Filed by the
Registrant ☒ Filed by a Party other than the
Registrant ☐
Persons who are to respond to the collection of information contained in this form are not required to respond unless the form
displays a currently valid OMB control number.
On behalf of the Board of Directors of Lear Corporation, you are
cordially invited to attend the 2017 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 18, 2017, at 9:00 a.m. (Eastern Time) at Lear Corporation’s Corporate Headquarters, 21557 Telegraph Road, Southfield,
Michigan 48033.
We have included in this letter a proxy statement that provides you with detailed information about the Annual Meeting. We encourage you to read the
entire proxy statement carefully. You may also obtain more information about Lear Corporation from documents we have filed with the Securities and Exchange Commission.
We are delivering our proxy statement and annual report pursuant to the Securities and Exchange Commission rules that allow companies to furnish proxy materials to their
stockholders over the Internet. We believe that this delivery method expedites stockholders’ receipt of proxy materials and lowers the cost and environmental impact of our Annual Meeting. On or about April 3, 2017, we will mail to our
stockholders a notice containing instructions on how to access our proxy materials. In addition, the notice includes instructions on how you can receive a paper copy of our proxy materials.
You are being asked at the Annual Meeting to elect directors named in this proxy statement, to ratify the retention of Ernst & Young LLP as our independent
registered public accounting firm, to provide an advisory vote to approve our executive compensation, to provide an advisory vote on the frequency of our advisory vote on executive compensation and to transact any other business properly brought
before the meeting.
Whether or not you plan to attend the Annual Meeting, your vote is important, and we encourage you to vote promptly. You may vote your shares
through one of the methods described in the enclosed proxy statement.
We strongly urge you to read the accompanying proxy statement carefully and to vote FOR the nominees proposed by the Board of Directors and in accordance with the
recommendations of the Board of Directors on the other proposals by following the voting instructions contained in the proxy statement.
This proxy statement is dated March 31, 2017 and is first being made available to stockholders via the Internet on or about
April 3, 2017.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING
Why did you send me this proxy statement?
We sent you this proxy statement because the Board of Directors (the “Board”) is soliciting your proxy to vote at
the Annual Meeting to be held on May 18, 2017, at 9:00 a.m. (Eastern Time) and at any postponements or adjournments of
the Annual Meeting. This proxy statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this proxy statement.
Who can vote at the Annual Meeting?
Only stockholders of record as of the record date are entitled to vote at the Annual Meeting. The record date to determine
stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on March 23, 2017. On the record date, there were 68,697,937 shares of our common stock, par value $0.01 per share, outstanding (excluding
10,510,641 shares reserved for the satisfaction of certain claims in connection with our emergence from chapter 11 bankruptcy proceedings, which are not entitled to vote at the Annual Meeting).
Our common stock is the only class of voting securities outstanding.
How many shares must be present to conduct the
Annual Meeting?
We must have a quorum present in person or by proxy to conduct the Annual Meeting. A quorum is established when a majority
of shares entitled to vote is present in person or
represented by proxy at the Annual Meeting. Abstentions and broker
non-votes
(as described below) are counted for purposes of determining whether a quorum
is present.
What matters are to be voted on at the Annual
Meeting?
The agenda for the Annual Meeting is to:
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2.
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ratify the retention of Ernst & Young LLP as our independent registered public accounting firm for 2017;
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3.
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provide an advisory vote to approve our executive compensation;
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4.
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provide an advisory vote on the frequency of the advisory vote on executive compensation; and
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5.
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conduct any other business properly brought before the Annual Meeting or any adjournments or postponements thereof.
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As of
the date of this proxy statement, we do not know of any other matters to be presented at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise
act in accordance with their judgment.
How does the Board recommend that I vote?
The Board recommends that you vote:
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1.
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FOR
the election of each of Lear’s director nominees named in this proxy statement;
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2.
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FOR
the ratification of the retention of Ernst & Young LLP as our independent registered public accounting firm for 2017;
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3.
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FOR
the approval, on an advisory basis, of our executive compensation; and
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4.
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For future advisory votes on executive compensation to occur
EVERY ONE YEAR
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
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How do I vote at the Annual Meeting?
You may vote in person at the Annual Meeting or by proxy. In addition, if you are a stockholder of record of Lear’s
shares, there are three ways to vote by proxy:
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By Telephone — You can vote by telephone by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote by telephone;
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By Internet — You can vote via the Internet by following the instructions on your proxy card. You will need to use the control number appearing on your Notice or proxy card to vote via the Internet; or
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By Mail — You can vote by completing, dating, signing and returning the proxy card.
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If you are a beneficial owner of
shares held in street name, you may vote as follows:
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By Telephone — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by calling the toll free number found on the voting instruction
form. The availability of telephone voting may depend on the voting process of the organization that holds your shares.
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By Internet — You may vote by proxy via the Internet by visiting www.proxyvote.com and entering the control number found in your Notice. The availability of Internet voting may depend on the voting process of the
organization that holds your shares.
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By Mail — If you request printed copies of the proxy materials by mail, you will receive a voting instruction form and you may vote by proxy by filling out the voting instruction form and returning it in the
envelope provided.
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If you are a beneficial owner of shares held in street name and wish to vote in person at the Annual Meeting, you must obtain
a “legal proxy” from the organization that holds your shares. A legal proxy is a written document that will authorize you to vote your shares held in street name at the Annual Meeting.
Please contact the organization that holds your shares for instructions regarding obtaining a legal proxy. You must bring a copy of the legal proxy to the Annual Meeting and ask for a ballot when you arrive.
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day. You may vote over the telephone or via the Internet until 11:59 p.m.
on May 17, 2017. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the Annual
Meeting in person.
Your proxy will be voted in accordance with your instructions, so long as, in the case of a proxy card returned by mail, such card has been signed
and dated. If you vote your shares via the Internet, by telephone or by executing and returning a proxy card by mail but you do not provide specific instructions with respect to the proposals, your shares will be voted FOR the director nominees
named in this proxy statement, FOR the ratification of the retention of our independent registered public accounting firm, FOR the advisory approval of executive compensation described in this proxy statement and for the EVERY ONE YEAR frequency
option for the advisory vote on executive compensation.
As of the date of this proxy statement, we do not know of any matters to be presented at the Annual Meeting
except those described in this proxy statement. If any other matters properly come before the Annual Meeting, however, the persons named as proxies will be authorized to vote or otherwise act in accordance with their judgment.
What does it mean if I receive more than one Notice
of Internet Availability of Proxy Materials?
You may receive more than one Notice, more than one
e-mail
or multiple proxy cards
or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate Notice, a separate
e-mail
or a separate voting instruction card for each
brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you may receive more than one Notice, more than one
e-mail
or more than one proxy card. To vote all of your shares by proxy, you must complete, sign, date and return each proxy card and voting instruction card that you receive and vote over the Internet
the shares represented by each Notice that you receive (unless you have requested and received a proxy card or voting instruction card for the shares represented by one or more of those Notices).
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
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May I change my vote?
Yes. You may revoke your proxy at any time before it is voted at the Annual Meeting. To change your vote, if you are a
stockholder of record, you may submit another later dated proxy by telephone, Internet or mail or by voting your shares in person at the Annual Meeting (your attendance at the Annual Meeting will not, by itself, revoke your proxy; you must vote in
person at the Annual Meeting to revoke your proxy). If you are
a beneficial owner and your shares are held in street name, you may change your vote by submitting new voting instructions to your bank, broker, trustee or nominee, or if you have obtained a
legal proxy from such entity giving you the right to vote your shares, you may change your vote by attending the Annual Meeting and voting in person.
What vote is required to elect directors and approve
the other matters described in this proxy statement?
Because this is an uncontested election, the director nominees must receive the affirmative vote of a majority of the votes
cast to be elected (i.e., the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee) (Proposal No. 1). Abstentions and broker
non-votes
will have no effect on the outcome of the election of directors.
For the ratification of the retention of
Ernst & Young LLP as our independent registered public accounting firm (Proposal No. 2) and the advisory approval of our executive compensation (Proposal No. 3), the affirmative vote of the holders of a majority of the shares
represented in person or by
proxy and entitled to vote on the proposal will be required for approval. Abstentions will not be voted but will be counted for purposes of determining whether there is a quorum. Accordingly,
abstentions will have the effect of a negative vote on Proposals No. 2 and 3. Broker
non-votes
will have no effect on Proposal No. 3. The frequency receiving the highest number of votes cast on the
advisory vote on the frequency of our advisory approval of executive compensation (Proposal No. 4) will be deemed to be the frequency selected by the stockholders. Abstentions and broker
non-votes
will
have no effect on Proposal No. 4. For additional information about broker
non-votes
see “How do I vote if my bank or broker holds my shares in ‘street name’?”
What is the difference between holding shares as a
stockholder of record and as a beneficial owner?
If your shares are registered in your name on the Company’s books and records or with our transfer agent, you are the
“stockholder of record” of those shares, and this proxy statement and accompanying materials have been provided directly to you by the Company. On the other hand, if you purchased your shares through a brokerage or other financial
intermediary, the brokerage or other financial intermediary will automatically put your shares into “street name” which means
that the brokerage or other financial intermediary will hold your shares in its name or another nominee’s name and not in your name, but will keep records showing you as the “beneficial
owner.” If you hold shares beneficially in street name, this proxy statement and accompanying materials have been forwarded to you by your broker, bank or other holder of record.
How do I vote if my bank or broker holds my shares
in “street name”?
If you hold your shares in “street name” through a bank, broker or other nominee, such bank, broker or nominee
will vote those shares in accordance with your instructions. To so instruct your bank, broker or nominee, you should refer to the information provided to you by such entity. Without instructions from you, a bank, broker or nominee will be permitted
to exercise its own voting discretion with respect to
so-called
routine matters (Proposal No. 2 (ratification of auditors)) but will not be permitted to exercise voting discretion with respect to
non-routine
matters (Proposals No. 1 (director elections), No. 3 (advisory vote on executive compensation) and No. 4 (advisory vote on the frequency of advisory vote on
executive compensation). Thus, if you do not give your bank, broker or nominee specific instructions with respect to Proposal No. 2, your shares will be voted in such entity’s
discretion. If you do not give your bank, broker or nominee specific instructions with respect to the remaining proposals, your shares will not be voted on such proposals. This is called a “broker
non-vote.”
Shares represented by such broker
non-votes
will be counted in determining whether there is a quorum and will have no effect on the
non-routine
proposals. We urge you to promptly provide your bank, broker or nominee with appropriate voting instructions so that all your shares may be voted at the Annual Meeting.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
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How many votes do I have?
Each share of common stock that you hold as of the record date entitles you to one vote, without cumulation, on each matter
to be voted upon at the Annual Meeting.
How will the votes be counted at the Annual Meeting?
The votes will be counted by the inspector of election appointed for the Annual Meeting.
How will the Company announce the voting results?
The Company will report the final results of the voting at the Annual Meeting in a filing with the SEC on a Current Report
on Form
8-K.
Who pays for the Company’s solicitation of
proxies?
The Board is soliciting your proxy to vote your shares of common stock at our Annual Meeting. We will bear the cost of
soliciting proxies on behalf of the Company, including preparing, printing and mailing this proxy statement. Proxies may be solicited personally, by mail, email or by telephone by certain of our directors, officers, employees or representatives.
Our directors and employees will not be paid any additional compensation for soliciting proxies. We will reimburse brokerage houses, banks, custodians and other nominees and fiduciaries for
out-of-pocket
expenses incurred in forwarding our proxy solicitation materials.
What is “householding” and how does it
work?
Under the rules adopted by the SEC, we may deliver a single set of proxy materials to one address shared by two or more of
our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one set of proxy materials to multiple stockholders who share
an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the proxy materials, as requested, to any stockholder at
the shared address to which a single copy of these documents was delivered. If you prefer to receive separate copies of the Notice, proxy statement or annual report, contact Broadridge Financial Solutions, Inc. by calling
1-800-542-1061
or in
writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
In addition, if you
currently are a stockholder who shares an address with another stockholder and would like to receive only one copy of future notices and proxy materials for your household, you may notify your broker if your shares are held in a brokerage account or
you may notify us if you hold registered shares. Registered stockholders may notify us by contacting Broadridge Financial Solutions, Inc. at the above telephone number or address or sending a written request to Lear Corporation, 21557 Telegraph
Road, Southfield, Michigan 48033, Attention: Investor Relations.
What do I need for admission to the Annual Meeting?
Attendance at the Annual Meeting or any adjournment or postponement thereof will be limited to record and beneficial
stockholders as of the record date (March 23, 2017), individuals holding a valid proxy from a record holder and other persons authorized by the Company. If you are a stockholder of record (or a “recordholder”), your name will be verified
against the list of stockholders of record prior to your
admittance to the Annual Meeting or any adjournment or postponement thereof. You should be prepared to present photo identification for admission. If you hold your shares in a street name, you
will need to provide proof of beneficial ownership on the record date, such as a brokerage account statement showing that you owned stock as of the record date, a copy of a voting instruction form provided by your
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
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broker, bank or other nominee, or other similar evidence of ownership as of the record date, as well as your photo identification, for admission. If you do not provide photo identification or
comply with the other procedures described
above, you will not be admitted to the Annual Meeting or any adjournment or postponement thereof. For security reasons, you and your bags may be subject to search prior to your admittance to the
Annual Meeting.
ELECTION OF
DIRECTORS
(PROPOSAL NO. 1)
Upon the recommendation of our Nominating and Corporate Governance Committee (the “Nominating Committee”), the
Board has nominated the ten individuals listed below to stand for election to the Board for a
one-year
term ending at the annual meeting of stockholders in 2018 or until their successors, if any, are elected
or appointed. Our Amended and Restated Certificate of Incorporation and Bylaws provide for the annual election of directors. Each director nominee must receive the affirmative vote of a majority of the votes cast to be elected (i.e., the number of
shares voted “for” a director nominee must exceed the number of votes cast “against” that
nominee). Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees. In addition, our Corporate Governance Guidelines
contain a resignation policy which provides that in the event an incumbent director fails to receive a majority of the votes cast in an uncontested election, such director shall promptly tender his or her resignation to the Board for consideration.
The Board has determined that each director nominee, other than Mr. Simoncini, is an independent director, as further described below in “Directors and Corporate Governance — Independence of Directors.”
All of the director nominees listed below have
consented to being named in this proxy statement and to serve if elected. However, if any nominee becomes unable to serve, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. Alternatively, our Board
may reduce the number of directors to be elected at the Annual Meeting.
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Name
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Position
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Richard H. Bott
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Director
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Thomas P. Capo
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Director
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Jonathan F. Foster
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Director
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Mary Lou Jepsen
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Director
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Kathleen A. Ligocki
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Director
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Conrad L. Mallett, Jr.
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Director
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Donald L. Runkle
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Director
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Matthew J. Simoncini
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Director, President and Chief Executive Officer
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Gregory C. Smith
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Director
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Henry D.G. Wallace
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Director,
Non-Executive
Chairman
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Biographical information relating to each of the director nominees is set forth below under “Directors and Corporate
Governance” and incorporated by reference herein.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF LEAR’S DIRECTOR
NOMINEES NAMED IN THIS PROXY STATEMENT.
PROXIES SOLICITED BY THE BOARD WILL BE VOTED FOR THE ELECTION OF EACH OF LEAR’S DIRECTOR NOMINEES NAMED IN THIS
PROXY STATEMENT UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
DIRECTORS
AND CORPORATE GOVERNANCE
Director Biographical Information and Qualifications
Set forth below is a description of the business experience of
each director, as well as the specific qualifications, skills and experiences considered by the Nominating Committee and the Board in recommending our slate of director nominees. Each director listed below is nominated for
re-election
to the Board for a term expiring at the annual meeting of stockholders in 2018. See “Election of Directors (Proposal No. 1).”
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Richard H. Bott
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Age: 70 Lear Committees:
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• Audit
Biography
Mr. Bott has been a director of the Company since September 2013. Mr. Bott worked in investment banking for more than 35 years at Morgan Stanley & Co.
and Credit Suisse First Boston (now Credit Suisse), where he provided financial structuring and strategic advice to numerous large American and international corporations, with a focus on industrial, automotive and transportation companies.
Mr. Bott served as Vice Chairman, Institutional Securities Group of Morgan Stanley & Co. Incorporated from 2003 until his retirement at the end of 2007. Prior to holding this position, Mr. Bott served as Vice Chairman, Investment
Banking, Credit Suisse First Boston Corporation from 1998 to 2003; Managing Director, The First Boston Corporation and its successor companies, CS First Boston Corporation and Credit Suisse First Boston Corporation, from 1982 to 1998; and Vice
President, Assistant Vice President & Associate, The First Boston Corporation from 1972 to 1982. Mr. Bott is also a director of Genesee & Wyoming Inc., serving on both the Audit and Compensation Committees. Mr. Bott has a
bachelor’s degree in Economics from Princeton University and an MBA from Columbia Business School.
Skills and Qualifications
• Executive management and leadership experience
• Public company directorship and committee
experience
• Extensive experience in
global finance, investment banking and capital markets
• Significant experience in structuring and executing financing transactions and mergers and acquisitions
• Independent of management
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DIRECTORS AND CORPORATE GOVERNANCE
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Thomas P. Capo
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Age: 66 Lear Committees:
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• Audit
• Compensation (Chair)
Biography
Mr. Capo has been a director of the Company since November 2009. Mr. Capo was Chairman of Dollar Thrifty Automotive Group, Inc. from October 2003 until November
2010. Mr. Capo was a Senior Vice President and the Treasurer of DaimlerChrysler Corporation from November 1998 to August 2000, Vice President and Treasurer of Chrysler Corporation from 1993 to 1998 and Treasurer of Chrysler Corporation from
1991 to 1993. Prior to holding these positions, Mr. Capo served as Vice President and Controller of Chrysler Financial Corporation. Mr. Capo also serves as the
Non-Executive
Chairman of Cooper
Tire & Rubber Company. Previously, Mr. Capo served as a director of Dollar Thrifty Automotive Group, Inc. from its initial public offering in 1997 until its sale to Hertz Corporation in 2012, JLG Industries, Inc. until its sale to
Oshkosh Corp. in 2006, Sonic Automotive, Inc. and Microheat, Inc. Mr. Capo has a bachelor’s degree in Finance, an MBA and a master’s degree in Economics from the University of Detroit-Mercy.
Skills and Qualifications
• Executive management and leadership
experience, with extensive knowledge of the automotive industry
• Public company directorship and committee experience, including at board chairman level
• Extensive experience in global finance,
treasury, investment management and capital markets
• Core leadership and management experience in mergers, acquisitions and divestitures, strategy development and
capital restructuring
• Extensive
experience in financial analysis, financial reporting, compliance and internal controls
• Independent of management
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DIRECTORS AND CORPORATE GOVERNANCE
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Jonathan F. Foster
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Age: 56 Lear Committees:
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• Audit
• Nominating and Corporate Governance (Chair)
Biography
Mr. Foster has been a director of the Company since November 2009. Mr. Foster is Managing Director of Current Capital Partners LLC, a private equity investing
and management services firm. Previously, from 2007 until 2008, Mr. Foster served as a Managing Director and
Co-Head
of Diversified Industrials and Services at Wachovia Securities. From 2005 until 2007,
he served as Executive Vice President — Finance and Business Development of Revolution LLC. From 2002 until 2004, Mr. Foster was a Managing Director of The Cypress Group, a private equity investment firm and from 2001 until 2002, he served
as a Senior Managing Director and Head of Industrial Products and Services Mergers & Acquisitions at Bear Stearns & Co. From 1999 until 2000, Mr. Foster served as the Executive Vice President, Chief Operating Officer and Chief
Financial Officer of Toysrus.com, Inc. Previously, Mr. Foster was with Lazard, primarily in mergers and acquisitions, for over ten years, including as a Managing Director. Mr. Foster is also a director of Masonite International
Corporation, Berry Plastics, Chemtura Corporation and Dayco Products LLC. He is
Non-Executive
Chairman of Chassix and a director of Rimstock, both automotive suppliers; he was a director of privately held
automotive suppliers TI Automotive and Stackpole. Mr. Foster was previously a member of the board of directors of publicly traded Sabine Oil & Gas and Smurfit-Stone Container Corporation. Mr. Foster has a bachelor’s degree in
Accounting from Emory University, a master’s degree in Accounting & Finance from the London School of Economics and has attended the Executive Education Program at Harvard Business School.
Skills and Qualifications
• Executive management and leadership
experience
• Public company directorship
and committee experience, including with global manufacturing companies
• Experience in financial statement preparation and accounting, financial reporting, compliance and internal
controls
• Previous experience as a
chief financial officer
• Extensive
transactional experience in mergers and acquisitions, debt financings and equity offerings
• Extensive experience as an investment banker, private equity investor and director with industrial companies,
including those in the automotive sector
• Independent of management
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DIRECTORS AND CORPORATE GOVERNANCE
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Mary Lou Jepsen
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Age: 52
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Biography
Dr. Jepsen was appointed a director of the Company in March 2016. Dr. Jepsen is the founder
of Openwater, which is a
start-up
company focused on replacing the functionality of Magnetic Resonance Imaging (MRI) with a consumer electronic wearable using novel opto-electronics to achieve comparable
resolution to a MRI. Previously, Dr. Jepsen was the Executive Director of Engineering at Facebook, Inc. and Head of Display Technologies at Oculus where she led advanced consumer electronics, opto-electronic and display design and manufacturing
efforts. From 2012 to 2015, Dr. Jepsen had a similar role at Google, Inc. and Google X. She also
co-founded
One Laptop per Child, and was the lead architect of the $100 laptop, millions of which were
shipped to children in the developing world. She is the principal inventor on approximately 100 patents. Dr. Jepsen has broad advisory experience in Peru, China, Uruguay, Taiwan, Brazil and the United States, as well as at the United Nations.
Dr. Jepsen holds a doctorate degree from Brown University in Optical Sciences, a master of science degree from Massachusetts Institute of Technology in Visual Studies and a bachelor’s of science degree in Electrical Engineering from Brown
University.
Skills and Qualifications
• One of the world’s foremost display
innovators
• Exceptional track record of
leadership and innovation
• Significant
experience in working with Asia’s largest computer manufacturers
• Experience and leadership in engineering with global technology companies
• Globally recognized with dozens of
prestigious awards including TIME magazine’s “Time 100” as one of the 100 most influential people in the world, a CNN top 10 thinker, and by the leading global professional societies in optics, display and electronics
• Executive management experience
• Independent of management
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DIRECTORS AND CORPORATE GOVERNANCE
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Kathleen A. Ligocki
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Age: 60 Lear Committees:
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• Compensation
• Nominating and Corporate Governance
Biography
Ms. Ligocki has been a director of the Company since September 2012. Ms. Ligocki is the Chief Executive Officer of Agility Fuel Solutions, based in Costa Mesa,
California. Ms. Ligocki has served as the Chief Executive Officer of Harvest Power, Inc., one of the leading organics management companies in North America from 2014 to 2015. From 2012 to 2014, she served as an Operating Partner at Kleiner
Perkins Caufield & Byers, one of Silicon Valley’s top venture capital providers where she worked with the firm’s greentech ventures on strategic challenges, scaling operations and commercialization. Ms. Ligocki also has
served as the Chief Executive Officer of two early stage companies: Next Autoworks, an auto company with a unique
low-cost
business model, from 2010 to 2012, and GS Motors, a Mexico City-based auto retailer
owned by Grupo Salinas, a large Mexican conglomerate, from 2008 to 2009. From 2008 to 2010, Ms. Ligocki also served as a Principal in Pine Lake Partners, a consultancy focused on
start-ups
and
turnarounds. From 2003 to 2007, Ms. Ligocki was the Chief Executive Officer of Tower Automotive, a global Fortune 1000 automotive supplier. Previously, Ms. Ligocki held executive positions at Ford Motor Company and at United Technologies
Corporation where she led operations in North America, Europe, Africa, the Middle East and Russia. Ms. Ligocki began her career at General Motors Corporation working for 15 years at Delco Electronics Corporation. Ms. Ligocki formerly
served as a director of Harvest Power, Inc., Ashland Inc., Next Autoworks, BlueOak Resources and Lehigh Technologies. Ms. Ligocki earned a bachelor’s degree with highest distinction in Liberal Studies from Indiana University Kokomo and
holds an MBA from the Wharton School at the University of Pennsylvania. She also has been awarded honorary doctorate degrees from Central Michigan University and Indiana University Kokomo.
Skills and Qualifications
• Executive management and leadership
experience, including in the automotive industry
• Public company directorship and committee experience, including in the automotive industry
• Extensive experience in financial
analysis, financial statement preparation, financial reporting, compliance and internal controls
• Senior management experience in international automotive operations
• Understanding of a wide range of issues
through experience with businesses ranging from
start-ups
to large, global manufacturing operations
• Independent of management
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2017 Proxy Statement
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11
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DIRECTORS AND CORPORATE GOVERNANCE
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Conrad L. Mallett, Jr
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Age: 63 Lear Committees:
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• Compensation
• Nominating and Corporate Governance
Biography
Justice Mallett has been a director of the Company since August 2002. In March 2017, Justice Mallett was named Interim Chief Executive Officer of Detroit Medical Center
Huron Valley-Sinai Hospital. He is also Executive Vice President and Chief Administrative Officer of Detroit Medical Center since January 2012, after serving as President and Chief Executive Officer of Detroit Medical Center’s Sinai Grace
Hospital from August 2003 until December 2011. Prior to that, Justice Mallett served as the Chief Legal and Administrative Officer of the Detroit Medical Center beginning in March 2003. Previously, he served as President and General Counsel of
La-Van
Hawkins Food Group LLC from April 2002 to March 2003, and Chief Operating Officer for the City of Detroit from January 2002 to April 2002. From August 1999 to April 2002, Justice Mallett was General Counsel
and Chief Administrative Officer of the Detroit Medical Center. Justice Mallett was also a Partner in the law firm of Miller, Canfield, Paddock & Stone from January 1999 to August 1999. Justice Mallett was a Justice of the Michigan Supreme
Court from December 1990 to January 1999 and served a
two-year
term as Chief Justice beginning in 1997. Justice Mallett formerly served as a director of Kelly Services, Inc. He was recognized by Savoy Magazine
as one of 2016 Most Influential Black Corporate Directors. Justice Mallett has a bachelor’s degree from the University of California, Los Angeles, a JD and a master of public administration degree from the University of Southern California and
an MBA from Oakland University.
Skills and Qualifications
• Executive management and leadership
experience
• Leadership experience
gained as Chief Justice of the Michigan Supreme Court
• Public company directorship and committee experience
• Extensive legal and governmental
experience, including significant involvement in state, municipal and community governmental activities
• Independent of management
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DIRECTORS AND CORPORATE GOVERNANCE
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Donald L. Runkle
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Age: 71 Lear Committees:
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• Compensation
• Nominating and Corporate Governance
Biography
Mr. Runkle has been a director of the Company since November 2009. Mr. Runkle currently serves as the Executive Chairman of Ioxus Inc. and is a Director of VIA
Motors. He also serves as an Operating Executive Advisor at Tennenbaum Capital Partners, a position he has held since 2005, and is on the Advisory Boards of General Fusion and TULA Technology. Mr. Runkle also serves on the Engineering Advisory
Council of the University of Michigan. Recently, Mr. Runkle was Executive Chairman of EcoMotors International and formerly served as its Chief Executive Officer. He was also formerly Chairman of Autocam and Eagle-Picher Corporations, and
formerly a director of Envirotest, the Lean Enterprise Institute, Transonic Combustion and WinCup Corporation. From 1999 until 2005, Mr. Runkle held various executive-level positions at Delphi Corporation, including Director, Vice Chairman and
Chief Technology Officer from 2003 until 2005, Executive Vice President and President, Delphi Dynamics and Propulsion Sector from 2000 until 2003 and President, Delphi Energy and Engine Management Systems from 1999 to 2000. Prior to Delphi,
Mr. Runkle was employed by General Motors Corporation for over 30 years in various executive-level positions, including Vice President & General Manager of Energy & Engine Management Systems from 1996 until 1999, Vice
President & General Manager of Saginaw Steering Systems from 1993 until 1996, Vice President of North American Engineering Operations from 1992 to 1993, Vice President of Advanced Engineering from 1988 to 1992, as well as Chief Engineer of
Chevrolet and Assistant Chief Engineer of Buick. Mr. Runkle has a bachelor’s and master’s degree in Mechanical Engineering from the University of Michigan and a Master of Science in Management Studies degree, as a Sloan Fellow, from
the Massachusetts Institute of Technology.
Skills and Qualifications
• Executive management and leadership
experience, including in the automotive industry
• Management and consulting experience in technology, including in the automotive industry and as chief
technology officer
• Directorship and
management experience, including in the automotive industry, at board chairman level and with a public company
• Independent of management
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2017 Proxy Statement
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13
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DIRECTORS AND CORPORATE GOVERNANCE
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Matthew J. Simoncini
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Age: 56 President and Chief Executive
Officer
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Biography
Mr. Simoncini has served as President, Chief Executive Officer and a director of the Company
since September 2011. In this role, Mr. Simoncini is responsible for the strategic direction and operational leadership of the Company. Formerly, Mr. Simoncini was Senior Vice President and Chief Financial Officer of the Company, a role he
had held since September 2007. As Senior Vice President and Chief Financial Officer, he was responsible for the Company’s Global Finance operations, including external Financial Reporting, Corporate Business Planning & Analysis,
Corporate Strategy and Business Development as well as Information Technology activities worldwide. In August 2006, Mr. Simoncini was named Senior Vice President of Finance and Chief Accounting Officer where he was responsible for the
Company’s worldwide operational finance, accounting and financial reporting. Prior to that, he was vice president of Operational Finance, a position he had held since June 2004. Mr. Simoncini also served as the Company’s Vice
President of Finance — Europe as well as held the Vice President of Finance position for the Company’s Electrical & Electronics business and DaimlerChrysler division. Mr. Simoncini joined United Technologies Automotive
(“UTA”) in April 1996 as director of Finance for the Motors Division with responsibility for the financial activities of the business unit. At the time of the Company’s acquisition of UTA in May 1999, Mr. Simoncini was director
of Global Financial Planning & Analysis. Previous to UTA, Mr. Simoncini held financial and manufacturing positions with Varity Kelsey Hayes and Horizon Enterprises including Chief Financial Officer of Kelsey Hayes’ European
Operations. Mr. Simoncini began his career at Touche Ross and is a certified public accountant. Born and raised in Detroit, Simoncini earned a bachelor’s degree from Wayne State University. In addition to his responsibilities at Lear, he
is a member of the board of directors for the Wayne State University Foundation, Detroit Economic Club, Business Leaders of Michigan, Michigan Opera Theatre, Downtown Detroit Partnership, Bing Youth Institute and the Detroit Mayor’s Workforce
Development Board.
Skills and Qualifications
• Executive management and leadership
experience with the Company, current President and Chief Executive Officer, former Senior Vice President and Chief Financial Officer
• Record of leadership, achievement and execution of the Company’s business and global strategy
• Extensive understanding of finance,
treasury, financial reporting, investment analysis, management, compliance and internal controls
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DIRECTORS AND CORPORATE GOVERNANCE
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Gregory C. Smith
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Age: 65 Lear Committees:
• Audit (Chair)
• Nominating and Corporate
Governance
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Biography
Mr. Smith has been a director of the Company since November 2009. Mr. Smith, a retired Vice
Chairman of Ford Motor Company, currently serves as Principal of Greg C. Smith LLC, a private management consulting firm, a position he has held since 2007. Previously, Mr. Smith was employed by Ford Motor Company for over 30 years until 2006.
Mr. Smith held various executive-level management positions at Ford Motor Company, most recently serving as Vice Chairman from 2005 until 2006, Executive Vice President and President — Americas from 2004 until 2005, Group Vice President
— Ford Motor Company and Chairman and Chief Executive Officer — Ford Motor Credit Company from 2002 to 2004, Vice President — Ford Motor Company, and President and Chief Operating Officer — Ford Motor Credit Company from 2001 to
2002. As Vice Chairman, Mr. Smith was responsible for Ford’s Corporate Strategy and Staffs, including Human Resources and Labor Affairs, Information Technology, and Automotive Strategy. During his career at Ford, Mr. Smith ran several
major business units and had extensive experience in Financial Services, Strategy, Marketing and Sales, Engineering and Product Development. Mr. Smith also was responsible for Hertz when Ford owned it, and, in 2005, Automotive Components
Holdings, the portion of Visteon that Ford repurchased. Currently, Mr. Smith serves as a director of Penske Corporation and formerly served as a director of the Federal National Mortgage Association (Fannie Mae) and Solutia Inc. Mr. Smith
is a Board Leadership Fellow of the National Association of Corporate Directors and also serves on the Risk Oversight Advisory Council of the National Association of Corporate Directors. Mr. Smith has a bachelor’s degree in Mechanical
Engineering from Rose-Hulman Institute of Technology and an MBA from Eastern Michigan University.
Skills and Qualifications
• Executive management and leadership experience, including in the automotive industry
• Public company directorship and committee
experience
• Served on audit committees
of public and private companies
• Experience actively overseeing finance departments and personnel
• Extensive experience and knowledge of
automotive industry
• Experience and
knowledge of automotive company operations and strategic issues, including engineering, manufacturing, marketing, human resources and finance
• Independent of management
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2017 Proxy Statement
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15
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DIRECTORS AND CORPORATE GOVERNANCE
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Henry D.G. Wallace
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Age: 71
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Biography
Mr. Wallace has served as the Company’s
Non-Executive
Chairman since August 2010 and has been a director of the Company since February 2005. Mr. Wallace worked for 30 years at Ford Motor Company until his retirement in 2001 and held several
executive level operations and financial oversight positions. His most recent positions included Chief Financial Officer and President and CEO of Mazda Motor Corporation. Mr. Wallace serves as
Non-Executive
Chairman of Diebold, Inc. (formerly Interim Executive Chairman). Mr. Wallace formerly served as a director of Hayes Lemmerz International, Inc. and AMBAC Financial Group, Inc.
Mr. Wallace earned a bachelor’s degree with Honours from the University of Leicester, England.
Skills and Qualifications
• Experience and leadership with a global manufacturing company
• Leadership experience on boards of several
public companies
• Extensive
international experience in Asia, Europe and Latin America
• Experience in finance, financial statement preparation and accounting, financial reporting, compliance and
internal controls, including as chief financial officer
• Executive management experience, including in the automotive industry
• Independent of management
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DIRECTORS AND CORPORATE GOVERNANCE
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Criteria for Selection of Directors
The following are the general criteria for the selection of our directors that the Nominating Committee utilizes in
evaluating candidates for Board membership. The Nominating Committee considers, without limitation, a director nominee’s independence, skills and other attributes, experience, perspective, background and diversity (which we define broadly to
include differences in viewpoints, background, experience, skill, education, national origin, gender, race, age,
culture and current affiliations that may offer the Company exposure to contemporary business issues and is considered in the context of the Board as a whole). These qualifications may vary from
year to year, depending on the needs of the Company at the time.
The general criteria set forth below are not listed in any particular order of importance:
The above criteria should not be construed as minimum qualifications for director selection nor is it expected that
director nominees will possess all of the criteria identified. Rather, they represent the range of complementary talents, backgrounds and experiences that the Nominating Committee believes would contribute to the effective functioning of our Board.
Our Corporate Governance Guidelines and Nominating Committee charter provide guidelines with respect to the consideration of director candidates. Under these
guidelines, the Nominating Committee is responsible for, subject to approval by the Board, establishing and periodically reviewing the criteria for Board membership and selection of new directors, including independence
standards. The Nominating Committee also may recommend to the Board changes to the portfolio of director skills, experience, perspective and background required for the effective functioning of
the Board considering our strategy and the regulatory, geographic and market environments. Any such changes to the director selection criteria must be approved by the Board.
The Nominating Committee screens candidates and recommends director nominees who are approved by the Board. The Nominating Committee considers candidates for Board
membership suggested by its members and other Board members, as well as management and stockholders. The Nominating Committee also may retain a search firm (which may be paid a fee) to identify director candidates.
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2017 Proxy Statement
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17
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DIRECTORS AND CORPORATE GOVERNANCE
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Once a potential candidate has been identified, the Nominating Committee evaluates the potential candidate based on the Board’s criteria for selection of directors (described above) and the
composition and needs of the Board at the time. All director candidates are evaluated on
the same basis. Candidates also are evaluated in light of Board policies, such as those relating to director independence and service on other boards, as well as considerations relating to the
size and structure of the Board.
Recommendation of
Directors by Stockholders
In accordance with its charter, the Nominating Committee will consider candidates for election as a director of the Company
recommended by any Lear stockholder, provided that the recommending stockholder follows the procedures set forth in Section 1.13 of the Company’s Bylaws for nominations by stockholders of persons to serve as directors. The Nominating
Committee evaluates such candidates in the same manner by which it evaluates other director candidates considered by the Nominating Committee, as described above.
Pursuant to Section 1.13 of the Bylaws, nominations of persons for election to the Board at a meeting of stockholders may be made by any stockholder of the Company
entitled to vote for the election of directors at the meeting who sends a timely notice in writing to our Corporate Secretary. To be timely, a stockholder’s notice must be delivered to, or mailed and received by, our Corporate Secretary at the
Company’s principal executive offices not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the annual meeting is more than 30 days prior to the
anniversary of the preceding year’s annual meeting or more than 70 days after such anniversary date, notice by the stockholder must be delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later
than the close of business
on the later of the 90th day prior to such annual meeting or the 10th day following the day on which “public announcement” of the date of such annual meeting is made by the Company. For
purposes of the Bylaws, “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by us with the SEC.
The stockholder’s notice or recommendation is required to contain certain prescribed information about each person whom the stockholder proposes to recommend for
election as a director, the stockholder giving notice and the beneficial owner, if any, on whose behalf notice is given. The stockholder’s notice must also include the consent of the person proposed to be nominated and to serve as a director if
elected. Recommendations or notices relating to director nominations should be sent to Lear Corporation, 21557 Telegraph Road, Southfield, Michigan 48033; Attention: Terrence B. Larkin, Executive Vice President, Business Development, General Counsel
and Corporate Secretary.
A copy of our Bylaws, as amended, has been filed as an exhibit to our Current Report on Form
8-K
filed with the SEC on November 9, 2009.
Independence of Directors
The Company’s Corporate Governance Guidelines provide that a majority of the members of the Board, and each member of
the Audit Committee, Compensation Committee and Nominating Committee, must meet the criteria for independence set forth under applicable law and the New York Stock Exchange (“NYSE”) listing standards. No director qualifies as independent
unless the Board determines that the director has no direct or indirect material relationship with the Company. These independence guidelines are part of our Corporate Governance Guidelines, available on our website at www.lear.com. In addition to
applying these director independence guidelines and the NYSE independence guidelines, the Board will consider all relevant facts and circumstances of which it is aware in making an independence determination with respect to any director.
The Board has made director independence determinations with respect to each of our directors. Based on our director
independence guidelines and the NYSE independence guidelines, the Board has affirmatively determined that (i) Messrs. Bott, Capo and Foster, Dr. Jepsen, Ms. Ligocki and Messrs. Mallett, Runkle, Smith and Wallace (A) have no
relationships or only immaterial relationships with us, (B) meet our director independence guidelines and the NYSE independence guidelines with respect to any such relationships and (C) are independent; and (ii) Mr. Simoncini is
not independent. Mr. Simoncini is our President and Chief Executive Officer (the “CEO”).
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DIRECTORS AND CORPORATE GOVERNANCE
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Board’s Role in Risk Oversight
The Company’s management continually monitors the material risks facing the Company. Our enterprise risk management
process is designed to facilitate the identification, assessment and management of certain key risks the Company may encounter and which may impact our ability to achieve our strategic
objectives. The enterprise risk management process supplements management’s ongoing responsibilities to monitor and address risks by working with risk owners to identify the key mitigating
actions for certain risks, which then are discussed with senior management.
The Board, with the assistance of the Board
committees, is responsible for overseeing such management actions to ensure that material risks affecting the Company are identified and managed appropriately. The Board and the Board committees oversee risks associated with their principal areas of
focus, as summarized below:
Board/Committee Areas of Risk Oversight and Actions
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Full Board
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• Carefully evaluates the reports received from management
and makes inquiries of management on areas of particular interest to the Board
• Reviews with management material strategic, operational, financial, compensation and compliance risks
• Considers specific risk topics in connection
with strategic planning and other matters
• Oversees risk oversight and related activities conducted by the Board committees through reports of the committee
chairmen to the Board
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Audit Committee
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• Responsible for ensuring that the Company has an
internal audit function to provide management and the Audit Committee with ongoing assessments of the Company’s risk management process and system of internal controls
• Discusses with management the Company’s process for assessing and managing risks, including the Company’s
major financial risk exposures and the steps necessary to monitor and control such exposures
• Central oversight of financial and compliance risks
• Meets periodically with senior management, our
vice president of internal audit, our chief compliance officer and our independent auditor, Ernst & Young LLP, and reports on its findings at each regularly scheduled meeting of the Board
• Periodically assesses reports provided by
management on risks addressed in the enterprise risk management process and other risks, and reports to the Board, as appropriate
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Compensation Committee
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• Oversees the review and evaluation of the risks
associated with our compensation policies and practices (see also “Compensation and Risk”)
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Nominating Committee
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• Oversees risks associated with our governance structure
and processes
• Reviews our organizational
documents, Code of Business Conduct and Ethics, Corporate Governance Guidelines and other policies
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Corporate Governance
The Board has approved Corporate Governance Guidelines and a Code of Business Conduct and Ethics. All of our corporate
governance documents, including the Corporate Governance Guidelines, the Code of Business Conduct and Ethics and committee charters, are available on our website at www.lear.com or in printed form upon request by contacting Lear Corporation at 21557
Telegraph Road, Southfield,
Michigan 48033, Attention: Investor Relations. The Board regularly reviews corporate governance developments and modifies these documents as warranted. Any modifications will be reflected on our
website. The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein.
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2017 Proxy Statement
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19
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DIRECTORS AND CORPORATE GOVERNANCE
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Security Ownership of Certain Beneficial Owners, Directors and Management
The following table sets forth, as of March 23, 2017
(except as indicated below), beneficial ownership, as defined by SEC rules, of our common stock and ownership of RSUs by the persons or groups specified. Each of the persons listed below has sole voting and investment power with respect to the
beneficially owned shares listed unless otherwise indicated. The percentage calculations set forth in the table are based on 68,697,937 shares of common stock outstanding on March 23, 2017 rather than based on the percentages set forth in
stockholders’ Schedules 13G or 13D, as applicable, filed with the SEC.
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Number of
Shares of
Common
Stock
Owned
Beneficially
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Percentage of
Common
Stock
Owned
Beneficially
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Number
of
RSUs
Owned
(17)
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5% Beneficial Owners:
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BlackRock, Inc.
(1)
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7,419,830
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10.8
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%
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—
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The Vanguard Group
(2)
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6,077,526
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8.8
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%
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—
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Executive Officers and Directors:
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Matthew J. Simoncini
(3)
(4)
(5)
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90,824
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*
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21,739
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Jeffrey H. Vanneste
(3)
(6)
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26,748
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*
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6,089
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Raymond E. Scott
(3)
(7)
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14,133
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*
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28,231
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Terrence B. Larkin
(3)
(8)
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18,889
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*
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6,442
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Frank Orsini
(3)
(7)
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12,785
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*
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20,530
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Richard H. Bott
(4)
(9)
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5,394
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|
|
|
*
|
|
|
|
—
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Thomas P. Capo
(4)
(10)
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|
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9,915
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|
|
|
*
|
|
|
|
—
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Jonathan F. Foster
(4)
(11)
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11,946
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|
|
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*
|
|
|
|
—
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Mary Lou Jepsen
(4)
(12)
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1,544
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|
|
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*
|
|
|
|
—
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Kathleen A. Ligocki
(4)
(13)
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11,004
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|
|
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*
|
|
|
|
—
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Conrad L. Mallett, Jr.
(4)
(14)
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6,164
|
|
|
|
*
|
|
|
|
—
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Donald L. Runkle
(4)
(15)
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10,316
|
|
|
|
*
|
|
|
|
—
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Gregory C. Smith
(4)
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12,822
|
|
|
|
*
|
|
|
|
—
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Henry D.G. Wallace
(4)
(16)
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20,144
|
|
|
|
*
|
|
|
|
—
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Total Executive Officers and Directors as a Group (19
individuals)
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336,079
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*
|
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128,631
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(1)
|
Information contained in the table above and this footnote is based on a report on Schedule 13G/A filed with the SEC on January 12, 2017 by BlackRock, Inc.
(“BlackRock”). BlackRock is the beneficial owner of 7,419,830 shares, with sole dispositive power as to all such shares and sole voting power as to 6,542,819 shares. Various persons have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from, the sale of the Company’s common stock. No one person’s interest in the Company’s common stock is more than five percent of the total outstanding common stock. BlackRock’s
principal place of business is 55 East 52nd Street, New York, New York 10055.
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(2)
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Information contained in the table above and this footnote is based on a report on Schedule 13G/A filed with the SEC on February 10, 2017 by The Vanguard Group
(“Vanguard”). Vanguard is the beneficial owner 6,077,526 shares, with sole voting power as to 58,669 such shares, sole dispositive power as to 6,008,000 such shares, shared voting power as to 13,532 such shares and shared dispositive power
as to 69,516 such shares. Vanguard’s principal place of business is 100 Vanguard Blvd., Malvern, PA 19355.
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(3)
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The individual is a Named Executive Officer.
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(4)
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The individual is a director.
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(5)
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Mr. Simoncini is retirement-eligible and therefore qualifies for accelerated vesting of all of his Career Shares and RSUs that would have vested if the date of
retirement had been 24 months later than it actually occurred. As a result, Mr. Simoncini’s share ownership includes 29,212 Career Shares and 35,461 unvested RSUs (all RSUs awarded more than one year prior to the record date). Such Career
Shares and unvested RSUs would be forfeited only if Mr. Simoncini were terminated for “cause” pursuant to the terms of his employment agreement.
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2017 Proxy Statement
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25
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DIRECTORS AND CORPORATE GOVERNANCE
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(6)
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Mr. Vanneste is retirement-eligible and therefore qualifies for accelerated vesting of all of his Career Shares and RSUs that would have vested if the date of
retirement had been 24 months later than it actually occurred. As a result, Mr. Vanneste’s share ownership includes 10,562 Career Shares and 8,714 unvested RSUs (all RSUs awarded more than one year prior to the record date). Such Career
Shares and unvested RSUs would be forfeited only if Mr. Vanneste were terminated for “cause” pursuant to the terms of his employment agreement.
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(7)
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Messrs. Scott and Orsini are not yet retirement-eligible, and thus, their share ownership does not include any unvested Career Shares or RSUs. If they remain employed
by the Company, Messrs. Scott and Orsini will become retirement-eligible on August 2, 2020 and April 2, 2027, respectively.
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(8)
|
Mr. Larkin is retirement-eligible and therefore qualifies for accelerated vesting of all of his Career Shares and RSUs that would have vested if the date of
retirement had been 24 months later than it actually occurred. As a result, Mr. Larkin’s share ownership includes 4,331 Career Shares and 9,760 unvested RSUs (all RSUs awarded more than one year prior to the record date). Such Career
Shares and unvested RSUs would be forfeited only if Mr. Larkin were terminated for “cause” pursuant to the terms of his employment agreement.
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(9)
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Includes 5,394 deferred stock units, which are fully vested and convert into shares of common stock on a
1-for-1
basis upon the earliest of the director’s departure from the Board, a change in control or the
pre-established
date elected by the director.
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(10)
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Includes 9,570 deferred stock units, which are fully vested and convert into shares of common stock on a
1-for-1
basis upon the earliest of the director’s departure from the Board, a change in control or the
pre-established
date elected by the director.
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(11)
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Includes 7,921 deferred stock units, which are fully vested and convert into shares of common stock on a
1-for-1
basis upon the earliest of the director’s departure from the Board, a change in control or the
pre-established
date elected by the director.
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(12)
|
Includes 1,331 deferred stock units, which are fully vested and convert into shares of common stock on a
1-for-1
basis upon the earliest of the director’s departure from the Board, a change in control or the
pre-established
date elected by the director.
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(13)
|
Includes 8,504 deferred stock units, which are fully vested and convert into shares of common stock on a
1-for-1
basis upon the earliest of the director’s departure from the Board, a change in control or the
pre-established
date elected by the director.
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(14)
|
Includes 6,161 deferred stock units, which are fully vested and convert into shares of common stock on a
1-for-1
basis upon the earliest of the director’s departure from the Board, a change in control or the
pre-established
date elected by the director.
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(15)
|
Includes 6,372 deferred stock units, which are fully vested and convert into shares of common stock on a
1-for-1
basis upon the earliest of the director’s departure from the Board, a change in control or the
pre-established
date elected by the director.
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(16)
|
Includes 16,005 deferred stock units, which are fully vested and convert into shares of common stock on a
1-for-1
basis upon the earliest of the director’s departure from the Board, a change in control or the
pre-established
date elected by the director.
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(17)
|
Includes, as of March 23, 2017, (i) Career Shares and unvested RSUs owned by our retirement-eligible executive officers that have been outstanding for less than
one year, and (ii) Career Shares and unvested RSUs owned by our
non-retirement-eligible
executive officers. These Career Shares and unvested RSUs are subject to all of the economic risks of stock
ownership but may not be voted or sold and are subject to vesting provisions as set forth in the respective grant agreements.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon our review of reports filed with the SEC and written representations that no other reports were required, we
believe that all of our directors and executive officers complied with the reporting requirements of Section 16(a) of the Exchange Act during 2016, except that on March 16, 2017,
Mr. Mallett filed a Form 4 disclosing the disposition of an aggregate of 4,236 shares of our common stock in a series of transactions from November 9, 2009 through October 28, 2014
previously unreported on Form 4.
COMPENSATION DISCUSSION AND ANALYSIS
The following discusses the material elements of the compensation for our Chief Executive Officer (CEO), Chief Financial Officer (CFO) and each of the other executive
officers listed in the “2016 Summary Compensation Table” (collectively, the “Named Executive Officers”) during the year ended December 31, 2016. To assist in understanding compensation for 2016, we have included a discussion
of our compensation policies and practices for periods before and after 2016 where relevant. To avoid repetition, in the discussion that follows we make cross-references to specific compensation data and terms for our Named Executive Officers
contained in “Executive Compensation.” In addition, because we have a global team of managers in 37 countries, our compensation program is designed to provide some common standards throughout the Company and, therefore, much of what is
discussed below applies to executives in general and is not limited specifically to our Named Executive Officers.
Named Executive
Officers
Our Named Executive Officers for 2016 are:
Matthew J. Simoncini,
President and Chief Executive Officer
Jeffrey H. Vanneste,
Senior Vice President and Chief Financial Officer
Raymond E. Scott,
Executive Vice President and President, Seating
Terrence B. Larkin,
Executive Vice President, Business Development, General Counsel and Corporate Secretary
Frank C. Orsini,
Senior Vice President and President,
E-Systems
Executive Summary
We are a leading Tier 1 supplier to the global automotive industry that operates in two business segments: Seating and
E-Systems.
We supply seating, electrical distribution systems and electronic modules, as well as related
sub-systems,
components and software, to virtually every major
automotive manufacturer in the world. Our manufacturing, engineering and administrative footprint covers 37 countries and 243 locations with approximately 148,400 employees worldwide. We are continuing to grow our business in all automotive
producing regions of the world, both organically and through complementary acquisitions. We have an executive compensation program that is, on average, market-median based, and which is closely linked to our Company’s performance.
Our overarching objective is to maximize shareholder value by delivering profitable sales growth while balancing risk and returns, maintaining a strong balance sheet
with investment grade credit metrics and consistently returning cash to our shareholders.
Highlights of our 2016 performance and recent significant events include the following:
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•
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|
We delivered record sales of $18.6 billion, up 5% excluding the impact of foreign exchange and commodity prices.
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|
•
|
|
We achieved record core operating earnings of $1.5 billion, an increase of 17% (see discussion of Adjusted Operating Income below).*
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•
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|
We achieved record adjusted earnings per share of $14.03, an increase of 29%.*
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|
•
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|
We delivered improved operating margins compared to 2015 in both business segments.
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|
•
|
|
We achieved a 7
th
consecutive year of increased sales and adjusted earnings per share.*
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|
•
|
|
We generated record free cash flow of $1.1 billion in 2016.*
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|
•
|
|
In 2016, we continued to invest in our business by entering into a strategic partnership with Tempronics for seat heating and cooling and acquiring AccuMED, a specialty fabric business.
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*
|
Core operating earnings, adjusted earnings per share and free cash flow are non-GAAP financial measures, and we are including our 2016 results for these measures to show an aspect of our performance. Appendix A to this
proxy statement contains reconciliations of these measures to the most directly comparable GAAP financial measures.
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2017 Proxy Statement
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27
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|
COMPENSATION DISCUSSION AND ANALYSIS
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|
•
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|
Over the past five years, we have invested nearly three-quarters of a billion dollars in our manufacturing footprint, significantly expanding our component capabilities to 143 facilities in 22
low-cost
countries.
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|
•
|
|
We continued to win new business in both product segments and diversify our sales, with a 2017 to 2019 sales backlog of $2.8 billion, which is 40% higher than last year’s backlog.
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|
•
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|
The Company returned $748 million to stockholders in 2016 through its share repurchase and dividend programs. Since these programs were initiated in 2011, the Company has returned $3.5 billion to stockholders,
including the repurchase of 39% of total shares outstanding. In February 2017, the Company’s share repurchase authorization was
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increased to $1 billion and the authorization period was extended to December 31, 2019.
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•
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|
In February 2017, our quarterly cash dividend was increased by 67%, representing the 6
th
consecutive annual increase since the dividend program was initiated.
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|
•
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|
The Company’s total return to stockholders in 2016 was 9%. The Company’s total return to stockholders for the five-year period ended December 31, 2016 was 250%, compared with 98% for the S&P 500.
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•
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Commensurate with our above target performance on the four incentive plan financial measures, incentive awards for the periods ending in 2016 were earned at above target levels, as illustrated below:
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2016 Annual Incentive Program
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2014-2016 Performance Shares
|
(see “— 2016 Incentive Programs — Pay for Performance,” “— 2016 Incentive Programs
— Annual Incentives” and “—2016 Incentive Programs — Long-Term Incentives” below for more information regarding these financial measures).
The highlights of our 2016 executive compensation program resulting from our 2016 Company financial performance were as
follows:
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•
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|
Incentive payouts were commensurate with our financial results. Annual incentive awards were earned at 189% of
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COMPENSATION DISCUSSION AND ANALYSIS
|
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the targeted level and the 2014-2016 cycle of long-term Performance Shares was earned at 193% of the targeted level based on achievement of the financial goals outlined above.
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•
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|
For 2016, long-term incentive awards granted in January 2016 to our Named Executive Officers were solely in the form of equity to further link the interests of our executives with
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those of our stockholders. We awarded Performance Shares to represent 75% of the value of these long-term incentive awards and service-based restricted stock units (“RSUs”) to represent
25%. We place the greatest weighting on Performance Shares in order to directly link our executives’ interests with those of our stockholders while also rewarding executives based on our three-year financial performance.
|
We maintain several compensation program features and
corporate governance practices to ensure a strong link between executive pay, Company performance and stockholder interests and to ensure that we have a fully competitive executive compensation program:
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WHAT WE DO
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WHAT WE DON’T DO
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Pay Program Aligned with Business Strategy
(see pages 30, 34 to 36)
Balanced Mix of Performance Measures
(see page 34)
High Percentage of Performance-Based Pay
(see the charts below and pages 30, 32 and 34)
Robust Stock Ownership Guidelines
(see page 37)
Equity Retention Requirement
(see page 37)
Annual Market Practices and Compensation Risk Review
(see pages 31 and 54)
Clawback of Incentive Compensation
(see page 39)
Independent Compensation Consultant for Compensation Committee
(see pages 21 and 32)
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No Excise Tax
Gross-Ups
(see page 39)
No Single-Trigger Change in Control Severance Benefits
(see pages 38 to 39, 50 to 53)
No Single-Trigger Change in Control Vesting of Equity Awards
(see pages 38 to 39, 50 to
53)
No Hedging or Pledging of Company Stock
(see page 39)
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2016 Target Total Direct Compensation Allocation
(Assuming Performance-Based Components at Target
and not including Career
Shares)
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2017 Proxy Statement
|
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29
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COMPENSATION DISCUSSION AND ANALYSIS
|
We will continue to monitor our executive compensation programs and consider appropriate modifications that will allow us
to drive achievement of our business strategy and
targeted financial results, meet our talent needs and maintain fully-competitive compensation programs and practices to maximize long-term stockholder value.
Pay-Performance
Alignment
The executive compensation program is designed to strongly align pay opportunities with performance outcomes. The
Compensation Committee considers multiple perspectives in assessing the achievement of this critical objective. Specifically, the Compensation Committee reviews incentive payouts as a percentage of target, financial and total shareholder return
(TSR) results, and the CEO’s three-year pay relative to the Comparator Group (as defined below). These analyses found that relative to the Comparator Group:
|
1.
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The Named Executive Officers’ target pay levels are in the competitive range of market median, on average, with an emphasis on performance-based pay opportunities.
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2.
|
Lear’s incentive plan performance measures are well-aligned to its business strategy, correlative to TSR and
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|
are generally consistent with the measures used by the Comparator Group (and the broader industrial market).
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3.
|
Lear’s annual incentive and performance share payouts are aligned with performance relative to the Comparator Group.
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4.
|
The CEO’s 2013 to 2015 aggregate “realizable pay” is well aligned with the Company’s relative TSR performance for the three years, 2013 to 2015 (which were the three most recent years of Comparator
Group pay data that were publicly-disclosed at the time). This analysis considers pay granted during the three-year period and values equity awards using the stock price at the end of the period.
|
2016 Advisory Vote on
Executive Compensation
The Compensation Committee reviewed the results of the 2016 stockholder advisory vote on Named Executive Officer
compensation and incorporated the results as one of the many factors considered in connection with the discharge of its responsibilities. Since a substantial majority (over 98%) of
our stockholders voting at the annual meeting approved the compensation program described in our 2016 Proxy Statement, the Compensation Committee did not implement changes to our executive
compensation program as a direct result of the stockholders’ advisory vote.
Executive Compensation
Philosophy and Objectives
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The objectives of our compensation policies are to:
• link executive pay to Company performance;
• optimize profitability, cash flow and revenue growth, and return on investment;
• link the interests of management with those of
stockholders;
• align management’s
compensation with our business strategy and compensation philosophy;
• promote teamwork within our group of global managers (our “One Lear” concept); and
• attract, reward and retain the best executive
talent.
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|
To achieve these objectives, we believe that the total compensation program for executive officers should consist of the following:
• base salary;
• annual incentives;
• long-term incentives;
• retirement plan benefits;
• health, welfare and other benefits; and
• termination/change in control
benefits.
|
The Compensation Committee routinely reviews the elements noted above. In general, the Compensation Committee monitors
compensation levels to ensure that a higher proportion of an executive’s total compensation is awarded in
the form of variable and performance-based components (dependent on Company performance) as the executive’s responsibilities increase.
Benchmarking
The Compensation Committee targets base salaries, annual incentive awards, long-term incentive awards and total direct
compensation of our executives on average to be within a competitive range (i.e., +/- 10%) of the median of the
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COMPENSATION DISCUSSION AND ANALYSIS
|
Company’s comparator group (the “Comparator Group”). In addition to pay benchmarking, other factors (including our business strategy, talent needs, executives’ experience
levels and cost) are considered in setting target pay. Actual compensation will vary based on such factors as external business conditions, the Company’s actual financial performance, an executive’s performance and achievement of specified
management objectives. For 2016, the base salaries, targeted annual incentive awards, targeted long-term incentive awards and targeted total direct compensation for our Named Executive Officers were, on average, within the competitive range of
market median for comparable positions within our Comparator Group.
The companies in our Comparator Group are listed below. The criteria used to select the 21 peer
companies focused on
automotive parts and equipment, industrial machinery, heavy trucks and other durable goods manufacturing companies, generally with the following specifics: (i) annual revenues typically
ranging from 0.5 times to 2.0 times the Company’s revenues (with a median near the Company’s revenues); (ii) global companies typically with U.S. headquarters; (iii) market capitalization typically ranging from 0.2 times to 5.0
times the Company’s market capitalization; and (iv) companies that are considered by independent proxy advisors to be the Company’s proxy peers. The Company supplements its review of the Comparator Group with a broader survey of
general industrial companies (not individually selected or identified) for benchmarking of executive compensation levels and, as appropriate, compensation design practices.
The companies in the Comparator Group for 2016 (which
did not change from 2015) are shown below. The revenues for this group in their most recently reported fiscal year ranged from $3.2 billion to $37.7 billion, with a median of $13.7 billion. Lear’s revenues for 2016 were
$18.6 billion.
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2016 Comparator Group
|
|
BorgWarner Inc.
|
|
Eaton Corporation plc
|
|
Johnson Controls International plc
|
|
Tenneco Inc.
|
|
Cummins Inc.
|
|
Emerson Electric Co.
|
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L-3
Technologies, Inc.
|
|
Textron Inc.
|
|
Dana, Inc.
|
|
Goodyear Tire & Rubber Company
|
|
Navistar International Corporation
|
|
ZF TRW Automotive Holdings Corp.
|
|
Deere & Company
|
|
Illinois Tool Works Inc.
|
|
PACCAR Inc.
|
|
Visteon Corporation
|
|
Delphi Automotive PLC
|
|
Ingersoll-Rand Plc
|
|
Parker-Hannifin Corporation
|
|
Whirlpool Corporation
|
|
Dover Corporation
|
|
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|
For 2017, the Compensation Committee approved the following changes to the Comparator Group, which now includes a total of
19 companies: (i) the removal of three companies (Dana, Inc., Dover Corporation and Visteon
Corporation), due to their relatively smaller size, (ii) the removal of ZF TRW Automotive Holdings Corp., which was acquired in 2015, and (iii) the addition of two direct peers (Adient
plc and Magna International Inc.).
Total Compensation Review
The Compensation Committee annually reviews key elements of our executive compensation program, including materials setting
forth the various components of compensation for our Named Executive Officers and a summary of market practices and emerging trends, and discusses potential implications to the Company in the context of our business strategy and talent needs. This
includes a specific review of dollar amounts for pay elements and potential payment obligations under our executive employment agreements, including an analysis of the resulting impact created by a change in control of the Company. The Compensation
Committee reviews total
compensation summaries or tally sheets for our Named Executive Officers on an annual basis. Tally sheets provide for an overall assessment of our compensation program while ensuring the proper
linkage to financial performance and stockholder interests. In addition, although each component is assessed independently, the total complement of the components must work in harmony to achieve a proper balance, which, in turn, helps manage
compensation risk. We also annually complete a comprehensive compensation risk assessment with assistance from our outside legal counsel and Pay Governance.
Role of Management in
Setting Compensation Levels
Our human resources staff supports the Compensation Committee in its work. They also work with compensation
consultants, whose engagements have been approved by the Compensation Committee, and with accountants, legal
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|
2017 Proxy Statement
|
|
|
|
|
31
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
counsel and other advisors, as necessary, to implement the Compensation Committee’s decisions, to monitor evolving competitive practices and to make compensation recommendations to the
Compensation Committee. The Compensation Committee has engaged Pay Governance as its independent compensation consultant to assist with the ongoing review of our executive and director compensation programs and to ensure that our programs are
competitive and appropriate given the Company’s objectives and prevailing market practices, and, for most compensation topics for which the Compensation Committee is responsible, it has directed Pay Governance to work with management to develop
recommendations that reflect the Compensation Committee’s objectives for the compensation program. Pay Governance performs no other services for the Company. The Compensation Committee has final authority to approve,
modify or reject these recommendations and to make its decisions in executive session. Our President and CEO provides input with respect to compensation of the executive officers (other than
himself) but is otherwise not involved in decisions of the Compensation Committee affecting the compensation of our executive officers. While our CFO, General Counsel, Senior Vice President of Human Resources and other members of our human resources
management attend such meetings to provide information, present materials to the Compensation Committee and answer related questions, they are not involved in decisions of the Compensation Committee affecting the compensation of our executive
officers. The Compensation Committee typically meets in executive session after each of its regularly scheduled meetings to discuss executive compensation and make decisions.
Discretion of
Compensation Committee
The Compensation Committee generally has the discretion to make awards under our incentive plans to our executive officers,
including the Named Executive Officers. The Compensation Committee did not exercise discretion in 2016
to increase or reduce the size of any outstanding award or to award compensation when a performance goal was not achieved.
Elements of Compensation
Our compensation program is designed to attract, motivate
and retain executives through a mix of short-term and long-term compensation, fixed and variable pay and cash and equity-based compensation, while emphasizing our philosophy of pay for performance. A summary of the core total direct compensation
elements (base salary, annual incentives and long-term incentives) follows below. Retirement plan benefits, termination/change in control benefits, and certain health, welfare and other benefits are not included in this table, but additional
information about these programs can be found on pages 38 to 39:
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Element
|
|
Purpose
|
|
Performance Measure(s)
|
|
Fixed vs.
Variable
|
|
Cash vs.
Equity
|
|
Payout
Range
|
|
Base Salary
|
|
Provide a competitive rate of pay to attract, motivate and retain executive officers of the Company
|
|
Individual performance, responsibilities, experience, time in position and critical skills
|
|
Fixed
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|
Cash
|
|
n/a
|
|
Annual Incentive
Plan (AIP)
|
|
Align a portion of annual pay to performance against key goals and objectives for the year
|
|
Adjusted Operating Income (50%)
Free Cash Flow (50%)
|
|
Variable
|
|
Cash
|
|
0-200%
of target
|
|
Performance
Shares under
Long-Term
Stock Incentive Plan
(LTSIP)
|
|
Align executive pay with long-term stockholder interests through equity-based compensation tied to key performance metrics of the Company over a three-year period
|
|
Adjusted Return on Invested Capital (ROIC) (66 2/3%)
Cumulative
Adjusted
Pre-Tax
Income (33 1/3%)
|
|
Variable
|
|
Equity
|
|
0-200%
of target number of shares; Performance Share value fluctuates with stock price movement
|
|
Restricted Stock
Units (RSUs)
under LTSIP
|
|
Align executive pay with long-term stockholder interests through equity-based compensation
|
|
Stock price alignment
|
|
Variable
|
|
Equity
|
|
Fluctuates with stock price movement
|
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|
COMPENSATION DISCUSSION AND ANALYSIS
|
Narrative descriptions of the individual elements of compensation are set forth below.
Base Salary
Base salary is used as an input for other elements of our compensation program. For example, annual incentive targets in
2016 were set as a percentage of base salary. Because the amount of base salary can establish the range of potential compensation for other elements, we take special care in establishing base salary levels.
Base salaries for our Named Executive Officers are targeted, on average, around the median level for comparable positions within the Comparator Group and broader
industrial survey, as appropriate. On an annual basis, we review respective responsibilities, individual performance, the Company’s business performance and base salary levels for senior executives at companies within the Comparator Group and
broader industrial survey. Base salaries for our executive officers are established at levels considered appropriate in light of the duties and scope of responsibilities of each officer’s position and considering internal pay equity and their
experience relative to industry peers. In this regard, the Compensation Committee also considers the compensation practices and financial performance of companies within the Comparator Group. Merit increases in base salary for our senior executives
are also determined by the results of the
Board’s annual leadership review. At this review, our CEO assesses the performance of our top executives and presents his perspectives to our Board. Our CEO’s base salary and total
compensation are reviewed by the Compensation Committee following the annual CEO performance review. Generally in February of each year, the CEO and Compensation Committee reach agreement on his goals and objectives for the upcoming year, and the
Compensation Committee evaluates his performance for the prior year against the prior year’s agreed goals and objectives. Based on the 2016 review, only Mr. Vanneste’s base salary was increased, effective October 1, 2016, from
$774,000 to $827,750, to remain competitive within the Comparator Group and to recognize his contributions within his role; the base salaries of the other Named Executive Officers did not change.
Mr. Simoncini’s base salary is currently $1,354,500 (with an incentive-eligible salary of $1,260,000). Our CEO has traditionally received a lower percentage of
his total compensation in the form of fixed amounts like base salary relative to our other executives in order to link more closely his compensation to the performance of the Company.
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|
2017 Proxy Statement
|
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33
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|
COMPENSATION DISCUSSION AND ANALYSIS
|
2016 Incentive Programs
Pay for Performance
All of the annual incentive opportunity and the majority (75%) of the long-term incentive opportunity are determined based on specific performance measures that
drive achievement of our business strategy while ensuring sharp focus on critical results. Time-based RSUs make up the remaining portion (25%) of our 2016 long-term incentive awards and derive their value from our stock price and dividends. In
order to drive profitable growth with efficient capital management, we selected four complementary performance measures (which assess earnings, cash flow and capital management over annual or three-year periods) to use in our incentive plans for
2016:
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Measure
|
|
Plan
|
|
Weighting
|
|
Background
|
|
Adjusted Operating Income
|
|
AIP
|
|
50%
|
|
• Pre-tax income before equity
income,
interest, other expense, restructuring costs and other special items.
• Adjusted Operating Income is a well understood operating metric that can be influenced by all levels of employees of
the Company.
• Provides motivation to maximize
earnings from current operations.
|
|
Free Cash Flow
|
|
AIP
|
|
50%
|
|
• Net cash provided by operating activities, less capital expenditures, excluding certain
transactions.
• Free Cash Flow is a well
understood operating metric that can be influenced by all levels of employees of the Company.
• Provides motivation to maximize cash flow through earnings and appropriate management of working capital and
investments.
|
|
Adjusted Return on
Invested Capital
(ROIC)
|
|
LTSIP
|
|
66 2/3%
|
|
• Based on Adjusted Operating Income and average invested capital for performance increments over
the three-year performance period (2016-2018).
• Adjusted ROIC is a well understood operating metric that focuses on the quality of earnings as measured by return on
total capital invested in the business.
• Provides long-term focus on generating adequate returns on capital balanced by the goal of profitable growth embedded
in the annual incentive performance measures.
• Desired goal is to generate returns in excess of the Company’s cost of capital.
|
|
Cumulative Adjusted
Pre-Tax
Income
|
|
LTSIP
|
|
33 1/3%
|
|
• Cumulative consolidated adjusted net income for the
three-year performance period (2016-2018) before a provision for income taxes, excluding certain transactions.
• Focuses on earnings generated from products sold, encouraging profitable revenue growth and efficient management of
costs over time.
|
Annual Incentives
Our executive officers participate in the Annual Incentive Plan (“AIP”). Under the AIP, the Compensation
Committee provides annual cash incentive award opportunities for the achievement of financial performance goals considered important to the
Company’s future success. Awards, if earned, are typically paid early in the following year based on our performance achieved in the prior fiscal year.
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|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Target Annual Incentive
. Each Named Executive Officer is assigned an annual target
opportunity under the AIP expressed as a percentage of such officer’s base salary. An executive’s target annual incentive percentage generally increases as his or her ability to affect the Company’s performance increases.
Consequently, as an executive’s responsibilities increase, his variable compensation in the form of an annual incentive, which is dependent on Company performance, generally makes up a larger portion of the executive’s total compensation.
The target opportunity for Mr. Simoncini in 2016 was 160% of his incentive-eligible base salary, based on his strong leadership of the Company and market median compensation levels. For each of Messrs. Vanneste, Scott, Larkin and Orsini the
target opportunity was 80% of their incentive-eligible base salaries. Beginning in 2017, the target opportunities for Messrs. Scott and Orsini were increased, respectively, to 100% and 90% of their incentive-eligible base salaries, and the
opportunities for Messrs. Simoncini, Vanneste and Larkin were unchanged.
Financial Measures
. Adjusted Operating Income and Free Cash Flow were used because they are
highly visible and important measures of operating performance that are relied upon by investors. The target goals of Adjusted Operating Income and Free Cash Flow were set based on the budget for the period reflecting a level of performance which at
the time was anticipated to be challenging, but achievable. The threshold level was set to be reflective of performance at which the Compensation Committee believed a portion of the award opportunity should be earned. The maximum level was set well
above the target, requiring significant achievements and reflecting performance at which the Compensation Committee believed a 200% target award was warranted. If threshold, target or maximum Adjusted Operating Income and Free Cash Flow goals
(described above in “— Executive Summary — 2016 Annual Incentive Program”) were attained in 2016, 50%, 100% or 200% of the target incentive amount for each executive, respectively, would be earned.
Results.
Our 2016
Adjusted Operating Income ($1,535 million) exceeded the target performance level and our Free Cash Flow ($1,091 million) was at the maximum performance level, which resulted in annual incentive awards being earned at 189% of target. Adjusted
Operating Income and Free Cash Flow are described above in “— 2016 Incentive Programs — Pay for Performance.” The resulting annual incentive amounts earned by our Named Executive Officers were as follows:
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|
|
2016 Annual Incentives
|
|
|
|
|
Target Opportunity
(as % of Base)
(1)
|
|
|
Target Amount
(1)
|
|
|
Actual Performance
|
|
|
2016 Incentive
Amount
(1)
|
|
|
Matthew J. Simoncini
|
|
|
160
|
%
|
|
$
|
2,016,000
|
|
|
|
189
|
%
|
|
$
|
3,810,240
|
|
|
Jeffrey H. Vanneste
|
|
|
80
|
%
|
|
$
|
616,000
|
|
|
|
189
|
%
|
|
$
|
1,164,240
|
|
|
Raymond E. Scott
|
|
|
80
|
%
|
|
$
|
636,352
|
|
|
|
189
|
%
|
|
$
|
1,202,705
|
|
|
Terrence B. Larkin
|
|
|
80
|
%
|
|
$
|
636,352
|
|
|
|
189
|
%
|
|
$
|
1,202,705
|
|
|
Frank C. Orsini
|
|
|
80
|
%
|
|
$
|
548,000
|
|
|
|
189
|
%
|
|
$
|
1,035,720
|
|
|
(1)
|
The incentive-eligible base salary amounts for the Named Executive Officers were as follows: Mr. Simoncini — $1,260,000; Mr. Vanneste — $770,000; Messrs. Scott and Larkin — $795,440; and
Mr. Orsini — $685,000. The Target Amount for each Named Executive Officer is the respective incentive-eligible base salary multiplied by the respective Target Opportunity. The Target Amount multiplied by the Actual Performance (189%)
represents the amount actually earned, as shown in the 2016 Incentive Amount column for each Named Executive Officer.
|
Long-Term Incentives
The long-term incentive component of our executive compensation program is designed to provide our senior management with
performance-based award opportunities, to drive superior long-term performance and to align the interests of our senior management with those of our stockholders. To achieve these goals, we have adopted a “portfolio” approach that
recognizes the strengths and weaknesses that various forms of long-term incentives provide.
2016 Awards.
The Compensation Committee
approved the 2016 long-term incentive program, which consisted of RSUs and equity-based Performance Shares granted under the 2009 Long-Term Stock Incentive Plan (“LTSIP”) to certain
officers and key employees, including to the Named Executive Officers. These awards generally were structured, consistent with market practices and the 2015 grants, such that recipients received
75% of the total target award value in the form of Performance Shares and the remaining 25% in service-based RSUs. Expressed as a percentage of their respective incentive-eligible base salaries, the target values of the 2016 long-term incentive
opportunities for each of our Named Executive Officers were as follows: Mr. Simoncini — 625%; Messrs. Vanneste, Scott, Larkin and Orsini — 270%. For 2017, the target values of the long-term incentive opportunities for Messrs.
Simoncini, Scott, Larkin and Orsini
|
|
|
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
35
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
were increased to 700%, 300%, 285% and 285%, respectively, of their respective incentive-eligible base salaries, and the target value of Mr. Vanneste’s long-term incentive opportunity
was unchanged.
The specific amounts and terms of these awards are shown in and following the “2016 Grants of Plan-Based Awards” table below. The target
levels of Adjusted ROIC and Cumulative Adjusted
Pre-Tax
Income performance for the Performance Shares were set based on the forecast for the period reflecting a level of performance which at the time was
anticipated to be challenging, but achievable. The threshold level was set to be reflective of performance at which the Compensation Committee believed a portion of the award opportunity should be earned. The maximum level was set significantly
above the target, requiring significant achievements and reflecting performance at which the Compensation Committee believed a 200% target award was warranted.
Vesting of 2014 Performance Share Awards
. In 2014, each of our Named Executive Officers
received grants of Performance Shares for the 2014-2016 performance period, with terms similar to those of the 2016 awards described above. The RSUs that were granted at the same time as the 2014 Performance Shares (and represented 25% of the total
equity award value at target) vested in February 2017.
The threshold, target, maximum and actual Adjusted ROIC and Cumulative
Pre-Tax
Income levels for the 2014-2016 performance period are set forth above under the heading “Compensation Discussion and Analysis — Executive Summary — 2014-2016 Performance Shares.”
If threshold, target or maximum were attained on these measures during the performance period, 50%, 100% or 200% of the target performance shares for each executive, respectively, would be earned.
Adjusted ROIC (15.9%) was achieved at the maximum
level and Cumulative
Pre-Tax
Income ($3,163 million) exceeded the target performance level, with the total award earned at 193% of target. Adjusted ROIC and Cumulative
Pre-Tax
Income are
non-GAAP
measures. Adjusted ROIC consists of Adjusted Operating Income (as defined in “— 2016 Incentive Programs — Annual
Incentives” above) after taxes (assuming the highest U.S. Federal corporate income tax rate of 35%) divided by average invested capital for each fiscal year, excluding the Eagle Ottawa acquisition. Average invested capital consists of total
assets plus the present value of operating leases, less accounts payable and drafts and accrued liabilities, and investments in unconsolidated entities, and certain other adjustments. Cumulative
Pre-Tax
Income
is Lear’s cumulative net income for the performance period before a provision for income taxes, excluding the Eagle Ottawa acquisition. The resulting share amounts earned by our Named Executive Officers are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014-2016 Performance Shares
|
|
|
|
|
Target
Shares (#)
|
|
|
Actual
Performance
|
|
|
Actual
Shares
Earned (#)
|
|
|
Matthew J. Simoncini
|
|
|
67,144
|
|
|
|
193
|
%
|
|
|
129,587
|
|
|
Jeffrey H. Vanneste
|
|
|
17,682
|
|
|
|
193
|
%
|
|
|
34,126
|
|
|
Raymond E. Scott
|
|
|
21,162
|
|
|
|
193
|
%
|
|
|
40,842
|
|
|
Terrence B. Larkin
|
|
|
21,162
|
|
|
|
193
|
%
|
|
|
40,842
|
|
|
Frank C. Orsini
|
|
|
17,167
|
|
|
|
193
|
%
|
|
|
33,132
|
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Management Stock Ownership Guidelines
The management stock ownership guidelines provide that our
executive officers achieve specified stock ownership levels based on a multiple of each executive officer’s base salary. The stock ownership guidelines were intended to create a strong link between our long-term success and the ultimate
compensation of our executive officers. Under the guidelines, unvested awards generally do not count towards the goal; however, once they are within 24 months of vesting, (i) for all executive officers, 60% of RSUs awarded count towards the
goal, and (ii) for retirement-eligible executive officers only, 60% of Career Shares awarded count towards the goal. Until an executive meets the goal, he or she must hold 50% of the net shares acquired upon the vesting of equity awards. Share
ownership targets for executives reaching age 60 are reduced by 10% annually up to a maximum reduction of 50%. The stock ownership levels which must be achieved by our executive officers are as follows:
|
|
|
|
|
|
|
|
Position
|
|
Required Share Ownership Level
(multiple of incentive eligible
base salary)
|
|
Chief Executive Officer
|
|
|
|
6X
|
|
|
Executive Vice Presidents
|
|
|
|
3X
|
|
|
Senior Vice Presidents
|
|
|
|
3X
|
|
|
Other Executive Officers
|
|
|
|
1.5X
|
|
Our stock ownership guidelines are reviewed periodically to ensure ongoing market competitiveness and reasonableness. As of
our latest measurement date (December 31, 2016), all of
our Named Executive Officers have met their respective ownership guideline levels.
Equity Award Policy
We do not time the grant of equity awards in coordination with the release of material
non-public
information. Our equity awards are generally approved on the dates of our regularly scheduled Compensation Committee meetings and are effective as of such dates or specified prospective dates. The
Compensation Committee has approved and formalized our equity award policy. It provides that the effective grant date of equity awards must be either the date of Compensation Committee or other committee approval or some future date specifically
identified in such approval. If such awards are granted, the exercise price of stock options and grant price of
Stock Appreciation Rights shall be the closing market price of our common stock on the grant date. The Compensation Committee must approve all awards to our executive officers. The policy also
allows the Compensation Committee to delegate to the CEO the ability to grant equity awards to
non-executive
officer employees who are newly hired or promoted or deemed to be deserving of special retention or
recognition awards. In addition, the aggregate award pool to
non-executive
officers must be approved by the Compensation Committee but may be allocated to individual employees by the CEO.
|
|
|
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
37
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Retirement Plan Benefits
Our Named Executive Officers participate in our retirement savings plan, qualified pension plan, pension equalization plan and supplemental savings plan, as eligible. The
general terms of these plans and formulas for calculating benefits are summarized following the 2016 Summary Compensation Table, 2016 Pension Benefits table and 2016 Nonqualified Deferred Compensation table, respectively, in “Executive
Compensation.” These benefits provide rewards for long-term service to the Company and an income source in an executive’s post-employment years. The various components of our retirement benefit program (including our frozen defined benefit
pension plans) disclosed in this proxy statement are summarized in the table below.
|
|
|
|
|
|
|
|
|
|
|
Summary of Retirement Benefits
|
|
Type
|
|
Plan/Program
|
|
Component/Feature
|
|
Purpose
|
|
Pages for
Further
Details
|
|
Defined Contribution
|
|
Salaried Retirement
Program (Qualified)
|
|
Deferral
|
|
Standard 401(k) plan and
matching contribution
|
|
42
|
|
|
|
Company Match
|
|
|
|
|
|
|
|
Pension Savings Plan
|
|
Main retirement program
|
|
|
|
|
Salaried Retirement Restoration Program
(Non-Qualified)
|
|
Deferral
|
|
Excess programs for
amounts above
qualified plan limits
|
|
42; 49
|
|
|
|
|
Company Match
|
|
|
|
|
|
|
|
Pension Savings Plan
|
|
|
|
Defined Benefit (frozen as of 12/31/06)
|
|
Lear Corporation Pension Plan
|
|
Qualified Pension Plan
(frozen)
|
|
n/a
|
|
48
|
|
|
Pension Equalization Program
|
|
Part of SERP (
frozen
)
|
|
|
48
|
|
|
Salaried Retirement Restoration Program (Pension Makeup)
|
|
Part of SERP (
frozen
)
|
|
|
49
|
|
Additional
|
|
Career Share (RSUs)
|
|
Shares not distributed until earlier of age 62 or after retirement.
|
|
Intended to facilitate attraction and retention, and reward key/high performers with grant levels set considering various factors, including performance, future potential and
competitiveness of retirement benefits and total pay.
|
|
43 to 44;50; 53
|
Employment Agreements/Termination/Change in Control Benefits
As described in detail and quantified in “Executive Compensation — Potential Payments Upon Termination or Change
in Control,” our Named Executive Officers receive certain benefits under their employment agreements upon their termination by the Company without “cause” or upon their resignation for “good reason,” including such
terminations following a change in control of the Company. The employment agreements also provide for restrictive covenants relating to
non-competition,
confidential information and
non-solicitation
of the Company’s employees and customers.
Our Named Executive Officers also receive, as do all employees who hold equity awards under the amended LTSIP (described below), accelerated vesting of equity awards if their employment is
terminated without cause or for good reason in connection with a change in control of the Company. These benefits are intended to ensure that members of senior management are not influenced by their personal situations and are able to be objective
in evaluating a potential change in control transaction. In addition, the benefits associated with “double-trigger” vesting of equity awards protect employees in
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
the event of a change in control and ensure an orderly transition of leadership. The Compensation Committee regularly reviews termination and change in control benefits and continues to believe
that the severance benefits in connection with certain terminations of employment constitute reasonable levels of protection for our executives. The LTSIP
provides for double-trigger vesting of equity awards (that are not assumed or replaced by the successor company) upon a change in control of the Company.
None of the employment agreements with the Company’s executive officers contains an excise tax
gross-up
provision.
Health, Welfare and
Certain Other Benefits
To remain competitive in the market for a high-caliber management team, the Company has traditionally provided its
executive officers, including our CEO, with health, welfare and other fringe benefits. In addition, personal use of our corporate aircraft has been eliminated except with respect to our CEO,
with approval of the Chairman of the Board or Chairman of the Compensation Committee. The Company does not provide tax
gross-up
payments for the imputed
income associated with personal use of corporate aircraft. In 2016, there was no personal use of corporate aircraft.
Clawback Policy
The Company maintains a formal clawback policy (the “Clawback Policy”) that applies to all incentive-based cash
and equity compensation awards granted on or after February 7, 2013 (“Incentive Compensation”) to any current or former executive officer of the Company (collectively, the “Covered Recipients”). In the event that the Company
is required by applicable U.S. federal securities laws to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under such securities laws where such accounting restatement was
caused or substantially caused by the intentional misconduct of the Covered Recipient, the Company will recover from such Covered Recipient who received Incentive Compensation during the three-year period preceding the date on which the
Company is required to prepare an accounting restatement, based on the erroneous data, the amount, if any, in excess of what would have been paid to the Covered Recipient under the accounting
restatement.
The Clawback Policy is administered by the Compensation Committee, which has the sole discretion in making all determinations under the Clawback Policy.
The Clawback Policy will be interpreted and administered (and, as necessary, amended to be) consistent with the applicable requirements of Section 10D of the Exchange Act, as added by Section 954 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, and any official guidance issued thereunder.
Hedging/Pledging Policy
The Company maintains a formal policy prohibiting officers and directors from (i) entering into hedging or
monetization transactions involving our Company stock and (ii) holding our Company stock in a margin account or pledging our Company stock as collateral for a loan. Exceptions to the pledging
prohibition may be granted by the Company’s General Counsel upon two weeks’ advance notice if the person clearly demonstrates the financial capacity to repay the loan without resort to
the pledged securities.
Tax Treatment of
Executive Compensation
One of the factors the Compensation Committee considers when determining compensation is the anticipated tax treatment to
the Company and to the executives of the various payments and benefits. Section 162(m) of the Internal Revenue Code disallows the deduction of
non-performance
based compensation in excess of $1,000,000
paid to the CEO (or an individual acting in such a capacity), and the three next highest compensated officers other than the CFO (or an individual acting in such a capacity) appearing in the 2016 Summary Compensation Table. The Compensation
Committee generally considers this limit when determining compensation; however, there are instances in which the
Compensation Committee has concluded, and may conclude in the future, that it is appropriate to exceed the limitation on deductibility under Section 162(m) to ensure that executive officers
are compensated in a manner that it believes to be consistent with the Company’s best interests and those of its stockholders. For example, in 2016, Mr. Simoncini received a base salary of $1,354,500, with a total of $354,500 being
non-deductible
to the Company. In setting Mr. Simoncini’s base salary level, the Compensation Committee weighed the cost of this
non-deductible
compensation against
the benefit of awarding competitive compensation to our CEO.
|
|
|
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
39
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Impact of Accounting Treatment
We have generally considered the accounting treatment of various forms of awards in determining the components of our
overall compensation program. We have generally sought to grant stock-settled equity awards to executives, which receive
fixed accounting treatment, as opposed to cash-settled equity awards, which receive variable accounting treatment. We intend to continue to evaluate these factors in the future.
EXECUTIVE
COMPENSATION
The following table shows information concerning the annual compensation for services to the Company and its subsidiaries in all capacities
of the CEO, CFO and the other Named Executive Officers during the last completed fiscal year. The footnotes accompanying the 2016 Summary Compensation Table generally explain amounts reported for 2016, unless otherwise noted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 Summary Compensation Table
|
|
|
Name and
Principal Position
(a)
|
|
Year
(b)
|
|
|
Salary
(c)
|
|
|
Bonus
(d)
|
|
|
Stock
Awards
(1)
(e)
|
|
|
Option
Awards
(f)
|
|
|
Non-Equity
Incentive
Plan
Compensation
(2)
(g)
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
(3)
(h)
|
|
|
All
Other
Compensation
(4)
(i)
|
|
|
Total
Compensation
(j)
|
|
|
Matthew J. Simoncini,
|
|
|
2016
|
|
|
$
|
1,354,500
|
|
|
$
|
—
|
|
|
$
|
8,524,711
|
|
|
$
|
—
|
|
|
$
|
3,810,240
|
|
|
$
|
27,427
|
|
|
$
|
726,657
|
|
|
$
|
14,443,535
|
|
|
President and Chief
|
|
|
2015
|
|
|
$
|
1,306,125
|
|
|
$
|
—
|
|
|
$
|
8,149,840
|
|
|
$
|
—
|
|
|
$
|
3,487,680
|
|
|
$
|
—
|
|
|
$
|
668,748
|
|
|
$
|
13,612,393
|
|
|
Executive Officer
|
|
|
2014
|
|
|
$
|
1,290,000
|
|
|
$
|
—
|
|
|
$
|
7,099,775
|
|
|
$
|
—
|
|
|
$
|
3,150,000
|
|
|
$
|
80,217
|
|
|
$
|
554,451
|
|
|
$
|
12,174,443
|
|
|
Jeffrey H. Vanneste,
|
|
|
2016
|
|
|
$
|
787,437
|
|
|
$
|
—
|
|
|
$
|
2,218,859
|
|
|
$
|
—
|
|
|
$
|
1,164,240
|
|
|
$
|
59,150
|
|
|
$
|
267,917
|
|
|
$
|
4,497,603
|
|
|
Senior Vice President and
|
|
|
2015
|
|
|
$
|
741,750
|
|
|
$
|
—
|
|
|
$
|
2,110,796
|
|
|
$
|
—
|
|
|
$
|
996,480
|
|
|
$
|
—
|
|
|
$
|
254,392
|
|
|
$
|
4,103,418
|
|
|
Chief Financial Officer
|
|
|
2014
|
|
|
$
|
708,268
|
|
|
$
|
—
|
|
|
$
|
1,937,944
|
|
|
$
|
—
|
|
|
$
|
952,000
|
|
|
$
|
168,628
|
|
|
$
|
230,994
|
|
|
$
|
3,997,834
|
|
|
Raymond E. Scott,
|
|
|
2016
|
|
|
$
|
855,098
|
|
|
$
|
—
|
|
|
$
|
2,422,618
|
|
|
$
|
—
|
|
|
$
|
1,202,705
|
|
|
$
|
91,341
|
|
|
$
|
292,048
|
|
|
$
|
4,863,810
|
|
|
Executive Vice President
|
|
|
2015
|
|
|
$
|
834,942
|
|
|
$
|
—
|
|
|
$
|
2,355,154
|
|
|
$
|
—
|
|
|
$
|
1,100,889
|
|
|
$
|
—
|
|
|
$
|
285,684
|
|
|
$
|
4,576,669
|
|
|
and President, Seating
|
|
|
2014
|
|
|
$
|
828,223
|
|
|
$
|
—
|
|
|
$
|
2,280,005
|
|
|
$
|
—
|
|
|
$
|
1,078,616
|
|
|
$
|
293,910
|
|
|
$
|
271,112
|
|
|
$
|
4,751,866
|
|
|
Terrence B. Larkin
|
|
|
2016
|
|
|
$
|
855,098
|
|
|
$
|
—
|
|
|
$
|
2,422,618
|
|
|
$
|
—
|
|
|
$
|
1,202,705
|
|
|
$
|
—
|
|
|
$
|
266,911
|
|
|
$
|
4,747,332
|
|
|
Executive Vice President,
|
|
|
2015
|
|
|
$
|
834,942
|
|
|
$
|
—
|
|
|
$
|
2,355,154
|
|
|
$
|
—
|
|
|
$
|
1,100,889
|
|
|
$
|
—
|
|
|
$
|
261,183
|
|
|
$
|
4,552,168
|
|
|
Business Development,
General Counsel and
Corporate
Secretary
|
|
|
2014
|
|
|
$
|
828,223
|
|
|
$
|
—
|
|
|
$
|
2,280,005
|
|
|
$
|
—
|
|
|
$
|
1,078,616
|
|
|
$
|
—
|
|
|
$
|
248,673
|
|
|
$
|
4,435,517
|
|
|
Frank C. Orsini,
|
|
|
2016
|
|
|
$
|
736,375
|
|
|
$
|
—
|
|
|
$
|
2,024,162
|
|
|
$
|
—
|
|
|
$
|
1,035,720
|
|
|
$
|
42,188
|
|
|
$
|
225,545
|
|
|
$
|
4,063,990
|
|
|
Senior Vice President, and
|
|
|
2015
|
|
|
$
|
708,156
|
|
|
$
|
—
|
|
|
$
|
1,929,740
|
|
|
$
|
—
|
|
|
$
|
948,040
|
|
|
$
|
—
|
|
|
$
|
216,600
|
|
|
$
|
3,802,536
|
|
|
President,
E-Systems
|
|
|
2014
|
|
|
$
|
683,073
|
|
|
$
|
—
|
|
|
$
|
1,807,292
|
|
|
$
|
—
|
|
|
$
|
910,000
|
|
|
$
|
111,859
|
|
|
$
|
160,844
|
|
|
$
|
3,673,068
|
|
|
(1)
|
The amounts reported in this column for each officer reflect the aggregate grant date fair value of Career Share RSUs, RSUs and Performance Shares under the LTSIP
granted in the year determined in accordance with ASC 718, which grant date fair values are shown by award type below. There can be no assurance that these values will ever be realized. See Note 10, “Stock-Based Compensation,” to the
consolidated financial statements included in our 2016 Annual Report on Form
10-K
for the assumptions made in determining these values. The maximum potential value of the 2016 Performance Share awards as of
the grant date is also shown below, based on the grant date value of our common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
RSU Career
Share Grant
Date Value
|
|
|
2016-2018
RSU Grant
Date Value
|
|
|
Performance
Shares Grant
Date Value
|
|
|
Total Grant
Date
Value
|
|
|
Performance
Shares at
Maximum
Value
|
|
|
Matthew J. Simoncini
|
|
$
|
649,953
|
|
|
$
|
1,968,659
|
|
|
$
|
5,906,099
|
|
|
$
|
8,524,711
|
|
|
$
|
11,812,198
|
|
|
Jeffrey H. Vanneste
|
|
$
|
274,946
|
|
|
$
|
485,978
|
|
|
$
|
1,457,935
|
|
|
$
|
2,218,859
|
|
|
$
|
2,915,871
|
|
|
Raymond E. Scott
|
|
$
|
274,946
|
|
|
$
|
536,918
|
|
|
$
|
1,610,754
|
|
|
$
|
2,422,618
|
|
|
$
|
3,221,508
|
|
|
Terrence B. Larkin
|
|
$
|
274,946
|
|
|
$
|
536,918
|
|
|
$
|
1,610,754
|
|
|
$
|
2,422,618
|
|
|
$
|
3,221,508
|
|
|
Frank C. Orsini
|
|
$
|
174,885
|
|
|
$
|
462,319
|
|
|
$
|
1,386,958
|
|
|
$
|
2,024,162
|
|
|
$
|
2,773,916
|
|
|
(2
)
|
Amounts in column (g) for 2016 represent the amounts earned under the AIP.
|
|
(3)
|
Represents the aggregate change in actuarial present value of the Named Executive Officer’s accumulated benefit under all defined benefit and actuarial pension plans (including supplemental plans), all of which
have been frozen since December 31, 2006.
|
|
|
|
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
41
|
|
(4)
|
The amount shown in column (i) includes for each Named Executive Officer:
|
|
|
•
|
|
matching contributions allocated by the Company to each of the Named Executive Officers pursuant to the Retirement Savings Plan, Company contributions under the Pension Savings Plan (described below) and contributions
to the Lear Corporation Salaried Retirement Restoration Program as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Pension Savings
Plan Qualified
Contribution
|
|
|
Salaried Retirement
Restoration Program
Nonqualified Contribution
|
|
|
Retirement Savings
Plan Qualified
Matching Contribution
|
|
|
Retirement Savings
Plan Nonqualified
Matching Contribution
|
|
|
Matthew J. Simoncini
|
|
$
|
23,678
|
|
|
$
|
480,604
|
|
|
$
|
11,323
|
|
|
$
|
206,576
|
|
|
Jeffrey H. Vanneste
|
|
$
|
23,678
|
|
|
$
|
159,486
|
|
|
$
|
11,323
|
|
|
$
|
68,954
|
|
|
Raymond E. Scott
|
|
$
|
23,678
|
|
|
$
|
177,554
|
|
|
$
|
11,323
|
|
|
$
|
76,697
|
|
|
Terrence B. Larkin
|
|
$
|
20,295
|
|
|
$
|
152,189
|
|
|
$
|
11,925
|
|
|
$
|
76,094
|
|
|
Frank C. Orsini
|
|
$
|
20,295
|
|
|
$
|
127,747
|
|
|
$
|
11,925
|
|
|
$
|
63,874
|
|
|
|
•
|
|
imputed income with respect to life insurance coverage in the following amounts: Mr. Simoncini, $3,612; Mr. Vanneste, $3,612; Mr. Scott, $1,932; Mr. Larkin, $5,544; and Mr. Orsini, $840.
|
|
|
•
|
|
life insurance premiums paid by the Company, including $864 in premiums for each of Messrs. Simoncini, Vanneste, Scott, Larkin and Orsini.
|
Employment Agreements
We have entered into employment agreements with each of our Named Executive Officers. Each employment agreement specifies
the annual base salary for the executive, which may be increased at the discretion of the Compensation Committee. In addition, the employment agreements specify that the executives are eligible for an annual incentive compensation bonus and
participation in the Company’s long-term incentive plan. Under the terms of the employment agreements, each Named Executive Officer is also eligible to participate in the welfare, retirement and other benefit plans, practices, policies and
programs, as may be in effect from
time to time, for senior executives of the Company generally. Under the employment agreements, if the Company reduces an executive’s base salary, adversely changes the manner of computing an
executive’s incentive compensation opportunity, defers payment of his compensation or eliminates or substantially modifies his benefits, the executive would have a basis to invoke his rights under the agreement for termination for good reason.
For a description of the severance provisions of the employment agreements, see “— Potential Payments upon Termination or Change in Control.”
Lear Corporation
Salaried Retirement Program
The Lear Corporation Salaried Retirement Program (“Retirement Program”) is comprised of two components:
(i) the Retirement Savings Plan (deferral and match) and (ii) the Pension Savings Plan. We established the Retirement Program pursuant to Section 401(a) of the Internal Revenue Code for eligible employees who have completed one month
of service. Under the Retirement Savings Plan, each eligible employee may elect to contribute, on a
pre-tax
basis, a portion of his eligible compensation in each year. The Company provides a matching
contribution of 100% of an employee’s contribution up to the first 3% of the employee’s eligible compensation, plus 50% of an employee’s contribution up to the next 3% of the employee’s eligible compensation, regardless of
service. In addition, the Retirement Savings Plan allows for discretionary Company matching contributions. Company matching contributions are initially invested in accordance with the Participant’s deferral contributions and can be transferred
by the participant to other funds under the Retirement Savings Plan at any time. Company matching
contributions generally become vested under the Retirement Savings Plan at a rate of 20% for each full year of service.
Under the Pension Savings Plan, we make contributions to each eligible employee’s Pension Savings Plan account based on the employee’s “points,” which
are the sum total of the employee’s age and years of service as of January 1 of the plan year. Based on an employee’s points, we contribute: (i) from 3% to 8% of eligible compensation up to the Social Security Taxable Wage Base
and (ii) from 4.5% to 12% of eligible compensation over the Social Security Taxable Wage Base. All Pension Savings Plan contributions are generally determined as of the last day of each month, provided, generally, that the employee is actively
employed on such date, and are allocated monthly. Contributions generally become vested under the Pension Savings Plan at a rate of 20% for each full year of service.
|
|
|
2016 Grants of Plan-Based Awards
|
The following table discloses the grants of plan-based awards to our Named Executive Officers in 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Type of
Award
|
|
Grant
Date (b)
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive Plan
Awards
(1)
|
|
|
Estimated Future Payouts
Under Equity Incentive Plan Awards
|
|
|
All
Other
Stock
Awards:
Number of
Shares
of
Stock
or Units
(i)(#)
|
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
(2)
(l)
|
|
|
|
|
|
Threshold
(c)
|
|
|
Target
(d)
|
|
|
Maximum
(e)
|
|
|
Threshold
(f)(#)
|
|
|
Target
(g)(#)
|
|
|
Maximum
(h)(#)
|
|
|
|
|
Matthew J. Simoncini
|
|
Annual Incentive Award
|
|
|
|
|
|
$
|
1,008,000
|
|
|
$
|
2,016,000
|
|
|
$
|
4,032,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Award
(3)
|
|
|
1/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,464
|
|
|
|
48,928
|
|
|
|
97,856
|
|
|
|
|
|
|
$
|
5,906,099
|
|
|
|
|
RSU Award
(4)
|
|
|
1/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,309
|
|
|
$
|
1,968,659
|
|
|
|
|
RSU Award (Career Shares)
(5)
|
|
|
11/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,151
|
|
|
$
|
649,953
|
|
|
Jeffrey H. Vanneste
|
|
Annual Incentive Award
|
|
|
|
|
|
$
|
308,000
|
|
|
$
|
616,000
|
|
|
$
|
1,232,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Award
(3)
|
|
|
1/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,039
|
|
|
|
12,078
|
|
|
|
24,156
|
|
|
|
|
|
|
$
|
1,457,935
|
|
|
|
|
RSU Award
(4)
|
|
|
1/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,026
|
|
|
$
|
485,978
|
|
|
|
|
RSU Award (Career Shares)
(5)
|
|
|
11/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,179
|
|
|
$
|
274,946
|
|
|
Raymond E. Scott
|
|
Annual Incentive Award
|
|
|
|
|
|
$
|
318,176
|
|
|
$
|
636,352
|
|
|
$
|
1,272,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Award
(3)
|
|
|
1/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,672
|
|
|
|
13,344
|
|
|
|
26,688
|
|
|
|
|
|
|
$
|
1,610,754
|
|
|
|
|
RSU Award
(4)
|
|
|
1/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,448
|
|
|
$
|
536,918
|
|
|
|
|
RSU Award (Career Shares)
(5)
|
|
|
11/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,179
|
|
|
$
|
274,946
|
|
|
Terrence B. Larkin
|
|
Annual Incentive Award
|
|
|
|
|
|
$
|
318,176
|
|
|
$
|
636,352
|
|
|
$
|
1,272,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Award
(3)
|
|
|
1/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,672
|
|
|
|
13,344
|
|
|
|
26,688
|
|
|
|
|
|
|
$
|
1,610,754
|
|
|
|
|
RSU Award
(4)
|
|
|
1/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,448
|
|
|
$
|
536,918
|
|
|
|
|
RSU Award (Career Shares)
(5)
|
|
|
11/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,179
|
|
|
$
|
274,946
|
|
|
Frank C. Orsini
|
|
Annual Incentive Award
|
|
|
|
|
|
$
|
274,000
|
|
|
$
|
548,000
|
|
|
$
|
1,096,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Award
(3)
|
|
|
1/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,745
|
|
|
|
11,490
|
|
|
|
22,980
|
|
|
|
|
|
|
$
|
1,386,958
|
|
|
|
|
RSU Award
(4)
|
|
|
1/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,830
|
|
|
$
|
462,319
|
|
|
|
|
RSU Award (Career Shares)
(5)
|
|
|
11/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,386
|
|
|
$
|
174,885
|
|
|
(1)
|
For the Annual Incentive Award, the threshold, target and maximum amounts represent 50%, 100% and 200%, respectively, of the total bonus opportunity for each Named Executive Officer. If actual performance falls between
threshold and maximum, the award would be calculated using linear interpolation. For the Annual Incentive Award, the target bonus opportunity for the Named Executive Officers was also based on a percentage of base salary, which is 160% for
Mr. Simoncini and 80% for Messrs. Vanneste, Scott, Larkin and Orsini.
|
|
(2)
|
See Note 10, “Stock-Based Compensation,” to the Company’s consolidated financial statements included in our 2016 Annual Report on Form
10-K
for the assumptions made in determining values.
|
|
(3)
|
Payment of each Performance Share award is contingent on the Company attaining certain levels of Adjusted ROIC and Cumulative Adjusted
Pre-Tax
Income performance in the 2016-2018
performance period.
Two-thirds
of each Performance Share award can be earned based on Adjusted ROIC performance and
one-third
can be earned based on Cumulative Adjusted
Pre-Tax
Income performance. If threshold, target or maximum performance goals are attained in the performance period, 50%, 100% or 200% of the target amount, respectively, may be earned. If actual performance falls
between threshold and maximum, the award would be calculated using linear interpolation.
|
|
(4)
|
The RSUs vest and are paid in shares of Lear common stock on the third anniversary of the grant date.
|
|
(5)
|
See “— Career Shares” below for an explanation regarding the vesting and distribution of the Career Shares.
|
|
|
|
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
43
|
Annual Incentives
A summary description of the Company’s AIP is set forth above under the heading “Compensation Discussion and
Analysis — Elements of Compensation — Annual Incentives.”
Performance Shares
The Performance Share awards were granted pursuant to the LTSIP. Payment of each Performance Share award is contingent on
the Company attaining certain levels of Adjusted ROIC and Cumulative Adjusted
Pre-Tax
Income in the 2016-2018 performance period.
Two-thirds
of each Performance Share
award can be earned based on Adjusted ROIC performance and
one-third
can be earned based on Cumulative Adjusted
Pre-Tax
Income performance. If threshold, target or
maximum performance goals are attained in a performance period, 50%, 100% or 200% of the target amount, respectively, may be earned. If actual performance falls between threshold and maximum, the award would be
calculated using linear interpolation. For a description of the effect of a termination of employment or a change in control on the vesting of Performance Shares, please see “Executive
Compensation — Potential Payments Upon Termination or Change in Control.”
Dividend equivalents are credited with respect to Performance Shares at the
same time as dividends are paid on the Company’s common stock; however, the dollar amount of these dividend equivalents is not paid unless and until the performance goals are met with respect to the underlying Performance Shares.
Restricted Stock
Units
The RSU awards were granted pursuant to the LTSIP. A summary description of the LTSIP is set forth above under the heading
“Compensation Discussion and Analysis — Elements of Compensation — Long-Term Incentives.”
Provided that the Company achieves positive adjusted
net income in the fiscal year in which the award is granted, the RSUs vest and settle in shares of common stock on the third anniversary of the grant date during the executive’s continuing employment. Positive adjusted net income is the
Company’s net income excluding the impact of restructuring and other
special items provided in the LTSIP. For a description of the effect of a termination of employment or a change in control on the vesting of RSUs, please see “Executive
Compensation — Potential Payments Upon Termination or Change in Control.”
Dividend equivalents are accrued with respect to RSUs at the same time as
dividends are paid on the Company’s common stock. However, the dollar amount of these dividend equivalents is not paid unless and until the underlying RSUs vest and are paid.
Career Shares
As shown in the table above, the Company granted “Career Shares” pursuant to the LTSIP to certain executives in
2016, including each of the Named Executive Officers.
In general, the underlying shares of common stock for the vested Career Share RSUs are not distributed until
the later of (i) age 62 or (ii) the vesting date. If the executive terminates due to a Career Share “qualifying retirement” (
i.e.
, voluntary termination at or after age 62 or the date that the executive attains a combined
number of age and years of service of 65, with a minimum age of 55 and minimum service of five years), the underlying shares of common stock for the vested RSUs
are not distributed until the earlier of (i) age 62 (or such later vesting date) or (ii) three years after the executive’s qualifying retirement. If the executive has attained a
combined number of age and years of service of at least 65, with a minimum age of 55 and minimum service of five years, or the executive is terminated without “cause” or resigns for “good reason,” in each case after the first
anniversary of the grant date, the underlying shares of common stock for the vested RSUs are not distributed until the earlier of (i) age 62 (or such later vesting date) or (ii) three years after the executive’s termination of
employment.
|
|
|
2016 Outstanding Equity Awards At Fiscal
Year-End
|
The following table shows outstanding equity awards as of December 31, 2016, for each Named Executive Officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Name(a)
|
|
Number of
Shares or
Units of Stock
That
Have
Not Vested
(1)
(g)
|
|
|
Market Value
of Shares or
Units of
Stock
That Have Not
Vested
(2)
(h)
|
|
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights that
have Not
Vested
(3)
(i)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
that
have
Not Vested
(3)
(j)
|
|
|
Matthew J. Simoncini
|
|
|
73,520
|
|
|
$
|
9,887,554
|
|
|
|
212,768
|
|
|
$
|
28,543,455
|
|
|
Jeffrey H. Vanneste
|
|
|
21,118
|
|
|
$
|
2,838,534
|
|
|
|
52,285
|
|
|
$
|
7,014,070
|
|
|
Raymond E. Scott
|
|
|
23,324
|
|
|
$
|
3,136,103
|
|
|
|
58,560
|
|
|
$
|
7,856,253
|
|
|
Terrence B. Larkin
|
|
|
23,324
|
|
|
$
|
3,136,103
|
|
|
|
58,560
|
|
|
$
|
7,856,253
|
|
|
Frank C. Orsini
|
|
|
18,097
|
|
|
$
|
2,433,872
|
|
|
|
49,869
|
|
|
$
|
6,690,025
|
|
|
(1)
|
The figures in column (g) represent the following RSU awards granted under the LTSIP (the Career Shares are subject to later payment as discussed above):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
2014 RSUs
Vested
February 6,
2017
|
|
|
Number of
2015 RSUs
Vesting
January 2,
2018
|
|
|
Number of
2016 RSUs
Vesting
January 4,
2019
|
|
|
Number of 2014
Career Shares
Vesting
November 19,
2017
|
|
|
Number of 2015
Career Shares
Vesting
November 18,
2018
|
|
|
Number of 2016
Career Shares
Vesting
November 16,
2019
|
|
|
Matthew J. Simoncini
|
|
|
22,381
|
|
|
|
19,152
|
|
|
|
16,309
|
|
|
|
5,287
|
|
|
|
5,240
|
|
|
|
5,151
|
|
|
Jeffrey H. Vanneste
|
|
|
5,894
|
|
|
|
4,688
|
|
|
|
4,026
|
|
|
|
2,114
|
|
|
|
2,217
|
|
|
|
2,179
|
|
|
Raymond E. Scott
|
|
|
7,054
|
|
|
|
5,312
|
|
|
|
4,448
|
|
|
|
2,114
|
|
|
|
2,217
|
|
|
|
2,179
|
|
|
Terrence B. Larkin
|
|
|
7,054
|
|
|
|
5,312
|
|
|
|
4,448
|
|
|
|
2,114
|
|
|
|
2,217
|
|
|
|
2,179
|
|
|
Frank C. Orsini
|
|
|
5,722
|
|
|
|
4,481
|
|
|
|
3,830
|
|
|
|
1,268
|
|
|
|
1,410
|
|
|
|
1,386
|
|
|
(2)
|
The total values in column (h) equal the total number of RSUs held by each Named Executive Officer multiplied by the market price of Company common stock at the close of the last trading day in 2016, which was
$132.37 per share, plus the following accrued dividend equivalents and interest at the prime rate (which are paid if and when the underlying RSUs vest and are paid):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 RSU
Dividend
Equivalents
|
|
|
2015 RSU
Dividend
Equivalents
|
|
|
2016 RSU
Dividend
Equivalents
|
|
|
2014 Career
Shares
Dividend
Equivalents
|
|
|
2015 Career
Shares
Dividend
Equivalents
|
|
|
2016 Career
Shares
Dividend
Equivalents
|
|
|
Total
Dividend
Equivalents
|
|
|
Matthew J. Simoncini
|
|
$
|
70,102
|
|
|
$
|
43,387
|
|
|
$
|
19,839
|
|
|
$
|
13,108
|
|
|
$
|
7,731
|
|
|
$
|
1,545
|
|
|
$
|
155,712
|
|
|
Jeffrey H. Vanneste
|
|
$
|
18,461
|
|
|
$
|
10,620
|
|
|
$
|
4,897
|
|
|
$
|
5,241
|
|
|
$
|
3,271
|
|
|
$
|
654
|
|
|
$
|
43,144
|
|
|
Raymond E. Scott
|
|
$
|
22,094
|
|
|
$
|
12,034
|
|
|
$
|
5,411
|
|
|
$
|
5,241
|
|
|
$
|
3,271
|
|
|
$
|
654
|
|
|
$
|
48,705
|
|
|
Terrence B. Larkin
|
|
$
|
22,094
|
|
|
$
|
12,034
|
|
|
$
|
5,411
|
|
|
$
|
5,241
|
|
|
$
|
3,271
|
|
|
$
|
654
|
|
|
$
|
48,705
|
|
|
Frank C. Orsini
|
|
$
|
17,922
|
|
|
$
|
10,151
|
|
|
$
|
4,659
|
|
|
$
|
3,144
|
|
|
$
|
2,080
|
|
|
$
|
416
|
|
|
$
|
38,372
|
|
|
|
|
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
45
|
|
(3)
|
The total amounts and values in columns (i) and (j) equal the total number of Performance Shares, at the maximum level, held by each Named Executive Officer multiplied by the market price of Company common stock at
the close of the last trading day in 2016, which was $132.37 per share. These amounts exclude the Performance Shares for the 2014-2016 performance period that vested based on performance through December 31, 2016 and are reported in the
“2016 Option Exercises and Stock Vested” table. In calculating the number of Performance Shares and their value, we are required by SEC rules to compare our performance through 2016 under the Performance Share grant against the threshold,
target and maximum performance levels for the grant and report in these columns the applicable potential share number and payout amount. If the performance is between levels, we are required to report the potential payout at the next highest level.
For example, if performance through the previous year exceeded target, even by only a modest amount, and even if it is unlikely that we will achieve the results that would dictate the payment of the maximum amount, we are required by SEC rules to
report the maximum potential payouts. For the first year of the 2016-2018 performance period and through the second year of the 2015-2017 performance period, we exceeded target levels of Adjusted ROIC and Cumulative
Pre-Tax
Income (Cumulative Adjusted
Pre-Tax
Income for the first year of the 2016-2018 performance period) (on a combined,
pro-rated
basis) and have accordingly reported the following Performance Shares at the maximum award level for each of these two performance periods. Amounts also include the following accrued dividend
equivalents at the maximum level (which are not paid unless the performance goals are met with respect to the underlying Performance Shares):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of 2015
Performance
Shares
(Maximum)
|
|
|
Number of 2016
Performance
Shares
(Maximum)
|
|
|
2015 Performance
Share Dividend
Equivalents
(2015-2017 Awards)
|
|
|
2016 Performance
Share Dividend
Equivalents
(2016-2018 Awards)
|
|
|
Total
Dividend
Equivalents
|
|
|
Matthew J. Simoncini
|
|
|
114,912
|
|
|
|
97,856
|
|
|
$
|
260,319
|
|
|
$
|
119,036
|
|
|
$
|
379,355
|
|
|
Jeffrey H. Vanneste
|
|
|
28,129
|
|
|
|
24,156
|
|
|
$
|
63,721
|
|
|
$
|
29,384
|
|
|
$
|
93,105
|
|
|
Raymond E. Scott
|
|
|
31,872
|
|
|
|
26,688
|
|
|
$
|
72,202
|
|
|
$
|
32,464
|
|
|
$
|
104,666
|
|
|
Terrence B. Larkin
|
|
|
31,872
|
|
|
|
26,688
|
|
|
$
|
72,202
|
|
|
$
|
32,464
|
|
|
$
|
104,666
|
|
|
Frank C. Orsini
|
|
|
26,889
|
|
|
|
22,980
|
|
|
$
|
60,911
|
|
|
$
|
27,954
|
|
|
$
|
88,865
|
|
|
|
|
2016 Option Exercises and Stock Vested
|
The following table sets forth certain information regarding stock-based awards that vested during 2016 for our Named Executive Officers. No options are outstanding and
none were exercised in 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
Name(a)
|
|
Number of
Shares Acquired
on Vesting
(d)
(1)
|
|
|
Value
Realized on
Vesting (e)
(1)(2)
|
|
|
Matthew J. Simoncini
|
|
|
167,213
|
|
|
$
|
22,546,442
|
|
|
Jeffrey H. Vanneste
|
|
|
44,706
|
|
|
$
|
6,018,135
|
|
|
Raymond E. Scott
|
|
|
53,309
|
|
|
$
|
7,178,689
|
|
|
Terrence B. Larkin
|
|
|
53,309
|
|
|
$
|
7,178,689
|
|
|
Frank C. Orsini
|
|
|
41,958
|
|
|
$
|
5,682,130
|
|
|
(1)
|
Consists of 2013 RSU awards that vested on February 7, 2016, 2013 Career Shares that vested on November 13, 2016, and performance shares that vested based on performance during the three-year period ended
December 31, 2016 (which were paid in 2017), in the following amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
2013
RSU
Shares
Acquired on
Vesting
|
|
|
2013 RSU
Value
Realized
on
Vesting
|
|
|
Number of
2013
Career
Shares
Acquired
on
Vesting
|
|
|
2013
Career
Shares
Value
Realized
on
Vesting
|
|
|
Number of
2014
Performance
Shares
Acquired
On Vesting
(2014-2016
Awards)
|
|
|
2014
Performance
Share
Value
Realized on
Vesting
(2014-2016
Awards)
|
|
|
Total
RSU, Career
Share and
Performance
Share Value
|
|
|
Matthew J. Simoncini
|
|
|
31,317
|
|
|
$
|
3,087,543
|
|
|
|
6,309
|
|
|
$
|
751,086
|
|
|
|
129,587
|
|
|
$
|
18,200,494
|
|
|
$
|
22,039,123
|
|
|
Jeffrey H. Vanneste
|
|
|
8,309
|
|
|
$
|
819,184
|
|
|
|
2,271
|
|
|
$
|
270,363
|
|
|
|
34,126
|
|
|
$
|
4,792,997
|
|
|
$
|
5,882,544
|
|
|
Raymond E. Scott
|
|
|
9,944
|
|
|
$
|
980,379
|
|
|
|
2,523
|
|
|
$
|
300,363
|
|
|
|
40,842
|
|
|
$
|
5,736,259
|
|
|
$
|
7,017,001
|
|
|
Terrence B. Larkin
|
|
|
9,944
|
|
|
$
|
980,379
|
|
|
|
2,523
|
|
|
$
|
300,363
|
|
|
|
40,842
|
|
|
$
|
5,736,259
|
|
|
$
|
7,017,001
|
|
|
Frank C. Orsini
|
|
|
7,312
|
|
|
$
|
720,890
|
|
|
|
1,514
|
|
|
$
|
180,242
|
|
|
|
33,132
|
|
|
$
|
4,653,389
|
|
|
$
|
5,554,521
|
|
|
(2)
|
Includes dividend equivalent payments, including interest, in the following amounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 RSU
Dividend
Equivalents
|
|
|
2013 Career Share
Dividend
Equivalents
|
|
|
2014 Performance
Share Dividend
Equivalents
(2014-2016 Awards)
|
|
|
Total
Dividend
Equivalent
Payments
|
|
|
Matthew J. Simoncini
|
|
$
|
81,192
|
|
|
$
|
18,943
|
|
|
$
|
407,184
|
|
|
$
|
507,319
|
|
|
Jeffrey H. Vanneste
|
|
$
|
21,542
|
|
|
$
|
6,819
|
|
|
$
|
107,230
|
|
|
$
|
135,591
|
|
|
Raymond E. Scott
|
|
$
|
25,781
|
|
|
$
|
7,575
|
|
|
$
|
128,332
|
|
|
$
|
161,688
|
|
|
Terrence B. Larkin
|
|
$
|
25,781
|
|
|
$
|
7,575
|
|
|
$
|
128,332
|
|
|
$
|
161,688
|
|
|
Frank C. Orsini
|
|
$
|
18,957
|
|
|
$
|
4,546
|
|
|
$
|
104,106
|
|
|
$
|
127,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name(a)
|
|
Plan Name(s)(b)
|
|
Number
of Years
Credited
Service
(c)
|
|
|
Number
of Years
of
Vesting
Service
(1)
|
|
|
Present
Value of
Accumulated
Benefit
(2)
(d)
|
|
|
Payments
During
Last Fiscal
Year(e)
|
|
|
Matthew J. Simoncini
|
|
Pension Plan
(tax-qualified
plan)
|
|
|
7.7
|
|
|
|
17.7
|
|
|
$
|
206,879
|
|
|
$
|
—
|
|
|
|
|
Pension Equalization Program
|
|
|
7.7
|
|
|
|
17.7
|
|
|
$
|
95,780
|
|
|
$
|
—
|
|
|
|
|
Salaried Retirement Restoration Program
|
|
|
7.7
|
|
|
|
17.7
|
|
|
$
|
107,043
|
|
|
$
|
—
|
|
|
Jeffrey H. Vanneste
(3)
|
|
Pension Plan
(tax-qualified
plan)
|
|
|
15.3
|
|
|
|
25.3
|
|
|
$
|
440,864
|
|
|
$
|
—
|
|
|
|
|
Pension Equalization Program
|
|
|
15.3
|
|
|
|
25.3
|
|
|
$
|
87,484
|
|
|
$
|
—
|
|
|
|
|
Salaried Retirement Restoration Program
|
|
|
15.3
|
|
|
|
25.3
|
|
|
$
|
376,764
|
|
|
$
|
—
|
|
|
Raymond E. Scott
|
|
Pension Plan
(tax-qualified
plan)
|
|
|
18.4
|
|
|
|
28.4
|
|
|
$
|
423,196
|
|
|
$
|
—
|
|
|
|
|
Pension Equalization Program
|
|
|
18.4
|
|
|
|
28.4
|
|
|
$
|
560,898
|
|
|
$
|
—
|
|
|
|
|
Salaried Retirement Restoration Program
|
|
|
18.4
|
|
|
|
28.4
|
|
|
$
|
363,704
|
|
|
$
|
—
|
|
|
Terrence B. Larkin
(4)
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank C. Orsini
|
|
Pension Plan
(tax-qualified
plan)
|
|
|
12.7
|
|
|
|
22.7
|
|
|
$
|
218,928
|
|
|
$
|
—
|
|
|
|
|
Pension Equalization Program
|
|
|
12.7
|
|
|
|
22.7
|
|
|
$
|
87,105
|
|
|
$
|
—
|
|
|
|
|
Salaried Retirement Restoration Program
|
|
|
12.7
|
|
|
|
22.7
|
|
|
$
|
111,422
|
|
|
$
|
—
|
|
|
(1)
|
The pension programs were frozen with respect to any new benefits as of December 31, 2006, but vesting service continues to accrue after such date towards vesting requirements. As a result of their vesting service
and/or age and service, all participating NEOs are vested in their pension benefits.
|
|
(2)
|
Present values determined using a December 31, 2016 measurement date and reflect benefits accrued based on service and pay earned through such date. Figures for
the
tax-qualified
pension plan are determined based on post-commencement valuation mortality
(RP-2014
with a modified
MP-2014
generational projection), commencement of benefits at age 65 and an assumed discount rate of 4.15% as of the measurement date. Figures for the Pension Equalization Program and the Salaried Retirement Restoration Program (collectively, the
“SERP”) are determined based on the mortality prescribed by Revenue Ruling
2001-62,
commencement of benefits at the later of age 60 and full vesting and an assumed discount rate of 3.25% as of the
measurement date. The assumed future SERP present value conversion rate for those not yet in payment is 2.86%.
|
|
(3)
|
Mr. Vanneste was credited with prior service for his past affiliation with the Company in accordance with plan provisions.
|
|
(4)
|
Mr. Larkin is not a participant in the Pension Plan, Pension Equalization Program or Salaried Retirement Restoration Program pension
make-up
account (“Pension
Make-Up
Account”).
|
|
|
|
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
47
|
Qualified Pension Plan
The Named Executive Officers (as well as other eligible employees), other than Mr. Larkin, participate in the Lear
Corporation Pension Plan (the “Pension Plan”), which was frozen with respect to any new benefits as of December 31, 2006. The Pension Plan is intended to be a qualified pension plan under the Internal Revenue Code, and its benefits
are integrated with Social Security benefits. In general, an eligible employee became a participant on July 1st or January 1st after completing one year of service (as defined in the plan). Benefits are funded by employer contributions
that are determined under accepted actuarial principles and the Internal Revenue Code. The Company may make contributions in excess of any minimum funding requirements when the Company believes it is financially advantageous to do so and based on
its other capital requirements and other considerations.
The Pension Plan contains multiple benefit formulas. Under the principal formula, which applies to all
applicable Named Executive Officers, pension benefits are based on a participant’s “final average pay,” which is the average of the participant’s compensation for the five calendar years in the last ten years of employment in
which the participant had his highest earnings. Compensation is generally defined under the plan to mean (i) all cash compensation reported for federal income tax purposes other than long-term incentive bonuses, and (ii) any elective
contributions that are not includable in gross income under Internal Revenue Code Section 125 or
401(k). A participant’s annual retirement benefit, payable as a life annuity at age 65, equals the greater of:
|
•
|
|
(a) 1.10% times final average annual earnings times years of credited service before 1997 (to a maximum of 35 years), plus (b) 1.00% times final average annual earnings times years of credited service after 1996
(with a maximum of 35 years reduced by years of credited service before 1997), plus (c) 0.65% times final average annual earnings in excess of covered compensation (as defined in IRS Notice
89-70)
times
years of credited service (with a maximum of 35 years); and
|
|
•
|
|
$360.00 times years of credited service.
|
Any employee who on December 31, 1996 was an active participant and age 50
or older earned benefits under the 1.10% formula for years of credited service through 2001.
Credited service under the Pension Plan includes all years of pension
service under the Lear Siegler Seating Corp. Pension Plan, and a participant’s retirement benefit under the Pension Plan is reduced by his benefit under the Lear Siegler Seating Corp. Pension Plan. The benefits under the Pension Plan become
vested once the participant accrues five years of vesting service under the plan. Service performed after December 31, 2006 will continue to count towards vesting credit even though no additional benefits will accrue under the plan after that
date.
Pension
Equalization Program
The Pension Equalization Program, which was frozen as to any new benefits as of December 31, 2006, provides benefits
in addition to the Pension Plan. The Pension Plan is subject to rules in the Internal Revenue Code that restrict the level of retirement income that can be provided to, and the amount of compensation that can be considered for, highly paid
executives under the Pension Plan. The Pension Equalization Program is intended to supplement the benefits under the Pension Plan for certain highly paid executives whose Pension Plan benefits are limited by those Internal Revenue Code limits. A
participant’s Pension Equalization Program benefit equals the difference between the executive’s actual vested accrued Pension Plan benefit and the Pension Plan benefit the executive would have accrued under the Company’s formula if
the Internal Revenue Code limits on considered cash compensation and total benefits did not apply. Highly compensated executives and other employees whose compensation exceeds the Internal Revenue Code limits for at least three years are eligible to
participate in the Pension Equalization Program. Each of the Named Executive
Officers other than Mr. Larkin participated in the Pension Equalization Program. The benefits under the Pension Equalization Program become vested once the participant has either
(i) attained age 55 and has 10 years of vesting service, attained age 65, or becomes eligible for disability retirement under the Pension Plan, or (ii) attained 20 years of vesting service. Vesting service will continue to accrue after
December 31, 2006.
On December 18, 2007, the Pension Equalization Program was amended to provide for its termination and the wind down of the
Company’s obligations pursuant thereto. All distributions will be completed within five years after the last participant vests or turns age 60, whichever is later. For an active participant who is eligible to receive benefits, amounts that
would otherwise be payable will be used to fund a third party annuity or other investment vehicle. In such event, the participant will not receive any cash payments until the participant retires or otherwise terminates employment with the Company.
Lear Corporation Salaried Retirement Restoration Program
We have established the Lear Corporation Salaried Retirement Restoration Program, which was previously named the Lear
Corporation PSP Excess Plan and before that, the Lear Corporation Executive Supplemental Savings Plan.
The Salaried Retirement Restoration Program has both defined
benefit and defined contribution elements. The defined benefit element has been quantified and described in the 2016 Pension Benefits table and in the narrative below. The 2016 Nonqualified Deferred Compensation table below identifies the
defined contribution components of the Salaried Retirement Restoration Program.
On November 14, 2012, the
Compensation Committee approved an amendment and restatement of the Lear Corporation Salaried Retirement Restoration Program. The amendment renamed the plan to its current name and, for eligible participants, reinstated, effective January 1,
2013,
non-qualified
elective deferrals of salary and annual incentive award/bonus and associated Company matching contributions into the plan.
Defined Benefit Element
The Salaried Retirement Restoration Program (through a Pension
Make-up
Account)
provides retirement benefits that would have been accrued through December 31, 2006 under the Pension Plan and/or the Pension Equalization Program if
the participant had not elected to defer compensation under the Salaried Retirement Restoration Program as from time to time was in effect.
Defined Contribution Element
In 2016, the defined contribution component of the Salaried Retirement Restoration Program generally provided a defined
contribution benefit of an amount that the participant would have received under the Pension Savings Plan but could not due to Internal Revenue Code limits applicable to the Pension Savings Plan as well as the opportunity to make deferrals of salary
and bonus, and to receive Company matching contributions above Internal Revenue Code limits. Participants generally become vested in excess Pension Savings Plan and Company matching contributions under the Salaried
Retirement Restoration Program after three years of vesting service. Distributions of the excess Pension Savings Plan contributions, deferral contributions and Company matching contributions are
made in a lump sum in the calendar year following the year of the participant’s termination of employment. Plan earnings under the excess Pension Savings Plan contributions, deferral contributions and Company matching contributions are
generally tied to rates of return on investments available under the qualified Retirement Program generally, as directed by plan participants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 Nonqualified Deferred Compensation
|
|
|
Name(a)
|
|
Plan Name
|
|
|
Executive
Contributions
in Last FY(b)
|
|
|
Company
Contributions
in Last FY
(1)
(c)
|
|
|
Aggregate
Earnings
in Last
FY(d)
(2)
|
|
|
Aggregate
Withdrawals/
Distributions(e)
(3)
|
|
|
Aggregate
Balance at
Last FYE(f)
(4)
|
|
|
Matthew J. Simoncini
|
|
|
Salaried Retirement
Restoration Program
|
|
|
$
|
290,531
|
|
|
$
|
687,180
|
|
|
$
|
513,517
|
|
|
$
|
—
|
|
|
$
|
4,600,023
|
|
|
|
|
|
Vested Career Shares
|
|
|
$
|
—
|
|
|
$
|
770,029
|
|
|
$
|
220,367
|
|
|
$
|
—
|
|
|
$
|
2,544,442
|
|
|
Jeffrey H. Vanneste
|
|
|
Salaried Retirement
Restoration Program
|
|
|
$
|
107,035
|
|
|
$
|
228,440
|
|
|
$
|
99,416
|
|
|
$
|
—
|
|
|
$
|
1,288,209
|
|
|
|
|
|
Vested Career Shares
|
|
|
$
|
—
|
|
|
$
|
277,182
|
|
|
$
|
73,951
|
|
|
$
|
—
|
|
|
$
|
848,388
|
|
|
Raymond E. Scott
|
|
|
Salaried Retirement
Restoration Program
|
|
|
$
|
117,359
|
|
|
$
|
254,251
|
|
|
$
|
156,593
|
|
|
$
|
—
|
|
|
$
|
2,304,495
|
|
|
|
|
|
Vested Career Shares
|
|
|
$
|
—
|
|
|
$
|
307,938
|
|
|
$
|
76,449
|
|
|
$
|
—
|
|
|
$
|
1,005,956
|
|
|
Terrence B. Larkin
|
|
|
Salaried Retirement
Restoration Program
|
|
|
$
|
117,359
|
|
|
$
|
228,283
|
|
|
$
|
142,661
|
|
|
$
|
—
|
|
|
$
|
2,034,949
|
|
|
|
|
|
Vested Career Shares
|
|
|
$
|
—
|
|
|
$
|
307,938
|
|
|
$
|
133,866
|
|
|
$
|
1,063,373
|
|
|
$
|
—
|
|
|
Frank C. Orsini
|
|
|
Salaried Retirement
Restoration Program
|
|
|
$
|
101,065
|
|
|
$
|
191,621
|
|
|
$
|
92,346
|
|
|
$
|
—
|
|
|
$
|
1,189,343
|
|
|
|
|
|
Vested Career Shares
|
|
|
$
|
—
|
|
|
$
|
184,788
|
|
|
$
|
45,872
|
|
|
$
|
—
|
|
|
$
|
603,601
|
|
|
(1)
|
Salaried Retirement Restoration Program amounts are included in column (i) of the 2016 Summary Compensation Table. For Vested Career Shares, amounts represent the value of the Vested Career Shares (and accrued
dividend equivalents) on November 13, 2016, the vesting date.
|
|
|
|
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
49
|
|
(2)
|
For Vested Career Shares, amounts represent accrued dividend equivalents plus stock price appreciation or depreciation.
|
|
(3)
|
For Mr. Larkin, the number in this column represents the value realized upon the delivery of shares of the Company’s common stock underlying the Vested Career Shares that had been considered vested in 2015 and
2016 due to Mr. Larkin turning age 62, based upon the closing price of the Company’s common stock on the date of delivery, December 11, 2016.
|
|
(4)
|
For Vested Career Shares, amounts reflect the closing price of the Company’s common stock on December 31, 2016, which was $132.37, and accrued dividend equivalents (see the 2016 Options Exercised and Stock
Vested table for more information).
|
Salaried Retirement Restoration Program
The defined contribution element of the Salaried Retirement Restoration Program is described in the narrative accompanying
the 2016 Pension Benefits table above and is
quantified in the 2016 Nonqualified Deferred Compensation table.
Vested Career Shares
We have included the Vested Career Shares in the 2016 Nonqualified Deferred Compensation table because they vested in a
previous year(s) but distribution of the underlying
shares of common stock is deferred, as described above in the narrative on the Career Shares program accompanying the 2016 Grants of Plan-Based Awards table.
Potential Payments Upon
Termination or Change in Control
The table below shows estimates of the compensation payable to each of our Named Executive Officers upon his termination of
employment with the Company. The amount each executive will actually receive depends on the circumstances surrounding his termination of employment. The amount payable is shown for each of six categories of termination triggers. All amounts are
calculated as if the executive terminated effective December 31, 2016. Values of accelerated equity awards are based on the closing price of
our common stock on December 31, 2016, which was $132.37. The actual amounts due to any one of the Named Executive Officers on his termination of employment can only be determined at the
time of his termination. There can be no assurance that a termination or change in control would produce the same or similar results as those described below if it occurs on any other date or at any other stock price, or if any assumption is not, in
fact, correct.
Accrued amounts under the Company’s pension and deferred compensation plans are not included in this table. For these amounts, see the 2016 Pension Benefits table
above and the 2016 Nonqualified Deferred Compensation table above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
and
Triggering
Event
|
|
Cash
Severance
(1)
|
|
|
Continuation
of
Medical/Welfare
Benefits (Present
Value)
(2)
|
|
|
Accelerated
Vesting or
Payout of
Equity
Awards
(3)
|
|
|
Total
Termination
Benefits
|
|
|
Matthew J. Simoncini
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• Involuntary Termination without Cause (or for Good Reason) With Change in Control
|
|
$
|
6,741,000
|
|
|
$
|
29,311
|
|
|
$
|
24,159,282
|
|
|
$
|
30,929,593
|
|
|
• Involuntary Termination without Cause (or for Good Reason)
|
|
$
|
6,741,000
|
|
|
$
|
29,311
|
|
|
$
|
16,539,905
|
|
|
$
|
23,310,216
|
|
|
• Retirement
(4)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,361,244
|
|
|
$
|
14,361,244
|
|
|
• Voluntary Termination (or Involuntary Termination for Cause)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
• Disability or Death
(5)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17,223,288
|
|
|
$
|
17,223,288
|
|
|
Jeffrey H. Vanneste
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• Involuntary Termination without Cause (or for Good Reason) With Change in Control
|
|
$
|
2,887,500
|
|
|
$
|
29,311
|
|
|
$
|
6,345,503
|
|
|
$
|
9,262,314
|
|
|
• Involuntary Termination without Cause (or for Good Reason)
|
|
$
|
2,887,500
|
|
|
$
|
29,311
|
|
|
$
|
4,349,606
|
|
|
$
|
7,266,417
|
|
|
• Retirement
(4)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,811,787
|
|
|
$
|
3,811,787
|
|
|
• Voluntary Termination (or Involuntary Termination for Cause)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
• Disability or Death
(5)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,638,694
|
|
|
$
|
4,638,694
|
|
|
Raymond E. Scott
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• Involuntary Termination without Cause (or for Good Reason) With Change in Control
|
|
$
|
2,982,900
|
|
|
$
|
26,057
|
|
|
$
|
7,064,228
|
|
|
$
|
10,073,185
|
|
|
• Involuntary Termination without Cause (or for Good Reason)
|
|
$
|
2,982,900
|
|
|
$
|
26,057
|
|
|
$
|
4,871,573
|
|
|
$
|
7,880,530
|
|
|
• Retirement
(4)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
• Voluntary Termination (or Involuntary Termination for Cause)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
• Disability or Death
(5)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,160,661
|
|
|
$
|
5,160,661
|
|
|
Terrence B. Larkin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• Involuntary Termination without Cause (or for Good Reason) With Change in Control
|
|
$
|
2,982,900
|
|
|
$
|
33,053
|
|
|
$
|
7,064,228
|
|
|
$
|
10,080,181
|
|
|
• Involuntary Termination without Cause (or for Good Reason)
|
|
$
|
2,982,900
|
|
|
$
|
33,053
|
|
|
$
|
4,871,573
|
|
|
$
|
7,887,526
|
|
|
• Retirement
(4)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,277,380
|
|
|
$
|
4,277,380
|
|
|
• Voluntary Termination (or Involuntary Termination for Cause)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
• Disability or Death
(5)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,160,661
|
|
|
$
|
5,160,661
|
|
|
Frank C. Orsini
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
• Involuntary Termination without Cause (or for Good Reason) With Change in Control
|
|
$
|
2,568,750
|
|
|
$
|
23,941
|
|
|
$
|
5,778,818
|
|
|
$
|
8,371,509
|
|
|
• Involuntary Termination without Cause (or for Good Reason)
|
|
$
|
2,568,750
|
|
|
$
|
23,941
|
|
|
$
|
3,968,231
|
|
|
$
|
6,560,922
|
|
|
• Retirement
(4)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
• Voluntary Termination (or Involuntary Termination for Cause)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
• Disability or Death
(5)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,152,112
|
|
|
$
|
4,152,112
|
|
|
(1)
|
Cash severance (in an amount equal to two times base salary plus target annual incentive bonus amount) is paid in a lump sum to each Named Executive Officer on the date that is six months after the date of termination
(other than Mr. Vanneste, who receives cash severance in installments over 24 months), consistent with the requirements of Section 409A of the Internal Revenue Code. In addition to the amounts shown in the table, the executive would receive any
accrued salary, bonus and all other amounts to which he is entitled under the terms of any compensation or benefit plans of the Company upon termination for any reason, and would receive a
pro-rated
bonus
based on actual performance in the event of termination without “cause” or for “good reason.”
|
|
(2)
|
Consists of continuation of health insurance, life insurance premium and imputed income amounts.
|
|
|
|
|
|
|
|
2017 Proxy Statement
|
|
|
|
|
51
|
|
(3)
|
Represents accelerated vesting of RSUs and accelerated or pro rata (as applicable) payout of Performance Shares (at target level) and any associated dividend equivalents with interest. Unvested Career Shares become
vested and the underlying shares are immediately distributed (along with those for vested Career Shares) upon the executive’s (i) death, (ii) disability or (iii) involuntary or “good reason” termination of employment within
24 months following a change in control. Payments under any of the plans of the Company that are determined to be deferred compensation subject to Section 409A of the Internal Revenue Code are delayed by six months to the extent required by such
provision. Accelerated and pro rata portions of the RSUs and performance shares are valued based on the December 31, 2016 closing price of the Company’s common stock.
|
|
(4)
|
As of December 31, 2016, Messrs. Simoncini, Vanneste and Larkin were retirement-eligible and, therefore, they qualify for accelerated vesting of certain incentive awards upon retirement. The Company does not
provide for enhanced early retirement benefits under its pension programs.
|
|
(5)
|
Messrs. Simoncini, Vanneste, Scott and Orsini are fully vested in their pension benefits, and, as such, there would be no pension vesting enhancement with respect to death benefits for them. Mr. Larkin is not a
participant in the Pension Plan and therefore is not eligible for such death benefit.
|
Payments and benefits to a Named Executive Officer upon termination or a change in control of the Company are determined
according to the terms of his employment agreement and equity or incentive awards and the Company’s compensation and incentive plans. The severance benefit payments set forth in the table and discussed below are
generally available to our executive officers, including the Named Executive Officers, who currently have employment agreements with the Company. The amounts due to an executive upon his
termination of employment depend largely on the circumstances of his termination, as described below.
Change in Control
The employment agreements do not provide benefits solely upon a change in control. The LTSIP provides for accelerated
vesting or payout of awards immediately upon a “change in control” (as defined in the LTSIP) only if the successor company does not agree to assume or replace such existing awards with an equivalent award upon the change in control.
Otherwise, awards will only receive accelerated vesting if a change in control occurs and the executive is terminated by the Company without “cause” (as defined in the LTSIP) or resigns
for “good reason” (as defined in the executive’s employment agreement, if applicable) within 24 months of such change in control.
Payments Made Upon Involuntary Termination (or
for “Good Reason”) with a Change in Control
If a change in control occurs and the Named Executive Officer is terminated by the Company without “cause” (as
defined in the LTSIP) or resigns for “good reason” (as defined in the Named Executive Officer’s employment agreement) within 24 months of such change in control, the Named Executive Officer will receive accelerated vesting with
respect to outstanding and unvested equity awards, as disclosed in the table above.
None of our Named Executive Officers is a party to an employment agreement
containing a provision which would
reimburse the executive for any excise taxes he becomes subject to under Section 4999 of the Internal Revenue Code upon a change in control. Instead, the employment agreements for each of
our Named Executive Officers contains a provision that reduces their change in control benefits below the level at which an excise tax is triggered, but only if the reduction results in greater
after-tax
proceeds to the executive.
Payments Made Upon Involuntary Termination (or
for “Good Reason”)
Upon termination of employment by the executive for “good reason” (as defined in the employment agreements) or by
the Company other than for “cause” or “incapacity” (each as defined in the employment agreement), the executive will receive base salary (at the higher of the rate in effect upon termination or the rate in effect 90 days prior to
termination) through the date of termination, plus all other amounts owed under any compensation or benefit plans, including a bonus
pro-rated
for the portion of the performance period occurring prior to the
date of termination. If the executive executes a
release relating to his employment, he will also receive a lump sum payment equal to two times the sum of his annual base salary rate and annual target bonus amount, each as in effect as of the
termination date. In the event of an involuntary termination for any reason other than cause, or by the executive for good reason, all unvested RSUs (other than Career Shares) become vested in their entirety upon termination and a pro rata amount of
Performance Shares may be earned through the termination date if actual performance during the performance period meets the
pre-established
performance requirements. In addition, executives would receive all dividend equivalents with interest
associated with the accelerated RSUs and any Performance Shares earned at the time of vesting.
Payments Made Upon Retirement
The employment agreements do not distinguish between retirement and voluntary termination for other reasons, but under the
LTSIP, an executive who retires with a combined number of age and years of service of at least 65, with a minimum age of 55 and minimum service of five years when he terminates, is entitled to additional vesting credit for RSU awards. The executive
will be entitled to receive the shares underlying the RSUs that would have vested if the date of
termination had been 24 months later than it actually occurred. A pro rata amount of Performance Shares may be earned through the retirement date if actual performance during the performance
period meets the
pre-established
performance requirements. In addition, executives would receive all dividend equivalents with interest associated with the accelerated RSUs and any Performance Shares earned at
the time of vesting.
Payments Made Upon Voluntary Termination (or
for “Cause”)
An executive who voluntarily resigns or whose employment is terminated by the Company for “cause” (as defined in
the employment agreement) will receive unpaid salary and benefits, if any, he has accrued through the effective date of his termination. If an executive terminates voluntarily and has not attained a combined number of age and years of service of at
least 65, with a minimum age of 55 and minimum service
of five years, he will be entitled to receive all of the shares underlying his vested RSUs and associated dividend equivalents with interest, but all unvested RSUs and Performance Shares and any
associated dividend equivalents with interest will be forfeited. If an executive is terminated for cause, he will forfeit all RSUs and Performance Shares along with any associated dividend equivalents with interest.
Payments Made Upon Termination for Disability
Following termination of the executive’s employment for disability, the executive will receive all base salary and
other accrued amounts then payable through the date of termination. He will also receive compensation payable under the Company’s disability and medical plans. In the event of the executive’s termination for disability, all unvested RSUs
become vested in their entirety upon termination and a pro
rata amount of Performance Shares may be earned through the termination date if actual performance during the performance period meets the
pre-established
performance requirements. In addition, executives would receive all dividend equivalents with interest associated with the accelerated RSUs and any Performance Shares earned at the time of distribution.
Treatment of Career Shares
All Career Shares (vested and unvested) are forfeited by the executive upon a voluntary termination by the executive prior
to the Career Share qualifying retirement date (
i.e.,
age 62 or the date that the executive attains a combined number of age and years of service of 65, with a minimum age of 55 and minimum service of five years) or for violating
non-competition
and
non-solicitation
covenants prior to distribution of the shares. If the executive has a Career Share qualifying retirement or is terminated without
“cause” or resigns for “good reason,” in each case within 24 months of the vesting date, the Career Shares will continue to vest as originally scheduled.
In general, the underlying shares of common stock for the vested Career Shares are not distributed until the later of (i) age 62 or (ii) the vesting date. If
the executive terminates due to a qualifying retirement, the underlying shares of common stock for the vested Career Shares are not distributed until the earlier of (i) age 62 (or such later vesting
date) or (ii) three years after the executive’s qualifying retirement. If the executive has attained a combined number of age and years of service of at least 65, with a minimum age of
55 and minimum service of five years, and the executive is terminated without “cause” or resigns for “good reason,” the underlying shares of common stock for the vested RSUs are not distributed until the earlier of (i) age
62 (or such later vesting date) or (ii) three years after the executive’s termination of employment.
Unvested Career Shares become vested and the
underlying shares are immediately distributed (along with those for vested Career Shares) upon the executive’s (i) death, (ii) disability or (iii) involuntary or “good reason” termination of employment within 24 months
following a change in control. The Career Shares do not automatically vest nor are the underlying shares distributed upon a change in control unless the successor company does not assume or replace the awards with awards of equivalent terms and
value.
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2017 Proxy Statement
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Payments Made Upon Death
Following the death of the executive, we will pay to his estate or designated beneficiary a pro rata portion of any bonus
earned prior to the date of death. In the event of the executive’s death, all unvested RSUs become vested in their entirety and a pro rata amount of Performance Shares may be earned through the date of death if actual performance during
the performance period meets the
pre-established
performance requirements. In addition, the estate or designated beneficiary would receive all dividend
equivalents with interest associated with the accelerated RSUs and any Performance Shares earned at the time of vesting.
Conditions and Obligations of the Executive
Each executive who has entered into an employment agreement with the Company is obligated to:
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comply with confidentiality,
non-competition
and
non-solicitation
covenants during employment;
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comply with
non-competition
and
non-solicitation
covenants for one year after the date of termination (extended to two years in the case of
termination upon disability, termination by the Company without “cause” or by the executive for “good reason”);
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in order to receive severance payments due under the employment agreement, sign a general release relating to
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his employment (applies only in the case of termination by the Company without “cause” or by the executive for “good reason”);
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return data and materials relating to the business of the Company in his possession;
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make himself reasonably available to the Company to respond to periodic requests for information regarding the Company or his employment; and
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cooperate with litigation matters or investigations as the Company deems necessary.
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Compensation and Risk
We have conducted a risk assessment of our employee compensation policies and practices, including our executive
compensation programs and metrics. The risk assessment was conducted by senior leaders of the Company, including representatives from finance, legal and human resources, and included a review of the employee compensation structures and pay
administration practices. The Compensation Committee and its independent compensation consultant reviewed and discussed the findings of the assessment and concluded that our employee compensation programs are designed with the appropriate balance of
risk and reward in relation to our overall business strategy and do not incent executives or other employees to take unnecessary or excessive risks. As a result, we believe that risks arising from our employee compensation policies and practices are
not reasonably likely to have a material adverse effect on the Company. In reaching these conclusions, we considered the attributes of all of our programs, including:
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The appropriate compensation mix between fixed (base salary) and variable (annual and long-term incentive) pay opportunities;
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A review of market data and competitive practices for elements of executive compensation;
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Performance measures that are tied to key Company short and long-term performance metrics and are correlated to total stockholder returns;
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The alignment of annual and long-term award objectives to ensure that both types of awards encourage consistent behaviors and sustainable performance results; and
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A balanced mix of four performance measures for incentive awards (Free Cash Flow, Adjusted Operating Income, Cumulative Adjusted
Pre-Tax
Income and Adjusted ROIC) that encourage
value creation, retention and stock price appreciation.
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We also reviewed our compensation programs for certain design features that may have the
potential to encourage excessive risk-taking, including: over-weighting towards annual incentives, highly leveraged payout curves, unreasonable performance thresholds and steep payout cliffs at certain performance levels that may encourage
short-term business decisions to meet payout thresholds. We concluded that our compensation programs do not include such elements.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The following persons
served on our Compensation Committee during all or a portion of 2016: Ms. Ligocki and Messrs. Capo, Mallett and Runkle. No member of the Compensation Committee was, during the fiscal year ended December 31, 2016, an officer, former officer
or employee of the Company or any of our subsidiaries. None of our executive officers served as a member of:
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the compensation committee of another entity in which one of the executive officers of such entity served on our Compensation Committee;
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the board of directors of another entity, one of whose executive officers served on our Compensation Committee; or
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the compensation committee of another entity in which one of the executive officers of such entity served as a member of our Board.
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2017 Proxy Statement
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