Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Table of Contents
2017
NOTICE OF ANNUAL MEETING OF
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STOCKHOLDERS AND PROXY STATEMENT
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MAY 5, 2017
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BRISTOL, CONNECTICUT
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Table of Contents
123 Main Street
Bristol, Connecticut 06010
March 20, 2017
NOTICE OF 2017 ANNUAL MEETING OF
STOCKHOLDERS
You are invited to attend Barnes Group
Inc.s 2017 Annual Meeting of Stockholders on Friday, May 5, 2017 at the
DoubleTree By Hilton, 42 Century Drive, Bristol, CT 06010, at 11:00 a.m.,
Eastern Daylight Time. Proposals to be considered at the Annual Meeting include:
Proposal
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Board
Vote
Recommendation
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1.
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Election of 11 directors
(page 2)
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FOR
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2.
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Ratify the Companys Bylaw amendment
allowing proxy access (page 12)
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FOR
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3.
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Advisory vote to approve the Companys
executive compensation (page 15)
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FOR
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4.
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Advisory resolution regarding the
frequency of holding an advisory vote on the Companys executive
compensation (page 16)
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FOR
Annual Frequency
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5.
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Ratify the selection of
PricewaterhouseCoopers LLP as the Companys independent auditor for 2017 (page 52)
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FOR
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To conduct such
other business that may properly come before the meeting
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Stockholders of record at the close of
business on March 9, 2017 (Record Date) may vote at the meeting. Each share of
our common stock is entitled to one vote for each director nominee and one vote
for each of the proposals to be voted on.
The Board of Directors recommends a vote
FOR Proposals 1, 2, 3 and 5 and FOR annual relative to Proposal 4.
Your vote is
important.
Whether or not you plan to attend
the meeting, we encourage you to vote as promptly as possible.
Stockholders of record on the Record Date are entitled to
vote at the meeting or in the following ways:
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Phone
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In
the U.S. or Canada, you can vote your shares by calling +1 (800)
690-6903
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Internet
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You can vote your shares using the internet at
www.proxyvote.com
. You will need the 12-digit control number on the Notice
of Internet Availability or proxy card.
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QR
CODE
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You
can vote your shares by scanning the QR code. You will need the 12-digit
control number on the Notice of Internet Availability or proxy card.
Additional software may need to be downloaded.
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Mail
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You can vote by mail by marking, dating and signing
your proxy card or voting instruction form and returning it in the
postage-paid envelope.
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Thomas O. Barnes
Chairman of the
Board
Table of Contents
PROXY SUMMARY
This summary highlights information
contained elsewhere in this proxy statement. Please read the entire proxy
statement carefully before voting.
MEETING AGENDA AND VOTING
RECOMMENDATIONS
Proposal
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Board
Vote
Recommendation
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1.
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Election of 11 directors
(page 2)
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FOR
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2.
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Ratify the Companys Bylaw amendment
allowing proxy access (page 12)
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FOR
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3.
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Advisory vote to approve the Companys
executive compensation (page 15)
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FOR
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4.
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Advisory resolution regarding the
frequency of holding an advisory vote on the Companys
executive compensation (page 16)
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FOR
Annual
Frequency
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5.
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Ratify the selection of
PricewaterhouseCoopers LLP as the Companys independent auditor for 2017
(page 52)
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FOR
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To
conduct such other business that may properly come before the meeting
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2017 DIRECTOR NOMINEES
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Committee
Memberships
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Name and Principal Occupation
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Age
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Audit
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CMDC
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CG
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Thomas O. Barnes
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68
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Chairman of the Board,
Barnes Group Inc.
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Elijah K.
Barnes
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36
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Principal, Avison Young
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Gary G. Benanav
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71
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Former CEO, New York Life
International, LLC and Former Vice
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Chairman and Director, New
York Life Insurance Company
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Patrick J.
Dempsey
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52
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President and CEO, Barnes Group
Inc.
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Thomas J. Hook
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54
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President and CEO,
Integer
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Mylle H.
Mangum
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68
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CEO, IBT Enterprises, LLC
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Chair
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Hans-Peter Männer
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54
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Managing Director of
Proventus Verwaltungs-GmbH
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Hassell H.
McClellan
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71
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Former Associate Professor of Finance and
Policy, Boston Colleges
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Chair
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Wallace E. Carroll School
of Management
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William J. Morgan
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70
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Former Partner, KPMG
LLP
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Chair
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Anthony V.
Nicolosi
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63
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Former Regional Risk Management Partner for
the Americas,
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KPMG LLP
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JoAnna L. Sohovich
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45
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CEO, The Chamberlain
Group, Inc.
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Number of meetings held
in 2016
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8
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4
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3
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i
Table of Contents
BOARD HIGHLIGHTS
Nominees for Director shall be selected
on the basis of their qualifications, such as:
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Character, wisdom, judgment
and integrity
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Experience in positions with a
high degree of responsibility
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Prominence and accomplishments
in areas relevant to the Companys business activities
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Understanding of the Companys
business environment
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Strategy-development,
experience in technology-laden industrial businesses and/or other relevant
firms
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Commitment to maximize
stockholder value
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The capacity and desire to
represent the interests of the Companys stockholders as a whole
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The
extent to which the interplay of the Nominees skills, knowledge,
expertise and diversity of background with that of the other Board members
will help build a Board that is effective in collectively meeting the
Company's strategic needs and serving the long-term interests of the
Company or its stockholders
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Ability to devote sufficient
time to the affairs of the Company
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CEO Experience 6
Manufacturing Expertise 5
Financial Experience 6
Diversity 3
2016 Tenure Average 11 years
Historical Tenure Average
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2013 15 yrs.
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2014 13 yrs.
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2015 14
yrs.
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Board Engagement
Board and Committee attendance
exceeded 98.8% for the last 8 years
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BOD
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AC
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CMDC
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CG
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Attendance
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98.8
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99
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%
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98.8
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%
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100
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%
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(2009 to 2016)
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# of Meetings
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77
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68
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35
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26
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Key Accomplishments:
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Declared continuous dividends since
1934
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Adopted Lead Independent Director
role
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Adopted political contributions
policy
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Adopted proxy access
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Set director age limits
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Required majority voting in uncontested
director elections
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Declassified the
Board
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ii
Table of Contents
GOVERNANCE HIGHLIGHTS
Independence
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7 of our 10 directors are
independent
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Our CEO is the only management
director
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Audit, Compensation and
Corporate Governance Committees are composed exclusively of independent
directors
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Board Practices
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Annual evaluation processes
for the Board and each of the standing committees
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Directors may not stand for
election after age 72
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Regular consideration of
rotation of committee chairs and members
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Corporate Governance
Guidelines require directors to attend director education programs and
briefing sessions
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A prohibition on directors
simultaneously serving on more than three public company audit committees,
including that of the Company
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Restrictions on hedging and
pledging Company stock by directors and executive
officers
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Board Oversight of Risk
Management
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Board risk management
oversight with a focus on the most significant risks facing the
Company
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Committee oversight and
disclosure regarding political
activities
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Executive Sessions
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Regular executive sessions of
Board and committees without management present
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Lead Independent Director
presides at executive sessions of the independent
directors
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Lead Independent
Director
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Lead Independent Director with
clearly established authority and responsibility over Board governance and
operations
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Selected by independent
directors
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Serves as a liaison between
the Chairman of the Board and the independent
directors
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Accountability
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Declassified Board - directors
serve one-year terms
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Bylaws - directors must
receive more for than withhold votes in uncontested elections
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Stockholders have right to
hold special meetings
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Stock Ownership
Requirements
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Long-standing executive and
director stock ownership requirements
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CEO required to own five times
his salary
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Other named executive officers
required to own three times their
salary
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Other Best Practices
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A policy that requires
Corporate Governance Committee approval
before an executive officer accepts outside board membership with
for-profit entities
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Bylaw amendment allowing proxy
access
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Stockholder engagement and
outreach to allow for management and the Board to understand and consider
issues that matter most to stockholders and enable the Company to address
them effectively
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iii
Table of Contents
2016 EXECUTIVE COMPENSATION KEY
ELEMENTS
The following summary of specific features
of our executive compensation program highlights our commitment to executive
compensation practices that align the interests of our executive officers and
stockholders.
What We Do
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We pay-for-performance -
over 80% of CEO total direct compensation at target (and on average over
60% for other NEOs) is at risk in the form of annual and long-term
incentives
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We consider a relevant peer
group in establishing
compensation
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We review the complete
compensation package of every NEO
annually
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We have robust stock
ownership requirements - 5x base salary for CEO and 3x for other
NEOs
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We have a clawback policy
incorporated into our incentive compensation
plans
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We have double trigger
equity vesting in the event of a change in control for all NEO
awards
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We have an independent
compensation consultant that works directly with the Compensation
Committee
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EQUITY
Stock Options
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Time-based vesting; 18,
30 and 42 months from the grant date in equal
installments.
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Restricted Stock Units
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Time-based vesting; 18,
30 and 42 months from the grant date in equal
installments.
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Performance Share Awards
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Performance-based
vesting at the end of a 3-year cycle; based on two equally weighted
measures: Total Shareholder Return (TSR) relative to the performance of
the Russell 2000 Index companies; and Return On Invested Capital (ROIC)
performance against an absolute internal goal as determined by the
Compensation Committee.
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CASH
Salary
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Base salaries are
reviewed annually and are typically increased at periodic intervals, often
at the time of a change in position or assumption of new
responsibilities.
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Annual Incentive
Compensation
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Stockholder-approved
program with payouts based on accomplishing targeted financial performance
measures. Annual incentive targets for our NEOs range from 45% to 75% of
base salary at target level performance. Actual payouts may range from
zero to three times target based on performance compared to our three
performance measures.
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RETIREMENT
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NEOs participate in
qualified retirement programs generally available to the Companys US
employees. NEOs also participate in a nonqualified retirement program that
provides benefits on base salary earnings in excess of Internal Revenue
Service (IRS) limits on qualified plans. Messrs. Dempsey and Stephens also
participate in grandfathered nonqualified executive retirement programs
that are closed to new entrants.
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CHANGE IN CONTROL AND
SEVERANCE
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Severance payable and
benefit continuation upon termination of employment in certain specified
circumstances or upon a change in control. Severance ranges from a
multiple of one times base salary plus pro rata bonus for certain
non-change in control events, to two times base salary plus pro rata bonus
and additional benefits for other change in control
events.
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LIMITED PERQUISITES
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Financial planning and
tax preparation services, annual physicals (for amounts not otherwise
covered by health insurance) and executive life insurance (with tax
gross-up benefit for grandfathered participants
only).
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What We Dont Do
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We dont provide any 280G
gross-ups for a golden parachute
payment
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We dont have excessive
perquisites
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We dont have individual
employment agreements with any executive
officer
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We dont allow re-pricing
of underwater stock options without stockholder
approval
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We dont have a minimum
payout of annual incentive or long term incentive
compensation
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iv
Table of Contents
2016 NEO COMPENSATION
SUMMARY
Name & Principal
Position
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Salary
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Bonus
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Stock
Awards
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Option
Awards
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Non-Equity
Incentive
Plan
Comp.
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Change in
Pension Value
&
Nonqualified
Deferred Comp.
Earnings
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All Other
Comp.
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Total
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Patrick J. Dempsey
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$800,000
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$0
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$3,054,284
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$532,073
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$670,103
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$902,828
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$210,378
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$6,169,666
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President and CEO
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Christopher J. Stephens, Jr.
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461,000
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0
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670,851
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142,801
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257,431
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67,084
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162,030
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1,761,197
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SVP, Finance and CFO
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Scott A. Mayo
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425,000
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0
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425,945
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90,624
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256,103
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0
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27,859
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1,225,531
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SVP and President, Barnes
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Industrial
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Michael A. Beck
1
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325,000
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55,000
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950,214
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195,986
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85,007
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0
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62,075
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1,673,282
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SVP and President, Barnes
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Aerospace
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James P. Berklas
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370,000
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0
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288,630
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61,789
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185,954
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0
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27,891
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934,264
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SVP, General Counsel and
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Secretary
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1.
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Mr. Becks salary represents a
portion of his $390,000 base salary since he joined the Company effective
March 2016.
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2018 ANNUAL MEETING
●
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Deadline for stockholder proposals to be included in the
proxy statement for the 2018 Annual Meeting of Stockholders: November 23,
2017.
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v
Table of Contents
PROXY STATEMENT FOR 2017
ANNUAL
MEETING OF STOCKHOLDERS
MAY 5, 2017
We are sending this proxy statement and a
proxy or voting instruction form in connection with Barnes Group Inc.s
solicitation of proxies on behalf of its Board of Directors (Board), for our
2017 Annual Meeting of Stockholders (2017 Annual Meeting). Availability of this
proxy statement and accompanying materials is scheduled to begin on or about
March 20, 2017. Please submit your vote and proxy by telephone, the internet, or
if you received your materials by mail, you can also complete, sign, date and
return your proxy or voting instruction form.
1
Table of Contents
GOVERNANCE
The Company is committed to good corporate
governance, which promotes the long-term interests of stockholders. Our Board
and senior management devote considerable time and attention to corporate
governance matters and we maintain a comprehensive set of policies and
procedures to enable effective corporate governance. We regularly review best
practices in corporate governance and modify our policies and procedures as
warranted. We also solicit feedback from stockholders on governance and
executive compensation practices.
You can access our governance materials on
our website at
www.BGInc.com
; click on
Investor
Relations
and then
Corporate Governance.
These documents will also be provided without charge to any stockholder
upon written request to Legal Services, Barnes Group Inc., 123 Main Street,
Bristol, Connecticut 06010.
●
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Certificate of
Incorporation
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Bylaws
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Charters for our Audit, Compensation
and Corporate Governance Committees
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Code of Business Ethics and
Conduct
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Corporate Governance
Guidelines
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Corporate Social Responsibility
Report
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Political Activity
Policy
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Proposal 1
Election of Directors
Upon the recommendation of the Corporate
Governance Committee, the Board has nominated Thomas O. Barnes, Elijah K.
Barnes, Gary G. Benanav, Patrick J. Dempsey, Thomas J. Hook, Mylle H. Mangum,
Hans-Peter Männer, Hassell H. McClellan, William J. Morgan and JoAnna L.
Sohovich to be elected at the 2017 Annual Meeting for continuing membership to
the Board. The Board also recommends Anthony V. Nicolosi for election to the
Board as a first time nominee.
The Board has determined that except for
Messrs. T. Barnes, Dempsey and Männer, each nominee is an independent director.
If elected, each nominee will hold office until the 2018 annual meeting unless
any of them earlier dies, resigns, retires or is removed, as provided in the
Bylaws.
The eleven nominees are listed below with
brief biographies. Each director has been associated with his or her present
organization for at least the past five years unless otherwise noted. None of
the organizations listed as business affiliates of the directors is a subsidiary
or other affiliate of the Company unless otherwise noted.
If a nominee for director should become
unavailable for any reason, it is intended that votes will be cast for a
substitute nominee designated by the Board. The Board has no reason to believe
the persons nominated will be unable to serve if elected.
The Board
recommends a vote FOR all nominees.
|
2
Table of Contents
Board Of
Directors
NOMINEES FOR ELECTION
THOMAS O. BARNES
|
|
Age
:
68
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Director since
:
1978
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Committees
:
None
|
|
Mr. Barnes is Chairman of the Board
and was a non-management employee of the Company through December 31,
2014. From 2007 until 2012 he served as a director of New England Bank
Shares, Inc. He served as a director of Valley Bank from 2005 to 2007 when
it was merged into New England Bank Shares, Inc. Mr. Barnes
qualifications to be a member of our Board include his experience in the
fields of manufacturing, finance and governance with numerous
organizations throughout his career, including the Companys former
distribution business. In addition, Mr. Barnes has owned and managed
several businesses and has experience in the commercial lending field. He
has served on the Board for over 35 years, has served as Chairman
of our Board since 1995, and has served as
chairman, trustee or director for over 20 non-profit
organizations.
|
ELIJAH K. BARNES
|
|
Age
:
36
|
|
Director since
:
2016
|
|
Committees
:
Audit
|
|
Mr. Barnes has over 13 years of
experience in the areas of commercial real estate, lease negotiation and
finance. He currently is Principal, Avison Young since 2014, where he is
the co-head of the Agency Leasing Practice Group for the Washington D.C.
office. From 2008 to 2014, he was Managing Director and Principal at
Cassidy Turley. Prior to this, he was Vice President for the Leasing
Management Group at Jones Lang LaSalle. Mr. Barnes qualifications to
serve on our Board include his significant real estate experience that
contributes to the Companys management of its extensive owned and leased
real estate portfolio. In addition to his business and financial
qualifications, Mr. Barnes membership on the Board continues a legacy of family oversight, sixth generation as Mr.
T. Barnes son, that is uniquely devoted to the Companys long-term
success and returning value to Company
stockholders.
|
GARY G. BENANAV
|
|
Age
:
71
|
|
Director since
:
1994
|
|
Committees
:
CMDC, CG
|
|
Mr. Benanav retired in March 2005
from New York Life International, LLC where he was the Chief Executive
Officer from December 1997, and the Vice Chairman and a director of New
York Life Insurance Company from November 1999. From January 2000 to May
2016, he served as a director of Express Scripts Holding Company (ESI), a
full-service pharmacy benefit management company. Mr. Benanavs
qualifications to be a member of our Board include having served as the
executive officer of two U.S. corporations with assets in excess of $100
billion, extensive international business experience, extensive management
responsibility for U.S. and international insurance and financial services
companies, experience in dealing with regulators and
legislators, extensive knowledge of finance and
accounting matters including complex financial statement and accounting
issues across various types of businesses, and practice as a business
attorney for 15 years, including serving as a legal advisor to boards of
directors for over five years. In addition, Mr. Benanav received a
Presidential appointment as U.S. representative to APEC Business Advisory
Council (2002 to 2005).
|
3
Table of Contents
PATRICK J. DEMPSEY
|
|
Age
:
52
|
|
Director since
:
2013
|
|
Committees
:
None
|
|
Mr. Dempsey was appointed the
President and Chief Executive Officer of the Company in March 2013. Prior
to this appointment, since February, 2012, he served as the Companys
Senior Vice President and Chief Operating Officer, and was responsible for
oversight and direction of the Companys global business segments, as well
as working closely on the development and execution of the Companys
strategic plan. Mr. Dempsey joined the Company in October 2000 and has
held a series of roles of increasing responsibility. He was appointed Vice
President, Barnes Group Inc. and President, Barnes Aerospace in 2004, Vice
President, Barnes Group Inc. and President, Barnes Distribution in October
2007, and Vice President, Barnes
Group Inc.
and President, Logistics and Manufacturing Services in October 2008. He is
currently a director of Nucor Corporation having been appointed in 2016.
Mr. Dempseys qualifications to be a member of our Board include his
extensive knowledge of the Companys business operations and his depth of
experience in the fields of business management, enterprise management
systems, business development and international
operations.
|
THOMAS J. HOOK
|
|
Age
:
54
|
|
Director since
:
2016
|
|
Committees
:
Audit
|
|
Mr. Hook has been the President and
Chief Executive Officer of Integer (formerly Greatbatch) since August
2006. Prior to this, he was Chief Operating Officer, a position to which
he was appointed in September 2004. From August 2002 until September 2004,
Mr. Hook was employed by CTI Molecular Imaging where he served as
President, CTI Solutions Group. From March 2000 to July 2002, he was
General Manager, Functional and Molecular Imaging for General Electric
Medical Systems. From 1997 to 2000, Mr. Hook worked for the Van Owen Group
Acquisition Company and prior to that, Duracell, Inc. He is Chairman of
the Board of HealthNow New York, Inc., a leading health care company in
Western New York that provides quality health
care services to companies and individuals in that region, and
serves on its executive committee. Mr. Hooks qualifications to be a
member of our Board include his wealth of leadership experience,
particularly in the high-tech manufacturing industry, together with his
substantial knowledge of finance and accounting by virtue of his
educational background and multiple executive management
positions.
|
MYLLE H. MANGUM
|
|
Age
:
68
|
|
Director since
:
2002
|
|
Committees
:
CMDC (Chair)
|
|
Ms. Mangum has served as Chief
Executive Officer of IBT Enterprises, LLC, a leading provider of branch
banking solutions, since October 2003. Prior to this, she served as the
Chief Executive Officer of True Marketing Services, LLC since July 2002,
focusing on consolidating marketing services companies. From 1999 to 2002,
she was the Chief Executive Officer of MMS Incentives, Inc., a private
equity company involved in developing and implementing marketing and
loyalty programs in high-tech environments. She is currently a director of
PRGX Global, Inc., Haverty Furniture Companies, Inc., and Express, Inc.
She also served as a director of Collective Brands Inc., and its
predecessor PaylessShoeSource, Inc., from 1997 to 2012,
Scientific-Atlanta, Inc. from 1993 to 2006, Respironics,
Inc. from 2004 to 2008, Matria Healthcare, Inc. from 2006 to 2008, and
Emageon Inc. from 2004 to 2009. Ms. Mangums qualifications to be a member
of our Board include her current service as a chief executive officer, and
extensive business and management experience including, in addition to
that mentioned above, serving as an executive with General Electric,
BellSouth and Holiday Inn Worldwide. She has extensive knowledge of
marketing, accounting and finance, as well as compliance and internal
controls.
|
4
Table of Contents
HANS-PETER MÄNNER
|
|
Age
:
54
|
|
Director since
:
2016
|
|
Committees
:
None
|
|
Hans-Peter Männer is the former
Chief Executive Officer of Otto Männer GmbH, a leader in the development
and manufacture of high precision molds, valve gate hot runner systems,
and micro-injection molding systems which the Company acquired in 2013.
Prior to joining Männer in 1990, Mr. Männer studied product engineering at
the University of Applied Sciences, graduating as a civil engineer
completing three years vocational training as a toolmaker. He has over 18
years experience as a board member for Volksbank Freiburg and over 10
years experience as a board member for WVIB Wirtschaftsverband, a trade
association. Mr. Männer is currently the Managing Director of Proventus
Verwaltungs-GmbH, a limited partnership managing properties
and capital assets. He holds an Executive MBA from
Steinbeis University, Berlin. The Board appointed Mr. Männer to the Board
as a director in 2016. Mr. Männers qualifications to be a member of our
Board include his extensive experience in the plastic injection molding
industry and industrial manufacturing, together with a background in
finance and asset management. As such, Mr. Männer is well-qualified to
help lead the strategic direction and investment decisions for the
Companys evolving portfolio of differentiated
technologies.
|
HASSELL H. MCCLELLAN
|
|
Age
:
71
|
|
Director since
:
2010
|
|
Committees
:
Audit, CG (Chair)
|
|
Dr. McClellan retired in 2013 as an
Associate Professor of Finance and Policy at Boston Colleges Wallace E.
Carroll School of Management, where he served as the Associate Dean from
1996 to 2000. Dr. McClellan had been a member of the faculty of Boston
College since 1984. He specializes in global competitiveness and strategic
management for boards of directors and financial services, and has both an
MBA and a Doctor of Business Administration degree. Dr. McClellan has
served as trustee of the Virtus Variable Insurance Trust (formerly Phoenix
Edge Series Fund) since 2008, as trustee of both the John Hancock Variable
Insurance Trust and John Hancock Funds II since 2005, as trustee of John
Hancock Funds and John Hancock Funds III
since 2012, and as trustee of Virtus Mutual Funds since January 1,
2015. Dr. McClellans qualifications to be a member of our Board include
his extensive experience and expertise in global competitiveness,
strategic planning and finance. In addition to his academic achievements
in these areas, he has served as a board member or trustee of more than
ten non-profit and private organizations.
|
WILLIAM J. MORGAN
|
|
Age
:
70
|
|
Director since
:
2006
|
|
Committees
:
Audit (Chair), CG
|
|
Mr. Morgan is a retired partner of
the accounting firm KPMG LLP (KPMG) where he served clients in the
industrial and consumer market practices. After his retirement in 2006,
and until 2010, he was a consultant to KPMGs Leadership Development Group
and Dean of KPMGs Chairmans 25 Leadership Development Program. He is the
Audit Committee financial expert of our Board. From 2004 until 2006, Mr.
Morgan was the Chairman of KPMGs Audit Quality Council and, from 2002
until 2006, he was a member of its Independence Disciplinary Committee. He
previously served as the Managing Partner of KPMGs Stamford, Connecticut
office. Mr. Morgan is currently a director of PGT, Inc. and The J.G.
Wentworth Company. He previously served as a
member of the Boards of Directors for KPMG and KPMG Americas. In
addition to his service with KPMG and on other boards of directors, Mr.
Morgans qualifications to be a member of our Board include his 39 year
career and expertise in the accounting and auditing fields, as well as his
extensive practice as a certified public accountant and experience working
with global industrial companies relative to accounting, finance,
auditing, controls, risk management, compliance and corporate
governance.
|
5
Table of Contents
JOANNA L. SOHOVICH
|
|
Age
:
45
|
|
Director since
:
2014
|
|
Committees
:
CMDC
|
|
Ms. Sohovich is the Chief Executive Officer of The
Chamberlain Group, Inc. since February 2016. Prior to that she was the
Global President, STANLEY Engineered Fastening at Stanley Black &
Decker, Inc. where she led a global technology and manufactured goods
business. Before being appointed to this position in 2015, she served as
Global President, Industrial & Automotive Repair since 2012 and, prior
to that, Industrial & Automotive Repair President - North America,
Asia and Emerging Regions since 2011, both at Stanley Black & Decker,
Inc. From 2002 to 2011, Ms. Sohovich served in several roles of increasing
responsibility at Honeywell International, including President, Security
& Communications from 2010 to 2011 emphasizing
new product development and innovation, Vice President & General
Manager, Commercial Building Controls from 2008 to 2010, leading growth
initiatives across a broad commercial building controls portfolio, and
Integration Leader from 2007 to 2008 resulting in Honeywells successful
acquisition and integration of Maxon Corporation. Ms. Sohovich served as
Vice President, Six Sigma for Honeywell from 2004 to 2005. Her earlier
experience includes Plant Management, Repair and Overhaul Shop Management,
Quality Management and service as an officer in the United States Navy.
Ms. Sohovichs qualifications to be a member of our Board include her
extensive executive management and leadership experience, broad knowledge
of industrial manufacturers, global mindset and direct experience in
driving innovation and strategic growth
initiatives.
|
FIRST TIME NOMINEE FOR
ELECTION
ANTHONY V. NICOLOSI
|
|
Age
:
63
|
|
Director Nominee
|
|
Committees
:
None
|
|
Mr. Nicolosi is a retired partner of the accounting firm
KPMG LLP (KPMG) where he had an approximately 39 year career. Most
recently, Mr. Nicolosi served in the Firm's National Office from 2008 to
2013 as the Regional Risk Management Partner for the Americas (one of
three KPMG Global Regions), the National Partner in charge of Risk
Management for the US Audit Practice and the Coordinator of the Firm-wide
Enterprise Risk Management Process. He also served as a member of the
Global Quality and Risk Management Steering Group; US Legal, Risk and
Regulatory Committee; Audit Operations Leadership and others. From 1987 to
2008, Mr. Nicolosi held positions as Engagement Partner or SEC Reviewing
Partner for US and multinational clients in many
industries, including diversified industrials and power generation. For
certain years in this period, Mr. Nicolosi served in the National Office's
Department of Professional Practice and held various leadership positions.
Mr. Nicolosi also served for over 10 years as a panel member on KPMG's
Audit Committee Institute roundtables and other related initiatives. Mr.
Nicolosi's qualifications to be a member of our Board include his
extensive practice as a certified public accountant and experience
relative to accounting, auditing, internal controls, risk management,
compliance and corporate governance acquired through serving notable
multinational companies, leadership positions, audit committee
contributions and more.
|
Director
Independence
Board Independence
. The Board has adopted categorical standards to guide it in
determining director independence. Under these standards, which are part of our
Corporate Governance Guidelines and listed below, an independent director must
meet the independence requirements in the New York Stock Exchange (NYSE) listing
standards, including the requirement that the Board must have affirmatively
determined that the director has no material relationships with the Company,
either directly or as a partner, stockholder, or officer of an organization that
has a relationship with the Company.
6
Table of Contents
|
a.
|
A director will not be independent if (i) the director
is, or was within the preceding three years, employed by the Company; (ii)
an immediate family member of the director is, or was within the preceding
three years, employed by the Company as an executive officer (as such
term is defined by the NYSE) other than on an interim basis; (iii) the
director or any immediate family member has received from the Company,
during any 12 consecutive months within the preceding three years, more
than $120,000 in direct compensation from the Company, other than
compensation received by an immediate family member of a director for
service as a non-executive employee of the Company and director and
committee fees and deferred compensation for prior service, provided, that
such deferred compensation is not contingent on continued service; (iv)
the director is employed by the Companys independent auditor; (v) an
immediate family member of the director is employed by the Companys
independent auditor (I) as a partner or (II) otherwise as an employee who
personally works on the Companys audit; (III) the director or an
immediate family member was within the last three years a partner or
employee of the Companys independent auditor and personally worked on the
Companys audit within that time; or (IV) a Company executive officer is,
or was within the preceding three years, on the board of directors of a
company which, at the same time, employed the Company director or an
immediate family member of the director as an executive
officer.
|
|
|
|
|
b.
|
The following commercial and charitable relationships
will not be considered material relationships that would impair a
directors independence: (i) if a Company director is an employee, or an
immediate family member is an executive officer, of another company that
does business with the Company and, within any of the last three fiscal
years, the annual sales to, or purchases from, the Company are less than
1% of the annual revenues of the other company; (ii) if a Company director
is an employee, or an immediate family member is an executive officer, of
another company that is indebted to the Company, or to which the Company
is indebted, and the total amount of either companys indebtedness to the
other is less than 1% of the total consolidated assets of the other
company; and (iii) if a Company director serves as an officer, director or
trustee of a charitable organization, and the Companys discretionary
charitable contributions to the organization are less than 1% of such
organizations total annual charitable receipts, provided, that the amount
of the Companys contributions shall not include the matching of
charitable contributions by Barnes Group Foundation, Inc. pursuant to the
Matching Gifts Program.
|
|
|
|
c.
|
For relationships not covered by b. above, the directors
who are independent under the Corporate Governance Guidelines in a. and b.
above will determine whether the relationship is material and, therefore,
whether the director is independent. The Company will explain in the
next proxy statement the basis of any Board determination that a
relationship was immaterial despite the fact that it did not meet the
categorical standards of immateriality in b.
above.
|
The Board has determined that other than
Messrs. T. Barnes, Dempsey and Männer, all of our director nominees are
independent under the listing standards of the NYSE and the above categorical
standards. Mr. T. Barnes is a former employee that was employed by the Company
within the past three years; Mr. Dempsey is a current employee of the Company;
and Mr. Männer is a former consultant that was
retained by the Company within the last three years.
Committee Independence.
All members of the Audit Committee, Compensation and
Corporate Governance Committee are independent within the meaning of the NYSE
listing standards and the above categorical standards, and all members of both
the Audit Committee and the Compensation Committee meet the additional
independence requirements of the NYSE listing standards that are applicable to
members of such committees.
Board
Leadership
The Board recognizes that one of its key
responsibilities is to evaluate and determine its optimal leadership structure
so as to provide independent oversight of management and a highly engaged and
high-functioning Board. The Companys Corporate Governance Guidelines provide
the Board with flexibility to select the appropriate leadership structure for
the Company. In making leadership structure determinations, the Board considers
many factors including the specific needs of the business and what is in the
best interests of the Companys stockholders. Our Board has determined that if
the Chairman is not an independent director, then there should be a Lead
Independent Director elected by our independent directors. Currently, Mr. T.
Barnes serves as Chairman of the Board and Mr. McClellan serves as Lead
Independent Director.
7
Table of Contents
Responsibilities of the Lead Independent
Director
|
●
Preside at all meetings of the Board at
which the Chairman of the Board is not present
●
Preside at executive sessions of the
independent directors
●
Serve as a liaison between the Chairman of
the Board and the independent directors
●
Together with the Chairman of the Board,
determine the nature and scope of the information sent to the
Board
●
Approve the final meeting agendas for the
Board following review by the Chairman of the Board
●
Approve meeting schedules to assure that
there is sufficient time for discussion of all agenda items
●
Has the authority to call meetings of the
independent directors
●
If requested by major stockholders, ensure
that (s)he is available for consultation and direct
communication
●
Perform such other duties as requested by
the independent directors
|
The Board believes that the current
structure is appropriate for the Company and provides for effective independent
Board leadership and engagement. Our Chairman, although deemed not to be
independent, has never been our chief executive officer and his prior employment
as a non-executive, full-time employee was complementary to his regular duties
as Chairman. Nonetheless, because a strong, independent oversight function is a
critical aspect of effective corporate governance, our Corporate Governance
Guidelines require that the independent directors annually elect an independent
director to serve as Lead Independent Director if the Chairman is not an
independent director. This oversight function is enhanced by the fact that the
Boards Audit, Compensation and Corporate Governance Committees are comprised
entirely of independent directors. Further, the Companys non-management
directors meet in regularly scheduled executive sessions, and the independent
directors also periodically meet in executive sessions.
Board Role In Risk
Oversight
While risk management is the
responsibility of the Companys management team, the Board is responsible for
oversight of the Companys risk management activities. The Audit Committee has
been designated by the Board to take the lead in overseeing risk management at
the Board level. By its charter, the Audit Committee is required to discuss
policies and guidelines that govern the risk assessment and risk management
process, including assigning responsibility with respect to particular risks to
other committees of the Board, and that it meet periodically with management to
review and assess the Companys major financial risk exposures and the manner in
which they are being monitored and controlled. Accordingly, the Audit Committee
reviews risk assessment and risk management, including in the areas of legal
compliance, internal audit and financial controls, litigation, and
environmental, health and safety. In doing so, the Audit Committee considers the
nature of the material risks the Company faces and the adequacy of the Companys
policies and procedures designed to respond to and mitigate these risks, and
receives reports from management and other advisors, including periodic risk
assessments by the Companys Internal Audit department.
Although the Boards primary risk
oversight has been assigned to the Audit Committee, the full Board also
periodically receives information about the Companys risk management and the
most significant risks that the Company faces. This is accomplished through
attendance at Audit Committee meetings by the other Board members when warranted
and by addressing significant risks with the full Board at Board meetings or in
executive sessions as appropriate.
Additionally, as described in Risk
Oversight and Assessment Policies and Practices on page 34, the Compensation
Committee oversees our compensation programs so that they are designed with the
appropriate balance of risk and reward in relation to the Companys overall
business strategy and are not reasonably likely to have a material adverse
effect on the Company.
8
Table of Contents
Process For
Selecting Directors; Stockholder Recommended Director
Candidates
Nominees for Director shall be selected
on the basis of their qualifications, such as:
●
|
Character, wisdom, judgment and
integrity;
|
●
|
Experience in positions with a high
degree of responsibility;
|
●
|
Prominence and accomplishments in
areas relevant to the Companys business
activities;
|
●
|
Understanding of the Companys
business environment;
|
●
|
Strategy-development, experience in
technology-laden industrial businesses, and/or other relevant
firms;
|
●
|
Capacity and desire to represent the
interests of the Companys stockholders as a
whole;
|
●
|
Commitment to maximize stockholder
value;
|
●
|
The extent to which the interplay of
the nominees skills, knowledge, expertise and diversity of background
with that of the other Board members will help build a Board that is
effective in collectively meeting the Company's strategic needs and
serving the long-term interests of the Company and its stockholders;
and
|
●
|
Ability to devote sufficient time to
the affairs of the Company.
|
Under the Process and Procedure for
Identifying Director Candidates adopted by the Corporate Governance Committee
(Director Candidates Process), the Corporate Governance Committee considers how
a candidate represents, in combination with the other directors, a diversity of
viewpoints, backgrounds, experiences and other demographics.
The Corporate Governance Committee will,
as stated in the Director Candidates Process, consider director candidates
recommended by stockholders of the Company, directors, officers and third-party
search firms. When utilizing a third-party search firm, the search firm is
instructed to identify candidates based on criteria specified by the Corporate
Governance Committee, perform initial screenings of the candidates resumes, and
conduct initial interviews.
The Corporate Governance Committee
evaluates stockholder-recommended candidates in the same manner as all other
candidates. Any stockholder wishing to submit a recommendation should do so in
writing addressed to:
Chairperson, Corporate Governance Committee
c/o Senior
Vice President, General Counsel and Secretary
Barnes Group Inc.
123
Main Street
Bristol, Connecticut
06010
|
Stockholder recommendations must comply
with the information requirements of the notice provisions contained in the
Companys Bylaws in order to be considered. Letters recommending a director
candidate must include, among other things, the stockholders name, address, and
stock ownership information (if the stockholder is not the registered holder of
shares, a written statement from the record holder of shares (e.g., a broker or
bank) verifying the stockholders beneficial ownership must be provided); the
stockholders opinion as to whether the recommended candidate meets the
definition of independent under the Companys Corporate Governance Guidelines
and is financially literate as contemplated by the NYSE rules; a description
of all agreements, arrangements and understandings between the nominee and any
other person regarding the nomination by such stockholder, and any direct or
indirect interest of such stockholder in any contract with the Company, any
affiliate of the Company or any principal competitor of the Company; and the
other disclosure requirements set forth in Section 7 of Article II of the
Bylaws. The recommendation letter must also include similar information
regarding the director candidate and other information, if any, that would be
required to be disclosed with regard to a nominee for director in the
solicitation of proxies for election of directors under federal securities laws,
and the stockholder must include a completed questionnaire, representation and
agreement signed by the candidate (which are provided by the Secretary of the
Company upon written request). Stockholder nominations must also comply with the
deadlines for submitting director nominations set forth in the Companys Bylaws.
A summary of these procedures is set forth below under the caption Stockholder
Proposals for 2018 Annual Meeting on page 55.
9
Table of Contents
Communication With The
Board
We have posted our Policy Regarding
Reporting of Complaints and Concerns on our website. The policy provides that
stockholders and other interested parties may communicate with the Board, a
committee of the Board, the independent directors or with an individual
director, by any of the following methods:
By telephone:
|
1-800-300-1560
|
|
|
By internet:
|
https://www.compliance-helpline.com/welcomepagebarnesgroup.jsp
|
|
|
By regular mail:
|
Barnes Group Corporate Compliance
Alertline
|
|
P.O. Box PMB 3667
|
|
13950 Ballantyne Corporate Place, Ste. 300 Charlotte, NC
28277-2712
|
All complaints and concerns reported by
the above methods will be received by a third-party provider, who will forward
each complaint or concern to the Office of the General Counsel which is
responsible for relaying communications for the Board to them. The Audit
Committee Chair receives regular summary reports of all complaints and concerns
reported.
Board of Directors And
Committees
DIRECTOR ATTENDANCE
Directors are expected to attend our
annual meeting of stockholders and all Board meetings and meetings of the
committees on which they serve. Our Board held six regular meetings and two
special meetings during 2016. Overall attendance at Board and committee meetings
during 2016 was 99% for our current directors. All directors attended the 2016
annual meeting.
BOARD SIZE AND ELECTION
Our Corporate Governance Guidelines also
provide that the Board should generally have no fewer than six and no more than
twelve directors. The Board currently has ten directors. Following the 2017
Annual Meeting, there are expected to be eleven directors. No director may stand
for reelection at or after the annual meeting of stockholders following his or
her 72
nd
birthday. Each director is also required to advise the
Chairman of the Board of any change in his or her status, including a change in
employment or service on other boards of directors, or retirement from his or
her principal occupation or another board of directors. Mr. T. Barnes, Chairman
of the Board, is designated to preside at executive sessions of non-management
directors. Mr. McClellan, the Lead Independent Director, is designated to
preside at executive sessions of the independent directors.
BOARD COMMITTEES
We have a standing Audit Committee,
Compensation Committee and Corporate Governance Committee. The primary
responsibilities for each of these committees are summarized below. The charter
for each of these committees is available on the Companys website,
www.BGInc.com
.
10
Table of Contents
AUDIT COMMITTEE
|
The Audit Committee is responsible
for overseeing accounting policies and practices, financial reporting and
the internal controls structure. The Audit Committee also has
responsibility for overseeing legal and regulatory compliance and our
independent auditors qualifications, performance and independence, and
for risk oversight of the Company generally. The Board has determined that
Mr. Morgan, who qualifies as an independent director under the NYSE
listing standards and the Companys Corporate Governance Guidelines, is an
audit committee financial expert as defined by the Securities and
Exchange Commission (SEC). For additional information about the Audit
Committees oversight of the risks faced by the Company, see Board Role
in Risk Oversight on page 8 and the Audit Committee Report on page 51.
|
|
Meetings in
2016:
8
Committee
Members:
William J. Morgan, Chair
Elijah K. Barnes
Thomas J. Hook
Hassell H.
McClellan
|
|
|
|
COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE
|
The Compensation Committee acts on
behalf of the Board to establish the compensation of executive and other
key officers and provides oversight of the Companys compensation
philosophy and of compensation policies and practices as they relate to
risk management. The Compensation Committee also acts as the oversight
committee with respect to the Performance-Linked Bonus Plan, the 2014
Barnes Group Inc. Stock and Incentive Award Plan (the Stock and Incentive
Award Plan), and other arrangements covering executive officers and other
senior management. The Compensation Committees processes for establishing
and overseeing executive compensation can be found in the Compensation
Discussion and Analysis section below. In overseeing those plans and
programs, the Compensation Committee may delegate authority for day-to-day
administration and interpretation of the plans, including selection of
participants, determination of award levels within plan parameters, and
approval of award documents, to officers of the Company or the Companys
Benefits Committee. However, the Compensation Committee may not delegate
any authority under those plans for matters affecting the compensation and
benefits of the executive officers.
The Compensation Committee also
oversees succession planning programs, including plans for the Chief
Executive Officer and key officers, and reports to the Board at least
annually regarding the strengths and weaknesses of the Companys processes
for management development and succession planning. Compensation Committee
agendas are established in consultation with the Compensation Committee
Chair and its independent compensation consultant. The Compensation
Committee has sole authority to retain outside advisors to assist in
evaluating executive officer compensation, and approve the terms of
engagement including the fees of such advisors. The Compensation Committee
typically meets in executive session without management present during
each meeting.
|
|
Meetings in
2016:
4
Committee
Members:
Mylle H. Mangum, Chair
Gary G. Benanav
JoAnna L. Sohovich
|
|
|
|
CORPORATE
GOVERNANCE COMMITTEE
|
The Corporate Governance Committee
makes recommendations concerning Board membership, functions and
compensation and the Companys overall corporate governance policies and
practices. The Corporate Governance Committee serves as the nominating
committee for the Board. The process by which the Corporate Governance
Committee considers nominees to the Board is described in Process for
Selecting Directors; Stockholder Recommended Director Candidates on page
9. Additional responsibilities include board succession matters, the
annual performance review of the Chairman of the Board, reviewing matters
relating to potential director conflicts of interest, overseeing the
Companys practices related to political activities, and administering the
Companys related person transactions policy.
|
|
Meetings in
2016:
3
Committee
Members:
Hassell H. McClellan, Chair
Gary G. Benanav
William J.
Morgan
|
11
Table of Contents
Governance Update
Proposal 2 Ratify The Companys Bylaw
Amendment Allowing Proxy Access
Effective July 28, 2016, the Board of
Directors implemented a proxy access bylaw. Article I, Section 7(e) of the
Companys Amended and Restated Bylaws (Bylaws) permits a stockholder, or a group
of up to 20 stockholders, owning 3% or more of the Companys outstanding common
stock continuously for at least three years, to nominate and include in the
Companys proxy materials director nominees constituting up to 20% of the total
number of directors then serving on the Board, provided that the stockholder(s)
and the nominee(s) satisfy the requirements specified in Article 7 of the
Companys Bylaws.
Proxy access increases stockholders
opportunity to engage with and influence the Company. The Board was proactive in
adopting proxy access for the benefit of stockholders and now seeks stockholder
ratification of this proxy access bylaw amendment.
If our stockholders do not ratify the
amendment, the Board will amend the Companys Bylaws to remove the proxy access
provision.
The Board recommends a
vote FOR this Proposal.
|
DIRECTOR COMPENSATION IN
2016
The Corporate Governance Committee reviews
and makes recommendations to the Board regarding the form and amount of
compensation for non-employee directors. As part of its review, the Corporate
Governance Committee periodically obtains competitive market data. The Companys
director compensation program is designed to attract and retain highly qualified
directors and to reward the time, effort, expertise and accountability required
of active Board membership. In general, the Corporate Governance Committee and
the Board believe that annual compensation for non-employee directors should
consist of both a cash component, designed to compensate members for their
service on the Board and its committees, and an equity component, designed to
align the interests of directors and stockholders and, by vesting over time, to
create an incentive for continued service on the Board.
12
Table of Contents
DIRECTOR COMPENSATION
The following table describes the
components of our non-employee director compensation program for 2016:
Compensation Element
|
|
Description
|
Cash Retainer
1
|
|
●
|
$87,500
|
Annual Equity Retainer
|
|
●
|
RSUs
valued at approximately $87,500 that vest quarterly granted to Board
members in February
|
|
|
●
|
Accelerated vesting in the event of a change in control, service
terminates as a result of death or disability, or retirement after
attaining age 72
|
|
|
●
|
Dividend equivalents equal to the dividend per share are paid on
each unvested RSU on each dividend payment date
|
Annual Chair Retainer
1
|
|
●
|
Chairman of the Board
|
$100,000
|
|
|
|
●
|
Audit
Committee
|
$17,500
|
|
|
|
●
|
Compensation Committee
|
$15,000
|
|
|
|
●
|
Corporate Governance Committee
|
$10,000
|
|
Other Fees
|
|
●
|
Eligible to earn a $1,500 fee for:
|
|
|
|
Serving on or chairing ad hoc or special committees of the
Board
|
|
|
|
Participating in specific Board projects, such as attending
meetings with the Companys senior management and interviewing prospective
director or senior officer candidates
|
Other Benefits
|
|
●
|
Business travel accident
insurance
|
|
|
●
|
Matching charitable gifts under the Barnes Group Foundation, Inc.,
the Companys charitable foundation
|
|
|
●
|
Life
insurance and accidental death and dismemberment insurance (only for
directors who joined before January 1, 2012)
|
New Director Award
(one-time grant)
|
|
●
|
RSUs
equal to a pro rata portion of the annual equity retainer vesting over the
remainder of the service year
|
|
●
|
Dividend equivalents equal to the dividend per share are paid on
each unvested RSU on each dividend payment date
|
Non-Management
Director
Stock Ownership
Requirements
|
|
●
Ownership of five times the annual cash retainer
●
Each of our non-management directors met this
requirement as of January 1, 2016, with the exception of our newest
directors, Thomas J. Hook and JoAnna L. Sohovich, who joined the Board in
May 2016 and May 2014, respectively
|
1.
|
All annual retainers are paid
quarterly.
|
13
Table of Contents
Deferred Compensation
Under the Non-Employee Director Deferred
Stock Plan each non-employee director who joined the Board before December 15,
2005 was granted the right to receive 12,000 shares of Common Stock when his or
her membership on the Board terminates or, if sooner, when a change in control
occurs. The plan also provides for the payment of dividend equivalents equal to
one dividend per share for each dividend payment date payable quarterly and in
cash.
Under the Directors Deferred Compensation
Plan each non-employee director may defer all or a portion of his or her Board
retainer and meeting fees, and/or the dividend equivalents paid under this plan.
Directors may elect to credit such deferred compensation to a cash account, a
phantom stock account, or a combination of the two.
Non-Management Director Stock Ownership
Requirements
As reflected above, under our stock
ownership requirements, each of our non-management directors is required to
accumulate an ownership position in Company Common Stock equal in value to five
times the annual cash retainer. Two-thirds of the value of unvested RSUs and all
of the shares payable under the Non-Employee Director Deferred Stock Plan count
toward achieving ownership requirements. Directors are required to retain all
net after-tax proceeds from Company equity grants until ownership levels are
met. Once ownership levels are met, the requirement is converted to a fixed
number of shares, subject to increases based on increases in the annual cash
retainer.
Director Compensation
Table
The following table sets forth the
aggregate amounts of compensation information for the year ended December 31,
2016 for non-management directors.
Name of Director
|
|
Fees Earned or
Paid in Cash
|
|
Stock
Awards
1
|
|
Changes in Pension Value
and Nonqualified
Deferred
Compensation Earnings
2
|
|
All Other
Compensation
3
|
|
Total
|
Thomas O. Barnes
|
|
$187,500
|
|
$83,316
|
|
$0
|
|
$88,206
|
|
$359,022
|
Elijah K. Barnes
|
|
61,657
|
|
64,892
|
|
0
|
|
0
|
|
126,549
|
Gary G. Benanav
|
|
90,995
|
|
83,316
|
|
6,823
|
|
317
|
|
181,451
|
William S. Bristow, Jr.
4
|
|
30,578
|
|
83,316
|
|
0
|
|
402,480
|
|
113,894
|
Thomas J. Hook
|
|
58,657
|
|
64,892
|
|
0
|
|
0
|
|
123,549
|
Francis J.
Kramer
5
|
|
62,222
|
|
41,673
|
|
0
|
|
0
|
|
103,895
|
Mylle H. Mangum
|
|
102,500
|
|
83,316
|
|
0
|
|
317
|
|
186,133
|
Hans-Peter
Männer
|
|
19,053
|
|
27,859
|
|
0
|
|
0
|
|
46,912
|
Hassell H. McClellan
|
|
94,032
|
|
83,316
|
|
0
|
|
317
|
|
177,665
|
William J.
Morgan
|
|
105,000
|
|
83,316
|
|
0
|
|
317
|
|
188,633
|
JoAnna L. Sohovich
|
|
95,000
|
|
83,316
|
|
0
|
|
0
|
|
178,316
|
1.
|
Stock Awards represent the
aggregate grant date fair value of RSUs granted to directors under the
Stock and Incentive Award Plan. The amounts differ from the annual
retainer amount of $87,500 because the number of RSUs subject to the
annual equity retainer is calculated using the average closing price of
our Common Stock for the first 15 trading days of 2016. The amount for
Messrs. E. Barnes, Hook and Männer reflect partial years based on their
date of election or appointment.
|
2.
|
Mr. Benanav participates in the
Barnes Group Inc. Directors Deferred Compensation Plan. Interest is
calculated each quarter, on the amount of deferred director fees and
dividends, based upon the rate of interest for prime commercial loans on
the first business day of each quarter. Any preferential amount would be
determined by calculating the difference between the actual interest
credited to Mr. Benanav and the interest that would have been earned using
120% of a ten-year Treasury bill rate. During 2016, there was $6,823 of
preferential interest earned and the aggregate balance of this deferred
compensation at December 31, 2016 was $1,741,751.
|
14
Table of Contents
3.
|
The compensation represented by
the amounts for 2016 set forth in the All Other Compensation column for
the directors is detailed in the following
table:
|
|
|
|
Taxes
Paid on All Other
|
|
Life
Insurance
|
|
|
|
|
|
Name of Director
|
|
Compensation
a
|
|
Premium
b
|
|
Other
c
|
|
Total
|
|
Thomas O. Barnes
|
|
$29,178
|
|
$59,028
|
|
$0
|
|
$88,206
|
|
Elijah K. Barnes
|
|
0
|
|
0
|
|
0
|
|
0
|
|
Gary G. Benanav
|
|
0
|
|
0
|
|
317
|
|
317
|
|
William S. Bristow, Jr.
|
|
0
|
|
0
|
|
402,480
d
|
|
0
|
|
Thomas J. Hook
|
|
0
|
|
0
|
|
0
|
|
0
|
|
Francis J. Kramer
|
|
0
|
|
0
|
|
0
|
|
0
|
|
Mylle H. Mangum
|
|
0
|
|
0
|
|
317
|
|
317
|
|
Hans-Peter Männer
|
|
0
|
|
0
|
|
0
|
|
0
|
|
Hassell H. McClellan
|
|
0
|
|
0
|
|
317
|
|
317
|
|
William J. Morgan
|
|
0
|
|
0
|
|
317
|
|
317
|
|
JoAnna L. Sohovich
|
|
0
|
|
0
|
|
0
|
|
0
|
|
a.
|
Includes taxes paid pursuant to
the terms of the SEELIP, under which the Company pays the policy premiums,
and pays the income tax liability arising from its payment of the premiums
and taxes. The SEELIP was closed to new participants effective April 1,
2011. The amount reflected is based on the maximum tax rates of the
directors jurisdiction.
|
|
b.
|
At December 31, 2016, the
aggregate balance included $30,369 of life insurance premiums paid on
behalf of Mr. T. Barnes under the SEELIP and $28,659 of income related to
a split dollar life insurance policy. The compensation associated with the
split dollar life insurance agreement was calculated by determining Mr. T.
Barnes current share in the policy and multiplying that by an estimated
term life insurance rate based upon certain factors such as the age of the
insured and the amount of the policy.
|
|
c.
|
Included in Other are life and
accidental death and dismemberment insurance premiums paid by the Company
for the benefit of Ms. Mangum and Messrs. Benanav, McClellan and
Morgan.
|
|
d.
|
Received under the Non-Employee Director Deferred Stock Plan (page 14).
|
4.
|
Mr. Bristow did not stand for re-election to the Board at the 2016 Annual Meeting. In consideration of his 35 years of service, the Board did not reduce his annual stock award amount for partial year service.
|
5.
|
Mr. Kramer resigned from the Board as of September 16, 2016. His stock award amount reflects the portion of the annual equity retainer earned through his resignation.
|
COMPENSATION DISCUSSION AND
ANALYSIS
Proposal 3 Advisory Vote To Approve
The Companys Executive Compensation
We seek our stockholders advisory
(non-binding) vote to approve the compensation of our named executive officers
as described in the Compensation Discussion and Analysis (CD&A) section, the
executive compensation tables, and the accompanying narrative disclosure
regarding named executive officer compensation. This advisory proposal, known as
a say-on-pay vote, gives stockholders the opportunity to vote whether or not
to approve the compensation of our named executive officers as described in this
proxy statement.
We recognize our stockholders interest in
the Companys executive compensation program. As such, we currently hold an
annual say-on-pay vote. If our stockholders vote for annual say-on-pay in
response to Proposal 4, below, our next say-on-pay vote will occur at our 2018
annual meeting.
The Companys executive compensation
programs are designed to attract, engage and retain highly qualified executive
officers. The Company has a strong pay-for-performance philosophy, so we closely
align our named executive officers compensation with the Companys performance.
We encourage stockholders to review the CD&A for a detailed description of
our executive compensation programs. The Board recommends that stockholders vote
FOR the following resolution:
RESOLVED, that the stockholders approve,
on an advisory basis, the compensation of the Companys named executive officers
as disclosed in this proxy statement, including the Compensation Discussion and
Analysis, the accompanying executive compensation tables and the related
narrative discussion.
15
Table of Contents
This vote is advisory, which means that it
is not binding on the Board or the Compensation Committee, nor will it affect
any compensation paid or awarded to any named executive officer. However, the
Board and the Compensation Committee will review and consider the voting results
when evaluating our future executive compensation arrangements.
The Board recommends a
vote FOR the
advisory vote to approve the
Companys executive
compensation.
|
Proposal 4 Advisory Resolution
Regarding The Frequency Of Holding An Advisory Vote On The Companys Executive
Compensation
At least once every six years we are
required to provide stockholders with a separate advisory (non-binding)
stockholder vote on the frequency of our say-on-pay proposal. The last vote took
place in 2011. Stockholders may indicate whether they would prefer a say-on-pay
advisory vote every one, two or three years, or abstain from voting.
Accordingly, stockholders are being asked to approve the following
resolution:
RESOLVED, that the Companys hold a
preferred annual stockholder vote to approve the compensation of the named
executive officers.
As provided by the Dodd-Frank Act, this
vote will not be binding on the Board of Directors or the Compensation Committee
and may not be construed as overruling a decision by the Board of Directors or
the Compensation Committee nor create or imply any additional fiduciary duty on
the Board of Directors. Further, it will not affect any compensation paid or
awarded to any named executive officer. However, the Compensation Committee and
the Board of Directors recognize the importance of receiving input from our
stockholders on important issues such as executive compensation and expect to
take into account the outcome of the vote when considering the frequency of
future say-on-pay votes.
In 2011, the Board of Directors
recommended a triennial frequency (i.e., every three years) as the optimal
frequency for the say-on-pay vote due to the cyclical nature of the Companys
businesses. That year, 59.2% of stockholders voted in favor of an annual
frequency. The Board responded to this advisory vote, implemented an annual
say-on-pay vote frequency and recommends retaining the Companys annual
frequency in light of the 2011 stockholder vote and current survey
data.
The Board recommends a
vote FOR an annual advisory vote
on the
Companys executive
compensation.
|
16
Table of Contents
This Compensation Discussion and Analysis
provides a detailed discussion of our executive compensation philosophy and
programs, the compensation decisions that the Compensation Committee has made
under those programs and the factors considered in making those decisions. We
also provide details regarding the individual components of our executive
compensation programs and explain how and why the Compensation Committee makes
decisions to establish executive compensation at particular levels. Our named
executive officers (NEOs) for 2016 were:
NEO
|
|
Title
|
Patrick J.
Dempsey
|
|
President and Chief
Executive Officer
|
Christopher J. Stephens, Jr.
|
|
Senior Vice President, Finance and Chief
Financial Officer
|
Scott A. Mayo
|
|
Senior Vice President,
Barnes Group Inc., and President, Barnes Industrial
|
Michael A. Beck
|
|
Senior Vice President, Barnes Group Inc.,
and President, Barnes Aerospace
|
James P. Berklas
|
|
Senior Vice President, General Counsel and
Secretary
|
Executive Summary
The Companys annual compensation program
closely links compensation to Company performance and results. In 2016, the
Company achieved its financial performance targets, delivering improvements in
sales, operating margin and earnings per share. We continued to transform the
Company by increasing the amount of highly-engineered products and
differentiated industrial technologies in our portfolio. This shift has been
accelerated through strategic acquisitions, particularly as it relates to our
Molding Solutions business.
In 2016, we acquired FOBOHA, which
specializes in the development and manufacture of complex plastic injection
molds for packaging, medical, consumer and automotive applications. The
acquisition of FOBOHA complements the Companys Molding Solutions business by
further expanding penetration into the complex plastic molding systems market.
The Companys performance reflects
organizational alignment behind three strategic enablers the deployment of the
Barnes Enterprise System, accelerating Innovation and building a robust Talent
Management System. Each enabler is instrumental in helping us to further
strengthen our competitive advantage in the market, driving our long-term growth
and success and supporting the continued transformation of the Company. They
promote operational excellence and create value for all of our key stakeholders
our employees, customers, stockholders and the community.
The Companys executive compensation
programs for 2016 remained relatively unchanged from 2015, with the exception of
a change in the number of performance measures applicable to the Performance
Share Award (PSA) program. Beginning in 2016, for the 2016-2018 three-year
measurement period, the Company eliminated EBITDA Growth relative to the
performance of the Russell 2000 Index companies as a performance measure, and
reduced the number of performance measures from three to two, maintaining Total
Shareholder Return (TSR) relative to the performance of the Russell 2000 Index
companies and Return On Invested Capital (ROIC) performance against an absolute
internal goal as determined by the Compensation Committee.
For our 2016 annual compensation program,
we continued to use Company-wide consolidated Revenue (Revenue), diluted
Earnings Per Share (EPS) and Days Working Capital (DWC). These three corporate
measures applied to Messrs. Dempsey, Stephens and Berklas. Messrs. Mayo and Beck
were measured 40% on these corporate measures and 60% on the performance of the
Industrial segment and Aerospace segment, respectively. Overall, this
combination of performance measures is designed to emphasize profitability and
productivity, and drive revenue growth.
Results under our 2016 annual compensation
program are determined first according to Generally Accepted
Accounting Principles (GAAP) but then may be adjusted to
include or exclude certain unusual, non-recurring, or other adjustments in
accordance with Section 162(m) of the Internal Revenue Code and as provided
under our stockholder approved Performance-Linked Bonus Plan (PLBP). The
Compensation Committee also retains negative discretion in accordance with
Section 162(m) of the Internal Revenue Code to further reduce, but not increase,
actual awards paid to NEOs under the PLBP. The adjusted financial performance
results certified by the Compensation Committee under the PLBP are non-GAAP
financial measures.
17
Table of Contents
For Messrs. Dempsey, Stephens and Berklas,
we calculated annual incentive compensation using the following corporate
measures and weighting (resulting in a payout of 112% of target):
Corporate Performance Measures
|
Weighting (%)
|
|
As Certified 2016 Results*
|
|
Comparison to Target
|
Diluted EPS
|
60
|
|
$2.54
|
|
$0.07
above target
|
Revenue (in millions)
|
20
|
|
$1,231
|
|
$14
below target
|
Days Working Capital (DWC)
|
20
|
|
125
|
|
2
days above (worse than)
target
|
For Mr. Mayo, we calculated annual
incentive compensation using the above corporate measures and weighting, and the
following measures and weighting for the Industrial segment (resulting in a
payout of 126% of target):
Industrial Performance Measures
|
Weighting (%)
|
|
As Certified 2016 Results*
|
|
Comparison to Target
|
Operating Profit (in
millions)
|
60
|
|
$136.9
|
|
$
3
above target
|
Revenue (in millions)
|
20
|
|
$824
|
|
$1
below target
|
Days Working Capital (DWC)
|
20
|
|
110
|
|
1
day below (better than)
target
|
For Mr. Beck, we calculated annual
incentive compensation using the above corporate measures and weighting, and the
following measures and weighting for the Aerospace segment (resulting in a
payout of 12% of target):
Aerospace Performance Measures
|
Weighting (%)
|
|
As Certified 2016 Results*
|
|
Comparison to Target
|
Operating Profit (in
millions)
|
60
|
|
$32.9
|
|
$15
below target
|
Revenue (in millions)
|
20
|
|
$363
|
|
$16
below target
|
Days Working Capital (DWC)
|
20
|
|
138
|
|
5
days above (worse than) target
|
*
|
Detailed descriptions of the
measures and process used to determine adjustments can be found below in
the Annual Cash Incentive Awards section on page 24.
|
Long-term incentive awards are the largest
component of our NEOs annual compensation opportunity. The program consists of
performance share awards (PSAs) that are earned based on key performance
criteria; restricted stock units (RSUs); and stock options. Our NEOs 2016
measures and weightings are shown below:
Our CEOs 2016 long-term incentive award
weightings were modified to 57% PSAs, 17% Stock Options and 26% RSUs to
emphasize his leadership in executing the long-term strategy and continued
transformation of the Company.
18
Table of Contents
The PSA component of our long-term
incentive program for 2016 measures the Companys relative performance over a
three-year period against the performance of Russell 2000 Index companies for
TSR and three-year ROIC performance against an absolute internal goal. The
grants made in 2016 cover the 2016 to 2018 performance period. Payouts, if any,
under the 2016 grants will be made in 2019.
In 2016, the 2013 PSA grant paid out at
145% of target, based on the following certified performance results for
performance criteria in place at the time:
Performance Measure
|
3 Year Growth
|
|
Relative Performance Level
|
TSR
|
72%
|
|
68%
|
EBITDA Growth (in millions)
|
36%
|
|
60%
|
Basic EPS Growth
|
30%
|
|
64%
|
Say On Pay Vote
The Compensation Committee believes that
our executive compensation programs are consistent with our pay-for-performance
philosophy. Each year, we evaluate our programs in light of market conditions,
stockholder views (including the results of our annual say-on-pay resolution),
and governance considerations, and make changes deemed appropriate for our
business. Our Board of Directors has recommended that the Company maintain an
annual frequency for the say-on-pay vote. At the 2016 annual stockholders
meeting, we had strong support from our stockholders with respect to the
compensation of our NEOs, with over 98% of the votes cast in favor of our
say-on-pay resolution. We continue to evaluate our compensation programs by
taking into account the voting results, other investor feedback through our
annual outreach efforts and other factors used in assessing our executive
compensation programs as discussed in this CD&A.
We continued outreach to our institutional
stockholders in 2016. In an effort to engage our top stockholders and solicit
their views on governance and executive compensation matters, we made a total of
45 solicitations for feedback from institutional stockholders, of which 4
stockholders accepted our offer to meet. During those meetings, we highlighted
key governance practices and aspects of our current executive compensation
program. Stockholders shared their perspectives, primarily consisting of
viewpoints on various governance matters that were in general alignment with
Company policy and practices as follows:
What We Do
|
|
What We Dont
Do
|
|
We pay-for-performance - over 80% of
CEO total direct compensation at target (and on average over 60% for other
NEOs) is at risk in the form of annual and long-term
incentives
|
|
|
We dont provide any 280G gross-ups
for a golden parachute payment
|
|
We consider a relevant peer group in
establishing compensation
|
|
|
We dont have excessive
perquisites
|
|
We review the complete compensation
package of every NEO annually
|
|
|
We dont have individual employment
agreements with any executive officer
|
|
We have robust stock ownership
requirements - 5x base salary for CEO and 3x for other NEOs
|
|
|
We dont allow re-pricing of
underwater stock options without stockholder approval
|
|
We have a clawback policy
incorporated into our incentive compensation plans
|
|
|
We dont have a minimum payout of
annual incentive or long term incentive compensation
|
|
We have double trigger equity
vesting in the event of a change in control for all NEO awards
|
|
|
|
|
We have an independent compensation
consultant that works directly with the Compensation Committee
|
|
|
|
19
Table of Contents
Executive Compensation
Philosophy
We believe that executive compensation
should support and reinforce the companys pay-for-performance philosophy.
Consequently, our NEO compensation is closely aligned with the Companys
performance on both a short- and long-term basis. We tie a significant portion
of the compensation opportunity for our NEOs directly to the Companys stock
performance and other objectives that we believe affect stockholder value. As a
result, if the Companys performance meets or exceeds pre-established
performance targets, including achieving performance levels at or above the 50th
percentile compared to Russell 2000 Index companies, and/or our stock price
increases, the NEOs can realize significant compensation in the form of annual
cash incentive payouts and long-term equity payouts. If the Companys
performance does not meet pre-established performance targets, such as
performance below the 50th percentile compared to Russell 2000 Index companies
or other performance targets, and/or our stock price declines, the NEOs have
significant downside financial risk.
The Company aims to provide our NEOs with
total direct compensation targeted in a range around the median compared to a
defined peer group of companies (Peer Group) on page 21. Individual executive
compensation may be above or below the target range based on the individuals
performance, experience, skill set and responsibilities. We also use proxy and
survey data to inform the Compensation Committee about the external market value
of our executive roles. We believe that targeting the median range for total
direct compensation provides appropriate compensation levels that will attract
high quality executives, provide the proper incentives to our NEOs to achieve
our strategic objectives and retain our NEOs over the long term.
Total Direct Compensation In
2016
Total direct compensation includes the
following three elements: annual base salary; annual cash incentive awards; and
long-term incentive awards. The Compensation Committee can vary the performance
measures from year to year as needed to reinforce strategic priorities. In
addition, our NEOs are eligible for change in control and severance benefits;
defined benefit or defined contribution program benefits; retirement and
executive life insurance programs; and limited perquisites.
Performance-based compensation in the form
of annual and long-term incentives constituted over 84% of 2016 total direct
compensation at target for our CEO and, on average, over 62% of 2016 total
direct compensation at target for our other NEOs. The actual mix of compensation
for our CEO and other NEOs is shown below.
CEO
|
Other NEOs
|
|
|
The Summary Compensation Table on page
35 provides details regarding actual compensation for each NEO.
20
Table of Contents
Executive Compensation General
Objectives And Process
The primary objective of the Companys
executive compensation program is to support our long-term strategic business
goals of building lasting stockholder value and achieving sustainable profitable
growth. To support these goals, our compensation programs for our NEOs are
designed to:
●
|
Provide appropriate incentives by
linking and balancing significant short- and long-term compensation
opportunities to Company performance and TSR;
|
●
|
Reward NEOs who contribute
meaningfully to achieving our strategic objectives;
|
●
|
Require NEOs to hold a significant
equity investment in our Company so that they manage the business from the
perspective of stockholders;
|
●
|
Align our compensation polices with
stockholders long-term interests by assigning a significant portion of
potential compensation to performance-based pay elements that depend on
achieving the Companys goals, but that do not encourage excessive
risk-taking;
|
●
|
Attract, retain and engage highly
qualified individuals by offering competitive, balanced compensation
arrangements based upon clear goals that vest on continued employment; and
|
●
|
Maximize the tax effectiveness of
the total compensation and benefits package, and minimize potentially
adverse tax and accounting consequences, in each case to the extent
practicable.
|
The Compensation Committee is responsible
for determining the types and amounts of compensation paid to our NEOs. The
Compensation Committee uses several tools to make these determinations,
including external consultants and peer group analysis.
External Consultants
Consistent with prior years, management
outsourced certain executive compensation analysis services to Mercer, a
wholly-owned subsidiary of Marsh & McLennan Companies, Inc. As part of these
services in 2016, Mercer compiled annual competitive compensation data and
reviewed the Companys compensation practices in terms of competitiveness,
appropriateness and alignment with our performance, as well as the mix of pay.
The Compensation Committee directly
retains a consulting firm, Meridian Compensation Partners, LLC (Meridian), to
assist in its oversight of the executive compensation program, which includes
reviewing and assessing information provided by management, including the
analysis furnished by Mercer. The fees for Meridian are negotiated directly by
the Compensation Committee and paid by the Company at the Compensation
Committees request. Meridian did not provide any services to the Company in
2016 other than advice on executive compensation.
Meridian regularly participates in
Compensation Committee meetings, both with and without Company management, and
advises the Compensation Committee on compensation trends and best practices,
plan design, pay and performance alignment and the process used to determine the
reasonableness of individual compensation awards. The Compensation Committee
believes that using an independent consultant helps ensure that the Companys
executive compensation program is reasonable and consistent with Company goals
and evolving governance considerations. In addition, the Compensation Committee
from time to time directly retains its own outside legal counsel.
Before retaining a compensation consultant
or any other external advisor, the Compensation Committee evaluates the
independence of such advisors. In 2016, the Compensation Committee assessed
Meridians independence, taking into account SEC Rule 10C-1(b)(4) and the
corresponding NYSE independence factors regarding compensation advisor
independence. Based on this assessment, the Compensation Committee believes that
there is no conflict of interest and that its advisors are able to independently
advise the Compensation Committee.
Peer Group Analysis
A primary data source used in setting NEO
compensation is the information publicly disclosed by our Peer Group. The Peer
Group is reviewed periodically and updated as appropriate to take into account
changes in the size, scope, financial performance, ownership structure and
business focus of the Company and the peer institutions.
21
Table of Contents
The 2016 Peer Group remains as it was
established in 2013 with the assistance of our former compensation consultant,
Frederic W. Cook & Company, Inc. (Cook), following the divestiture of
certain distribution related businesses. In developing this Peer Group, Cook
considered companies: with revenue ranging from about one-half to two times the
Companys revenue; that operated in one of the same industries as the Company;
and that used the same distribution channels as the Company. Companies with a
significant concentration of ownership by one party were removed from
consideration. In addition to the factors described above, Cook reviewed the
following additional criteria to evaluate potential peer companies:
●
|
Primarily focused on
manufacturing
|
●
|
Multiple lines of business
|
●
|
Involved with specialty products
|
●
|
Similar customer base
|
●
|
Derives at least 25% of its revenue
from outside the United States
|
●
|
Included in the Peer Group assigned
to the Company by at least one of the major proxy advisory firms
|
●
|
Includes the Company in its peer
group
|
Based on this review, the Compensation
Committee approved a new Peer Group in October 2013 which has not changed and
was used in evaluating 2016 NEO compensation. When establishing the Peer Group,
the Compensation Committee reviewed the rankings of the Company compared to the
Peer Group in a variety of categories, including Revenue Growth, EBITDA Growth,
Net Income Growth, Basic EPS Growth, Return on Average Invested Capital and
TSR.
Our 2016 Peer Group includes the following
24 companies, all of which were part of our 2015 Peer Group:
Actuant Corporation
|
Curtiss-Wright Corporation
|
IDEX Corporation
|
Altra Holdings Inc.
|
Donaldson Company, Inc.
|
Kennametal Inc.
|
B/E Aerospace, Inc.
|
Enpro Industries Inc.
|
Nordson Corporation
|
Chart Industries
|
Esco Technologies
|
Standex International Corp.
|
Circor International, Inc.
|
Esterline Technologies Corporation
|
TriMas Corporation
|
Clarcor, Inc.
|
Franklin Electric Company
|
Valmont Industries Inc.
|
Columbus McKinnon Corporation
|
Graco Inc.
|
Watts Water Technologies, Inc.
|
Crane Company
|
Hexcel Corp.
|
Woodward,
Inc.
|
In 2017, we plan to undertake a complete
review of the Peer Group given the ongoing transformation of our business
portfolio.
For executive positions where public proxy
data from our peers is not available, survey data representing similarly sized
companies in manufacturing is used for benchmarking purposes. In addition, in
connection with our annual compensation review process, in July 2016 the
Compensation Committee reviewed tally sheets for each NEO that provided total
compensation information, including direct compensation and benefits, as well as
possible payments under various termination scenarios.
The Role of Executive
Officers
Our President and Chief Executive Officer
provides the Compensation Committee with a performance assessment for each of
the other NEOs. In 2016, Mr. Dempsey provided the Compensation Committee with
his assessments of NEO performance and recommendations on salary changes and
annual equity grants. The Compensation Committee uses these assessments, along
with other information, to determine NEO compensation. Messrs. Dempsey and
Berklas, Senior Vice President, General Counsel and Secretary, as well as Ms.
Dawn N. Edwards, Senior Vice President, Human Resources, regularly attend
Compensation Committee meetings at the request of the Compensation Committee,
but they are not present for any discussion of their own compensation. In
addition, Mr. Stephens, Senior Vice President, Finance, and Chief Financial
Officer, provides financial information used by the Compensation Committee to
make decisions regarding incentive compensation targets and related payouts.
22
Table of Contents
Components Of Our Executive
Compensation Program
For 2016, compensation for our NEOs
included:
●
|
Base salary;
|
●
|
Annual cash incentive awards;
|
●
|
Long-term incentive awards;
|
●
|
Change in control and severance
benefits;
|
●
|
Defined benefit or defined
contribution retirement benefits and executive life insurance programs;
and
|
●
|
Limited
perquisites.
|
Base salary, annual cash incentive awards
and long-term incentive awards are taken into account to set the target total
direct compensation opportunity for each NEO. Based on competitive compensation
data compiled by Mercer and presented to the Compensation Committee in December,
2016 target total direct compensation for Messrs. Dempsey, Stephens, Mayo, Beck
and Berklas approximates the market median compared to our Peer Group. In
setting the target total direct compensation for our NEOs, the Compensation
Committee may make decisions that vary from the Peer Group or competitive
compensation survey data based on NEO experience, performance, retention
considerations, range of responsibilities and the nature and complexity of each
NEOs role.
Base Salary
Base salaries for executive officers are
determined by the Compensation Committee and reviewed annually. They are
typically increased at periodic intervals, often at the time of a change in
position or assumption of new responsibilities. Base salary increases usually
take effect on or around April 1
st
of each year, but may be made at
other times if the Compensation Committee deems it appropriate based on internal
and external considerations.
In determining whether to award merit-based salary
increases to our NEOs, the Compensation Committee considered a number of
factors, including:
●
|
Peer Group data and external market
information;
|
●
|
Individual
performance;
|
●
|
The level of responsibility assumed
and the nature and complexity of each NEOs role (including the number of
years in the position, any recent promotion or change in responsibility or
impact as a member of management, and the amount, timing and percentage
of the last base salary increase);
|
●
|
The leadership demonstrated to
create and promote a day-to-day working environment of unwavering
integrity, compliance with applicable laws and the Companys ethics
policies, and global responsibility; and
|
●
|
The desire to retain NEOs capable of
driving achievement of the Companys strategic objectives and the
marketability and criticality of retention of
NEOs.
|
In 2016, the Compensation Committee
continued to focus on performance-based compensation and did not increase the
base salary of any NEO.
NEO Base Salary Levels 2015 -
2016
|
|
Base Salary
Effective
|
|
Base Salary
Effective
|
|
Change in
Annual
|
|
Change in Annual
Base
|
Name of Executive
|
|
December 31, 2015
|
|
December 31, 2016
|
|
Base Salary ($)
|
|
Salary (%)
|
P. Dempsey
|
|
$800,000
|
|
$800,000
|
|
$0
|
|
0%
|
C. Stephens, Jr.
|
|
461,000
|
|
461,000
|
|
0
|
|
0%
|
S. Mayo
|
|
425,000
|
|
425,000
|
|
0
|
|
0%
|
M. Beck
1
|
|
n/a
|
|
390,000
|
|
n/a
|
|
n/
a
|
J. Berklas
|
|
370,000
|
|
370,000
|
|
0
|
|
0%
|
1.
|
Mr. Beck joined the Company in
2016.
|
23
Table of Contents
Annual Cash Incentive
Awards
We pay annual cash incentive awards to
reward the performance of our NEOs. Except in circumstances of retirement,
death, or disability, or certain instances of involuntary termination by the
Company on or after November 1
st
of an award period, an NEO generally
must be employed by us on the payment date to receive an annual cash incentive
award. In 2016, all NEOs participated in the PLBP, except for Mr. Beck who
participated in the Management Incentive Compensation Plan (MICP). Mr. Beck was
not a PLBP participant in 2016 since he joined the Company after the February
2016 Compensation Committee meeting at which the Compensation Committee
determined the participants in the PLBP for 2016.
We refer to the PLBP and MICP plans as our
Annual Incentive Plans. The MICP is structured to pay annual cash incentive
awards on the same terms and conditions as set forth in the PLBP. The difference
between the two plans is that the PLBP may be structured to pay amounts that
meet the qualified performance-based compensation exception under Section 162(m)
of the Internal Revenue Code.
Under both the PLBP and MICP, each NEO is
assigned an award opportunity expressed as a percentage of his or her base
salary, which varies by the NEOs role. Each NEOs annual cash incentive payout
is generally determined based on our achievement of Company performance
objectives.
The chart below details the cash incentive
award opportunities available to each NEO for 2016 under the PLBP or MICP
expressed as a percentage of base salary. Where performance falls between the
threshold, target or maximum performance levels, the cash incentive award
opportunity is calculated using straight-line interpolation.
|
|
% of Salary
|
Name of Executive
|
|
Threshold Level
|
|
Target Level
|
|
Maximum Level
|
P. Dempsey
|
|
18.75%
|
|
75%
|
|
225%
|
C. Stephens, Jr.
|
|
12.5%
|
|
50%
|
|
150%
|
S. Mayo
|
|
12.5%
|
|
50%
|
|
150%
|
M. Beck
|
|
12.5%
|
|
50%
|
|
150%
|
J. Berklas
|
|
11.25%
|
|
45%
|
|
135%
|
The Compensation Committee generally
establishes the target for each financial performance measure in December of
each year based on review and approval of the Companys annual business plan and
budget. These targets are reviewed again at the Compensation Committees next
meeting in February along with the Companys full year financial performance.
The Compensation Committee may establish and approve revised targets to the
extent the Companys annual business plan and budget are modified within the
first 90 days of the year based on the full year performance. We use financial
performance objectives under the PLBP and MICP because they are consistent with
our focus on driving strong business performance and increasing long-term
stockholder value.
For fiscal year 2016, the corporate
performance measures for the PLBP and MICP continued to be Diluted EPS, Revenue
and DWC. Diluted EPS is used because it is a principal driver of our stock
price. Revenue is used to drive growth in the size of our business. DWC is used
to enhance focus on driving cash flow from operating activities.
For fiscal year 2016, all NEOs were
evaluated at least in part on corporate measures. We evaluated NEOs, other than
Messrs. Mayo and Beck, based 100% on the corporate measures in recognition of
the key role that each plays in the overall management of the Company and in
recognition of the impact of overall corporate strategies on segment results.
For Messrs. Mayo and Beck, 40% of the determination was based on corporate
measures and 60% of the determination was based on measures tied to the
performance of their respective business segments, reflecting their specific
responsibilities for segment performance.
24
Table of Contents
The charts below set forth the PLBP and
MICP performance measures and the weighting of each measure for the NEOs for
2016:
Corporate
Measures
|
Segment
Measures
|
|
|
The definitions of the segment measures
are included in the footnotes to the Segment Goal tables included
below.
As noted previously, achievement of the
financial performance measures under the PLBP and MICP is first determined
according to GAAP, but then adjusted under the terms of the PLBP to include or
exclude certain unusual or non-recurring or other adjustments in accordance with
Section 162(m) of the Internal Revenue Code. The Compensation Committee also
retains negative discretion in accordance with Section 162(m) of the Internal
Revenue Code to further reduce, but not increase, actual awards paid to the NEOs
under the PLBP. The adjusted financial performance results certified by the
Compensation Committee under the PLBP and MICP are non-GAAP financial measures.
The charts below detail results certified
by the Compensation Committee compared to the goals:
Corporate Goal
|
Threshold
|
|
Target
|
|
Maximum
|
|
As Certified 2016 Results
|
|
Comparison to Target as a %
|
Diluted EPS
1
|
$2.39
|
|
$2.47
|
|
$2.84
|
|
$2.54
|
|
137.8%
|
Revenue (in millions)
2
|
$1,200
|
|
$1,245
|
|
$
1,332
|
|
$
1,231
|
|
76.3
%
|
Days Working Capital (DWC)
3
|
127
|
|
123
|
|
120
|
|
125
|
|
68.7%
|
|
Industrial Segment Goal
|
Threshold
|
|
Target
|
|
Maximum
|
|
As Certified 2016 Results
|
|
Comparison to Target as a %
|
Operating Profit (in
millions)
4
|
$120.7
|
|
$134.1
|
|
$154.2
|
|
$136.9
|
|
128.1%
|
Revenue (in millions)
2
|
$797
|
|
$825
|
|
$
883
|
|
$
824
|
|
97.9
%
|
Days Working Capital (DWC)
3
|
114
|
|
111
|
|
108
|
|
110
|
|
149.7%
|
|
Aerospace Segment Goal
|
Threshold
|
|
Target
|
|
Maximum
|
|
As Certified 2016 Results
|
|
Comparison to Target as a %
|
Operating Profit (in
millions)
4
|
$43.2
|
|
$48.0
|
|
$55.2
|
|
$32.9
|
|
0.0%
|
Revenue (in millions)
2
|
$365
|
|
$379
|
|
$
406
|
|
$
363
|
|
0.0
%
|
Days Working Capital (DWC)
3
|
142
|
|
133
|
|
130
|
|
138
|
|
60.7%
|
1.
|
As Certified 2016 Diluted EPS
is based on reported diluted EPS, excluding the effects of acquisitions,
certain tax benefits reflecting a change in accounting, and amounts
related to a contract termination dispute and award, under the terms of
the PLBP and MICP.
|
2.
|
As Certified 2016 Revenue
corporate performance measure is based on reported Revenue. As Certified
2016 Revenue for the business-segment specific portion of Messrs. Mayo
and Becks annual incentive compensation is based on reported revenue for
the Industrial segment and the Aerospace segment (excluding Barnes
Aerospace Revenue Sharing Programs), respectively.
|
3.
|
As Certified 2016 DWC corporate
performance measure is based on accounts receivables (what our customers
owe) plus inventory (generally material, labor and overhead costs used to
produce products we sell to customers) less accounts payables (generally
what we owe our suppliers for products and services we purchase) based on
a 5 point average, excluding the effects of acquisitions.
|
4.
|
As Certified 2016 Operating
Profit for the business segment specific portion of Messrs. Mayo and
Becks annual incentive compensation is based on operating profit for the
Industrial and Aerospace segments, respectively, adjusted for the impact
of acquisitions, under the terms of the PLBP and MICP. As Certified 2016
Operating Profit for the Aerospace segment excludes Barnes Aerospace
Revenue Sharing Programs.
|
25
Table of Contents
The annual cash incentive awards are
generally paid in February of the following calendar year, after the results are
certified by the Compensation Committee. The following cash incentive awards
were paid to NEOs for 2016 performance based on the results certified by the
Compensation Committee:
Name of Executive
|
|
Annual Incentive Earned
|
|
Annual Incentive Earned
as % of Base Salary
in 2016
|
P. Dempsey
|
|
$670,103
|
|
84%
|
C. Stephens, Jr.
|
|
257,431
|
|
56%
|
S. Mayo
|
|
256,103
|
|
60%
|
M. Beck
|
|
85,007
|
|
22%
|
J. Berklas
|
|
185,954
|
|
50%
|
Long-Term Incentive
Compensation
Long-term incentive award opportunities
are potentially the largest component of total annual compensation and
constituted over 84% of 2016 total direct compensation at target for our CEO and
on average over 62% of 2016 total direct compensation at target for our NEOs. We
believe that long-term performance is enhanced through the use of awards
denominated in share value. These awards reward our NEOs for maximizing
stockholder value over time, aligning the interests of our employees and
management with those of our stockholders. When coupled with the ownership
requirements described below, our long-term incentive awards encourage our NEOs
to maintain a continuing stake in our long-term success and provide an effective
way to tie a substantial percentage of total direct compensation to any increase
or decrease in stockholder value.
In 2016, the Company used a combination of
time-based equity awards and performance-based equity awards. Particular
emphasis was placed on PSAs, which make up the largest portion (50%) of the
value of equity awards at the time of grant. In determining the mix of equity
grants, the Compensation Committee considered the pay-for-performance philosophy
at the Company, aligning the NEOs interests with those of our stockholders,
past practice, changes in business strategy, competitive practice (both
generally and within the Peer Group), and the strategic impact of equity-based
compensation (i.e
.,
cost effectiveness, stockholder dilution, executive retention, a link to
Company performance and total stockholder return).
The following types of long-term incentive
awards are currently used under the terms of the 2014 Barnes Group Inc. Stock
and Incentive Award Plan (the Stock and Incentive Award Plan):
Vehicle
|
|
Target Portion of Total
Long-term
Incentive
Compensation
|
|
Vesting
|
|
Comments
|
PSAs
|
|
CEO: 57%
Other NEOs: 50%
|
|
Performance-based vesting at the end of a 3-year
cycle
|
|
●
Provides an opportunity to
receive Common Stock if pre-defined performance measures are met over the
3-year performance period
●
Settled in shares of Common
Stock
●
Accrued dividends are paid
out in cash at the end of the 3-year cycle, adjusted for the number of
shares actually earned
●
For the 2016 grant, based
on two equally-weighted performance measures - TSR relative to the
performance of the Russell 2000 Index and ROIC performance based on
absolute internal measures as determined by the Compensation
Committee.
|
Stock Options
|
|
CEO: 17%
Other NEOs: 20%
|
|
Time-based vesting; 18, 30, and 42
months from the grant date in equal installments
|
|
●
Provides the opportunity for compensation only if the
Companys stock price increases from the grant date
●
Grants are priced at the
fair market value on the grant date
|
RSUs
|
|
CEO: 26%
Other NEOs: 30%
|
|
Time-based vesting; 18, 30, and 42 months
from the grant date in equal installments
|
|
●
Settled in shares of Common Stock
●
Pays out dividend
equivalents in cash during vesting
periods
|
26
Table of Contents
Stock options and RSUs are subject to
time-based vesting with staggered vesting dates to encourage NEO retention. In
addition to the time-vesting requirements, stock options have value only if the
Common Stock price at the time of exercise exceeds the fair market value as of
the grant date. This directly correlates to our stockholders interests, and
focuses executives on the long-term growth of the Company and stockholder value.
The 2016 award will measure three-year TSR
against the performance of Russell 2000 Index companies and three-year ROIC
performance against an absolute internal goal determined by the Compensation
Committee. The two measures are weighted equally. Based on performance,
following the end of the three-year cycle, a payout, if any, is in the form of
shares of Common Stock. A payout may range from zero for performance below the
threshold level, to 250% of target for exceptional performance at the maximum
level or above.
The chart below illustrates potential
payouts at various levels of performance for the 2016 PSAs:
2016 Performance Share
Awards
|
Performance Levels
1
|
3-Year Performance Measures
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Maximum+
|
|
Maximum++
|
Relative TSR (percentile
vs. Russell 2000 Index)
|
|
33rd
|
|
50th
|
|
66th
|
|
75th
|
|
85th
|
Payout Level (as a % of
Target)
|
|
33%
|
|
100%
|
|
150%
|
|
200%
|
|
250%
|
ROIC (absolute internal measure)
|
|
8.70%
|
|
9.00%
|
|
9.25%
|
|
9.50%
|
|
10.00%
|
Payout Level (as a % of Target)
|
|
33%
|
|
100%
|
|
150%
|
|
200%
|
|
250%
|
1.
|
Results between
Performance Levels are interpolated.
|
Payouts in the Last
Year.
Payouts under the PSA program
occurred in 2016 for the three-year performance period ending December 31, 2015.
The Relative Measure PSA program was renamed as the PSA program in 2015 to
reflect the mixture of performance metrics, measured on a relative basis and on
an absolute internal basis. In accordance with the plan, the Compensation
Committee adjusted the reported or actual performance results to include or
exclude certain unusual or non-recurring or other adjustments in accordance with
the plan. The PSA payout for the period ending December 31, 2015 resulted in a
weighted average payout level of 145%, calculated using the following results:
Performance Measure
|
|
As Certified
2012 Results
|
|
As Certified
2015 Results
|
|
Change
|
|
3 Year
Growth
|
|
Relative Performance
Level (Percentile)
|
|
Payout Level
|
TSR
1
|
|
$21.72
|
|
$37.41
|
|
$15.69
|
|
72%
|
|
68%
|
|
161%
|
EBITDA Growth (in millions)
|
|
197.2
2
|
|
268.3
3
|
|
71.10
|
|
36
%
|
|
60
%
|
|
131
%
|
Basic EPS Growth
|
|
1.91
2
|
|
2.49
3
|
|
0.58
|
|
30%
|
|
64%
|
|
143%
|
1.
|
TSR represents the
comparison between the average closing price for the 20 days before the
grant and the average closing price for the final 20 days of the
performance period, plus cumulative dividends during the performance
period.
|
2.
|
As Certified 2012 EBITDA Results
and As Certified 2012 Basic EPS Results are based on EBITDA derived from
reported amounts and reported basic EPS, respectively, adjusted for the
effects of acquisition including short-term purchase accounting and
acquisition related costs.
|
3.
|
As Certified 2015 EBITDA Results
and As Certified 2015 Basic EPS Results are based on EBITDA derived from
reported amounts, and reported basic EPS, respectively, adjusted for the
effects of acquisition short term purchase accounting and acquisition
related costs, the effect of restructuring activities, contract
termination dispute costs and pension lump sum
settlement.
|
Based on these results, the following
payouts were made to NEOs who received a grant of Relative Measure PSAs in 2013:
Name of Executive
|
|
2013 PSAs Granted
|
|
Weighted Average
Payout
Level
|
|
Payout Shares
|
|
Payout of Accumulated
Dividends
|
P. Dempsey
|
|
36,300
1
|
|
145%
|
|
52,789
1
|
|
$71,265
1
|
C.
Stephens, Jr.
|
|
14,000
|
|
145%
|
|
20,359
|
|
27,485
|
1.
|
Includes 22,600 shares
granted upon appointment to CEO (Messrs. Mayo, Berklas and Beck joined the
Company in 2014, 2015 and 2016, respectively, and therefore did not
participate in the 2013 Relative Measure PSA
program).
|
27
Table of Contents
Termination
Provisions
.
For PSAs, if the participants employment is involuntarily terminated by
the Company without cause before the first anniversary of the PSA grant date,
the award is forfeited. If they are terminated after one year, a pro rata
portion of the award based on the number of days the participant was employed
during the applicable performance period is paid based on the Companys actual
performance for that performance period relative to target. For stock options
and RSUs, if the participants employment is involuntarily terminated by the
Company without cause, any unvested stock options or RSUs will be forfeited and
vested options will remain exercisable for one year from the date of
termination.
Since 2012, long-term incentive awards
require a double trigger for accelerated vesting in the event of a change in
control of the Company. In the event of a change in control as defined in the
Stock and Incentive Award Plan, stock options, RSUs and PSAs will vest and
accelerate only if an NEOs employment is terminated by the Company without
cause, or if the NEO resigns for good reason (as defined in the severance
agreements) on or within two years following a change in control.
Information on termination provisions
related to death, disability and retirement can be found in the footnotes to the
Summary Compensation Table and under Awards Granted Under The Stock And
Incentive Award Plan on page 45.
Setting Award
Levels
.
Long-term incentive award opportunities are established by the
Compensation Committee according to the NEOs position and responsibilities and
based on a comparison to our Peer Group and competitive compensation data. In
2016, the Compensation Committee differentiated target awards based on
individual NEO performance, experience and market positioning.
The Compensation Committee does not take
into account existing NEO Common Stock holdings when determining awards because
it believes that doing so could penalize success (if compensation were reduced
based on the appreciation of past awards) or reward underperformance (if
compensation were awarded to make up for lack of appreciation in stock price).
The Companys practice is to make all
equity awards at the first regularly scheduled meeting of the Compensation
Committee, which typically occurs early in February. The Company makes
off-cycle equity grants to NEOs in limited circumstances, generally for newly
hired executives, promotions, in recognition of special events, or as retention
incentives.
2016 Awards
.
The established target
mix for all NEOs places more weight on performance-based equity. For NEOs other
than the CEO, the same target mix and weighting for equity was used in 2016 as
in prior years, with PSAs at 50%, RSUs at 30% and Stock Options at 20%. In 2016,
the target mix and weighting for equity for the CEO was modified to increase
PSAs to 57% and reduce RSUs to 26% and Stock Options to 17%, to place additional
emphasis on performance-based PSAs for the CEO.
2016 Long-Term Incentive Compensation
1
Name of Executive
|
|
Target Values
|
|
Stock Option Grants
|
|
RSU Grants
|
|
PSA Grants
|
P. Dempsey
|
|
$3,250,000
|
|
77,500
|
|
26,000
|
|
57,400
|
C. Stephens, Jr.
|
|
750,000
|
|
20,800
|
|
7,000
|
|
11,600
|
S. Mayo
|
|
475,000
|
|
13,200
|
|
4,400
|
|
7,400
|
M. Beck
|
|
400,000
|
|
11,283
|
|
3,904
|
|
6,506
|
J. Berklas
|
|
325,000
|
|
9,000
|
|
3,000
|
|
5,000
|
1.
|
Annual grants made during
February are shown above. Mr. Beck received a special one-time grant upon
his appointment in March 2016, having a target value of $490,000 (not
reflected above).
|
28
Table of Contents
NEO Stock Ownership Requirements
All of our NEOs, as well as certain other
members of Company leadership, are subject to stock ownership requirements.
Two-thirds of the value of unvested RSUs
count toward achieving ownership requirements. There is no deadline to achieve
the ownership levels, but all net after-tax proceeds from Company equity grants,
including stock option exercises, must be retained until ownership levels are
met. Once ownership levels are met, the requirement is converted to a fixed
number of shares.
As of the end of 2016, compliance with the
requirements was as follows:
Name of Executive
|
|
Multiple of
Annual Salary
|
|
Fully Met
Ownership Requirement
|
|
In Progress Toward
Meeting Ownership
Requirement
|
P. Dempsey
|
|
5x
|
|
X
|
|
|
C. Stephens, Jr.
|
|
3x
|
|
X
|
|
|
S. Mayo
1
|
|
3x
|
|
|
|
X
|
M. Beck
1
|
|
3x
|
|
|
|
X
|
J. Berklas
1
|
|
3x
|
|
|
|
X
|
1.
|
Messrs. Mayo, Berklas and Beck
joined the Company in 2014, 2015 and 2016,
respectively.
|
Risk Considerations
Our executive compensation program
motivates and rewards our NEOs for their performance during the fiscal year and
over the long term and for taking appropriate business risks consistent with our
strategic objectives. Our executive compensation program is also designed to
mitigate the likelihood that our NEOs would make business decisions that present
undue risk:
●
|
Our Stock Options and RSUs vest
ratably over three or more years. Our PSAs vest based on performance at
the end of the three-year performance period.
|
●
|
Annual cash incentive performance
targets are tied to several financial metrics, including basic or diluted
EPS and/or Operating Profit, Revenue and DWC and are quantitative and
measurable.
|
●
|
The performance periods and vesting
schedules for long-term incentives overlap and, therefore, reduce the
motivation to maximize performance in any one period.
|
●
|
Our stock ownership requirements
require our NEOs to own equity representing a significant multiple of
their base salary and to retain this equity throughout their tenures.
|
●
|
All NEOs have entered into clawback
agreements that allow us to recoup incentive compensation in situations
where the awards earned by NEOs are based on the achievement of certain
financial performance targets that are later restated and would therefore
result in lower awards paid.
|
●
|
Payouts under our annual and
long-term incentive programs are subject to a cap. Our annual cash
incentive award payments are capped at 2.25 times base salary for the CEO
and less for the other NEOs. Performance-based payouts under the PSAs are
capped at 2.5 times the target level PSA
grant.
|
Based on its most recent evaluation, the
Compensation Committee concluded that the executive compensation programs are
designed with the appropriate balance of risk and reward in relation to the
Companys business strategy and are not reasonably likely to have a material
adverse effect on the Company. For further discussion on risk oversight of the
compensation programs for Company-wide employees, see the Risk Oversight and
Assessment Policies and Practices section on page 34.
29
Table of Contents
Pension and Other Retirement Programs
Our NEOs have the opportunity to
participate in one or more of the following retirement plans:
Plan
|
|
Summary of Features
|
Salaried Retirement Income Plan
(SRIP)
Effective 12/31/2016, now called the
Consolidated Pension Plan (CPP)
|
|
A broad-based tax-qualified defined
benefit pension plan; vesting upon attaining 5 years of service. Effective
December 31, 2012, this plan was closed to employees hired on or after
January 1, 2013. In lieu of this benefit, eligible new employees will
receive an annual retirement contribution under the Barnes Group Inc.
Retirement Savings Plan of 4% of eligible earnings. Only Messrs. Dempsey
and Stephens participate in the SRIP.
|
Retirement Savings Plan (RSP)
|
|
401(k): A broad-based tax qualified
defined contribution savings plan with a 401(k) elective deferral and
matching contribution feature for all participants. 100% vesting in
matching contributions upon 2 years of service. All NEOs may participate
in the 401(k) portion of the RSP.
Retirement Contribution: New
employees who are not eligible to participate in the SRIP also receive an
annual Retirement Contribution (RC) of 4% of eligible earnings subject to
5 year graded vesting. Messrs. Mayo, Berklas and Beck are eligible for the
RC component of the
RSP.
|
Retirement Benefit Equalization Plan
(RBEP)
|
|
Provides benefits on base salary
earnings in excess of Internal Revenue Service (IRS) limit on qualified
plans that applies to the SRIP or the RC component of the RSP to eligible
salaried employees, officers and NEOs who do not meet MSSORP/DC Plan
vesting requirements; vesting upon attaining
5 years
of service (5 year graded
vesting for benefits based on the RC component of the RSP). All NEOs
participate in the RBEP.
|
Modified Supplemental Senior Officer
Retirement Plan (MSSORP)
|
|
Provides a 55% average final pay
benefit (base salary and annual incentive); benefit is reduced for offsets
from prior employer retirement benefits and other Company retirement
benefits; vesting upon attaining age 55 and 10 years of service. This
program was closed to new or rehired entrants in 2008. Only Mr. Dempsey
participates in the MSSORP.
|
Nonqualified Deferred Compensation
Plan (DC Plan)
|
|
Provides an annual Company
contribution based on a percent of base salary and annual incentive in
excess of IRS limit on qualified plans; for 2014, the contribution was
based on 20% of base salary and annual incentive pay; vesting upon
attaining age 55 and 10 years of service. The Company modified the DC Plan
to close participation to any employee hired, rehired or promoted into an
eligible position on or after April 1, 2012. Mr. Stephens is a
grandfathered participant in the DC Plan.
|
30
Table of Contents
The SRIP and RSP are broad-based
tax-qualified plans. The RBEP provides the benefits of the SRIP and the RC
component of the RSP in excess of IRS limits on broad-based tax-qualified plans.
The MSSORP and the DC Plan are non-tax-qualified supplemental executive
retirement plans that provide a higher level of benefits than are available
under the SRIP to certain designated employees and senior level officers,
including certain NEOs as reflected in the table below. Both of these plans are
closed to new participants so new executives receive the same benefit levels as
qualified plan participants.
The chart below summarizes which NEOs
participate in each of the qualified and nonqualified pension and retirement
plans. A more detailed discussion of the pension benefits payable to our NEOs is
described in the Pension Benefits table and the narrative following the table on
page 39.
|
|
Qualified
Plans
|
|
Nonqualified
Plans
|
Name of Executive
|
|
SRIP
|
|
RSP RC
1
|
|
RBEP
|
|
MSSORP
|
|
DC Plan
|
P. Dempsey
2
|
|
X
|
|
|
|
X
|
|
X
|
|
|
C. Stephens, Jr.
|
|
X
|
|
|
|
X
|
|
|
|
X
|
S. Mayo
|
|
|
|
X
|
|
X
|
|
|
|
|
M. Beck
|
|
|
|
X
|
|
X
|
|
|
|
|
J. Berklas
|
|
|
|
X
|
|
X
|
|
|
|
|
1.
|
All NEOs may
participate in the RSP (i.e., 401(k) plan) on the same terms as all other
employees, but only Messrs. Mayo, Berklas and Beck are eligible to
participate in the RC component of the RSP.
|
2.
|
If age and service
vesting requirements are not met under the MSSORP or the DC Plan, the RBEP
benefits apply.
|
Change in Control and Employment
Termination Benefits
The Company provides change in control
benefits specifically to retain key executives, including NEOs, during a
potential change in control, to provide continuity of management and to provide
income continuation for NEOs who are particularly at risk of involuntary
termination in the event of a change in control. These benefits are part of a
competitive compensation package and keep our executive officers focused on our
business goals and objectives. In some instances these agreements provide for
payments and other benefits if we terminate a NEOs employment without cause,
or if an NEO terminates employment for good reason, either before or after a
change in control.
As discussed in more detail on page 33,
none of the agreements for our NEOs include a gross-up for any taxes as a result
of golden parachute payments under Section 4999 of the Internal Revenue Code. In
addition, we generally do not provide change in control cash compensation
benefits in excess of two times an executives base salary and annual cash
incentive compensation. Our agreements with our NEOs also provide for
continuation of group health, life insurance, and other benefits for 24 months
following the executives termination and for certain other benefits. The terms
of the change in control and incremental termination benefits payable to our
NEOs are described in more detail under Potential Payments Upon Termination or
Change in Control on page 46.
Perquisites
In 2016, the Company provided certain
limited perquisites to our NEOs. The perquisites are fully described in the
footnotes to the Summary Compensation Table and generally fall in the categories
of financial planning and tax preparation services and annual executive physical
examination.
Additional Benefits
Messrs. Dempsey and Stephens are
grandfathered participants in the Companys Senior Executive Enhanced Life
Insurance Program (SEELIP), under which the Company pays the premiums for a life
insurance policy with a benefit of four times the employees base salary. The
policy is owned by the NEO but the Company pays the NEOs income tax liability
arising from its payment of the premiums and taxes during the NEOs employment.
Upon termination or retirement, the Company no longer pays the premium or the
income tax liability. As previously disclosed, the Company closed participation
to any employee hired or promoted into an eligible position after April 1, 2011.
31
Table of Contents
When the SEELIP was closed to new
entrants, the Company established the Executive Group Term Life Insurance
Program (EGTLIP) for new NEOs and other eligible executives who were not already
participants in the SEELIP. The EGTLIP provides premium payments for a
term insurance policy with a benefit of four times the employees base salary.
Upon termination or retirement, the Company no longer pays the premiums. The NEO
owns the policy and is responsible for any tax liability (i.e., no tax gross-up)
resulting from this benefit. Messrs. Mayo, Berklas and Beck are participants in
the EGTLIP.
Each of our NEOs participates in other
employee benefit plans generally available to all U.S. based employees (e.g.,
health insurance) on the same terms as all other employees.
Additional
Information
Employment Contracts
Generally, we have no employment contracts
with our employees, unless required or customary based on local law or practice.
None of our NEOs have an employment contract.
Clawback Agreements
Executives hired or promoted into
corporate officer positions are required to enter into clawback agreements.
These agreements permit the Company to recoup or clawback certain annual
incentive compensation and performance-based equity awards paid to those
officers where the awards were based on the achievement of certain financial
performance targets that were later restated and would therefore have resulted
in lower awards paid. The Company has entered into agreements with all NEOs and
other select key employees. In addition, all of the Companys equity award
agreements provide that awards may be forfeited if an employee engages in
activity that is detrimental to the Company, including performing services for a
competitor, disclosing confidential information, or otherwise violating the
Companys Code of Business Ethics and Conduct. The Compensation Committee has
discretion to make certain exceptions to the clawback requirements and
ultimately determine whether any adjustment will be made.
Hedging and Pledging
The Company prohibits certain members of
Company leadership, including all directors and executive officers (including
all NEOs) from engaging in hedging transactions involving the Companys
securities.
The Company prohibits certain members of
Company leadership, including all directors and executive officers, from
pledging or margin call arrangements involving the Companys securities that are
held to meet the Companys stock ownership requirements. The Company also places
other restrictions on any other pledging or margin call arrangements involving
Company securities by such individuals. In addition, the ability of these
individuals to engage in such transactions requires pre-approval from the
Corporate Governance Committee and an annual certification to the Corporate
Governance Committee that the individual is in compliance with the policy. None
of our NEOs have pledged Company securities or have Company securities subject
to a margin call arrangement.
Tax And Accounting
Considerations
Internal Revenue Code Section
162(m)
As discussed above, our Compensation
Committee considers the tax and accounting treatment associated with its cash
and equity awards, although these considerations are not the overriding factor
that the Compensation Committee uses in making its decisions. Section 162(m) of
the Internal Revenue Code places a limit of $1 million on the compensation that
the Company may deduct in any one year with respect to each of its NEOs (except
the CFO), unless certain conditions are met. There is an exception to the $1
million limitation for performance-based compensation meeting certain
requirements.
The Company currently grants awards
intended to meet this exception including annual cash incentive awards, stock
option awards and PSAs. Grants of restricted stock or stock units that vest
solely on the basis of service do not qualify for the exception. To maintain
flexibility in compensating NEOs in a manner designed to promote varying Company
goals, our Compensation Committee has not adopted a policy requiring all
compensation to be deductible. Our Compensation Committee may approve
compensation or changes to plans, programs or awards that may cause the compensation or awards to exceed the limitation under Section
162(m) if it determines that action is appropriate and in the Companys best
interests.
32
Table of Contents
Internal Revenue Code Section
280G
The Company also periodically reviews the
severance agreements entered into between the Company and the NEOs to assess the
impact of Section 280G of the Internal Revenue Code. Currently, the severance
agreements do not provide for any gross-up to compensate our NEOs for taxes
incurred under Section 4999 of the Internal Revenue Code as a consequence of
golden parachute payments upon a change in control. Nor do they preclude the
possibility that, in certain circumstances, the compensation payable in the
event of a change in control under the agreements or other plans and
arrangements may be non-deductible by the Company under Section 280G of the
Internal Revenue Code.
Accounting for Equity
Compensation
The Company accounts for its stock-based
employee compensation plans at fair value on the grant date and recognizes the
related cost in its consolidated statement of income in accordance with
accounting standards related to share-based payments. The fair values of stock
options are estimated using the Black-Scholes option-pricing model based on
certain assumptions. The fair values of RSU awards and PSAs with a
performance condition are estimated based on the fair market value of the
Companys stock price on the grant date. The fair values of PSAs with a
market condition are estimated using a Monte Carlo valuation model based on
certain assumptions.
COMPENSATION
COMMITTEE REPORT
To Our Fellow Stockholders at Barnes
Group Inc.
We, the Compensation and Management
Development Committee of the Board of Directors of Barnes Group Inc., have
reviewed and discussed with management the Compensation Discussion and Analysis
contained in this proxy statement and, based on such review and discussion, have
recommended to the Board that the Compensation Discussion and Analysis be
included in this proxy statement.
THE
COMPENSATION COMMITTEE
|
|
Mylle H. Mangum,
Chair
|
Gary G.
Benanav
|
JoAnna L.
Sohovich
|
33
Table of Contents
RISK OVERSIGHT AND ASSESSMENT POLICIES
AND PRACTICES
Our Audit Committee is ultimately
responsible for overall risk oversight for the Company generally. The Compensation Committee evaluates and
reviews our incentive compensation arrangements annually based on an inventory
of all relevant compensation programs prepared by the Human Resources department
which includes details of the principal features of the programs, including key
risk mitigation factors to ensure that our employees, including our NEOs, are
not encouraged to take unnecessary risks in managing our business. These factors
include:
●
|
Our target total direct compensation
mix represents a balance of short-term and long-term incentive based
compensation, that focuses on both short-term and long-term goals and
provides a mixture of cash and equity-based compensation;
|
●
|
Our
annual long-term incentive awards vest over three or more years;
|
●
|
Our
short-term incentive awards are tied to multiple performance-driven
financial metrics;
|
●
|
Payments under our short-term and long-term incentive programs are
capped;
|
●
|
We
have stock ownership requirements for our executive officers, as well as
certain other members of Company leadership, which ensure alignment with
our stockholders interests over the long term;
|
●
|
On an
annual basis, our executive officers confirm compliance with both our Code
of Business Ethics and Conduct and our Securities Law Compliance Policy;
and
|
●
|
We
have formal clawback agreements with our executive officers.
|
The Compensation Committee also consults
with and makes certain recommendations to the Board regarding the Companys
compensation programs as necessary. Based on its evaluation, the Compensation
Committee has concluded that the overall structure of the compensation programs
for NEOs and Company-wide employees are designed with the appropriate balance of
risk and reward in relation to the Companys overall business strategy and are
not reasonably likely to have a material adverse effect on the Company.
34
Table of Contents
EXECUTIVE COMPENSATION
Summary Compensation
Table
The following table sets forth the
compensation earned by our NEOs for the fiscal years ended December 31, 2016,
2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
&
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive
|
|
Deferred
Comp.
|
|
All
Other
|
|
|
Name & Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus
2
|
|
Awards
3
|
|
Awards
4
|
|
Plan Comp.
5
|
|
Earnings
6
|
|
Comp.
7
|
|
Total
|
Patrick J. Dempsey
1
President and CEO
|
|
2016
|
|
|
$800,000
|
|
$0
|
|
$3,054,284
|
|
$532,073
|
|
$670,103
|
|
$902,828
|
|
$210,378
|
|
$6,169,666
|
|
2015
|
|
|
793,750
|
|
0
|
|
2,539,258
|
|
579,506
|
|
267,840
|
|
249,522
|
|
95,482
|
|
4,525,358
|
|
2014
|
|
|
768,750
|
|
0
|
|
2,130,065
|
|
443,912
|
|
1,538,220
|
|
1,622,098
|
|
141,129
|
|
6,644,174
|
Christopher J. Stephens,
Jr.
SVP, Finance and CFO
|
|
2016
|
|
|
461,000
|
|
0
|
|
670,851
|
|
142,801
|
|
257,431
|
|
67,084
|
|
162,030
|
|
1,761,197
|
|
2015
|
|
|
461,000
|
|
0
|
|
608,817
|
|
139,364
|
|
102,895
|
|
32,892
|
|
262,522
|
|
1,607,490
|
|
2014
|
|
|
461,000
|
|
0
|
|
762,575
|
|
159,663
|
|
609,995
|
|
88,646
|
|
362,296
|
|
2,444,175
|
Scott A. Mayo
SVP and
President, Barnes
Industrial Segment
|
|
2016
|
|
|
425,000
|
|
0
|
|
425,945
|
|
90,624
|
|
256,103
|
|
0
|
|
27,859
|
|
1,225,531
|
|
2015
|
|
|
425,000
|
|
0
|
|
428,650
|
|
98,789
|
|
68,799
|
|
0
|
|
44,113
|
|
1,065,351
|
|
2014
|
|
|
336,799
|
|
0
|
|
1,069,840
|
|
72,978
|
|
305,952
|
|
0
|
|
138,434
|
|
1,924,003
|
Michael A. Beck
1
SVP and President, Barnes
Aerospace
Segment
|
|
2016
|
|
|
325,000
|
|
55,000
|
|
950,214
|
|
195,986
|
|
85,007
|
|
0
|
|
62,075
|
|
1,673,282
|
|
2015
|
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
2014
|
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
James P. Berklas
1
SVP, General Counsel
and
Secretary
|
|
2016
|
|
|
370,000
|
|
0
|
|
288,630
|
|
61,789
|
|
185,954
|
|
0
|
|
27,891
|
|
934,264
|
|
2015
|
|
|
154,167
|
|
0
|
|
213,086
|
|
48,297
|
|
31,040
|
|
0
|
|
57,897
|
|
504,487
|
|
2014
|
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
1.
|
Mr. Dempseys 2015 salary
represents a pro rata amount taking into account Mr. Dempseys increase in
salary from $775,000 to $800,000; Mr. Becks 2016 salary represents a
portion of his $390,000 base salary since he joined the Company effective
March 2016 and Mr. Berklas 2015 salary represents a portion of his
$370,000 base salary since he joined the Company effective August
2015.
|
2.
|
On February 8, 2017, the
Compensation Committee approved a one-time discretionary bonus payment in
the amount of $55,000 (less applicable taxes) for Mr. Becks leadership in
2016 and positioning the Aerospace segment for future growth.
|
3.
|
Stock Awards represent the
aggregate grant date fair value of RSUs and PSAs granted to NEOs under the
Stock and Incentive Award Plan. PSAs vest upon satisfying established
performance and market goals. In addition to the RSU value, the value
disclosed in this column for the PSAs for Messrs. Dempsey, Stephens, Mayo,
Beck and Berklas represents the amount of compensation if the target goals
are met. The maximum grant date fair value of the PSAs granted in 2016 was
$3,577,890 for Mr. Dempsey, $723,058 for Mr. Stephens, $461,261 for Mr.
Mayo, $1,026,025 for Mr. Beck and $311,663 for Mr. Berklas. The PSAs allow
a NEO to receive up to 250% of the target amount. The fair value of the
performance based portion of the awards was determined based on the market
value of Common Stock on the date of grant and the fair value of the
market based portion of awards was determined based on a Monte Carlo
valuation method; as described in the note on Stock-Based Compensation in
the notes to the Companys consolidated financial statements filed with
the Annual Report on Form 10-K for the respective year-end. The values
disclosed in this column for 2014 include special recognition RSU and
PSAs. The 2014 stock awards for Mr. Mayo, the 2015 stock awards for Mr.
Berklas and the 2016 stock awards for Mr. Beck include new hire
awards.
|
4.
|
Option Awards represent the
aggregate grant date fair value of stock options granted to NEOs under the
Stock and Incentive Award Plan. The fair value was determined using the
Black-Scholes option pricing model applied consistently with the Companys
practice, as described in the note on Stock-Based Compensation in the
notes to the Companys consolidated financial statements filed with the
Annual Report on Form 10-K for the respective year-end.
|
5.
|
Non-Equity Incentive Plan
Compensation which was paid in February 2017 includes amounts earned under
the PLBP and MICP, as applicable, for all NEOs.
|
6.
|
The amount listed in Change in
Pension Value and Nonqualified Deferred Compensation Earnings represents
the annual increase in pension value for all of the Companys defined
benefit retirement programs. All assumptions are as detailed in the notes
to the Companys consolidated financial statements filed with the Annual
Report on Form 10-K for the respective year-end, with the exception of the
following: retirement age for all plans is assumed to be the older of the
unreduced retirement age, as defined by each plan, or age as of December
31, 2016, December 31, 2015, or December 31, 2014, as applicable, and no
pre-retirement mortality, disability, or termination is assumed. The U.S.
discount rates of 4.50%, 4.65% and 4.25%, respectively, are detailed in
the Managements Discussion and Analysis filed with the Annual Report on
Form 10-K for the respective year-end. Year-over-year changes in pension
value generally are driven in large part due to changes in actuarial
assumptions underlying the calculations as well as increase in service,
age and compensation.
|
35
Table of Contents
The Pension Values are segregated by plan
in the following table:
|
|
|
Plan Name
|
|
Name of Executive
|
|
Year
|
|
SRIP
b
|
|
RBEP
a,b
|
|
MSSORP
b
|
|
SERP
b
|
|
Total
|
|
Patrick J. Dempsey
President and CEO
|
|
2016
|
|
$
|
674,406
|
|
n/a
|
|
|
$3,850,964
|
|
n/a
|
|
|
$4,525,370
|
|
|
2015
|
|
|
580,423
|
|
n/a
|
|
|
3,042,119
|
|
n/a
|
|
|
3,622,542
|
|
|
2014
|
|
|
556,969
|
|
n/a
|
|
|
2,816,051
|
|
n/a
|
|
|
3,373,020
|
|
Christopher J. Stephens, Jr.
SVP, Finance and
CFO
|
|
2016
|
|
|
330,395
|
|
n/a
|
|
|
n/a
|
|
n/a
|
|
|
330,395
|
|
|
2015
|
|
|
263,311
|
|
n/a
|
|
|
n/a
|
|
n/a
|
|
|
263,311
|
|
|
2014
|
|
|
230,419
|
|
n/a
|
|
|
n/a
|
|
n/a
|
|
|
230,419
|
|
Consistent with financial
calculations in the notes to the Companys consolidated financial
statements filed with the Annual Report on Form 10-K for the fiscal years
ending December 31, 2016, December 31, 2015 and December 31, 2014, it is
assumed that the form of payment is a life annuity for the SRIP, the RBEP,
the Supplemental Executive Retirement Plan (SERP) and the MSSORP. The
2016, 2015 and 2014 qualified plan limits of $265,000, $260,000 and
$255,000, respectively, have been incorporated.
|
a.
|
The amount listed for Mr.
Stephens assumes that he will vest under the Barnes Group 2009 Deferred
Compensation Plan and therefore would not be eligible to receive benefits
under the RBEP. The amounts listed for Mr. Dempsey assume that he would
vest under the MSSORP and therefore would not be eligible to receive
benefits under the RBEP.
|
b.
|
Messrs. Mayo, Beck and Berklas do
not participate in the SRIP, MSSORP or SEP plans and therefore are not
eligible to receive pension-related benefits under the RBEP.
|
7.
|
The compensation represented by
the amounts for 2016 set forth in the All Other Compensation column for
the NEOs is detailed in the following table:
|
|
|
|
|
|
Taxes Paid on
|
|
Life
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal
|
|
|
|
All Other
|
|
Insurance
|
|
Compensation
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
Position
|
|
Year
|
|
Compensation
a
|
|
Premiums
b,c
|
|
Plan
d
|
|
Relocation
e
|
|
Other
f
|
|
Perquisites
g
|
|
Total
|
|
Patrick J.
Dempsey
President and CEO
|
|
2016
|
|
|
$96,740
|
|
|
$100,688
|
|
|
$0
|
|
|
$0
|
|
|
$7,950
|
|
|
$5,000
|
|
|
$210,378
|
|
Christopher J. Stephens, Jr.
SVP, Finance and CFO
|
|
2016
|
|
|
43,817
|
|
|
45,606
|
|
|
59,779
|
|
|
0
|
|
|
7,950
|
|
|
4,878
|
|
|
162,030
|
|
Scott A. Mayo
SVP and
President, Barnes
Industrial
|
|
2016
|
|
|
0
|
|
|
2,859
|
|
|
0
|
|
|
0
|
|
|
24,950
|
|
|
50
|
|
|
27,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael A. Beck
SVP and President,
Barnes
Aerospace
|
|
2016
|
|
|
14,046
|
|
|
3,775
|
|
|
0
|
|
|
20,724
|
|
|
19,674
|
|
|
3,856
|
|
|
62,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James P. Berklas
SVP, General Counsel
and
Secretary
|
|
2016
|
|
|
2,855
|
|
|
1,601
|
|
|
0
|
|
|
0
|
|
|
22,750
|
|
|
685
|
|
|
27,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
This column represents the
reimbursement of taxes paid on eligible compensation included in the All
Other Compensation table for the NEOs in accordance with the Company's
policies and practices. For Messrs. Dempsey and Stephens, includes taxes
paid pursuant to the terms of the SEELIP, under which the Company pays the
policy premiums and pays the income tax liability arising from its payment
of the premiums and taxes. The SEELIP was closed to new participants
effective April 1, 2011. For Mr. Beck, includes a gross-up on relocation
expenses incurred during 2016 on all items considered to be taxable during
relocation. For Mr. Berklas, includes a gross-up paid in 2016 on
relocation expenses incurred in 2015 on all items considered to be taxable
during relocation, which are reflected in the All Other Compensation
column in 2015.
|
|
b.
|
Payments made under the SEELIP
for Messrs. Dempsey and Stephens. Under the SEELIP, the Company pays the
premiums for the individual life insurance policies that are owned by the
participants, with the life insurance coverage equal to four times base
salary, and the Company pays the participating NEO's income tax liability
arising from its payment of the premiums and taxes, therefore, incurring
no out-of-pocket expense for the policies. The Company will cease to pay
policy premiums and taxes upon termination of employment or
retirement.
|
|
c.
|
Payments made under the EGTLIP
for Messrs. Mayo, Beck and Berklas. The SEELIP was closed to new or
rehired executives effective April 1, 2011, and the Company established
the EGTLIP for new NEOs and other eligible executives. Under the EGTLIP,
the Company pays the premiums for individual life insurance policies that
are owned by the participants, with the life insurance coverage equal to
four times base salary. The employee owns the policy and is responsible
for any tax liability (no tax gross-up) resulting from this program. The
Company ceases to pay policy premiums on termination of
employment.
|
|
d.
|
The amount listed as deferred
compensation for Mr. Stephens includes employer contributions to the
Barnes Group 2009 Deferred Compensation Plan.
|
|
e.
|
Mr. Beck received relocation
benefits consistent with Company policy and practices. The relocation
costs included an allowance for incidentals and costs for temporary living
and final move. In addition, Mr. Beck received a tax gross-up on all items
considered to be taxable, which are reflected in the Taxes Paid on All
Other Compensation column.
|
|
f.
|
Consists of matching
contributions made by the Company under the RSP which is a plan generally
available to most U.S. based employees, including the NEOs. For Messrs.
Mayo, Beck and Berklas, who were not eligible to participate in the SRIP,
this also includes a retirement contribution of 4% eligible earnings under
the RC component of the RSP. Contributions made by the Company under its
health savings account plan which is also a plan generally available to
most U.S. based employees, including the NEOs, are not included; the
maximum allowable Company contributions under this plan were $1,000 in
2016.
|
|
g.
|
Included in All Other Perquisites
are payments made for financial planning and tax preparation services for
Messrs. Dempsey, Stephens and Beck and an executive physical for Mr.
Stephens.
|
36
Table of Contents
Grants of Plan Based Awards In
2016
For a discussion regarding the PLBP and
the Stock and Incentive Award Plan, please see the Compensation Discussion and
Analysis on page 15. The vesting schedule for outstanding PSAs, RSUs and stock
option awards are set forth in the footnotes to the Outstanding Equity Awards at
Fiscal Year End table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Awards:
|
|
Exercise
|
|
Date Fair
|
|
|
|
|
Estimated Future
|
|
Estimated Future
|
|
Awards:
|
|
Number
of
|
|
or
Base
|
|
Value of
|
|
|
|
|
Payouts Under Non-Equity
|
|
Payouts Under Equity
|
|
Number
|
|
Securities
|
|
Price
of
|
|
Stock &
|
Name of
|
|
Grant
|
|
Incentive Plan Awards
1
|
|
Incentive Plan Awards
2
|
|
of
Stock
|
|
Underlying
|
|
Option
|
|
Option
|
Executive
|
|
Date
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Options
3
|
|
Awards
4
|
|
Awards
|
P. Dempsey
|
|
2/10/16
|
|
$150,000
|
|
$600,000
|
|
$1,800,000
|
|
18,942
|
|
57,400
|
|
143,500
|
|
26,000
|
|
77,500
|
|
$30.71
|
|
$3,586,353
|
C. Stephens, Jr.
|
|
2/10/16
|
|
57,625
|
|
230,500
|
|
691,500
|
|
3,828
|
|
11,600
|
|
29,000
|
|
7,000
|
|
20,800
|
|
30.71
|
|
813,651
|
S. Mayo
|
|
2/10/16
|
|
53,125
|
|
212,500
|
|
637,500
|
|
2,442
|
|
7,400
|
|
18,500
|
|
4,400
|
|
13,200
|
|
30.71
|
|
516,568
|
M. Beck
|
|
3/1/16
|
|
40,905
|
|
163,621
|
|
490,863
|
|
4,777
|
|
14,476
|
|
36,190
|
|
8,686
|
|
25,105
|
|
34.92
|
|
1,146,199
|
J. Berklas
|
|
2/10/16
|
|
41,625
|
|
166,500
|
|
499,500
|
|
1,650
|
|
5,000
|
|
12,500
|
|
3,000
|
|
9,000
|
|
30.71
|
|
350,419
|
1.
|
Sets forth the range of the
potential amounts payable under the PLBP and MICP for all
NEOs.
|
2.
|
Sets forth the range of the
number of shares of Common Stock that could be issued under PSAs granted
in 2016 under the Stock and Incentive Award Plan.
|
3.
|
Stock options granted under the
Stock and Incentive Award Plan are described in the Outstanding Equity
Awards at Fiscal-Year End table.
|
4.
|
Each option has an exercise price
equal to the fair market value of Common Stock at the time of grant, as
determined by the last trading price per share of Common Stock during
regular trading hours on the grant date of the
option.
|
37
Table of Contents
Outstanding Equity Awards At Fiscal
Year End
The following table summarizes equity
awards granted to the Companys NEOs that remain outstanding as of December 31,
2016:
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Plan
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned
|
|
Market
or
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number
|
|
Market
Value
|
|
Shares,
|
|
Payout
Value
|
|
|
|
|
Securities
|
|
Number of
|
|
|
|
|
|
|
of Shares
|
|
of Shares
or
|
|
Units or
|
|
of
Unearned
|
|
|
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
|
or Units
of
|
|
Units of
|
|
Other
|
|
Shares,
Units
|
|
|
|
|
Unexercised
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Stock That
|
|
Stock That
|
|
Rights
That
|
|
or Other
Rights
|
Name of
|
|
Grant
|
|
Options
(#)
|
|
Options
(#)
|
|
Exercise
|
|
Expiration
|
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
That Have
Not
|
Executive
|
|
Date
1
|
|
Exercisable
|
|
Unexercisable
|
|
Price ($)
2
|
|
Date
3
|
|
|
Vested (#)
4
|
|
Vested ($)
5
|
|
Vested (#)
6
|
|
Vested ($)
5
|
P. Dempsey
|
|
2/10/16
|
|
|
|
77,500
|
|
30.71
|
|
02/10/26
|
|
|
26,000
|
|
1,232,920
|
|
57,400
|
|
2,721,908
|
|
|
2/11/15
|
|
21,905
|
|
43,795
|
|
36.31
|
|
02/11/25
|
|
|
15,866
|
|
752,366
|
|
39,600
|
|
1,877,832
|
|
|
2/12/14
|
|
20,534
|
|
10,266
|
|
37.13
|
|
02/12/24
|
|
|
5,399
|
|
256,021
|
|
27,000
|
|
1,280,340
|
|
|
2/12/14
|
|
3,934
|
|
1,966
|
|
37.13
|
|
02/12/24
|
|
|
1,033
|
|
48,985
|
|
5,100
|
|
241,842
|
|
|
3/1/13
|
|
25,300
|
|
|
|
26.32
|
|
03/01/23
|
|
|
|
|
|
|
|
|
|
|
|
2/12/13
|
|
15,400
|
|
|
|
24.24
|
|
02/12/23
|
|
|
|
|
|
|
|
|
|
|
|
2/8/12
|
|
3,379
|
|
|
|
26.59
|
|
02/08/22
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
90,452
|
|
133,527
|
|
|
|
|
|
|
48,298
|
|
2,290,291
|
|
129,100
|
|
6,121,922
|
C. Stephens, Jr.
|
|
2/10/16
|
|
|
|
20,800
|
|
30.71
|
|
02/10/26
|
|
|
7,000
|
|
331,940
|
|
11,600
|
|
550,072
|
|
|
2/11/15
|
|
5,268
|
|
10,532
|
|
36.31
|
|
02/11/25
|
|
|
3,799
|
|
180,149
|
|
9,500
|
|
450,490
|
|
|
2/12/14
|
|
6,267
|
|
3,133
|
|
37.13
|
|
02/12/24
|
|
|
666
|
|
31,582
|
|
8,200
|
|
388,844
|
|
|
2/12/14
|
|
2,534
|
|
1,266
|
|
37.13
|
|
02/12/24
|
|
|
1,633
|
|
77,437
|
|
3,300
|
|
156,486
|
|
|
2/12/13
|
|
15,700
|
|
|
|
24.24
|
|
02/12/23
|
|
|
|
|
|
|
|
|
|
|
|
2/8/12
|
|
13,600
|
|
|
|
26.59
|
|
02/08/22
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
43,369
|
|
35,731
|
|
|
|
|
|
|
13,098
|
|
621,107
|
|
32,600
|
|
1,545,892
|
S. Mayo
|
|
2/10/16
|
|
|
|
13,200
|
|
30.71
|
|
02/10/26
|
|
|
4,400
|
|
208,648
|
|
7,400
|
|
350,908
|
|
|
2/11/15
|
|
3,735
|
|
7,465
|
|
36.31
|
|
02/11/25
|
|
|
2,666
|
|
126,422
|
|
6,700
|
|
317,714
|
|
|
3/17/14
|
|
3,834
|
|
1,916
|
|
38.96
|
|
03/17/24
|
|
|
1,033
|
|
48,985
|
|
8,350
|
|
395,957
|
|
|
3/17/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,150
|
|
244,213
|
Total
|
|
|
|
7,569
|
|
22,581
|
|
|
|
|
|
|
8,099
|
|
384,055
|
|
27,600
|
|
1,308,792
|
M. Beck
|
|
3/1/16
|
|
|
|
11,283
|
|
34.92
|
|
03/01/26
|
|
|
4,782
|
|
226,762
|
|
6,506
|
|
308,515
|
|
|
3/1/16
|
|
|
|
13,822
|
|
34.92
|
|
03/01/26
|
|
|
3,904
|
|
185,128
|
|
7,970
|
|
377,937
|
Total
|
|
|
|
|
|
25,105
|
|
|
|
|
|
|
8,686
|
|
411,890
|
|
14,476
|
|
686,452
|
J. Berklas
|
|
2/10/16
|
|
|
|
9,000
|
|
30.71
|
|
02/10/26
|
|
|
3,000
|
|
142,260
|
|
5,000
|
|
237,100
|
|
|
8/1/15
|
|
|
|
5,107
|
|
38.93
|
|
08/01/25
|
|
|
1,861
|
|
88,249
|
|
3,101
|
|
147,049
|
Total
|
|
|
|
|
|
14,107
|
|
|
|
|
|
|
4,861
|
|
230,509
|
|
8,101
|
|
384,149
|
1.
|
The option vests at 33.34% on the
eighteenth month and 33.33% on each of the thirtieth and forty-second
month anniversaries of the grant date.
|
2.
|
Option exercise price is the last
trading price during regular trading hours per share of Common Stock on
the grant date.
|
3.
|
The options terminate 10 years
after the grant date.
|
4.
|
The RSU award vests one-third on
the eighteenth month, thirtieth month and forty-second month anniversaries
of the grant date.
|
5.
|
Market value reflects the closing
price on December 31, 2016, of $47.42.
|
6.
|
The PSA vests on the third
anniversary of the grant date subject to the achievement of performance
goals.
|
38
Table of Contents
Option Exercises And Stock
Vested
The following table provides information
on the value realized by each of the NEOs as a result of the exercise of stock
options and stock awards that vested during fiscal year 2016:
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
Shares
|
|
Value
Realized on
|
|
Number of
Shares
|
|
Value Realized on
|
Name of Executive
|
|
Acquired on Vesting
|
|
Vesting
1
|
|
Acquired on Vesting
|
|
Vesting
2
|
P. Dempsey
|
|
50,621
|
|
$1,368,159
|
|
74,422
|
|
$2,794,989
|
C. Stephens, Jr.
|
|
10,000
|
|
225,298
|
|
36,759
|
|
1,313,511
|
S. Mayo
|
|
0
|
|
0
|
|
6,542
|
|
241,737
|
M. Beck
|
|
0
|
|
0
|
|
0
|
|
0
|
J. Berklas
|
|
0
|
|
0
|
|
0
|
|
0
|
|
1.
|
Amount reflects the difference
between the exercise price of the option and the market value at the time
of exercise.
|
|
2.
|
Amount reflects the market value
of the stock on the day the stock vested.
|
Pension Benefits
The following table sets forth pension or
other benefits providing for payment at, following, or in connection with
retirement granted or accrued to the Companys NEOs in 2016:
|
|
|
|
Number of
Years Credited
|
|
Present Value
of
|
|
Payments During Last
|
Name of Executive
|
|
Plan Name
|
|
Service (12/31/16)
|
|
Accumulated Benefit
|
|
Fiscal Year
|
Patrick J. Dempsey
President
and CEO
|
|
SRIP
|
|
16.167
|
|
$674,406
|
|
$0
|
|
RBEP
|
|
n/a
|
|
n/a
|
|
n/a
|
|
MSSORP
|
|
16.167
|
|
3,850,964
|
|
0
|
|
|
|
|
|
|
|
|
|
Christopher J. Stephens,
Jr.
SVP, Finance and CFO
|
|
SRIP
|
|
7.917
|
|
330,395
|
|
0
|
|
RBEP
|
|
n/a
|
|
n/a
|
|
n/a
|
|
|
MSSORP
|
|
n/a
|
|
n/a
|
|
n/a
|
●
|
All
assumptions are as detailed in the notes to the consolidated financial
statements for the fiscal year ended December 31, 2016, including a
discount rate of 4.50% with the exception of the
following:
|
|
|
Retirement age for all
plans is assumed to be the later of unreduced retirement age, as defined
by each plan, or age as of December 31, 2016.
|
|
|
No pre-retirement
mortality, disability, or termination is assumed.
|
●
|
Consistent with financial disclosure
calculations, it is assumed that the form of payment is a life annuity for
the SRIP, the RBEP and the MSSORP.
|
●
|
The 2016 qualified plan
compensation limit of $265,000 has been incorporated.
|
●
|
The terms of (i) the
RBEP plan document as amended and restated effective January 1, 2013, (ii)
the terms of the SSORP plan document as amended and restated effective
January 1, 2009, (iii) and the terms of the SERP plan document as restated
effective February 8, 2010, and as amended and restated effective April 1,
2012, and as further amended on December 12, 2014 have been reflected in
the December 31, 2016 SEC disclosure tables. Subsequent amendments as of
December 30, 2009 and December 14, 2014 to the MSSORP plan document are
likewise reflected in the December 31, 2016 SEC disclosure tables.
|
●
|
Internal Revenue Code
Section 415 limits are not reflected for these calculations. Note that the
limits would only affect the distribution of amounts between the qualified
and nonqualified plans.
|
●
|
Messrs. Mayo, Beck and
Berklas do not participate in the SRIP, MSSORP or SEP plans and therefore
are not eligible to receive pension-related benefits under the RBEP.
|
DISCUSSION CONCERNING PENSION
BENEFITS TABLE
We provide benefits to NEOs under one or
more of the following pension plans:
●
|
Salaried Retirement Income Plan
(SRIP);
|
●
|
Retirement Benefit Equalization Plan (RBEP); and
|
●
|
Modified Supplemental Senior Officer Retirement Plan
(MSSORP).
|
The SRIP is a broad-based tax-qualified
defined benefit pension plan. The RBEP and the MSSORP are non-tax-qualified
supplemental executive retirement plans that provide more generous benefits than
are available under the SRIP to certain designated
employees and senior level officers, including certain NEOs as described below.
39
Table of Contents
SALARIED RETIREMENT INCOME
PLAN
The SRIP is a defined benefit pension plan
designed to provide income after retirement to eligible employees and their
beneficiaries. The only NEOs that participate in the SRIP Plan are Messrs.
Dempsey and Stephens. As described below, given the closure of the SRIP to
employees hired on or after January 1, 2013, Messrs. Mayo, Berklas and Beck are
eligible to receive an annual retirement contribution under the RSP of 4% of
eligible earnings subject to 5 year graded vesting.
Under the SRIP each eligible employee
receives credit for benefit accrual and vesting purposes equal to the number of
full months elapsed from the date the employee becomes a participant until the
date the participant is no longer employed by the Company. The formula for
benefit purposes ranges from 0.5% to 2.5% of a participants highest five
consecutive years of covered compensation (which generally includes base
salary). A participant is 100% vested after five years of service. Benefits are
generally structured to be paid upon retirement.
The normal retirement date under the SRIP
is the first day of the month following (1) a participants 65
th
birthday or (2) if hired after age 60, the month the participant achieves five
years of service. Participants are eligible for early retirement if they have
completed 10 years of vesting service and have reached age 55. A participant
whose employment terminates before he or she is eligible to retire on account of
normal or early retirement but who has otherwise met the vesting requirements of
the SRIP is entitled to a deferred vested retirement benefit.
In 2006, the benefit formula for
calculating benefits under the SRIP was changed for credited service earned on
and after January 1, 2007. The following table shows the calculation of the
basic retirement benefit for credited service earned as of December 31, 2006
under the prior formula and for credited service earned on and after January 1,
2007:
|
|
Benefit Accrual Rate
|
|
|
For Credited Service
Earned as of
|
|
For Credited Service
Earned on and
|
|
|
12/31/2006
|
|
after 1/1/2007
|
Final Average Earnings up
to Covered
Compensation times Credited Service up to
25 years
times
|
|
1.85%
|
|
1.5%
|
Plus
|
|
|
|
|
Final Average Earnings above Covered
Compensation
times Credited Service up to
25 years times
|
|
2.45%
|
|
2.0%
|
Plus
|
|
|
|
|
Final Average
Earnings times Credited
Service over 25 years times
|
|
0.5%
|
|
0.5%
|
Final Average Earnings is the average of
a participants highest 5 consecutive years compensation within the 10 years
before retirement or termination of employment with the Company. Compensation
includes all earnings paid to the participant as reported to the IRS on the
participants Form W-2, but excludes overtime pay, bonuses, directors fees,
reimbursed expenses and any other additional form of earnings, including
contributions made to or under any other form of benefit plan (e.g., a 401(k) or
profit sharing plan). The 2016 qualified plan compensation limit is $265,000.
Covered Compensation is the average
annual earnings used to calculate a participants Social Security benefit.
Covered Compensation is based on the year in which a participant reaches his or
her Social Security retirement age. It assumes that the participant will earn
the maximum amount taxable by Social Security up to that time. Covered
Compensation for a participant who reached age 65 and retired in 2016 was
$78,000.
Credited Service is the total time a
participant spends working at the Company that counts toward his or her pension
benefit. Credited Service most often is the number of months the participant
works for the Company.
40
Table of Contents
The basic retirement benefit is reduced by
the monthly amount of income payable to the participant attributable to employer
contributions under any other tax-qualified defined benefit pension plan under
which the participant receives credit for service which also constitutes
credited service under the SRIP.
The normal retirement benefit of a
participant will be his or her basic retirement benefit as determined above
multiplied by 100% (minus any percentage attributable to the cost of a
pre-retirement survivor annuity, if applicable) and multiplied by (a) the
actuarial equivalent factor of the normal form of benefit for the participant or
(b) the actuarial equivalent factor of any optional form of retirement benefit
provided for under the SRIP that the participant elects to receive instead of
the normal form. Optional forms of benefit include Contingent Annuity of 25%,
50%, 75% or 100%, 120 Months Certain and Life Option, Level Income Option and
Level Income and Contingent Annuity Option.
RETIREMENT BENEFIT EQUALIZATION
PLAN
The RBEP provides supplemental benefits
for participants in the SRIP whose benefits are limited by statute or the
Internal Revenue Code. For example, the Internal Revenue Code Section 415 limit
(i.e., the annual contribution limit to a defined contribution plan ($53,000
through December 31, 2016)) and the annual benefits payable from defined benefit
plans ($210,000 through December 31, 2016) and the Internal Revenue Code Section
401(a)(17) limit (i.e., earnings taken into account for tax-qualified plan
purposes ($265,000 through December 31, 2016). All NEOs are eligible to
participate in the RBEP. Generally, the RBEP is structured to pay the
participants the difference between the benefits paid under the SRIP and what
the participant would have received but for the statutory limitations described
in the SRIP. The RBEP takes into account base salary for purposes of determining
the benefits accrued under the plan. All NEOs participate in the RBEP. The
defined benefit RBEP was closed to new participants effective December 31, 2012,
with no impact to the benefits of existing participants and replaced with the
defined contribution RBEP effective January 1, 2013.
MODIFIED SUPPLEMENTAL SENIOR OFFICER
RETIREMENT PLAN
The MSSORP provides supplemental
retirement benefits to selected employees of the Company. The only NEO that
participates in the MSSORP is Mr. Dempsey. The MSSORP was closed to new
participants on December 31, 2008 and replaced by the 2009 Deferred Compensation
Plan.
The MSSORP provides certain early or
normal retirement benefits to participants as follows. The normal retirement
benefits under the MSSORP are equal to (a) minus the sum of (b), (c) and (d),
where:
(a)
|
equals 55% of the participants
final average compensation multiplied by the ratio (not to exceed 1.0) of
his or her credited service to 15 years;
|
(b)
|
equals the participants SRIP
benefit;
|
(c)
|
equals the participants Social
Security benefit; and
|
(d)
|
equals the participants prior
employer benefit.
|
The early retirement benefits under the
MSSORP are equal to (a) minus the sum of (b), (c) and (d), where:
(a)
|
equals 55% of the participants
final average compensation (which generally includes base salary and
annual incentive compensation) multiplied by the ratio (not to exceed 1.0)
of his or her credited service to the greater of 15 years or the credited
service the participant would have completed had credited service
continued to age 62 multiplied by a percentage factor (less than 100%)
based on the participants age at the time that benefits
commence;
|
(b)
|
equals the participants SRIP
benefit as of such date;
|
(c)
|
equals the participants Social
Security benefit; and
|
(d)
|
equals the participants prior
employer benefit multiplied by the same percentage factor based on the
participants age used in the calculation of
(a).
|
41
Table of Contents
The MSSORP is structured to cover any gaps
of coverage under the SRIP and RBEP up to 55% of a participants final average
compensation. This is because when an individual becomes eligible for the
MSSORP, a portion of the benefits are based on amounts earned and vested under
the SRIP and RBEP, which all vest prior to the MSSORP benefits.
Final average compensation has the same
meaning as Final Average Earnings under the SRIP except that final average
compensation is not subject to the IRS qualified plan compensation limits. In
addition, final average compensation includes annual cash incentive awards.
The Qualified Plan benefit is the annual pension benefit payable as a single
life annuity upon the participants actual retirement date, excluding any
portion of such annual pension benefit attributable to any period after, or any
compensation earned after, the participant has a separation from service
within the meaning of Internal Revenue Code Section 409A. Social Security
benefit means the participants annual Social Security benefit. Prior employer
benefit means any benefit paid or payable by any prior employer of the
participant.
For participants who had attained age 55
as of January 1, 2009, distributions are made in the form of an annuity. For
participants who had not attained age 55 as of January 1, 2009 (none, only Mr.
Dempsey participates in the plan), distributions generally are made in 5
installments over a 4-year period following retirement; provided, however, that
if the participant terminates employment before attaining age 55, the
participant is instead entitled to benefits under the RBEP.
Nonqualified
Deferred Compensation
The following table sets forth information
with regard to defined contribution or other plans that provide for the deferral
of compensation on a basis that is not tax qualified. In 2016, Mr. Stephens was
the only NEO that had nonqualified deferred compensation as follows:
NONQUALIFIED DEFERRED COMPENSATION
TABLE FOR 2016
|
|
Aggregate
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
|
|
Executive
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Balance in
|
|
Contributions
|
|
Registrant
|
|
Earnings
|
|
Aggregate
|
|
Aggregate
|
|
|
Last Fiscal
|
|
in Last Fiscal
|
|
Contributions in
|
|
in Last
|
|
Withdrawals /
|
|
Balance at Last
|
Name of Executive
|
|
Year
|
|
Year
|
|
Last Fiscal Year
|
|
Fiscal Year
|
|
Distributions
|
|
Fiscal Year-End
|
Christopher J. Stephens, Jr.
|
|
$833,937
|
|
|
|
$59,779
|
|
$47,802
|
|
|
|
$941,518
|
SVP, Finance and CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
The Barnes Group 2009 Deferred
Compensation Plan (DC Plan) was authorized by the Board in July 2009 effective
September 1, 2009. Officers of the Company who were elected or appointed on or
after January 1, 2009 until April 1, 2012 when the DC Plan was closed to any new
or rehired otherwise eligible executive, were eligible to participate in the DC
Plan at the Boards discretion. The DC Plan replaced the MSSORP which was closed
to new participants as of December 31, 2008. Mr. Stephens is the only NEO that
participates in the DC Plan.
There are no participant contributions to
the DC Plan; rather, for each DC Plan participant, the Company credits an annual
hypothetical contribution equal to 20% of the compensation above the Internal
Revenue Code Section 401(a)(17) limit (i.e., earnings taken into account for
tax-qualified plan purposes, currently $265,000) or such other amount determined
by the Compensation Committee. The hypothetical contributions credited are
adjusted according to the performance of investment options provided under the
DC Plan. Each participant in the DC Plan determines from the investment options
available how his or her fund will be invested. The DC Plan provides most of the
same investment options as the Barnes Group Inc. Retirement Savings Plan.
Subject to the Companys amendment and termination rights and other DC Plan and
trust provisions, participants generally vest upon attaining the age of 55 and
10 years of service; provided that the Board may reduce the required years of
service to five years for any given participant; and provided further that, for
death and defined disabilities, vesting occurs if a participant is at least 55
with five years of service. Distributions under the DC Plan generally are made
in five installments over a four-year period. If, at separation from service or
death, a participant has satisfied the age and service conditions for the
payment of a benefit under the DC Plan, a benefit under the RBEP will not be
paid to the participant.
As of December 31, 2016, if Mr. Stephens
was not a participant in the DC Plan, the present value of his accumulated
benefit under the RBEP would be $276,125. The amount that the Company
contributes under the DC Plan is also included in the All Other Compensation
column of the Summary Compensation Table for Mr. Stephens.
42
Table of Contents
Post Termination
And Change In Control Benefits
The Company has entered into certain
agreements and maintains certain plans that will require the Company to provide
compensation to the NEOs in the event of a termination of employment or a change
in control of the Company. The key provisions of those arrangements are
described below, and the values of potential payments that would be due if
termination of employment or a change in control occurred on December 31, 2016
are set forth in the tables following the description.
SEVERANCE AGREEMENT
All of our NEOs are eligible for certain
severance benefits in connection with a change in control or a separation from
service following a change in control under the terms of a severance agreement.
Generally, our severance agreements are based on the same form agreement. The
term of each severance agreement is one year with an automatic annual extension
commencing on each January 1, unless the Company or the NEO provides written
notice not later than September 30 of the preceding year of a determination not
to extend the severance agreement. However, if a change in control occurs during
the term of the severance agreement, the term will expire no earlier than 24
months after the month in which the change in control occurs. The Compensation
Committee believes that the Companys severance agreements for its NEOs help
assure that the NEOs will act in the best interest of the stockholders in any
proposed merger or acquisition transaction, even if they might face possible
termination of employment as a result of such a transaction.
The severance agreements provide, among
other things, that upon the occurrence of a change in control, NEOs are entitled
to a cash payment equal to a pro rated target annual bonus for the year in which
the change in control occurs which will be credited against any annual bonus or
incentive award that each NEO is otherwise entitled to receive with respect to
such year.
In addition, if, following a change in
control and during the applicable term of the severance agreement, a NEOs
employment is involuntarily terminated other than for cause or if the NEO
voluntarily terminates employment for good reason, then each NEO is entitled to
certain severance payments and benefits conditioned upon executing a release.
These payments and benefits generally consist of the following:
●
|
An amount equal to two
times the most recent base salary and two times the highest of (i) the
annualized average bonus for up to three years prior (or such annualized
year if applicable) to the (a) separation from service; or (b) change in
control; or (ii) the target bonus for the year in which the separation
from service occurs;
|
●
|
Cash payment equal to a
prorated target bonus for the year in which the separation from service
occurs (less any pro rata bonus previously paid for the same
period);
|
●
|
Twenty-four months of
additional age credit, benefit accruals and vesting credit under the
Companys nonqualified and qualified retirement plans, with the resulting
benefits payable either at the times provided by such plans or in an
actuarially equivalent lump sum on March 1 of the year following the year
in which the date of termination occurs;
|
●
|
Twenty-four months of
continued financial planning assistance at the Companys
expense;
|
●
|
Twenty-four months continued
participation in any welfare plans of the Company (including medical,
dental, death, disability and the Companys SEELIP, if applicable) in
which the NEO was participating at the time of termination of employment
or change in control; and
|
●
|
An additional payment each
month during the 24-month period to gross-up the NEO for all taxes due on
the medical and dental benefits payable under the severance
agreement.
|
For purposes of the severance agreements,
good reason generally includes a termination by an NEO, subject to an
applicable cure period, for: (i) the assignment of any duties materially
inconsistent with the NEOs status as an executive officer or a material adverse
alteration in the nature or status of the NEOs responsibilities from such
responsibilities in effect prior to the change in control, (ii) a reduction in
the annual base salary of more than 5% or $20,000, (iii) greater than a 50-mile
change in the location of Company executive offices and (iv) the failure to
follow procedures in the event of a termination for cause.
43
Table of Contents
If, during the term of the severance
agreement following a change in control, the Company disputes that an NEOs
employment has been involuntarily terminated other than for cause or that the
NEO terminated employment for good reason, the Company may be obligated under
the severance agreement to continue to pay the executive salary, bonus, benefits
and perquisites as described above for the balance of the term of the severance
agreement, in addition to the payments and benefits described above.
If an NEO becomes entitled to health,
welfare, pension and other benefits of the same type as referred to above during
the 24-month period following employment termination, the Company will stop
providing these benefits and the NEO may be obligated to repay a portion of any
benefits that were previously paid as described above in a lump sum.
The severance agreement also provides
that, if any payment or benefit would be subject to the excise tax imposed under
Section 4999 of the Internal Revenue Code, the severance payments and benefits
to the executive will be reduced if and to the extent that reducing the payments
and benefits would result in the executive retaining a larger amount, on an
after-tax basis, than if he or she received the entire amount of such payments
and benefits and paid the applicable excise tax (i.e., the Company does not
provide a tax gross-up for any excise taxes as a result of change in control
benefits).
The severance (change in control)
agreement supersedes any other agreements and plans that apply in the event that
the executives employment with us is terminated following a change in control
without cause or by the executive for good reason. The superseded agreements
include the Barnes Group Inc. Executive Separation Pay Plan described
below.
BARNES GROUP INC. EXECUTIVE SEPARATION
PAY PLAN
During 2016, each of our NEOs was covered
by the Executive Separation Pay Plan. The Executive Separation Pay Plan provides
for severance payments and benefits to an eligible executive who experiences an
involuntary separation from service without cause provided that, after December
31, 2008, such separation is not covered by a severance agreement. No payments
or benefits are made to an executive whose employment is terminated due to
misconduct of any type, including, but not limited to, violation of Company
rules or policies or any activity which results in conviction of a felony or if
the employment termination is a result of the sale of a business unit of the
Company and the employee is offered employment by the purchaser within 30 days
after the closing of the sale, in a comparable position and for substantially
equivalent compensation and benefits as before the sale.
Under the Executive Separation Pay Plan, a
terminated eligible NEO is entitled to minimum severance of one months base
salary or the amount of accrued vacation pay, whichever is greater. In order to
receive the higher severance benefit of 12 months salary continuation (or, 24
months salary and pro rata actual bonus in the case of Mr. Dempsey) plus
accrued vacation pay, the eligible NEO must execute a release of claims
acceptable to us. The salary portion is to be paid on regular payroll dates but
payments may be delayed until six months after separation from service if
necessary to comply with Internal Revenue Code Section 409A. The vacation pay
portion is to be paid in a lump sum. The pro rata actual bonus to be paid to Mr.
Dempsey would be paid in a lump sum. During the severance period, benefits will
continue to be provided pursuant to medical, dental, flexible benefit and
premium payments and benefits under the SEELIP, ELIP, or EGTLIP will be
continued for NEOs.
ANNUAL INCENTIVE PLANS
Participants in the PLBP for any year
whose employment is involuntarily terminated by the Company other than for cause
on or after November 1 and before awards are paid for such year are eligible to
receive prorated awards for such year based on actual performance, as are
participants who by reason of retirement, death or disability. A participant
whose employment terminates for any other reason before awards are paid for a
year is not eligible to receive an award. The MICP is structured on the same
terms and conditions as set forth in the PLBP.
RETIREMENT PLANS
The amount and form of pension benefits
that would be paid upon a qualifying retirement under our SRIP, the RBEP and the
MSSORP are disclosed in the Pension Benefits on page 39 and the accompanying
discussion. Any additional retirement benefits that would be payable in the
event of termination of employment or a change in control are shown in the
Potential Payments Upon Termination or Change in Control on page
46.
44
Table of Contents
Awards Granted
Under The Stock And Incentive Award Plan
The table below summarizes potential
payments upon termination or change in control pursuant to each of the Companys
stock option, RSU and PSA standard agreements. The applicable agreement contains
the complete and controlling terms and conditions that apply to each type of
award, which may vary by individual. For awards granted after January 1, 2016,
retirement refers to a termination of employment by an employee who has
reached the age of 55 with 10 years of service. For awards granted prior to
January 1, 2016, retirement refers to a termination of employment by an
employee who has reached the age of 62 with 5 years of service.
Termination
|
|
|
|
|
|
|
Scenario
|
|
Stock Options
|
|
Restricted Stock Units
|
|
Performance Share Awards
|
Termination without cause
|
|
Vested options will remain exercisable for one year from the
date of termination. Unvested options will terminate.
|
|
Unvested portion of award will terminate.
|
|
For
awards granted at least one year prior to termination, a pro rata payout
will be made based on actual performance, at the end of the three-year
performance cycle. All unearned PSAs will terminate.
|
Death
|
|
Grants 2016 or later: a pro rata portion of the stock options
will immediately vest and remain exercisable for one year after
termination.
|
|
Grants 2016 or later: a pro rata portion of unvested shares
will immediately vest.
|
|
Grants 2016 or later: a pro rata payout will be made based on
actual performance, at the end of the three-year performance
cycle.
|
|
|
Grants prior to 2016: all unvested
options immediately vest and remain exercisable for one year.
|
|
Grants prior to 2016: all unvested
shares will immediately vest.
|
|
Grants prior to 2016: a pro rata
payout will be made based on assumed target performance, at the end of the
three-year performance period.
|
Disability
|
|
Grants 2016 or later: unvested options
continue to vest according to their original vesting schedule and remain
exercisable for one year.
|
|
Grants 2016 or later: shares will continue
to vest.
|
|
Grants 2016 or later: a pro rata payout will
be made based on actual performance, at the end of the three-year
performance cycle.
|
|
|
Grants prior to 2016: all unvested options immediately vest
and remain exercisable for one year.
|
|
Grants prior to 2016: all unvested shares will immediately
vest.
|
|
Grants prior to 2016: a pro rata payout will be made based on
assumed target performance, at the end of the three-year performance
period.
|
Retirement
|
|
Grants 2016 or later: a pro rata portion of the stock options
will immediately vest and remain exercisable for five years after the
termination date.
|
|
Grants 2016 or later: a pro rata portion of unvested shares
will immediately vest.
|
|
Grants 2016 or later: a pro rata payout will be made based on
actual performance, at the end of the three-year performance
cycle.
|
|
|
Grants prior to 2016: all unvested
options granted at least one year before retirement immediately vest and
remain exercisable for five years after the termination date.
|
|
Grants prior to 2016: shares that
were granted at least two years before retirement will immediately
vest.
|
|
Grants prior to 2016: for awards
granted at least two years prior to termination a pro rata payout will be
made based on actual performance, at the end of the three-year performance
period. For awards granted less than two years prior to termination, a pro
rata payout will be made based on the lesser of actual performance or
target level and will be paid at the end of the three-year performance
period.
|
Termination for cause
|
|
All
outstanding stock options will terminate.
|
|
Unvested portion of award will terminate.
|
|
All
unearned PSAs will terminate.
|
Change in control and termination other than for cause within
2 years
|
|
All unvested options will immediately vest and remain
exercisable for two years after the termination date.
|
|
All unvested shares will become vested.
|
|
Vesting of PSAs based on actual performance will occur for
full years that have been completed and based on target for any remaining
period.
|
45
Table of Contents
Potential Payments
Upon Termination Or Change In Control
The amount of compensation payable to each
NEO if termination of employment or a change in control occurs, assuming a
December 31, 2016 triggering event, is listed in the table
below
1
.
|
|
|
|
|
|
Without
Cause/Good
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
Voluntary
|
|
For Cause
|
|
Reason
|
|
|
|
|
|
Change in
|
|
Control with
|
|
|
|
|
Termination
7
|
|
Termination
8
|
|
Termination
9
|
|
Death
10
|
|
Disability
11
|
|
Control
12
|
|
Termination
13
|
|
Retirement
14
|
P. Dempsey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation/ Severance
|
|
|
|
|
|
$2,270,103
|
|
$670,103
|
|
$670,103
|
|
|
|
$1,677,468
|
|
|
Additional Retirement Benefits
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
351,101
|
|
|
Continuation of Other Benefits
3
|
|
|
|
|
|
192,569
|
|
|
|
|
|
|
|
370,139
|
|
|
Stock Options
4
|
|
|
|
|
|
|
|
1,132,629
|
|
612,430
|
|
|
|
1,907,455
|
|
|
Restricted Stock Units
5
|
|
|
|
|
|
|
|
1,552,626
|
|
1,057,371
|
|
|
|
2,290,291
|
|
|
Performance Share Awards
6
|
|
|
|
|
|
2,774,070
|
|
3,681,373
|
|
3,681,373
|
|
|
|
6,121,922
|
|
|
Total
|
|
|
|
|
|
5,236,742
|
|
7,036,731
|
|
6,021,277
|
|
|
|
12,718,376
|
|
|
C. Stephens, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation/ Severance
|
|
|
|
|
|
718,431
|
|
257,431
|
|
257,431
|
|
|
|
1,909,516
|
|
|
Additional Retirement Benefits
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124,459
|
|
|
Continuation of Other Benefits
3
|
|
|
|
|
|
134,167
|
|
|
|
|
|
|
|
253,335
|
|
|
Stock Options
4
|
|
|
|
|
|
|
|
301,888
|
|
162,276
|
|
|
|
509,844
|
|
|
Restricted Stock Units
5
|
|
|
|
|
|
|
|
422,512
|
|
289,167
|
|
|
|
621,107
|
|
|
Performance Share Awards
6
|
|
|
|
|
|
845,657
|
|
1,029,014
|
|
1,029,014
|
|
|
|
1,545,892
|
|
|
Total
|
|
|
|
|
|
1,698,255
|
|
2,010,845
|
|
1,737,888
|
|
|
|
4,964,153
|
|
|
S. Mayo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation/ Severance
|
|
|
|
|
|
681,103
|
|
256,103
|
|
256,103
|
|
|
|
1,559,980
|
|
|
Additional Retirement Benefits
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,700
|
|
|
Continuation of Other Benefits
3
|
|
|
|
|
|
56,203
|
|
|
|
|
|
|
|
97,405
|
|
|
Stock Options
4
|
|
|
|
|
|
|
|
187,742
|
|
99,146
|
|
|
|
319,718
|
|
|
Restricted Stock Units
5
|
|
|
|
|
|
|
|
259,198
|
|
175,407
|
|
|
|
384,055
|
|
|
Performance Share Awards
6
|
|
|
|
|
|
851,979
|
|
968,949
|
|
968,949
|
|
|
|
1,308,792
|
|
|
Total
|
|
|
|
|
|
1,589,285
|
|
1,671,992
|
|
1,499,605
|
|
|
|
3,706,650
|
|
|
M. Beck
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation/ Severance
|
|
|
|
|
|
475,007
|
|
85,007
|
|
85,007
|
|
$77,938
|
|
1,332,945
|
|
|
Additional Retirement Benefits
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,083
|
|
|
Continuation of Other Benefits
3
|
|
|
|
|
|
72,767
|
|
|
|
|
|
|
|
130,534
|
|
|
Stock Options
4
|
|
|
|
|
|
|
|
117,975
|
|
|
|
|
|
313,813
|
|
|
Restricted Stock Units
5
|
|
|
|
|
|
|
|
154,874
|
|
|
|
|
|
411,890
|
|
|
Performance Share Awards
6
|
|
|
|
|
|
|
|
228,817
|
|
228,817
|
|
|
|
686,452
|
|
|
Total
|
|
|
|
|
|
547,774
|
|
586,673
|
|
313,824
|
|
77,938
|
|
2,920,717
|
|
|
J. Berklas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation/ Severance
|
|
|
|
|
|
555,954
|
|
185,954
|
|
185,954
|
|
|
|
1,258,954
|
|
|
Additional Retirement Benefits
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,506
|
|
|
Continuation of Other Benefits
3
|
|
|
|
|
|
47,655
|
|
|
|
|
|
|
|
80,310
|
|
|
Stock Options
4
|
|
|
|
|
|
|
|
103,765
|
|
43,358
|
|
|
|
193,748
|
|
|
Restricted Stock Units
5
|
|
|
|
|
|
|
|
145,390
|
|
88,249
|
|
|
|
230,509
|
|
|
Performance Share Awards
6
|
|
|
|
|
|
98,033
|
|
177,066
|
|
177,066
|
|
|
|
384,149
|
|
|
Total
|
|
|
|
|
|
701,642
|
|
612,175
|
|
494,627
|
|
|
|
2,192,176
|
|
|
1.
|
The value of equity awards
vesting upon a change in control, death or disability are equal to the
grant's intrinsic value as of December 31, 2016 based on the closing
market price of $47.42. Equity awards and non-equity incentive plan
compensation that were fully vested by their terms as of December 31, 2016
are not included in the numbers shown above. For information on any
outstanding fully-vested awards, see the Outstanding Equity Awards at
Fiscal Year End Table.
|
2.
|
The value of these benefits is
based upon provisions of the change in control severance agreements with
our NEOs whereby the executives are entitled to the value of additional
retirement benefits that would have been earned had they continued
employment for two additional years after employment
termination.
|
3.
|
The value of these benefits is
based upon the Executive Separation Pay Plan and the change in control
severance agreements with our NEOs whereby the executives are entitled to
continued participation in the Companys welfare and fringe benefit plans
for 12 or 24 months upon covered terminations of employment, and
continuation of premium payments and benefits under the SEELIP, ELIP, or
EGTLIP as applicable. Although continued participation may cease to the
extent the NEO subsequently has coverage elsewhere, the numbers set forth
in the table above reflect an estimate of coverage for the maximum
applicable time period.
|
46
Table of Contents
4.
|
Amounts reflect the
difference between the exercise price of the options underlying the awards
and the closing market price of $47.42 as of December 31, 2016. Options
with a strike price greater than $47.42 are shown as $0. Equity awards
that were fully vested by their terms as of December 31, 2016 are not
included in the numbers shown above. Calculation assumes that options are
exercised immediately, although severance agreements allow 2 years to
exercise following a Change in Control and qualified termination and 1
year in the case of death or disability. For information on any
outstanding fully-vested awards, see the Outstanding Equity Awards at
Fiscal Year End Table.
|
5.
|
Amounts reflect the
market value of the shares underlying the awards as of December 31, 2016
at the closing market price of $47.42 and do not include any value for
that portion of the award with respect to which the participants accrued a
vested interest by or on December 31, 2016. For information on any
outstanding fully-vested awards, see the Outstanding Equity Awards at
Fiscal Year End Table.
|
6.
|
Amounts reflect the
market value of the shares underlying the awards as of December 31, 2016
at the closing market price of $47.42 and assume target level performance
and do not include any value for that portion of the award with respect to
which the participants accrued a vested interest by or on December 31,
2016. No values are included in the Change In Control column because
performance results are determined and approved by the CMDC in February
2017. For Without Cause/Good Reason Termination, performance shares
granted over a year prior to the termination date are pro-rated at target.
For death and disability, all unvested performance shares are pro rated at
target.
|
7.
|
No additional payment
is due under the Annual Incentive Plans for the Cash
Compensation/Severance row of the table; participants must be employed on
the date of payment to receive an award.
|
|
8.
|
The Executive
Separation Pay Plan stipulates no separation benefits are due if the
executive is terminated for misconduct. Under the Annual Incentive Plans,
the officer generally must be employed on the date of payment to receive
an award. A retirement-eligible officer also gets no bonus under the
Annual Incentive Plans if terminated for Cause.
|
9.
|
The amount in the Cash
Compensation/Severance row of the table equals one year's salary (or two
years' salary for Dempsey) and includes a pro rated award under the Annual
Incentive Plans for all executives. Under the Annual Incentive Plans, an
executive terminated other than for cause after October 31, 2016 is
entitled to a prorated award. The amounts shown in the table assume
performance at target levels for 2016 and future years.
|
10.
|
No additional salary is
due upon death or disability, but, under the Annual Incentive Plans, the
participant would be entitled to a prorated award for a death or
disability on December 31, 2016. Participants' beneficiaries would also be
entitled to life insurance benefits as well as certain pension plan death
benefits not shown on this table. Prorated equity awards vest at date of
death for awards granted on or after January 1, 2016. Proration is based
on days worked in performance period for performance shares. Proration is
based on days worked since grant date for other equity awards. Restricted
Stock Units and Stock Options awarded before January 1, 2016 vest in full
upon death or disability. No incremental value is shown for death because
the table assumes death occurred on the last day of the year; the awards
would then have already been earned.
|
11.
|
Participants would be
able to receive short-term disability and long-term disability payments
available to all salaried employees for which amounts are not shown in the
table above. Participants would also accrue service under some of the
pension plans during a period of disability. Equity awards granted on or
after January 1, 2016 (other than performance shares) are subject to
continued vesting upon the occurrence of a qualifying disability event. No
incremental value is shown for disability because vesting does not
accelerate upon termination for disability. For information on any
outstanding fully-vested awards, see the Outstanding Equity Awards at
Fiscal Year End Table.
|
12.
|
Upon a change in
control event with continued employment, executives are entitled to a pro
rated target bonus. The table reflects a December 31, 2016 change in
control event. Since a portion of the 2016 bonus is earned as of December
31, 2016, the Cash Compensation/Severance row includes the excess (if any)
of the full-year target bonus over the amount actually awarded for the
year.
|
13.
|
Executives are entitled
to 2 years salary and a pro-rated target bonus upon a change in control.
The table reflects a December 31, 2016 event. Since a portion of the 2016
bonus is earned as of December 31, 2016, the Cash Compensation/Severance
row includes the excess (if any) of the full-year target bonus over the
amount actually awarded for the year. Pro-rated bonus is based on target
for Beck, and actual for all other NEOs. Agreements separately provide for
a bonus component of the severance benefit. For all NEOs, this is based on
a 2x multiple of a 3-year average bonus or the target bonus if target is
more favorable, for post-change in control termination. The severance
benefits shown for Mr. Dempsey for a post-change in control termination
have been reduced by $2,384,386, to the largest after-tax
payment.
|
14.
|
No pro-rated bonus is
due to the executives as of December 31, 2016 as none of the NEOs were
eligible to retire. Equity awards only allow for retirement treatment if
an executive retires at or after attaining age 62 with at least five years
of service. No amounts are shown in this column as none of the NEOs were
eligible to retire on December 31, 2016.
|
47
Table of Contents
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth information
regarding securities authorized for issuance under the Companys equity
compensation plans as of December 31, 2016.
|
|
|
|
|
|
Number of
Securities
|
|
|
|
|
|
|
Remaining Available
for
|
|
|
Number of Securities to
be
|
|
|
|
Future Issuance Under
Equity
|
|
|
Issued Upon Exercise
of
|
|
Weighted-average
Exercise
|
|
Compensation
Plans
|
|
|
Outstanding
Options,
|
|
Price of Outstanding
Options,
|
|
(excluding securities
reflected
|
Plan Category
|
|
Warrants and Rights
|
|
Warrants and Rights
|
|
in column a)
|
|
|
(a)
|
|
(b)
|
|
(c)
|
Equity Compensation Plans
|
|
1,256,599
1
|
|
28.67
2
|
|
6,108,925
3
|
Approved by Security Holders
|
|
|
|
|
|
|
Barnes Group Inc., Stock
and
|
|
|
|
|
|
|
Incentive Award Plan (2014
Plan)
|
|
|
|
|
|
|
Employee Stock Purchase Plan
|
|
|
|
|
|
|
(ESPP)
|
|
|
|
|
|
285,399
|
Non-Employee Director
Deferred
|
|
38,400
|
|
|
|
|
Stock Plan, As Further
Amended
|
|
|
|
|
|
|
Total
|
|
1,294,999
|
|
|
|
6,394,324
|
1.
|
Included in this amount are
308,904 shares reserved for RSU awards, 288,788 shares reserved for PSAs
assuming target performance and 69,747 shares reserved for PSAs assuming
above target performance.
|
2.
|
Weighted-average exercise price
excludes 597,692 shares for restricted stock awards with a zero exercise
price.
|
3.
|
The 2014 Plan allows for stock
options and stock appreciation rights to be issued at a ratio of 1:1 and
other types of incentive awards at a ratio of
2.84:1.
|
STOCK
OWNERSHIP
Security Ownership
Of Certain Beneficial Owners
As of March 1, 2017, the individuals and
institutions set forth below are the only persons known by us to be beneficial
owners of more than 5% of the outstanding shares of Common Stock:
Beneficial Ownership of Common Stock
|
Name of Person or Group
|
|
Common Stock
|
|
Percent of Common Stock
|
BlackRock Inc.
|
|
5,658,313
|
|
10.5%
|
Bank of America Corporation and Affiliates
|
|
5,198,332
|
|
9.66%
|
Vanguard Group Inc.
|
|
4,297,405
|
|
7.98%
|
Dimensional Fund Advisors LP
|
|
3,507,270
|
|
6.5%
|
Mr. Thomas O. Barnes
|
|
3,031,844
|
|
5.6%
|
Nature of Beneficial Ownership of Common
Stock
|
|
|
|
|
Bank of
America
|
|
Vanguard
|
|
Dimensional
Fund
|
|
|
|
|
BlackRock, Inc.
|
|
Corporation
|
|
Group Inc.
|
|
Advisors LP
|
|
Mr. Thomas O. Barnes
|
Sole voting power
|
|
5,539,003
|
|
none
|
|
59,936
|
|
3,446,700
|
|
3,031,844*
|
Shared voting power
|
|
none
|
|
5,193,581
|
|
6,032
|
|
none
|
|
none
|
Sole investment power
|
|
5,658,313
|
|
none
|
|
423,399
|
|
3,507,270
|
|
938,580*
|
Shared investment power
|
|
none
|
|
5,198,289
|
|
63,406
|
|
none
|
|
2,093,264
|
*Includes 12,000 shares Mr. T. Barnes
has the right to receive under the Non-Employee Director Deferred Stock
Plan.
|
48
Table of Contents
The foregoing information is based solely
on a Schedule 13G/A filed by BlackRock, Inc., 55 East 52nd Street, New York, NY
1005, with the SEC on January 12, 2017; Schedule 13G/A filed by Bank of America
Corporation (BoA), Bank of America Corporate Center, 100 N Tryon Street,
Charlotte, NC 28255, with the SEC on February 9, 2017; Schedule 13G/A filed by
Vanguard Group Inc., 100 Vanguard Blvd., Malvern, PA 19355, with the SEC on
February 10, 2017; Schedule 13G filed by Dimensional Fund Advisors LP, Building
One, 6300 Bee Cave Road, Austin, Texas with the SEC on February 9, 2017 and
Company records for Mr. T. Barnes, 123 Main Street, Bristol, CT 06010.
Security Ownership
Of Directors And Executive Officers
As of March 1, 2017, each of our directors
and NEOs and all directors and executive officers as a group beneficially owned
the number of shares of Common Stock shown below. The number of shares reported
as beneficially owned has been determined in accordance with Rule 13d-3 under
the Exchange Act.
|
|
Amount and Nature of
Beneficial
|
|
|
Name of Person or Group
|
|
Ownership
1
|
|
Percent of Common Stock
|
Thomas O. Barnes
|
|
3,031,844
|
|
5.6%
|
Elijah K. Barnes
|
|
31,271
|
|
*
|
Michael A. Beck
|
|
0
|
|
*
|
Gary G. Benanav
|
|
60,573
|
|
*
|
James P. Berklas
|
|
2,087
|
|
*
|
Patrick J. Dempsey
|
|
272,866
|
|
*
|
Thomas J. Hook
|
|
1,925
|
|
*
|
Mylle H. Mangum
|
|
21,348
|
|
*
|
Hans-Peter Männer
|
|
400,721
|
|
*
|
Scott A. Mayo
|
|
15,310
|
|
*
|
Hassell H. McClellan
|
|
17,213
|
|
*
|
William J.
Morgan
|
|
38,556
|
|
*
|
Anthony V. Nicolosi (Director
Nominee)
|
|
0
|
|
*
|
JoAnna L.
Sohovich
|
|
5,188
|
|
*
|
Christopher J. Stephens, Jr.
|
|
119,045
|
|
*
|
Current directors & executive officers
as a group (19)
2
|
|
4,571,680
|
|
8.5%
|
*
|
Less than 1%
of Common Stock beneficially owned.
|
|
1.
|
The named person or
group has sole voting and investment power with respect to the shares
listed in this column, except as set forth in this
note.
|
|
2.
|
Includes 11,831 shares for Mr. Kramer who resigned from the Board in September 2016 and 409,573 shares for Mr. Bristow who did not stand for re-election to the Board at the May 2016 Annual Meeting.
|
Mr. T. Barnes has sole voting power with
respect to 3,031,844 shares; sole investment power with respect to 938,580
shares and shared investment power with respect to 2,093,264 shares. Of the
shares of Common Stock owned by Mr. T. Barnes, 100,000 shares are
pledged.
The shares listed for Messrs. Berklas,
Dempsey, Mayo and Stephens and all directors and executive officers as a group
include 1,703; 90,452; 7,569; 43,369 and 188,601 shares, respectively, which
they have the right to acquire within 60 days after March 1, 2017.
The shares listed for Messrs. T. Barnes,
Dempsey and Stephens and all directors and executive officers as a group include
35,084; 4,123; 1,908; and 55,887 shares, respectively, over which they have
shared investment power. These shares are held under the Companys Retirement
Savings Plan
.
The shares listed for Messrs. T. Barnes,
Benanav and Ms. Mangum include 12,000 shares that each of them has the right to
receive under the Non-Employee Director Deferred Stock Plan described in Deferred Compensation on page 14.
49
Table of Contents
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange
Act of 1934 requires that our directors, executive officers and beneficial
owners of 10% or more of our Common Stock file reports with the SEC concerning
their ownership, and changes in their ownership, of our Common Stock. Based on
our review of reports filed with the SEC and written representations from our
directors and executive officers, we had one late Form 4 to report the open
market sale of common stock for Ms. Dawn Edwards, Senior Vice President, Human
Resources due to an administrative error.
RELATED PERSON
TRANSACTIONS
Policies And
Procedures For Related Person Transactions
We have a written policy regarding related
person transactions. The policy covers all related person transactions or series
of similar transactions. All related person transactions are to be in the best
interests of the Company and its stockholders and, unless different terms are
specifically approved or ratified by the Corporate Governance Committee, must be
on terms that are no less favorable to us than would be obtained in a similar
transaction with an unaffiliated third party under the same or similar
circumstances. The Corporate Governance Committee may consider the
following:
●
|
the extent of the related persons
interest in the transaction;
|
●
|
whether the transaction would create
an actual or apparent conflict of interest;
|
●
|
the availability of other sources or
comparable products or services, if
applicable;
|
●
|
whether the item is generally
available to substantially all employees, if
applicable;
|
●
|
the benefit to the Company;
and
|
●
|
the aggregate value of the
transaction.
|
Our General Counsel is responsible for
reviewing all related person transactions and taking all reasonable steps to
ensure that all material related person transactions (those required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC) are
presented to the Corporate Governance Committee for pre-approval or ratification
in its discretion. Each director and executive officer is responsible for
promptly notifying our General Counsel of any related person transaction in
which such director or executive officer may be directly or indirectly involved
as soon he or she becomes aware of a possible transaction.
For related person transactions that are
not material, our General Counsel is to determine whether the transaction is in
compliance with the policy. If a non-material related person transaction
involves the General Counsel, the Chief Financial Officer assumes the
responsibilities of the General Counsel with respect to the policy.
Related Person
Transactions For 2016
In 1999, the Company entered into
collateral assignment split dollar life insurance agreements (Agreements),
which replaced similar agreements that had been entered into in 1985, with our
current Chairman of the Board and his sister. The insured under the policies is
the father of our current Chairman of the Board. The current beneficiaries under
the policies are our current Chairman and his sister. The Agreements were
originally entered into when our current Chairmans father was the Companys
chief executive officer and chairman of the board, and they were customary at
the time. Since 1985, the Company has paid an annual premium of $49,500 for each
policy as required under the Agreements. Upon termination of the Agreements or
death of the insured, the Company is entitled to the greater of the aggregate
premiums paid or the cash value of the policies. As of December 31, 2016, the
death benefit of each policy was $3,493,267. The aggregate premiums paid by the
Company for each policy was $1,715,344 and the cash value of each policy was
$1,828,344.
50
Table of Contents
AUDIT
MATTERS
Audit Committee
Report
The Board of Directors has ultimate
authority and responsibility for effective corporate governance, including the
role of oversight of Company management. The Audit Committees purpose is to
assist the Board of Directors in fulfilling its responsibilities to the Company
and its stockholders by overseeing the Company's accounting policies and
internal controls, financial reporting process and practices and legal and
regulatory compliance. The Audit Committee relies on the expertise and knowledge
of management and the Companys independent registered public accounting firm in
carrying out its oversight responsibilities.
Through regularly scheduled meetings, the
Audit Committee facilitates open communication among the Board of Directors,
Company management and the Companys independent and internal auditors.
Management has the primary responsibility for establishing and maintaining
effective systems of internal and disclosure controls, for preparing financial
statements and for the public reporting process. The Companys independent
registered public accounting firm for 2016, PricewaterhouseCoopers (PwC), was
responsible for expressing opinions on the conformity of the Companys audited
financial statements for the year ended December 31, 2016 with generally
accepted accounting principles and on the effectiveness of internal controls
over our financial reporting.
With respect to the fiscal year ended
December 31, 2016, the Audit Committee, among other things: oversaw compliance
with legal and regulatory requirements; reviewed and discussed with management
and PwC the Companys financial statements and financial reporting process,
including the audited financial statements included in the Companys Annual
Report on Form 10-K; discussed with PwC the matters required to be discussed by
Public Company Accounting Oversight Board (PCAOB) Auditing Standard (AS) No. 16
(reorganized as No. 1301, effective December 31, 2016); and reviewed and
discussed the qualifications, performance and independence of PwC. In addition,
the Audit Committee received from PwC the written disclosures and letter
required by PCAOBs Rule 3526, Communication with Audit Committees Concerning
Independence.
Based on the reviews and discussions
described above, the Audit Committee recommended to our Board of Directors and
the Board of Directors approved, inclusion of the audited financial statements
for the fiscal year ended December 31, 2016, in our Annual Report on Form 10-K
for 2016 filing with the SEC.
THE AUDIT COMMITTEE
William J. Morgan, Chair
|
|
Thomas J. Hook
|
Elijah K. Barnes
|
|
Hassell H.
McClellan
|
Principal
Accounting Fees And Services
Fees paid to PricewaterhouseCoopers LLP
for 2016 and 2015 are set forth below:
Type of Fees
|
|
|
2016
|
|
|
2015
|
Audit Fees
1
|
|
$
|
2,228,175
|
|
$
|
2,270,505
|
Audit-Related Fees
2
|
|
|
776,000
|
|
|
413,165
|
Tax Fees
3
|
|
|
862,371
|
|
|
1,181,737
|
All
Other Fees
4
|
|
|
2,000
|
|
|
4,000
|
Total Fees
|
|
|
3,868,546
|
|
|
3,869,407
|
1.
|
Fees for professional services provided in connection
with the integrated audit of the Companys financial statements and
internal controls over financial reporting for the respective years, and
review of financial statements included in Forms 10-Q, and includes
statutory audits, attest services, consents and assistance with and review
of documents filed with the SEC. Fees included in these balances for 2016
related to the acquisition of the FOBOHA business, which was integrated
into the Company's Industrial segment in 2016, were $148,000. Included in
2015 were fees of $30,000 related to the acquisition of the Thermoplay
business.
|
2.
|
Fees primarily for transactional and due diligence
reviews and benefit plan audits. Due diligence fees included in these
balances for 2016 related to the acquisition of the FOBOHA business in
2016 were $336,000. Included in 2015 were due diligence fees of $230,000
related to the acquisition of the Thermoplay
business.
|
51
Table of Contents
3.
|
Fees for tax compliance, tax
consulting and expatriate tax services. Included in the 2016 balances are
fees for due diligence related to the acquisition of FOBOHA; tax
consulting fees related to the acquisition of Thermoplay business of
$153,778 and $56,123, respectively. Also included in the 2015 balances are
tax consulting and due diligence fees related to the acquisition of the
Thermoplay business of $45,308 and $74,763 and the acquisition of the
Priamus business of $53,287 and $76,959 respectively.
|
4.
|
All Other Fees are license fees
for PricewaterhouseCoopers LLP's publication
Comperio.
|
Proposal 5 Ratify
The Selection Of PricewaterhouseCoopers LLP As The Companys Independent Auditor
For 2017
The Audit Committee of the Board has
selected PricewaterhouseCoopers LLP as the Companys independent registered
public accounting firm for the fiscal year ended December 31, 2017. Although not
required by the Companys Charter or Bylaws, the Company has determined to ask
stockholders to ratify this selection as a matter of good corporate practice. A
representative of PricewaterhouseCoopers LLP is expected to be present at the
meeting, have the opportunity to make a statement, if desired, and be available
to respond to appropriate questions.
The Board
recommends a vote FOR this Proposal.
|
VOTING
INFORMATION
Who Can
Vote
Only stockholders of record at the close
of business on March 9, 2017 will be entitled to vote at the 2017 Annual
Meeting. As of March 9, 2017, the Company had 53,720,710 outstanding shares of
common stock, par value $.01 per share (Common Stock), each of which is entitled
to one vote.
Voting Your
Shares
You can vote your shares either by proxy
or in person at the 2017 Annual Meeting. If you choose to vote by proxy, you can
do so in one of four ways:
|
|
|
|
|
|
|
|
|
|
In the U.S. or Canada, you can vote
your shares by calling +1 (800) 690-6903
|
|
|
|
You can vote your shares using the
internet at
www.proxyvote.com
. You will need
the 12-digit control number on the Notice of Internet Availability or
proxy card.
|
|
|
Phone
|
|
|
Internet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
You can vote your shares by scanning
the QR code. You will need the 12-digit control number on the Notice of
Internet Availability or proxy card. Additional software may need to be
downloaded.
|
|
|
|
You can vote by mail by marking,
dating and signing your proxy card or voting instruction form and
returning it in the postage-paid envelope.
|
|
|
QR
CODE
|
|
|
Mail
|
|
|
|
|
|
|
|
|
|
If you vote by internet or telephone, you
should not return your proxy card.
If you hold your shares through a broker,
bank or other nominee, you will receive separate instructions from the nominee
describing how to vote your shares.
52
Table of Contents
Revocation of
Proxy
A stockholder who executes and delivers a
proxy may revoke it at any time before it is exercised by voting in person at
the 2017 Annual Meeting, by delivering a subsequent proxy, by notifying the
inspectors of the election in person or in writing or, if previous instructions
were given through the internet or by telephone, by providing new instructions
by the same means.
Quorum
For the business of the 2017 Annual
Meeting to be conducted, a minimum number of shares constituting a quorum must
be present. The holders of a majority of the outstanding shares of Common Stock
entitled to vote at the 2017 Annual Meeting must be present in person or
represented by proxy at the 2017 Annual Meeting to have a quorum. Shares
represented at the meeting by proxies including abstentions and broker non-votes
are treated as present at the meeting for purposes of determining a
quorum.
Voting Standards
And Board Recommendations
Voting Item
|
|
Voting Standard
|
|
Board Recommendation
|
1.
|
Election of 11 directors
|
|
Affirmative vote of a majority of
shares of Common Stock represented in person or by proxy and entitled to
vote on the matter. Proxies may not be voted for more than the number of nominees named by the Board.
|
|
For
|
2.
|
Ratify the Companys bylaw amendment
allowing proxy access
|
|
Affirmative vote of a majority of
shares of Common Stock represented in person or by proxy and entitled to
vote on the matter
|
|
For
|
3.
|
Advisory vote to approve the Companys executive
compensation
|
|
Affirmative vote of a majority of shares of Common Stock
represented in person or by proxy and entitled to vote on the
matter
|
|
For
|
4.
|
Advisory resolution regarding the
frequency of holding an advisory vote on the Companys executive
compensation
|
|
Affirmative vote of a majority of
shares of Common Stock represented in person or by proxy and entitled to
vote on the matter
|
|
Annual
|
5.
|
Ratify the selection of
PricewaterhouseCoopers LLP as the Companys independent auditor for
2017
|
|
Affirmative vote of a majority of shares of
Common Stock represented in person or by proxy and entitled to vote on the
matter
|
|
For
|
Broker
Non-votes
A broker non-vote occurs when a
stockholder who holds his or her shares through a bank or brokerage firm does
not instruct that bank or brokerage firm how to vote the shares and, as a
result, the broker is prevented from voting the shares held in the stockholders
account on certain proposals. Under applicable NYSE rules, if you hold your
shares through a bank or brokerage firm and your broker delivers the Notice of
Internet Availability or the printed proxy materials to you, the broker has
discretion to vote on routine matters only. Of the matters to be voted on as
described in this proxy statement, only the ratification of the selection of our
independent registered public accounting firm is considered routine and
therefore eligible to be voted on by your bank or brokerage firm without
instructions from you.
Effect of Broker
Non-votes And Abstentions
Abstentions and broker non-votes will not
have an effect on the outcome of Proposal 1 (election of directors). In voting
on Proposal 2 (proxy access), Proposal 3 (executive compensation), Proposal 4
(frequency of holding an advisory vote on the Companys executive compensation)
and Proposal 5 (independent auditor), abstentions will have the effect of votes
against the proposals and broker non-votes will not have an effect on the
outcome of the vote.
Participants In The
Barnes Group Inc. Retirement Savings Plan
You must provide the trustee of the Barnes
Group Inc. Retirement Savings Plan with your voting instructions in advance of
the meeting. You may do so by returning your voting instructions by mail, or
submitting them by telephone or electronically, using the internet. You cannot
vote your shares in person at the 2017 Annual Meeting; the trustee is the only
one who can vote your shares. The trustee will vote your shares as you have
instructed. Except as otherwise required by law, if the trustee does not
receive your instructions, the trustee will vote your shares in the same
proportion on each issue as it votes those shares for which it has received
voting instructions. To allow sufficient time for voting by the trustee, your
voting instructions must be received by 11:59 p.m. Eastern Daylight Time (EDT)
on May 2, 2017.
53
Table of Contents
DOCUMENT REQUEST
INFORMATION
E-Proxy
Process
According to the rules of the Securities
and Exchange Commission (the SEC), instead of mailing a printed copy of our
proxy materials to each stockholder of record or beneficial owner, we are
furnishing our proxy materials (proxy statement for the 2017 Annual Meeting, the
proxy card and the 2016 Annual Report to Stockholders) by providing access to
these materials on the internet.
A Notice of Meeting and Internet
Availability of Proxy Materials will be mailed to stockholders on or about March
20, 2017. We are providing this notice in lieu of mailing the printed proxy
materials and instructing stockholders as to how they may: (1) access and review
the proxy materials on the internet; (2) submit their proxy; and (3) receive
printed proxy materials.
Stockholders may request to receive
printed proxy materials by mail or electronically by e-mail on an ongoing basis
at no charge by following the instructions in the notice. A request to receive
proxy materials in printed form by mail or by e-mail will remain in effect until
such time as the submitting stockholder elects to terminate it.
Stockholders
Requesting Copies Of 2016 Annual Report
Stockholders may request and we will
promptly mail without charge a copy of the 2016 Annual Report by writing to:
Legal Services, Barnes Group Inc., 123 Main Street, Bristol, Connecticut
06010.
Householding Of
Annual Meeting Materials
Some banks, brokers, broker-dealers and
other similar organizations acting as nominee record holders may be
participating in the practice of householding proxy statements and annual
reports. This means that only one copy of this proxy statement and the 2016
Annual Report may have been sent to multiple stockholders in your household. If
you would prefer to receive separate copies of a proxy statement or annual
report for other stockholders in your household, either now or in the future,
please contact your bank, broker, broker-dealer or other similar organization
serving as your nominee.
Upon written or oral request to Legal
Services, Barnes Group Inc., 123 Main Street, Bristol, Connecticut 06010, or via
telephone to the Investor Relations department at (800) 877-8803, we will
promptly provide separate copies of the 2016 Annual Report and/or this proxy
statement. Stockholders sharing an address who are receiving multiple copies of
this proxy statement and/or the 2016 Annual Report and who wish to receive a
single copy of these materials in the future will need to contact their bank,
broker, broker-dealer or other similar organization serving as their nominee to
request that only a single copy of each document be mailed to all stockholders
at the shared address in the future.
Other
Matters
The Board does not know of any matters to
be presented for consideration at the meeting other than the matters described
in Proposals 1, 2, 3, 4 and 5 of the Notice of 2017 Annual Meeting. However, if
other matters are presented, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their judgment.
All shares represented by the accompanying proxy, if the proxy is given before
the meeting, will be voted in the manner specified therein.
54
Table of Contents
STOCKHOLDER
PROPOSALS FOR 2018 ANNUAL MEETING
A proposal for action to be presented by
any stockholder at the 2018 Annual Meeting of Stockholders will be acted upon
only:
If the proposal is to be included in the
proxy statement and form of proxy, the proposal is received at the Companys
Office of the Secretary at the address below on or before November 23, 2017;
or
If the proposal is not to be included in
the proxy statement, or to nominate candidates for election as directors, it
must be in accordance with our Bylaws, which provide that they may be made only
by a stockholder of record as of the date such notice is given and as of the
date for determination of stockholders entitled to vote at such meeting, who
shall have given notice of the proposed business or nomination which is received
by us between December 6, 2017 and January 5, 2018. The notice must contain,
among other things, the name and address of the stockholder, a brief description
of the business desired to be brought before the 2018 Annual Meeting, the
reasons for conducting the business at the 2018 Annual Meeting and the
stockholders ownership of the Companys capital stock. The requirements for the
notice are set forth in the Bylaws, which are available on the Companys
website,
www.BGInc.com
. Stockholders may also obtain a copy by writing to the
Company at:
Legal Services
Barnes Group Inc.
123 Main
Street
Bristol, Connecticut
06010
|
March 20, 2017
55
Table of Contents
BARNES GROUP INC.
RESOURCES
●
Corporate
|
http://www.barnesgroupinc.com/
|
●
Leadership
|
http://www.barnesgroupinc.com/about-bgi/leadership-team.aspx
|
●
Investor Relations
|
http://ir.barnesgroupinc.com/investor-relations/overview/default.aspx
|
●
Annual Meeting
|
http://s2.q4cdn.com/115332500/files/doc_downloads/annual_reports/2015/Barnes-Group-Inc.-2015-Annual-Report-(web_bmk).pdf
|
●
Proxy Statement
|
http://s2.q4cdn.com/115332500/files/doc_downloads/supplemental_report_2014/2016/Barnes-Group-Inc-2016-Proxy-Statement-(bookmarked).pdf
|
●
Press Releases
|
http://ir.barnesgroupinc.com/investor-relations/press-releases/default.aspx
|
●
Events and Presentations
|
http://ir.barnesgroupinc.com/investor-relations/events-and-presentations/default.aspx
|
●
Barnes Enterprise System (BES)
|
http://www.barnesgroupinc.com/about-bgi/barnes-enterprise-system.aspx
|
FINANCIAL
REPORTING
|
|
●
Annual Reports
|
http://ir.barnesgroupinc.com/investor-relations/financial-reports/annual-reports/default.aspx
|
●
SEC Filings
|
http://ir.barnesgroupinc.com/investor-relations/financial-reports/sec-filings/default.aspx
|
●
Quarterly Reports
|
http://ir.barnesgroupinc.com/investor-relations/financial-reports/quarterly-reports/default.aspx
|
GOVERNANCE
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Board of Directors
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http://www.barnesgroupinc.com/about-bgi/board-of-directors.aspx
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Communicating Concerns to Directors
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https://www.compliance-helpline.com/welcomepagebarnesgroup.jsp
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Audit Committee
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http://ir.barnesgroupinc.com/investor-relations/corporate-governance/committee-composition/audit-committee/default.aspx
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Compensation and Management Committee
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http://ir.barnesgroupinc.com/investor-relations/corporate-governance/committee-composition/compensation-and-management/default.aspx
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Corporate Governance Committee
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http://ir.barnesgroupinc.com/investor-relations/corporate-governance/committee-composition/corporate-governance-committee/default.aspx
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Executive Committee
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http://ir.barnesgroupinc.com/investor-relations/corporate-governance/committee-composition/executive-committee/default.aspx
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Company Bylaws
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http://s2.q4cdn.com/115332500/files/doc_downloads/Barnes/
Laws-Effective-7-28-2016.pdf
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Certificate of Incorporation
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http://s2.q4cdn.com/115332500/files/doc_downloads/Barnes/Restated-Certificate-of-Incorporation-05032013.pdf
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Corporate Governance Guidelines
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http://ir.barnesgroupinc.com/investor-relations/corporate-governance/committee-composition/executive-committee/default.aspx
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Code of Business Ethics and Conduct
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http://s2.q4cdn.com/115332500/files/doc_downloads/code_of_business/2015/Code-of-Conduct-English-compressed.pdf
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Corporate Social Responsibility Report
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http://www.barnesgroupinc.com/about-bgi/corporate-social-responsibility.aspx
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Political Activity Policy
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http://s2.q4cdn.com/115332500/files/doc_downloads/Governance/Barnes-Group-Political-Activity-Policy-December-2015.pdf
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Conflicts Mineral Policy
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http://s2.q4cdn.com/115332500/files/doc_downloads/Governance/Conflict-Minerals-Policy.pdf
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California Transparency in Supply Chains Act Disclosure
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http://s2.q4cdn.com/115332500/files/doc_downloads/Governance/California-Transaparency-in-Supply-Chains-Act.pdf
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STOCK INFORMATION
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Stock Quote and Chart
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http://ir.barnesgroupinc.com/investor-relations/stock-information/stock-quote-and-chart/default.aspx
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Historical Price Lookup
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http://ir.barnesgroupinc.com/investor-relations/stock-information/historical-price-lookup/default.aspx
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Dividends
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http://ir.barnesgroupinc.com/investor-relations/stock-information/dividends-and-splits/default.aspx
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ACRONYMS
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AC
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Audit Committee
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BOD
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Board of Directors
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CD&A
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Compensation Discussion and
Analysis
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CG
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Corporate Governance Committee
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CMDC
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Compensation and Management Development
Committee
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DC Plan
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Deferred Compensation Plan
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DWC
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Days Working Capital
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EBITDA
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Earnings Before Interest, Taxes,
Depreciation and Amortization
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EGTLIP
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Executive Group Term Life Insurance
Program
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ELIP
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Enhanced Life Insurance Program
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EPS
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Earnings Per Share
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ESPP
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Employee Stock Purchase Plan
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MICP
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Management Incentive Compensation
Plan
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MSSORP
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Modified Supplemental Senior Officer
Retirement Plan
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NEO
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Named Executive Officer
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NYSE
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New York Stock Exchange
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OM
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Operating Margin
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PCAOB
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Public Company Accounting Oversight
Board
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PLBP
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Performance-Linked Bonus Plan
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PSA
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Performance Share Award
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RBEP
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Retirement Benefit Equalization
Plan
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ROIC
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Return on Invested Capital
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RSU
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Restricted Stock Units
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SEC
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Securities and Exchange
Commission
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SEELIP
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Senior Executive Enhanced Life Insurance
Program
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SERP
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Supplemental Executive Retirement
Plan
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SRIP
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Salary Retirement Income Plan
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TSR
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Total Shareholder
Return
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56
Table of Contents
A LONG HISTORY
SIGNIFICANT RECENT
TRANSFORMATION
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Table of
Contents
123 MAIN STREET
BRISTOL, CT
06010
VOTE BY INTERNET -
www.proxyvote.com
or scan the QR Barcode
above
Use the Internet to transmit your
voting instructions and for electronic delivery of information up until 11:59
P.M. Eastern Time the day prior to the meeting date. Have your proxy card 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 cards 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 PHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day prior to the meeting date. Have your proxy card in hand when you call
and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card 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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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION
ONLY
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THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
BARNES GROUP INC.
VOTE ON
DIRECTORS
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The Board of Directors
recommends you vote FOR all of the following director
nominees:
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1
.
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Election of Directors
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For
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Against
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Abstain
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1)
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Thomas O. Barnes
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☐
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☐
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☐
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2)
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Elijah K. Barnes
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☐
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☐
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☐
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3)
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Gary G. Benanav
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☐
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☐
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☐
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4)
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Patrick J. Dempsey
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☐
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☐
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☐
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5)
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Thomas J. Hook
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☐
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☐
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☐
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6)
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Mylle H. Mangum
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☐
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☐
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☐
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7)
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Hans-Peter M
ä
nner
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☐
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☐
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☐
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8)
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Hassell H. McClellan
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☐
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☐
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☐
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9)
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William J. Morgan
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☐
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☐
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☐
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10)
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Anthony V. Nicolosi
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☐
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☐
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☐
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11)
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JoAnna L. Sohovich
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☐
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☐
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☐
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VOTE ON PROPOSALS
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The Board of Directors
recommends you vote FOR proposals 2 and 3:
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For
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Against
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Abstain
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2.
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Ratify the Companys bylaw
amendment allowing proxy access.
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☐
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☐
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☐
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3.
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Advisory vote to approve the
Companys executive compensation.
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☐
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☐
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☐
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The Board of Directors
recommends you vote 1 Year on the following proposal
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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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4.
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Advisory resolution regarding the
frequency of holding an advisory vote on the
Companys executive compensation.
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☐
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☐
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☐
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☐
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The Board of Directors
recommends you vote FOR proposal 5
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For
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Against
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Abstain
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5.
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Ratify the selection of
PricewaterhouseCoopers LLP as the Companys independent auditor for
2017.
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☐
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☐
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☐
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NOTE:
To conduct
such other business that may properly come before the meeting or any
adjournment thereof.
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●
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For address changes and/or comments, please check this
box and write them on the back where indicated.
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☐
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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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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
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Signature [PLEASE SIGN WITHIN
BOX]
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Date
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Signature (Joint
Owners)
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Date
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Table of
Contents
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and 2016 Annual Report are
available at www.proxyvote.com.
BARNES GROUP INC.
Annual Meeting of Stockholders
May
5, 2017 11:00 AM
This proxy is solicited by the Board
of Directors
The stockholders hereby appoint(s) Thomas
O. Barnes and Patrick J. Dempsey, or either of them, as proxies, each with the
power to appoint his substitute, and hereby authorizes them to represent and to
vote, as designated on the reverse side of this ballot, all of the shares of
common stock of BARNES GROUP INC. that the stockholders are entitled to vote at
the Annual Meeting of Stockholders to be held at 11:00 AM, Eastern Daylight Time
(EDT) on May 5, 2017, at the DoubleTree By Hilton in Bristol, CT 06010, and any
adjournment or postponement thereof. The shares represented by this proxy will
be voted as directed by the undersigned stockholder(s). If no direction is given
when this proxy is returned, such shares will be voted FOR all of the director
nominees listed in proposal 1, FOR proposals 2, 3, and 5 and 1 Year on
proposal 4. In their discretion, the proxies are authorized to vote upon any
other matter that may properly come before the meeting. This card also provides
confidential voting instructions to the Trustee for shares held in the Barnes
Group Inc. Retirement Savings Plan. If you are a participant and have shares of
Barnes Group Inc. common stock allocated to the account under this plan, please
read the following as to the voting of such shares: if you do not provide voting
instructions to the Trustee by 11:59 PM EDT on May 2, 2017, your shares will be
voted in the same manner and proportion as shares for which instructions are
timely received from other plan participants.
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Address Changes/Comments:
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(If you noted any Address
Changes/Comments above, please mark corresponding box on the reverse
side.)
Continued and to be signed on reverse
side
Barnes (NYSE:B)
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From Mar 2024 to Apr 2024
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From Apr 2023 to Apr 2024