisfaction of the
guidelines. If a participant fails to meet or show sustained progress toward
meeting these ownership requirements, we may reduce future long-term incentive
program awards to that participant.
DIRECTORS
Our non-employee directors are expected to
own at minimum a number of shares of our common stock and deferred stock units
having a value equal to the lesser of (a) three times the sum of the annual cash
retainer (currently $80,000) and the annual grant (currently $120,000) or (b) an
aggregate of 15,000 shares and deferred stock units.
Table of Contents
Summary of 2017 Proxy
Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive
Officers |
Securities Ownership |
Other
Information |
SECURITY OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS
The following table sets forth information
as of the record date regarding beneficial ownership of our common stock by each
director and each executive officer named in the Summary Compensation Table and
all directors and executive officers as a group, including any shares held by
executive officers through the Investment Plan.
Name |
|
Common Shares Beneficially Owned,
Excluding Shares Subject to Options and Restricted
Stock Units(a) |
|
Shares Subject to Vested Options and Options
and Restricted Stock Units that Vest Within 60
Days |
|
Deferred Stock Units(b) |
|
Total Beneficial Stock and Stock Unit
Holdings(c) |
Jose Armario(d) |
|
[______] |
|
|
|
[______] |
|
[______] |
Thomas A. Burke |
|
[______] |
|
|
|
[______] |
|
[______] |
Matthew Carter Jr. |
|
[______] |
|
|
|
[______] |
|
[______] |
Brian J. Cook |
|
[______] |
|
[______] |
|
|
|
[______] |
Dominic A. Dannessa |
|
[______] |
|
[______] |
|
|
|
[______] |
Gretchen R. Haggerty |
|
[______] |
|
|
|
|
|
[______] |
William H. Hernandez |
|
[______] |
|
|
|
[______] |
|
[______] |
Matthew F. Hilzinger(e) |
|
[______] |
|
[______] |
|
|
|
[______] |
Brian A. Kenney |
|
[______] |
|
|
|
|
|
[______] |
Richard P. Lavin |
|
[______] |
|
|
|
|
|
[______] |
Steven F. Leer |
|
[______] |
|
|
|
[______] |
|
[______] |
James S. Metcalf |
|
[______] |
|
[______] |
|
|
|
[______] |
Jennifer F. Scanlon |
|
[______] |
|
[______] |
|
|
|
[______] |
Michelle M. Warner |
|
[______] |
|
[______] |
|
|
|
[______] |
All current directors and
executive officers as a |
|
|
|
|
|
|
|
|
group (19 persons) |
|
[______] |
|
[______] |
|
[______] |
|
[______] |
(a) |
|
Unless otherwise noted, each
individual or member of the group has sole voting power and investment
power with respect to the shares shown in this column. |
(b) |
|
Indicates the non-voting deferred stock units credited
to the account of the individual director or members of the group under
current and past director compensation programs. The units increase and
decrease in value in direct proportion to the market value of our common
stock and are paid in cash or stock following termination of Board
service. |
(c) |
|
As of the record date no director or executive officer
beneficially owned 1% or more of our Companys outstanding common stock.
The current directors and executive officers of our Company as a group
beneficially owned approximately [_____]% of the common stock outstanding
on the record date. |
(d) |
|
Includes [______] shares held by trusts for the benefit
of Mr. Armarios children. |
(e) |
|
Includes [______] shares held
by the M&S Hilzinger Family, LP, over which Mr. Hilzinger and his wife
share voting and investment power. |
Table of
Contents
Summary of 2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table provides information
regarding the beneficial ownership of our common stock by all persons known by
us to be the beneficial owner of more than 5% of our common stock on the record
date. This information is based upon statements
on Schedule 13D or 13G or Form 3 or 4 filed by those persons with the Securities
and Exchange Commission.
Name and Address of Beneficial Owner |
|
Amount of Beneficial Ownership |
|
Percent of Class |
Berkshire Hathaway Inc.(a) 1440 Kiewit
Plaza Omaha, Nebraska 68131 |
|
43,387,980 |
|
[____]% |
C & G Verwaltungs GmbH(b) Am Bahnhof
7 97346 Iphofen Federal Republic of Germany |
|
14,757,258 |
|
[____]% |
(a) |
The number of shares shown as beneficially owned
includes (a) 17,072,192 shares held by National Indemnity Company, a
Nebraska insurance corporation (NICO), which is an indirect subsidiary
of Berkshire Hathaway, Inc., a Delaware corporation (Berkshire
Hathaway), (b) 14,035,088 shares (the BH Nebraska Shares) held by
Berkshire Hathaway Life Insurance Company of Nebraska, a Nebraska
corporation (BH Nebraska), (c) 7,894,736 shares (the BH Assurance
Shares, and together with the BH Nebraska Shares, the Nebraska/Assurance
Shares) held by Berkshire Hathaway Assurance Corporation, a New York
corporation (BH Assurance), and (d) 4,385,964 shares (the General Re
Life Shares) held by General Re Life Corporation, a Connecticut
corporation (General Re Life). Mr. Buffett may be deemed to control
Berkshire Hathaway, which controls BH Nebraska, BH Assurance and General
Re Life. Thus, both Mr. Buffett and Berkshire Hathaway may be considered
to have beneficial ownership of the Nebraska/Assurance Shares and the
General Re Life Shares. NICO, a direct subsidiary of Berkshire Hathaway
and the direct parent company of BH Nebraska and BH Assurance, also may be
considered to have beneficial ownership of the Nebraska/Assurance Shares.
General Reinsurance Corporation, a Delaware corporation (General
Reinsurance), an indirect subsidiary of Berkshire Hathaway and the direct
parent company of General Re Life, also may be considered to have
beneficial ownership of the General Re Life Shares. General Re
Corporation, a Delaware corporation (General Re), a direct subsidiary of
Berkshire Hathaway and the direct parent company of General Reinsurance,
also may be considered to have beneficial ownership of the General Re Life
Shares. BH Nebraska has voting and investment power with respect to the BH
Nebraska Shares. BH Assurance has voting and investment power with respect
to the BH Assurance Shares. However, Mr. Buffett, Chairman of the Board of
Directors of Berkshire Hathaway, who may be deemed to control BH Nebraska
and BH Assurance, directs the investment of BH Nebraska and BH Assurance.
Thus, Mr. Buffett, Berkshire Hathaway, and NICO share voting and
investment power with respect to the Nebraska/Assurance Shares. General Re
Life has voting and investment power with respect to General Re Life
Shares. However, Mr. Buffett, Chairman of the Board of Directors of
Berkshire Hathaway, who may be deemed to control General Re Life, directs
the investment of General Re Life. Thus, Mr. Buffett, Berkshire Hathaway,
General Reinsurance and General Re share voting and investment power with
respect to the General Re Life Shares. |
(b) |
C & G Verwaltungs GmbH, a limited liability company
organized under the laws of the Federal Republic of Germany (C&G),
is an indirect subsidiary of Gebr. Knauf Verwaltungsgesellschaft KG, a
limited partnership organized under the laws of the Federal Republic of
Germany (Gebr. Knauf) controlled by members of the Knauf family. Hans
Peter Ingenillem and Martin Stürmer are the general managers of C&G,
and Mr. Ingenillem and Manfred Grundke are the general partners of Gebr.
Knauf. C&G and Gebr. Knauf both report that they have sole voting and
dispositive power with respect to all of the reported
shares. |
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange
Act of 1934, as amended, requires that our executive officers, directors and
greater than 10% owners file reports of beneficial ownership and changes in
beneficial ownership of our common stock with the Securities and Exchange
Commission. Based on a review of ownership reports filed with the Securities and Exchange Commission during 2016, or written
representations that all such reports were timely filed, we believe that all
filing requirements under Section 16(a) were met by our directors and executive
officers during that year.
Table of
Contents
Summary of 2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
ADDITIONAL INFORMATION
In addition to solicitation by mail, our
directors, officers and employees may solicit proxies by telephone or other
means with no additional compensation paid for those services.
A copy of our Annual Report on Form 10-K
for the year ended December 31, 2016, as filed with the Securities and Exchange
Commission, will be sent without charge to any stockholder upon written request
addressed to USG Corporation, c/o Corporate Secretary, 550 West Adams Street,
Chicago, Illinois 60661-3676. The Annual Report on Form 10-K may also be accessed at the Securities and Exchange
Commission website www.sec.gov or our website www.usg.com.
The Board does not know of any matter to
be presented for action at the annual meeting other than the matters identified
in this proxy statement. If any other matter is properly presented for action,
the individuals named in the proxy solicited by the Board intend to vote on such
matter in accordance with their best judgment on behalf of the stockholders they
represent.
DEADLINE
FOR STOCKHOLDER PROPOSALS
Stockholder proposals intended for
inclusion in the proxy statement for our next regularly scheduled annual meeting
in May 2018 must be received by us no later than [______]. Any such stockholder
proposal must comply with Rule 14a-8 of Regulation 14A of the Securities and
Exchange Commission. Under our Bylaws, stockholder proposals not intended for
inclusion in the proxy statement, but intended to be raised at our regularly
scheduled annual meeting of stockholders in May 2018, including nominations for election of director(s) other than the Boards
nominees, must be received no earlier than [______] nor later than [______] and
must comply with the procedures outlined in our By-laws. The By-laws are
accessible on our website www.usg.com. A copy of the By-laws also is available
upon written request to USG Corporation, c/o Corporate Secretary, 550 West Adams
Street, Chicago, Illinois 60661-3676.
Table of
Contents
Summary of 2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
ANNUAL
MEETING INFORMATION
WHO IS
ASKING FOR MY VOTE AND WHY?
The Board is
soliciting proxies for use at our annual meeting of stockholders to be held on
Wednesday, May 10, 2017, or any adjournment or postponement of the meeting. The
annual meeting will be held only if there is a quorum, which means that a
majority of the outstanding shares of our common stock is present or represented
by proxy at the annual meeting. To ensure that there is a quorum, the Board asks that you vote before the meeting, which
allows your shares of our Companys stock to be represented at the annual
meeting. This proxy statement provides you with information related to the
matters upon which you are asked to vote as a stockholder to assist you in
voting your shares.
HOW DO I
ATTEND THE ANNUAL MEETING?
If you plan to
attend the meeting, you must be a holder of our Companys shares as of the
record date of March 13, 2017. A form of photo identification will be required
for admission to the annual meeting as well as one of the following proofs of
stock ownership:
|
If your shares are registered in
your name and you received your proxy materials by mail: Please mark the space on your proxy form if you plan to
attend the annual meeting. An admission ticket is attached to your proxy
form. |
|
If your shares are registered in
your name and you received or accessed your proxy materials electronically
over the Internet: Click the
appropriate box on the electronic proxy
form or follow the telephone instructions when prompted and an admission
ticket will be held for you at the registration desk at the annual
meeting. |
|
If you hold shares through a
broker, bank or other nominee (i.e., in street name): You will be required to present a statement from that
institution reflecting your ownership of shares of our stock as of the
record date, the notice regarding the availability of proxy materials you
received or the non-voting portion of the voting instruction form you
received. |
WHY DID
I RECEIVE A NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS INSTEAD OF THE
PROXY MATERIALS?
We furnish our
proxy materials to certain stockholders over the Internet using Notice and
Access delivery, as permitted by the Securities and Exchange Commission. This
method expedites stockholders receipt of proxy materials, reduces our print and
mail costs as well as the environmental impact of our annual meeting. All
stockholders receiving the notice will be able to access the proxy materials and to request paper copies by mail. Instructions on
how to access those documents over the Internet or to request paper copies of
them may be found in the notice. In addition, the notice contains instructions
on how you may request to receive proxy materials in printed form by mail or
through e-mail access on an ongoing basis.
WHY DID
I NOT RECEIVE A NOTICE IN THE MAIL ABOUT THE INTERNET AVAILABILITY OF THE PROXY
STATEMENT AND RELATED PROXY MATERIALS?
Stockholders who
have previously requested to receive proxy materials in paper form or through
e-mail access are being provided copies of the proxy materials in the format
previously requested instead of receiving the
notice regarding Internet availability of the proxy materials. In addition,
stockholders who hold our Companys shares in the Investment Plan may receive
materials by either e-mail or in paper.
WHO IS
ENTITLED TO VOTE AT THE ANNUAL MEETING?
All record
holders of our common stock at the close of business on our record date of March
13, 2017 are entitled to vote their shares at the annual meeting. On that date,
there were [_________] shares of our common stock issued and outstanding and entitled to vote. Each share is entitled to
one vote on each matter presented at the annual meeting. The shares of common
stock are our only securities entitled to vote at the annual meeting.
Table of
Contents
Summary of 2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
HOW DO I
VOTE?
We have both stockholders of record, or registered stockholders, and
street name stockholders. If your shares are registered in your name with
Computershare Trust Company N.A., our transfer agent, you are a stockholder of
record or registered stockholder. You are a stockholder of record, for example,
if you hold a certificate for your shares. If your shares are held in the name
of a broker, bank or other nominee, you are a street name holder.
Whether you
hold shares directly as a stockholder of record or as a street name holder, you
may direct how your shares are voted by proxy without attending the annual
meeting. There are three ways to vote by proxy:
|
By telephone You can vote
by telephone by calling 1-800-690-6903 and following the instructions on
the notice regarding Internet availability of proxy materials or the proxy
or voting instruction form you received; |
|
By Internet You can vote
over the Internet at www.proxyvote.com by following the instructions on
the notice regarding Internet availability of proxy materials or the proxy
or voting instruction form you received; or |
|
By mail If you received
your proxy materials by mail, you can vote by mail by signing, dating and
mailing the enclosed proxy or voting instruction
form. |
If you are a
street name holder and you wish to vote your shares in person at the annual
meeting, you must obtain a proxy from your broker, bank or other nominee giving
you the right to vote your shares at the meeting.
Fidelity
Management Trust Company, as trustee of the Investment Plan, or the Trustee,
held [_________] shares of our common stock on the record date. Only the
Trustee, as of the record date, can vote the shares held by the Investment Plan.
However, the Investment Plan provides that Investment Plan participants are
entitled to instruct the Trustee how the shares allocated to their accounts
under the Investment Plan are to be voted.
The Investment
Plan also provides that unallocated shares and shares for which no instructions
are received by the Trustee will be voted by the Trustee in the same proportion
as those shares for which instructions are received, unless otherwise required
by law. Thus, Investment Plan participants will be exercising power and control
as a named fiduciary of the Investment Plan not only over the shares allocated
to their own accounts, but also over a portion of the undirected shares. By
submitting voting instructions over the Internet, by telephone or by signing and
returning the proxy voting form accompanying this proxy statement, an Investment
Plan participant will be directing the Trustee to vote the shares allocated to
his or her account under the Investment Plan, in person or by proxy, as
instructed, at the annual meeting of stockholders. Investment Plan participants
may revoke previously submitted voting instructions by phone, Internet or filing
with Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, New York 11717,
the Investment Plan proxy tabulator, either a written notice of revocation or a
properly completed and signed proxy form bearing a later date.
If you own shares
through the Investment Plan and you are also a stockholder of record, your proxy
form will allow you to designate the manner in which you want both the shares
registered in your name and the shares in the Investment Plan voted at the
annual meeting. If you hold shares through the Investment Plan, but you do not
own any shares of our common stock as a stockholder of record, you will be able
to designate the manner in which you want those shares voted at the annual
meeting by voting as described above.
Unless you hold
your shares through the Investment Plan, you may vote via the Internet or by
phone until 11:59 p.m. Eastern Time, on May 9, 2017, or our Companys agent must
receive your paper proxy card on or before May 9, 2017. If you hold any of your
shares through the Investment Plan, you may vote via the Internet or by phone
until 11:59 p.m., Eastern Time, on May 7, 2017, or our Companys agent must
receive your paper proxy card on or before May 7, 2017.
WHAT
DOES IT MEAN TO VOTE BY PROXY?
It means that you
give someone else the right to vote your shares in accordance with your
instructions. We are asking you to give your proxy to our Chief Executive
Officer and our Corporate Secretary. In this way,
you ensure that your vote will be counted even if you are unable to attend the
annual meeting.
Table of
Contents
Summary of 2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
If you sign and submit your proxy or voting instruction form without
giving specific instructions on how to vote your shares, in accordance with the
recommendation of the Board, either our Chief Executive Officer or our Corporate
Secretary will vote your shares in the following manner:
|
FOR the election of each of the Boards nominees for
director; |
|
FOR
the ratification of the appointment of
Deloitte & Touche LLP as our
independent registered public accountants
for 2017; |
|
FOR
the approval of the Committee
Amendment; |
|
FOR
the advisory vote approving the
compensation of our named executive
officers; and |
|
to conduct future advisory votes on
the compensation of our named executive
officers EVERY
YEAR. |
WHAT
HAPPENS IF OTHER MATTERS ARE PRESENTED AT THE ANNUAL MEETING?
If other matters
are properly presented at the annual meeting, either our Chief Executive Officer
or our Corporate Secretary will have discretion to vote your shares for you on
those matters in accordance with her best
judgment if you have granted a proxy. However, we have not received timely
notice from any stockholder of any other matter to be presented at the annual
meeting.
WHAT IF
I SUBMIT A PROXY AND LATER CHANGE MY MIND?
If you have given
your proxy and wish to revoke it and change your vote, you may do so by (i)
giving written notice to our Corporate Secretary, (ii) voting in person at the
annual meeting, (iii) granting a subsequent proxy over the Internet or by telephone or (iv) if you received your proxy
materials by mail, submitting another signed proxy form with a date later than
your previously delivered proxy.
WHAT ARE
MY CHOICES WHEN VOTING?
With respect to the say-on-frequency vote, you may cast your
vote to recommend that the advisory vote be held every year, every two years or every three years, or you may abstain from
voting your shares on such proposal. You may cast your vote for or against, or you may abstain
from voting your shares on, each other proposal.
WHAT
VOTE IS REQUIRED TO APPROVE EACH MATTER?
Assuming a quorum
is present at the annual meeting, each of the matters specified in the notice of
the annual meeting, other than approval of the Committee Amendment and the
say-on-frequency vote, requires the affirmative vote of a majority of the shares
actually voted at the meeting in person or by proxy. The affirmative vote of 80%
of the outstanding shares of our common stock is required for the approval of
the Committee Amendment to remove the requirement that we maintain a Finance
Committee. With respect to the say-on-frequency vote, the frequency receiving the greatest number of votes (e.g., every one,
two or three years) will be considered the frequency recommended by our
stockholders.
The say-on-pay
and say-on-frequency votes are non-binding. However, our Board will review the
results of such votes and will take them into account in making determinations
concerning executive compensation and the frequency of future votes on the
compensation of our named executive officers.
HOW ARE
BROKER NON-VOTES AND ABSTENTIONS TREATED?
Broker non-votes
occur when nominees, such as brokers and banks, holding shares on behalf of
street name holders do not receive voting instructions from those owners
regarding a matter and do not have discretionary authority to vote on the matter
under the rules of the NYSE. Those rules allow nominees to vote in their
discretion on routine matters, such as the ratification of the appointment of
our independent registered public accountants,
even if they do not receive voting instructions from the street name holder. On
non-routine matters, such as the other proposals specified in the notice of the
annual meeting, nominees cannot vote unless they receive instructions from the
street name holder. The failure to receive such instructions as to a non-routine
matter results in a broker non-vote. Broker non-votes are counted for purposes
of determining
Table of
Contents
Summary of 2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
whether a quorum
is present at the annual meeting, but because they are not votes they will not
affect the outcome of the vote on any matter presented at the annual meeting
other than the approval of the Committee Amendment. Broker non-votes will have
the same effect as a vote against the approval of the Committee Amendment.
Abstentions are
counted for purposes of determining whether a quorum is present, but they are
not treated as votes cast, except with respect to approval of the Committee
Amendment. Accordingly, abstentions will have the same effect as a vote against
the Committee Amendment, but will have no effect on the other matters presented
at the annual meeting.
WHAT IF
I RECEIVE MORE THAN ONE NOTICE OR E-MAIL REGARDING THE INTERNET AVAILABILITY OF
THE PROXY MATERIALS OR MORE THAN ONE PAPER COPY OF THE PROXY
MATERIALS?
Receiving more
than one notice, e-mail or paper copy means your shares are registered in two or
more accounts. To vote all of your shares by proxy, please complete, sign, date
and return each proxy and voting instruction form that you receive, or vote the
shares in each account to which those forms relate by Internet or telephone, and vote by Internet or telephone the shares in
each account for which you receive a notice or e-mail regarding Internet
availability of the proxy materials and do not request and receive a proxy or
voting instruction form.
WHAT IS
HOUSEHOLDING?
Unless you
advised otherwise, if you hold your shares in street name and other residents at
your mailing address share the same last name and also own shares of our
Companys common stock in an account at the same broker, bank or other nominee,
your nominee delivered a single notice or set of proxy materials to your
address. This method of delivery is known as householding. Householding reduces
the number of mailings you receive, saves on printing and postage costs and
helps the environment. Stockholders who participate in householding continue to
receive separate voting instruction cards and control numbers for voting
electronically.
If you would like
to change your householding election, request that a single copy of the proxy
materials be sent to your address, or request a separate copy of the proxy materials, you should submit this request by writing
Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way,
Edgewood, New York, 11717, or calling 1-866-540-7095. We will promptly deliver
the proxy materials to you upon receipt of your request. Beneficial owners
sharing an address who are receiving multiple copies of the proxy materials and
wish to receive a single copy of these materials in the future should contact
their broker, bank or other nominee to make this request.
If you are a
registered stockholder or hold shares in the Investment Plan, we sent you and
each registered Investment Plan holder at your address separate notices or sets
of proxy materials.
WHO WILL
COUNT THE VOTE?
A representative
of Broadridge Financial Solutions, Inc. will count the votes and serve as
Inspector of Election. The Inspector of Election will be present at the annual
meeting.
WHO PAYS
THE COST OF THIS SOLICITATION?
Our Company is
paying the cost of this proxy solicitation. Upon request, we will reimburse
brokers, dealers, banks and trustees, or their nominees, for reasonable expenses
they incur in forwarding proxy material to street name holders.
We have retained
Alliance Advisors, LLC to aid in soliciting votes for the annual meeting for a
fee of approximately $9,500 plus out-of-pocket expenses.
Table of
Contents
Summary of 2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
WHAT IF I HAVE A QUESTION REGARDING MY SHARES
OR MY MAILING ADDRESS?
If you are a registered stockholder,
please contact Computershare Trust Company N.A. directly at 211 Quality Circle,
Suite 210, College Station, Texas 77845. If you are a street name holder, please
contact your broker, bank or other nominee directly.
WHERE CAN I FIND THE RESULTS OF THE ANNUAL
MEETING?
We will announce preliminary voting
results at the annual meeting and publish the results in a Form 8-K filed with
the Securities and Exchange Commission within four business days after the
annual meeting.
Table of
Contents
Summary of 2017 Proxy Statement |
Board of Directors
and Corporate Governance |
Audit Committee Matters |
Finance Committee Matters |
Compensation of Executive Officers |
Securities Ownership |
Other
Information |
ANNEX A PROPOSED COMMITTEE AMENDMENT
AMENDMENT TO
RESTATED CERTIFICATE OF
INCORPORATION
OF
USG CORPORATION
USG Corporation,
a corporation organized and existing under and by virtue of the Delaware General
Corporation Law (the Corporation), DOES HEREBY CERTIFY THAT:
FIRST: This Amendment to the Restated
Certificate of Incorporation (the Restated Certificate of Incorporation) of
the Corporation has been duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
SECOND:
Article SEVENTH of the Restated Certificate
of Incorporation is hereby amended by deleting the following paragraph in its
entirety:
Notwithstanding
the foregoing paragraph, the corporation shall maintain a Finance Committee,
which shall have the power to review all of the corporations significant
financial matters, including, but not limited to, strategies, policies or
transactions, contemplated by the corporation. Without limiting the
foregoing, the Finance Committee shall provide review and oversight of and make
recommendations to the board of directors on the corporations financing
requirements and programs to obtain funds; relations with banks, bondholders and
other creditors; forecasting procedures on revenues, expenses, earnings, and
cash flow; operating and capital expenditure budgets; dividend policy; the
adoption of any compensation plan for key employees which contemplates the
issuance of stock of the corporation or which is a significant cash compensation
plan (other than an annual cash bonus plan consistent with past practice); and
acquisitions, divestitures and significant transactions affecting the
corporations capital structure or ownership. The Finance Committee shall confer
with the Pension Committee established under the corporations retirement plan
and report periodically to the board of directors on the funding of qualified
pension plans of the corporation and its subsidiaries and the investment
performance of plan funds and, on behalf of the board of directors, authorize
necessary or desirable changes in actuarial assumptions for funding the plans.
The Finance Committee shall consider such other matters as may be referred to it
from time to time by the board of directors and shall at all times prior to June
22, 1997 be composed of four members of the board of directors who are not
officers or employees of the corporation. Any actions by the Finance Committee
shall be by a majority vote of at least 3 of its members. Prior to June 22 1997,
(i) the scope and power of review of the Finance Committee as set forth herein
shall not in any way be limited or reduced and (ii) the composition, existence
and function of the Finance Committee as set forth herein shall not be altered
or diminished, in either such case without the unanimous consent of all
directors then in office.
IN WITNESS
WHEREOF, the Corporation has caused this
Certificate of Amendment of the Restated Certificate of Incorporation to be
executed on this day of , 2017.
USG
CORPORATION |
By: |
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Name: |
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Title: |
Table of Contents
USG CORPORATION
550 WEST ADAMS
STREET
CHICAGO, IL 60661
ANNUAL MEETING ADMISSION TICKET
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time on May 9, 2017. Have your proxy form in hand when
you access the web site and follow the instructions to obtain your records and
to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
If you would like to reduce the
costs incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy forms and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE BY TELEPHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
on May 9, 2017. Have your proxy form in hand when you call and then follow the
instructions.
VOTE BY MAIL
Mark, sign and date your proxy form and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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E19152-P87976 |
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION
ONLY |
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED. |
USG
CORPORATION
The Board of Directors recommends you vote FOR all the nominees listed
below:
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1. |
Election of Directors |
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For |
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Against |
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Abstain |
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Nominees: |
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1a. |
Matthew Carter, Jr. |
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☐ |
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☐ |
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☐ |
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1b. |
Richard P. Lavin |
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☐ |
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☐ |
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☐ |
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1c. |
Jennifer F. Scanlon |
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☐ |
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☐ |
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☐ |
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The Board of
Directors recommends you vote FOR proposals 2, 3 and 4. |
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2. |
Ratification of the appointment of Deloitte & Touche LLP
as independent registered public accountants for the year ending December
31, 2017. |
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☐ |
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☐ |
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☐ |
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3. |
Approval of an amendment to our Restated Certificate of
Incorporation to remove the requirement that we maintain a Finance
Committee. |
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☐ |
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☐ |
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☐ |
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4. |
Approval, by advisory vote, of the compensation of our named
executive officers. |
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☐ |
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☐ |
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☐ |
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For address changes,
please check this box and write them on the back where
indicated. |
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☐ |
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Please indicate if you
plan to attend this meeting. |
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☐ |
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☐ |
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Yes |
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No |
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Please sign
exactly as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint owners
should each sign personally. All holders must sign. If a corporation or
partnership, please sign in full corporate or partnership name by authorized
officer.
The Board of
Directors recommends you vote 1 YEAR on proposal 5. |
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1 Year |
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2 Years |
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3 Years |
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Abstain |
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5. |
Recommendation, by advisory vote, on
the frequency of future votes to approve the compensation of our named
executive officers. |
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☐ |
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☐ |
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☐ |
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☐ |
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NOTE: Such other business as may properly come before the
meeting or any adjournment
thereof. |
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint
Owners) |
Date |
Table of Contents
Annual Meeting of Stockholders
of USG
Corporation
May 10, 2017, 9:00 a.m., Central Time
550 West Adams Street
Chicago, Illinois
60661
You must present this ticket (top portion
only) to a USG representative to be
admitted to the USG Corporation Annual
Meeting.
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice of Annual Meeting of Stockholders and Proxy
Statement, Annual Report on Form 10-K and Letter to Shareholders
are
available at www.proxyvote.com.
PROXY - USG CORPORATION
This proxy is solicited on behalf of
the Board of Directors
of USG Corporation for its Annual Meeting of
Stockholders
on May 10, 2017
The undersigned hereby appoints
Jennifer F. Scanlon and Michelle M. Warner, and each or either of them, proxies,
with power of substitution and with powers the undersigned would possess, if
personally present, to vote all stock of the undersigned in USG Corporation at
the annual meeting of stockholders of USG Corporation to be held at 550 West
Adams Street, Chicago, Illinois on May 10, 2017, and at any adjournment or
postponement thereof, on the matters shown on the reverse side and as set forth
in the accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement.
This proxy, when properly executed,
will be voted in the manner directed herein and in the discretion of the proxy
holder on all other matters properly coming before the meeting. If no direction is given, this proxy will be voted FOR the
election of the Board's nominees for director, FOR ratification of the
appointment of Deloitte & Touche LLP as USG Corporation's independent
registered public accountants for 2017, FOR approval of an amendment to our
Restated Certificate of Incorporation to remove the requirement that we maintain
a Finance Committee, FOR approval of the compensation of our named executive
officers and for holding future votes on the compensation of our executive
officers every 1 YEAR, except for any shares the undersigned holds in the USG
Corporation Investment Plan, which will be voted according to the rules of that
plan.
PLEASE MARK, SIGN, DATE AND MAIL THIS
PROXY FORM PROMPTLY USING THE ENCLOSED ENVELOPE, EXCEPT IF YOU VOTE
BY
TELEPHONE OR INTERNET.
(If you noted any Address Changes above, please mark
corresponding box on the reverse side.)
Continued and to be signed on reverse
side
This regulatory filing also includes additional resources:
usg_courtesy-pdf.pdf
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