PROXY STATEMENT
Mailed on or about August 24, 2017
Annual Meeting of
Stockholders to be held on October 5, 2017
This Proxy Statement is furnished in connection with the solicitation of Proxies by the Board of Directors of RPM
International Inc. (the “Company” or “RPM”) to be used at the Annual Meeting of Stockholders of the Company to be held on October 5, 2017, and any adjournment or postponement thereof. The time, place and purposes of the
Annual Meeting are stated in the Notice of Annual Meeting of Stockholders which accompanies this Proxy Statement.
The accompanying Proxy is solicited by the Board of
Directors of the Company. All validly executed Proxies received by the Board of Directors of the Company pursuant to this solicitation will be voted at the Annual Meeting, and the directions contained in such Proxies will be followed in each
instance. If no directions are given, the Proxy will be voted (i) FOR the election of the four nominees listed on the Proxy, (ii) FOR Proposal Two relating to the advisory vote on executive compensation, (iii) on Proposal Three, for
future advisory votes on executive compensation to occur EVERY YEAR, and (iv) FOR ratifying the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending May 31, 2018.
Any person giving a Proxy pursuant to this solicitation may revoke it. A stockholder, without affecting any vote previously taken, may revoke a Proxy by giving
notice to the Company in writing, in open meeting or by a duly executed Proxy bearing a later date.
The expense of soliciting Proxies, including the cost of
preparing, assembling and mailing the Notice, Proxy Statement and Proxy, will be borne by the Company. The Company may pay persons holding shares for others their expenses for sending proxy materials to their principals. In addition to solicitation
of Proxies by mail, the Company’s Directors, officers and employees, without additional compensation, may solicit Proxies by telephone, electronic means and personal interview. Also, the Company has engaged a professional proxy solicitation
firm, Georgeson LLC, to assist it in soliciting proxies. The Company will pay a fee of approximately $10,500, plus expenses, to Georgeson LLC for these services.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on October 5, 2017: Proxy materials for the
Company’s Annual Meeting, including the 2017 Annual Report and this Proxy Statement, are now available over the Internet by accessing the Investor Information section of our website at www.rpminc.com.
To access the proxy materials over the
Internet or to request an additional printed copy, go to www.rpminc.com. You also can obtain a printed copy of this Proxy Statement, free of charge, by writing to: RPM International Inc., c/o Secretary, 2628 Pearl Road, P.O. Box 777, Medina, Ohio
44258.
1
This summary
highlights information contained elsewhere in this Proxy Statement and in the Company’s Annual Report on Form
10-K.
For more complete information about these topics, please review the Company’s
complete Proxy Statement and Annual Report on Form
10-K.
RPM International Inc.
RPM International Inc. owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services across three segments. The
Company’s industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and other construction chemicals. Industrial companies include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Euclid Chemical and
RPM Belgium Vandex. The Company’s consumer products are used by professionals and
do-it-yourselfers
for home maintenance and improvement and by hobbyists. Consumer
brands include Rust-Oleum, DAP, Zinsser, Varathane and Testors. The Company’s specialty products include industrial cleaners, colorants, exterior finishes, specialty OEM coatings, edible coatings, restoration services equipment and specialty
glazes for the pharmaceutical and food industries. Specialty segment companies include
Day-Glo,
Dryvit, RPM Wood Finishes, Mantrose-Haeuser, Legend Brands,
Kop-Coat
and
TCI.
The Company’s consolidated net sales, net income, and diluted earnings per share for the fiscal year ended May 31, 2017 were as follows:
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Consolidated net sales increased 3.0% to a record $4.96 billion in fiscal 2017 from $4.81 billion in fiscal 2016;
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Net income decreased 48.7% to $181.8 million in fiscal 2017 from $354.7 million in fiscal 2016 (adjusted net income* decreased 3.5% to $333.4 million in fiscal 2017 from $345.5 million in fiscal 2016); and
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Diluted earnings per share decreased 48.3% to $1.36 in fiscal 2017 from $2.63 in fiscal 2016 (adjusted earnings per share* decreased 3.9% to $2.47 in fiscal 2017 from $2.57 in fiscal 2016).
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Fiscal 2016 adjusted net income of $345.5 million and adjusted earnings per share of $2.57 exclude the reversal of contingent obligations for earnout targets that were not met at our Kirker reporting unit for $14.5
million ($9.2 million after-tax), with a $0.06 impact on diluted earnings per share. Fiscal 2017 adjusted net income of $333.4 million and adjusted earnings per share of $2.47 exclude (i) a charge of $12.3 million related to the Flowcrete decision
to exit the Middle East with a $0.09 impact on diluted earnings per share; (ii) a pretax charge of $188.3 million ($129.0 million after-tax) of goodwill and intangible asset impairment losses related to our Kirker reporting unit with a $0.94 impact
on diluted earnings per share; and (iii) the pretax impact of $15.0 million ($10.2 million after-tax) for severance charges incurred during the fourth quarter of fiscal 2017 pursuant to a plan to reduce future SG&A expense with a $0.08 impact on
diluted earnings per share. See our Annual Report to Stockholders, which can be found on our website at www.rpminc.com, for more information about these adjustments. The Compensation Committee considered our fiscal 2017 operating results, including
our adjusted net income and our adjusted earnings per share, in connection with its compensation decisions.
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Dividend
On October 6, 2016, the Board of Directors increased the quarterly dividend on shares of the Company’s Common Stock to $0.30 per share, an increase of 9.1% from
the prior year and the highest ever paid by the Company. With a
43-year
track record of a continuously increasing cash dividend, the Company is in an elite category of less than
one-half
of one percent of all publicly traded U.S. companies to have increased the dividend for this period of time or longer, according to the 2017 edition of the
Mergent Handbook of Dividend
Achievers
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During this timeframe, the Company has paid approximately $1.9 billion in cash dividends to its stockholders.
Corporate Transactions
The Company acquired ten companies with combined sales of more than $246 million during fiscal 2017 and early fiscal 2018:
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Tremco Group, in July 2016, acquired the assets of Duram Industries Pty Limited, an Australian manufacturer of commercial waterproofing products with annual net sales of $6 million.
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In July 2016, Applied Polymerics, Inc. & Marketing Associates, Inc. (API/MAI), a North Carolina-based manufacturer and supplier and installer of specialist construction products for use in major structures, was
acquired to be part of our RPM Performance Coatings Group’s Universal Sealants (U.K.) Limited (USL) business unit. API/MAI has annual net sales of $14 million.
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In September 2016, Specialty Polymer Coatings, Inc. (SPC), a Canadian manufacturer of high performance coatings for the global oil and gas pipeline market, was acquired to be part of our RPM Performance Coatings Group.
SPC has annual net sales of $26 million.
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PROXY STATEMENT SUMMARY
(CONTINUED)
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In November 2016, tremco illbruck acquired Adhere Industrial Tapes Ltd., a U.K.-based manufacturer of foam tapes for use in construction and industrial applications with annual net sales of $6 million.
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In January 2017, Arnette Polymers, LLC, a Missouri-based manufacturer and supplier of specialty chemical raw materials, was acquired to be part of our RPM Performance Coatings Group. Arnette Polymers has annual net
sales of $20 million.
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Prime Resins, a Georgia-based manufacturer of specialty chemicals and equipment for use in infrastructure construction and repair with annual net sales of $7 million, was acquired in January 2017 to be part of our
USL business unit.
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Prochem, an
Arizona-based
manufacturer of commercial carpet and floor cleaning equipment and chemicals with annual net sales of $22 million, was acquired by Legend Brands in
January 2017.
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In January 2017, we acquired Touch ‘n Foam, the foam division of Missouri-based Clayton Corporation, to be part of our DAP Group. Best known for its consumer spray-polyurethane foam brand Touch ‘n Foam and its
industrial brand Touch ‘n Seal, the foam division has annual net sales of $60 million.
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In February 2017, we acquired SPS Group, a Netherlands-based manufacturer of decorative and specialty coatings for maintenance and renovation applications, to be part of our Rust-Oleum European business. SPS Group has
annual net sales of $60 million.
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In July 2017, we acquired Key Resin Company, an Ohio-based manufacturer of polymer flooring and coating systems, to be one of our Euclid Group’s companies. Key Resins has annual net sales of $25 million.
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Stock Repurchase Program
On January 8, 2008, the Board
of Directors authorized a stock repurchase program under which the Company may repurchase shares of its Common Stock at management’s discretion for general corporate purposes. The Company may limit or terminate the stock repurchase program at
any time. During the fiscal year ended May 31, 2017, the Company did not purchase any shares of Common Stock under this program.
Corporate Governance
The Company is committed to meeting high standards of ethical behavior, corporate governance and business conduct. This commitment has led the Company to
implement the following practices:
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Board Independence
– eleven of twelve Directors and Director nominees are independent under the Company’s Corporate Governance Guidelines and NYSE listing standards. All members of the
Audit Committee, the Compensation Committee and the Governance and Nominating Committee are independent.
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Independent Directors Meetings
– independent Directors meet in executive sessions each year in January, April and July, without management present.
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Lead Director
– one independent Director serves as Lead Director.
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Majority Voting for Directors
– in an uncontested election, any nominee for Director who receives more votes “withheld” from his or her election than votes “for” such
election is expected to tender his or her resignation for prompt consideration by the Governance and Nominating Committee and by the Board of Directors.
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Director Tenure
– the average tenure of our independent Directors will have decreased from 16.5 years for each of the 11 independent Directors in 2011 to 6.5 years upon the election of the
four Director nominees at the Annual Meeting, and six new independent Directors will have joined the Board of Directors since April 2012.
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Stock Ownership Guidelines for Directors and Executive Officers
– the Company adopted stock ownership guidelines for Directors and executive officers in July 2012, and the Company increased
the stock ownership guidelines for Directors in July 2014. Each of the Directors and executive officers satisfies the stock ownership guidelines or is within the grace period provided by the stock ownership guidelines to achieve compliance.
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Annual Board and Chief Executive Officer Self-Evaluations
– each year, the Governance and Nominating Committee of the Board of Directors administers self-evaluations of the Board of
Directors and its committees, and the Compensation Committee of the Board of Directors administers an evaluation of the Chief Executive Officer.
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PROXY STATEMENT SUMMARY
(CONTINUED)
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Hedging Transactions Prohibited
– the Company’s insider trading policy prohibits short sales and hedging transactions of shares of the Company’s Common Stock by Directors, officers
and employees.
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Pledging Prohibited
– the Company’s insider trading policy was amended in fiscal 2017 to provide that, effective as of June 1, 2017, pledging of shares of the Company’s Common
Stock by Directors, officers and employees is prohibited, subject to limited exceptions.
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Performance-Based Compensation
– the Company relies heavily on performance-based compensation for executive officers, including awards of performance-based restricted stock.
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Double-Trigger Vesting Provisions
– the Company’s 2014 Omnibus Equity and Incentive Plan (2014 Omnibus Plan) provides double-trigger vesting provisions for long-term equity awards.
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Clawback Policy
– the Board of Directors may require reimbursement of certain bonuses or incentive compensation awarded to an executive officer if, as the result of that executive
officer’s misconduct, the Company is required to restate all or a portion of its financial statements.
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Chief Executive Officer Succession Planning
– the Company’s succession plan, which the Board of Directors reviews annually, addresses both an unexpected loss of the Chief Executive
Officer as well as longer-term succession.
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The Values
& Expectations of 168
– the Company’s code of business conduct and ethics, entitled “The Values & Expectations of
168,” emphasizes individual responsibility and accountability, encourages reporting and dialogue about ethics concerns, and focuses on the Company’s core principles of integrity, commitment, responsible entrepreneurship and moral courage.
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Statement of Governance Policy
– the Board of Directors adopted our Statement of Governance Policy in 2016, which recognizes that conducting our business in conformity with The
Values & Expectations of 168 is essential to advancing our fundamental objective of building long-term stockholder value.
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See also
“Information Regarding Meetings and Committees of the Board of Directors” at page 17 for further information on the Company’s governance practices. Additional information about our majority voting policy appears under the caption
“Voting Rights” on page 7.
RPM INTERNATIONAL INC.
STATEMENT OF GOVERNANCE POLICY
RPM International’s fundamental objective is to build long-term stockholder value by profitably growing our businesses and
consistently delivering strong financial performance. We think that our ability to generate value for our stockholders is inextricably linked to our ability to provide value to our principal stakeholders, including our customers and associates.
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We must continue to earn the ongoing commitment and trust of our stockholders by delivering the solid returns expected by them from an investment in RPM.
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We must continue to offer our customers innovative, high-quality products and services at competitive prices.
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We must attract and retain high-quality associates at every level of our organization, provide them with the tools they need to do their jobs, and compensate them in such a way as to closely align their interests with
our long-term success.
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We must conduct our business in conformity with The Values & Expectations of 168, which encompass complying with all legal and ethical standards, and working to be exemplary corporate citizens of the
communities in which we work.
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We do not focus narrowly on efforts to maximize the short-term price of our stock, and think that
such an approach is fundamentally misguided. Instead, we believe that emphasizing consistent value creation in our businesses will maximize the long-term value of our stockholders’ investment.
In short, we manage our businesses to create wealth for our stockholders. Creating value for our other stakeholders
is how we have achieved, and will continue to achieve, that objective.
PROXY STATEMENT SUMMARY
(CONTINUED)
Enterprise-Wide Risk Oversight
The Board of Directors, assisted by its committees, oversees management’s enterprise-wide risk management activities. Risk management activities include assessing
and taking actions necessary to manage risk incurred in connection with the long-term strategic direction and operation of the Company’s business. See “Information Regarding Meetings and Committees of the Board of
Directors – Role in Risk Oversight” for further information.
ELECTION OF DIRECTORS
The
authorized number of Directors of the Company presently is fixed at eleven, with the Board of Directors divided into three Classes. Currently, each of Class I and Class II has four Directors, and Class III has three Directors. The
term of office of one Class of Directors expires each year, and at each Annual Meeting of Stockholders the successors to the Directors of the Class whose term is expiring at that time are elected to hold office for a term of three years.
Robert A. Livingston, a nominee for election as Director at this year’s Annual Meeting, does not currently serve as a Director of the Company. In connection
with Mr. Livingston’s election
as Director, the authorized number of Directors of the Company will be fixed at twelve, and each of Class I, Class II and Class III of the Board of Directors will have four
Directors.
The term of office of the persons elected as Directors in Class III at this year’s Annual Meeting will expire at the time of the Annual Meeting
held in 2020. Each Director in Class III will serve until the expiration of that term or until his or her successor shall have been duly elected. In addition to Mr. Livingston, the Board of Directors’ nominees for election as
Directors in Class III are Julie A. Lagacy, Frederick R. Nance and William B. Summers, Jr. Ms. Lagacy and Messrs. Nance and Summers currently serve as Directors in Class III.
The Proxy holders named in the accompanying Proxy or
their substitutes will vote such Proxy at the Annual Meeting or any adjournment or postponement thereof for the election as Directors of the four nominees unless the stockholder instructs, by marking the appropriate space on the Proxy, that
authority to vote is withheld. If any nominee should become unavailable for election (which contingency is not now contemplated or foreseen), it is intended that the shares represented by the Proxy will be voted for such substitute nominee as may be
named by the Board of Directors. In no event will the accompanying Proxy be voted for more than four nominees or for persons other than those named below and any such substitute nominee for any of them.
NOMINEES FOR ELECTION
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Julie A. Lagacy
, age 50 – Director since 2017
Vice President of Global Information Services and Chief Information Officer, Caterpillar Inc. (NYSE:
CAT). Caterpillar is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives with 2016 sales and revenues of $38.5 billion. Ms. Lagacy joined Caterpillar
in 1988, and served as Product and Commercial Manager from 1999 until 2004, Human Resources Manager from 2004 until 2006, Senior Business Resource Manager (Global Mining) from 2006 until 2012, and Chief Financial Officer (Global Mining) from 2012
until 2013. From 2013 until 2014, Ms. Lagacy served as Vice President (Financial Services Division), and became Vice President of Global Information Services and Chief Information Officer in 2014. She earned dual bachelor’s degrees in
Management and Economics from Illinois State University, an M.B.A. degree from Bradley University, and is a Certified Management Accountant.
The Board of Directors has determined that Ms. Lagacy should serve as a Director because of her extensive executive management experience at Caterpillar. At
Caterpillar, Ms. Lagacy deals with many of the major issues, such as financial, strategic, technology, cybersecurity, management development, acquisitions and capital allocation, that the Company deals with today. Also, with her extensive
financial background, Ms. Lagacy is a financial expert for the Company’s Audit Committee.
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Shares of Common Stock beneficially owned:
0
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Nominee to Class III
(term expiring in 2020)
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Robert A. Livingston
, age 63 – Nominee for Director
President and Chief Executive Officer, Dover Corporation, a $6.8 billion diversified
manufacturer, since 2008. Previously, he held positions with Dover business units Dover Engineered Systems, Inc. (as President and Chief Executive Officer) from 2007 until 2008, and Dover Electronics, Inc. (as President and Chief Executive Officer)
from 2004 until 2007. Mr. Livingston was previously the President of Vectron International, Inc., a Dover business unit, from 2001 until 2004, and the Executive Vice President (from 1998 until 2001) and Vice President, Finance and Chief
Financial Officer (from 1987 until 1998) of Dover Technologies, Inc. Prior to its acquisition by Dover in 1983, Mr. Livingston was Vice President, Finance of K&L Microwave, and continued to serve in that capacity until 1984, when he became
Vice President and General Manager of K&L Microwave until 1987. Mr. Livingston has been a director of Dover Corporation since 2008. Mr. Livingston received his B.S. degree in business administration from Salisbury University.
The Board of Directors has determined that Mr. Livingston should serve as a Director because of
his extensive executive management experience, including his service as President and Chief Executive Officer of Dover. In that position, Mr. Livingston deals with many of the major issues, such as financial, strategic, technology,
compensation, management development, acquisitions, capital allocation, government and stockholder relations, that the Company deals with today.
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Shares of Common Stock beneficially owned:
0
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Nominee to Class III
(term expiring in 2020)
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Frederick R. Nance
, age 63 – Director since 2007
Global Managing Partner of Squire Patton Boggs (US) LLP,
Attorneys-at-law,
Cleveland, Ohio, since January 2017, where Mr. Nance is responsible for 36 offices in 16 countries. He received his B.A. degree from Harvard University and his J.D. degree from the
University of Michigan. Mr. Nance joined Squire Patton Boggs directly from law school, became partner in 1987, served as the Managing Partner of the firm’s Cleveland office from 2002 until 2007, and served as the firm’s Regional
Managing Partner from 2007 until 2017. Mr. Nance also served two four-year terms on the firm’s worldwide, seven-person Management Committee. In addition to his duties at Squire Patton Boggs, where he heads the firm’s U.S. Sports and
Entertainment practice representing clients including LeBron James, Mr. Nance serves on the boards of the Greater Cleveland Partnership and the Cleveland Clinic. In October 2015, Mr. Nance was inducted into the Northeast Ohio Business Hall
of Fame.
The Board of Directors has determined that Mr. Nance should serve as a
Director primarily due to his significant legal background and management experience. Mr. Nance’s background allows him to provide valuable insights to the Board of Directors, particularly in regard to corporate governance and risk issues
that confront the Company. Mr. Nance also provides the Board of Directors a valuable perspective as a member of the boards of several prominent local
non-profit
organizations.
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Shares of Common Stock beneficially owned:
16,921
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Nominee to Class III
(term expiring in
2020)
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William B. Summers, Jr.
, age 67 – Director since 2004
Retired Chairman and Chief Executive Officer of McDonald Investments Inc., an investment
banking and securities firm and a part of KeyBanc Capital Markets. Prior to his retirement, Mr. Summers served as Chairman of McDonald Investments Inc. from 2000 to 2006, and as its Chief Executive Officer from 1994 to 2000. From 1998 until
2000, Mr. Summers served as the Chairman of Key Capital Partners and an Executive Vice President of KeyCorp. Mr. Summers is a director of Integer Holdings Corporation (formerly Greatbatch, Inc.), and a member of the advisory board of
Molded Fiber Glass Companies. From 2004 until May 2011, Mr. Summers was a director of Developers Diversified Realty Corporation. Mr. Summers was previously a member of the NASDAQ Stock Market board of directors, and served as its chairman
for two years. Mr. Summers is a trustee of Baldwin Wallace University, and serves on the boards of the Cleveland Rock and Roll Hall of Fame and Museum, the United States Army War College Foundation, and the Cleveland Convention and Visitors
Bureau.
The Board of Directors has determined that Mr. Summers should serve as
a Director because of his extensive executive management experience, including over 15 years of experience as Chairman and Chief Executive Officer of McDonald Investments Inc., service on the boards of both the New York Stock Exchange and
National Association of Securities Dealers, and his experience serving as a director of other private and public companies. His experience enables Mr. Summers to provide keen insight and diverse perspectives on several critical areas impacting
the Company, including capital markets, financial and external reporting, long-term strategic planning and business modeling. With his extensive financial background, Mr. Summers serves as a financial expert for the Company’s Audit
Committee. Mr. Summers also provides the Board of Directors a valuable perspective as a member of the boards of several prominent local
non-profit
organizations.
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Shares of Common Stock beneficially owned:
36,906
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Nominee to Class III
(term expiring in
2020)
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DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE ANNUAL MEETING
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David A. Daberko
, age 72 – Director since 2007
Retired Chairman of the Board and Chief Executive Officer, National City Corporation, now a
part of PNC Financial Services Group, Inc. Mr. Daberko earned a bachelor’s degree from Denison University and a M.B.A. degree from the Weatherhead School of Management at Case Western Reserve University. He joined National City Bank in
1968. Mr. Daberko was elected Deputy Chairman of National City Corporation and President of National City Bank in Cleveland in 1987. He served as President and Chief Operating Officer of National City Corporation from 1993 until 1995. From 1995
until his retirement in 2007, Mr. Daberko served as Chairman and Chief Executive Officer of National City Corporation. Mr. Daberko is also a director of Marathon Petroleum Corporation and MPLX GP LLC, and was formerly a director of
Williams Partners L.P.
The Board of Directors has determined that Mr. Daberko
should serve as a Director because of his extensive executive management experience, including 12 years as Chairman and Chief Executive Officer of National City Corporation. In that position, Mr. Daberko dealt with many of the major
issues, such as financial, strategic, technology, compensation, management development, acquisitions, capital allocation, government and stockholder relations, that the Company deals with today. His service on other boards of directors has given him
exposure to different industries and approaches to governance and other key issues.
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Shares of Common Stock beneficially owned:
25,812
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Director in Class I
(term expiring in 2019)
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Thomas S. Gross
, age 63 – Director since 2012
Retired Vice Chairman and Chief Operating Officer for the Electrical Sector of Eaton
Corporation plc, a global diversified power management company. Mr. Gross joined Eaton in 2003 as Vice President, Eaton Business Systems, and from June 2004 to December 2009 served as President of Eaton’s power quality and controls
business. From January 2009 until his retirement in August 2015, Mr. Gross served as Vice Chairman and Chief Operating Officer for Eaton’s Electrical Sector. Prior to joining Eaton, Mr. Gross held executive leadership positions with
Danaher Corporation, Xycom Automation and Rockwell Automation. Mr. Gross is a director of WABCO Holdings Inc., a leading manufacturer of vehicle control systems, and is also a director of Celestica Inc., a leading manufacturer of electronic and
mechanical parts and systems. Mr. Gross received his B.S. degree in electrical and computer engineering from the University of Wisconsin and his M.B.A. degree from the University of Michigan.
The Board of Directors has determined that Mr. Gross should serve as a Director because of
his extensive executive management experience at Eaton Corporation plc. At Eaton, Mr. Gross dealt with many of the major issues, such as financial, strategic, technology, compensation, management development, acquisitions and capital
allocation, that the Company deals with today. Also, with his extensive financial background, Mr. Gross is a financial expert for the Company’s Audit Committee.
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Shares of Common Stock beneficially owned:
11,966
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Director in Class I
(term expiring in
2019)
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Craig S. Morford
, age 58 – Director since 2013
Chief Legal and Compliance Officer of Cardinal Health, Inc. Mr. Morford joined Cardinal Health
in 2008 as Chief Compliance Officer, and became Chief Legal and Compliance Officer in 2009. Before joining Cardinal Health, Mr. Morford spent 20 years with the U.S. Department of Justice, which included an appointment by President George W.
Bush as acting U.S. deputy attorney general. Mr. Morford is a member of The Association of General Counsel. He also serves on the audit and compliance committee of the board of trustees of The Ohio State University. Mr. Morford earned his
bachelor degree in economics from Hope College, and a juris doctorate from Valparaiso University.
The Board of Directors has determined that Mr. Morford should serve as a Director primarily due to his significant experience in legal affairs, regulatory
compliance, corporate governance, corporate ethics and enterprise risk management at Cardinal Health and his service with the U.S. Department of Justice. Mr. Morford’s background allows him to provide valuable insights to the Board of
Directors, particularly in regard to corporate governance and risk issues that confront the Company. Mr. Morford also provides the Board of Directors a valuable perspective as a member of the boards of prominent
non-profit
organizations.
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Shares of Common Stock beneficially owned:
9,087
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Director in Class I
(term expiring in 2019)
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Frank C. Sullivan
, age 56 – Director since 1995
Chairman and Chief Executive Officer, RPM International Inc. Mr. Sullivan entered the University
of North Carolina as a Morehead Scholar and received his B.A. degree in 1983. From 1983 to 1987, Mr. Sullivan held various commercial lending and corporate finance positions at Harris Bank and First Union National Bank prior to joining RPM as
Regional Sales Manager from 1987 to 1989 at RPM’s AGR Company joint venture. In 1989, he became RPM’s Director of Corporate Development. He became a Vice President in 1991, Chief Financial Officer in 1993, Executive Vice President in 1995,
President in 1999, Chief Operating Officer in 2001, Chief Executive Officer in 2002, and was elected Chairman of the Board in 2008. Mr. Sullivan serves on the boards of The Timken Company, the American Coatings Association, the Cleveland Rock
and Roll Hall of Fame and Museum, Greater Cleveland Partnership, the Ohio Business Roundtable, the Army War College Foundation, Inc., the Chamber of Commerce of the United States, the Cleveland School of Science and Medicine, and the Medina County
Bluecoats.
The Board of Directors has determined that Mr. Sullivan should serve as a
Director because of his role as the Company’s Chief Executive Officer, his intimate knowledge of the Company, and his experience serving as a director of other public companies and
non-profit
organizations. The Board of Directors believes that Mr. Sullivan’s extensive experience in and knowledge of the Company’s business gained as a result of his long-time service as a member of management is essential to the Board of
Directors’ oversight of the Company and its business operations. The Board of Directors also believes that continuing participation by qualified members of the Sullivan family on the Board of Directors is an important part of the Company’s
corporate culture that has contributed significantly to its long-term success.
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Shares of Common Stock beneficially owned:
1,519,249
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Director in Class I
(term expiring in 2019)
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General John P. Abizaid
, age 66 – Director since 2008
Senior Partner, JPA Partners LLC, a Nevada-based strategic and analytic consulting firm. Gen.
Abizaid retired from the U.S. Army in 2007 after 34 years of service, during which he rose from an infantry platoon leader to become a four-star general and the longest-serving commander of U.S. Central Command. During his distinguished career,
his command assignments ranged from infantry combat to delicate international negotiations. Gen. Abizaid graduated from the U.S. Military Academy with a bachelor of science degree in 1973. His civilian studies include an Olmsted Scholarship at the
University of Jordan, Amman, and a master of arts degree in Middle Eastern studies at Harvard University. Gen. Abizaid is a highly decorated officer who has been awarded the Defense Distinguished Service Medal, the Army Distinguished Service Medal,
Legion of Merit and the Bronze Star. He serves as a director of Virtu Financial, Inc.
The Board of Directors has determined that Gen. Abizaid should serve as a Director because of the extensive leadership and management experience he gained during
his distinguished military career in which he ultimately became a four-star general in the U.S. Army. As commander of U.S. Central Command, Gen. Abizaid was responsible for military operations in 27 countries and commanded over 500,000 U.S. and
allied air, naval and land forces for over three years. Furthermore, as director of strategic plans and policies for the United States Armed Forces Joint Staff, Gen. Abizaid led numerous delegations to foreign nations and conducted extensive
negotiations on a number of sensitive subjects. His experience also enables him to assist the Company with leadership development and also provide a unique strategic perspective to the Company.
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Shares of Common Stock beneficially owned:
25,164
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Director in Class II
(term expiring in
2018)
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Bruce A. Carbonari
, age 61 – Director since 2002
Retired Chairman and Chief Executive Officer, Fortune Brands, Inc., a diversified consumer
products company. Prior to his retirement, Mr. Carbonari served as the Chairman and Chief Executive Officer of Fortune Brands from 2008 to 2011, and as its President and Chief Executive Officer from 2007 to 2008. Previously, he held positions
with Fortune Brands business unit, Fortune Brands Home & Hardware LLC, as Chairman and Chief Executive Officer from 2005 until 2007 and as President and Chief Executive Officer from 2001 to 2005. Mr. Carbonari was the President and
Chief Executive Officer of Fortune Brands Kitchen and Bath Group from 1998 to 2001, and was previously the President and Chief Executive Officer of Moen, Inc. from 1990 to 1998. Prior to joining Moen in 1990, Mr. Carbonari was Executive Vice
President and Chief Financial Officer of Stanadyne, Inc., Moen’s parent company at that time. He began his career at PricewaterhouseCoopers prior to joining Stanadyne in 1981.
The Board of Directors has determined that Mr. Carbonari should serve as a Director
because of his extensive executive management experience, including his service as Chairman and Chief Executive Officer of Fortune Brands, Inc. In that position, Mr. Carbonari dealt with many of the major issues, such as financial, strategic,
technology, compensation, management development, acquisitions, capital allocation, government and stockholder relations, that the Company deals with today.
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Shares of Common Stock beneficially owned:
32,152
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Director in Class II
(term expiring in
2018)
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Jenniffer D. Deckard
, age 51 – Director since 2015
President and Chief Executive Officer of Fairmount Santrol Holdings Inc. Ms. Deckard has
served as President, Chief Executive Officer and director of Fairmount Santrol since 2013. Previously, Ms. Deckard served as Fairmount Santrol’s President from January 2011 until May 2013, Vice President of Finance and Chief Financial
Officer from 1999 until 2011, Corporate Controller from 1996 to 1999 and Accounting Manager from 1994 until 1996. Ms. Deckard serves on the boards of the Cleveland Foundation, Edwins Foundation, and the First Tee of Cleveland. She also serves
on the Case Western Weatherhead School of Management’s Visiting Committee and the Board of Directors for the Fairmount Santrol Foundation. Ms. Deckard received a bachelor of science from the University of Tulsa and a M.B.A. degree from
Case Western Reserve University.
The Board of Directors has determined that
Ms. Deckard should serve as a Director because of her extensive executive management experience and financial expertise, including her service as President and Chief Executive Officer of Fairmount Santrol. In that position, Ms. Deckard
deals with many of the major issues, such as financial, strategic, technology, compensation, management development, acquisitions, capital allocation, government and stockholder relations, that the Company deals with today. Ms. Deckard also
provides the Board of Directors a valuable perspective as a member of the boards of several prominent local
non-profit
organizations.
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Shares of Common Stock beneficially owned:
4,800
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Director in Class II
(term expiring in 2018)
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Salvatore D. Fazzolari
, age 65 – Director since 2013
Former Chairman, President and Chief Executive Officer of Harsco Corporation, a diversified
global industrial company. Mr. Fazzolari served as Chairman and Chief Executive Officer of Harsco Corporation from 2008 until February 2012, in addition to serving as its President from 2010 until February 2012. During the course of his over 30
years of service to Harsco Corporation, Mr. Fazzolari held various other positions, including President (2006 – 2007), Chief Financial Officer (1998 – 2007) and Treasurer and Corporate Controller.
Mr. Fazzolari is a certified public accountant (inactive) and a certified information systems auditor (inactive). He serves on the board of directors of OrangeHook, Inc., Gannett Fleming Affiliates, Inc. and Bollman Hat Company. He is also an
advisory board member of Current Capital LLC, and is a member of the senior advisory council of AEA Investors LP, a private equity firm. He earned his bachelor of business administration degree in accounting from Pennsylvania State
University.
The Board of Directors has determined that Mr. Fazzolari should
serve as a Director because of his extensive executive management experience, including his service as Chairman, President and Chief Executive Officer of Harsco Corporation. In that position, Mr. Fazzolari dealt with many of the major issues,
such as financial, strategic, technology, compensation, management development, acquisitions, capital allocation, government and stockholder relations, that the Company deals with today. Also, Mr. Fazzolari has extensive global experience, and
because of his considerable financial background, he is a financial expert for the Company’s Audit Committee and serves as its chairman.
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Shares of Common Stock beneficially owned:
10,098
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Director in Class II
(term expiring in 2018)
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INFORMATION
REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, an Audit Committee, a Compensation Committee and a Governance and
Nominating Committee. The Executive Committee has the power and authority of the Board of Directors in the interim period between Board meetings. The functions of each of the Audit Committee, the Compensation Committee and the Governance and
Nominating Committee are governed by charters that have been adopted by the Board of Directors. The Board of Directors also has adopted Corporate Governance Guidelines to assist the Board of Directors in the exercise of its responsibilities, and a
code of business conduct and ethics (“The Values & Expectations of 168”) that applies to the Company’s Directors, officers, and employees.
The charters of the Audit Committee, Compensation Committee and Governance and Nominating Committee and the Corporate Governance Guidelines and The Values &
Expectations of 168 are available on the Company’s website at www.rpminc.com and in print to any stockholder who requests a copy. Requests for copies should be directed to Manager of Investor Relations, RPM International Inc.,
P.O. Box 777, Medina, Ohio 44258. The Company intends to disclose any amendments to The Values & Expectations of 168, and any waiver of The Values & Expectations of 168 granted to any Director or executive officer of the
Company, on the Company’s website. As of the date of this Proxy Statement, there have been no such waivers.
Board Independence
The Company’s Corporate Governance Guidelines and the New York Stock Exchange (the “NYSE”) listing standards provide that at least a majority of the
members of the Board of Directors must be independent, i.e., free of any material relationship with the Company, other than his or her relationship as a Director or Board Committee member. A Director is not independent if he or she fails to satisfy
the standards for independence under the NYSE listing standards, the rules of the Commission, and any other applicable laws, rules and regulations. The Board of Directors adopted categorical standards (the “Categorical Standards”) to
assist it in making independence determinations. The Categorical Standards specify the criteria by which the independence of the Directors will be determined and meet or exceed the independence requirements set forth in the NYSE listing standards
and the rules of the Commission. The Categorical Standards are available on the Company’s website at www.rpminc.com.
During the Board of Directors’ annual
review of director independence, the Board of Directors considers transactions, relationships and arrangements between each Director or an immediate family member of the Director and RPM. The
Board of Directors also considers transactions, relationships and arrangements between each Director or an immediate family member of the Director and RPM’s senior management.
In July 2017, the Board of Directors performed its annual director independence review for fiscal 2017. As a result of this review, the Board of Directors determined that
10 out of 11 current Directors are independent, and that all members of the Audit Committee, the Compensation Committee and the Governance and Nominating Committee are independent. The Board of Directors determined that Ms. Deckard,
Ms. Lagacy, and Messrs. Abizaid, Carbonari, Daberko, Fazzolari, Gross, Morford, Nance and Summers meet the Categorical Standards and are independent and, in addition, satisfy the independence requirements of the NYSE. The Board of Directors has
also determined that Mr. Livingston, who has been nominated by the Board of Directors to stand for election at the Annual Meeting, will be an independent Director. Mr. Sullivan is not considered to be independent because of his position as
Chairman and Chief Executive Officer of RPM.
In determining the independence of Ms. Deckard, the Board of Directors considered that she is the President and
Chief Executive Officer of Fairmount Santrol, a provider of high-performance sand and sand-based products used in various industries, including oil and gas exploration, foundry and building products, from which the Company has purchased products
from time to time in the ordinary course of the Company’s business. For the Company’s fiscal year ended May 31, 2017, the Company purchased approximately $1.8 million of products and services of a transactional nature from
Fairmount Santrol, representing less than 0.34% of Fairmount Santrol’s $535 million in net sales on an annual basis. The Board of Directors does not believe that this relationship impairs Ms. Deckard’s independence.
As part of this review, the Board of Directors also considered common private and charitable board memberships among our executive officers and Directors, including
Ms. Deckard,
and Messrs. Nance and Summers. The Board of Directors does not believe that any of these common board memberships impairs the independence of
the Directors.
Audit Committee
The Audit Committee assists the Board of
Directors in fulfilling its oversight of the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, and the
performance of the Company’s internal audit function and independent auditor, and prepares the report of the Audit Committee. The specific functions and responsibilities of the Audit Committee are set
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
(CONTINUED)
forth in the Audit Committee Charter which is available on the Company’s website.
The Board of Directors
has determined that each member of the Audit Committee is financially literate and satisfies the current independence standards of the NYSE listing standards and Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). The Board of Directors has also determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as that term is defined in Item 407(d) of
Regulation S-K.
Each of Ms. Lagacy and Messrs. Fazzolari, Gross and Summers also satisfies the NYSE accounting and financial management expertise requirements. Upon her appointment to the Board of
Directors on July 18, 2017, Ms. Lagacy was appointed to serve on the Audit Committee, and Mr. Carbonari stepped down from the Audit Committee as of that date.
Compensation Committee
The Compensation Committee assists the Board of
Directors in discharging its oversight responsibilities relating to, among other things, executive compensation, equity and incentive compensation plans, management succession planning and producing the Compensation Committee Report. The
Compensation Committee administers the Company’s Incentive Compensation Plan, Restricted Stock Plan, Restricted Stock Plan for Directors, and 2014 Omnibus Plan. The Compensation Committee reviews and determines the salary and bonus compensation
of the Chief Executive Officer, as well as reviews and recommends to the Board of Directors for its approval the compensation of the other executive officers of the Company. The Compensation Committee may delegate its authority to a subcommittee or
subcommittees. Each member of the Compensation Committee is independent within the meaning of the NYSE listing standards and the Company’s Corporate Governance Guidelines.
Our Chief Executive Officer and our President and Chief Operating Officer, together with the Compensation Committee, review assessments of executive compensation
practices at least annually against our defined comparative framework. Our Chief Executive Officer and our President and Chief Operating Officer make recommendations to the Compensation Committee with the intent of keeping our executive officer pay
practices aligned with our intended pay philosophy. The Compensation Committee must approve any recommended changes before they can be made. The Compensation Committee has the sole authority to retain and terminate any compensation and benefits
consultant, independent legal counsel or other adviser, to assess the independence of such compensation and benefits consultant, independent legal counsel or other adviser and any potential
conflicts of interest prior to engagement, and to approve the related fees and other retention terms of such compensation and benefits consultant, independent legal counsel or other adviser.
Before selecting any compensation and benefits consultant, independent legal counsel or other adviser, the Compensation Committee takes into account all factors relevant
to that adviser’s independence from management, including the following six factors:
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the provision of other services to the Company by the adviser’s employer;
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the amount of fees received from the Company by the adviser’s employer, as a percentage of total revenues of the employer;
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the policies and procedures of the adviser’s employer that are designed to prevent conflicts of interest;
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any business or personal relationship of the adviser with a member of the Compensation Committee;
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any Common Stock of the Company owned by the adviser; and
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any business or personal relationship of the adviser or the adviser’s employer with an executive officer of the Company.
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Governance and Nominating Committee
The Governance and Nominating Committee
reports to the Board of Directors on all matters relating to corporate governance of the Company, including the development and recommendation to the Board of Directors of a set of corporate governance principles applicable to the Company,
selection, qualification and nomination of the members of the Board of Directors and nominees to the Board of Directors, and administration of the Board’s evaluation process. Each of the members of the Governance and Nominating Committee is
independent within the meaning of the NYSE listing standards and the Company’s Corporate Governance Guidelines.
In identifying and considering possible
candidates for election as a Director, the Governance and Nominating Committee, after consultation with the Board and the Chief Executive Officer, will consider all relevant factors and will be guided by the following principles: (1) each
Director should be an individual of the highest character and integrity; (2) each Director shall have demonstrated exceptional ability and judgment and should have substantial experience which is of particular relevance to the Company;
(3) each Director should have sufficient time available to devote to the affairs of the
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
(CONTINUED)
Company; and (4) each Director should represent the best interests of the stockholders as a whole rather than special interest groups. This evaluation is performed in light of the Governance
and Nominating Committee’s views as to the needs of the Board of Directors and the Company as well as what skill set and other characteristics would most complement those of the current Directors.
The Governance and Nominating Committee and the Board of Directors consider a diverse group of experiences, characteristics, attributes, and skills, including diversity
in gender, ethnicity, race, cultural background, and age, in determining whether an individual is qualified to serve as a Director of the Company. While the Board of Directors does not maintain a formal policy regarding diversity, pursuant to its
Charter the Governance and Nominating Committee does consider the diversity of the Board of Directors when considering Director nominees for recommendation to the Board of Directors. The Governance and Nominating Committee and the Board of Directors
also consider the composition of the Board of Directors as a whole in evaluating whether a particular individual should serve on the Board of Directors, as the Board of Directors seeks to comprise itself of members which, collectively, possess a
range of relevant skills, experience, and expertise.
During fiscal 2017, the Governance and Nominating Committee retained a third-party search firm to locate and
identify potential Director candidates who may meet the needs of the Board of Directors. The third-party search firm identified and recommended Ms. Lagacy and Mr. Livingston to the Governance and Nominating Committee, and worked with the Board of
Directors in reviewing their candidacies.
The Governance and Nominating Committee will consider potential candidates recommended by stockholders, current Directors,
Company officers, employees and others. The Governance and Nominating Committee will use the above enumerated factors to consider potential candidates regardless of the source of the recommendation. Stockholder recommendations for director
nominations may be submitted to the Secretary of the Company at P.O. Box 777, Medina, Ohio 44258, and they will be forwarded to the Governance and Nominating Committee for consideration, provided such recommendations are accompanied by sufficient
information to permit the Governance and Nominating Committee to evaluate the qualifications and experience of the potential candidates. Recommendations should include, at a minimum, the following:
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the name, age, business address and residence address of the proposed nominee;
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the principal occupation or employment of the proposed nominee;
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the number of shares of Common Stock which are beneficially owned by such candidate;
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a description of all arrangements or understandings between the stockholder(s) making such nomination and each candidate and any other person or persons (naming such person or persons) pursuant to which nominations are
to be made by the stockholder;
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detailed biographical data and qualifications and information regarding any relationships between the candidate and the Company within the past three years;
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any other information relating to the proposed nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;
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any other information the stockholder believes is relevant concerning the proposed nominee;
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a written consent of the proposed nominee(s) to being named as a nominee and to serve as a director if elected;
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a written agreement of the proposed nominee(s) to comply with the provisions of the Company’s majority voting policy;
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the name and record address of the stockholder who is submitting the notice; and
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the number of shares of Common Stock which are owned of record or beneficially by the stockholder who is submitting the notice and the date such shares were acquired by the stockholder and if such person is not a
stockholder of record or if such shares are owned by an entity, reasonable evidence of such person’s ownership of such shares or such person’s authority to act on behalf of such entity.
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Stockholders who desire to nominate a proposed nominee for Director at an Annual Meeting must also comply with the requirements set forth in the
By-Laws
concerning such nominations.
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
(CONTINUED)
Committee Membership
Set
forth below is the current membership of each of the Committees, with the number of meetings held during the fiscal year ended May 31, 2017 in parentheses:
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Executive
Committee(0)
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Audit Committee(6)
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Compensation
Committee(3)
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Governance and
Nominating Committee(3)
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Frank C. Sullivan
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Salvatore D. Fazzolari
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David A. Daberko
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Bruce A. Carbonari
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(Chairman)
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(Chairman)
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(Chairman)
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(Chairman)
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Bruce A. Carbonari
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Thomas S. Gross
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John P. Abizaid
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Jenniffer D. Deckard
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David A. Daberko
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Julie A. Lagacy
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Thomas S. Gross
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Craig S. Morford
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Salvatore D. Fazzolari
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William B. Summers, Jr.
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Frederick R. Nance
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Board Meetings
The Board of
Directors held four meetings during the fiscal year ended May 31, 2017. No Director, during the fiscal year ended May 31, 2017, attended fewer than 75% of the aggregate of (i) the total number of meetings of the Board of Directors
held during the period that the Director served and (ii) the total number of meetings held by Committees of the Board of Directors on which the Director served, during the period that the Director served.
Independent Directors Meetings
Each of the Directors, other than
Mr. Sullivan, is a
non-management
Director. Each of the
non-management
Directors was independent within the meaning of the NYSE listing standards and the
Company’s Corporate Governance Guidelines during fiscal 2017. The Company’s independent Directors generally meet in executive sessions each year in January, April and July. Bruce A. Carbonari currently serves as Lead Director, and served
as the Lead Director for the January, April and July meetings of the Company’s independent Directors in 2017. The Company’s Corporate Governance Guidelines define such Lead Director’s role and responsibilities.
Structure of the Board of Directors
The
By-Laws
provide that one person may hold the position of Chairman of the Board of Directors and Chief Executive Officer. The Chief Executive Officer of the Company currently serves as the Chairman of the Board
of Directors. The Board of Directors believes that the Chief Executive Officer is best situated to serve as Chairman because he is one of the Directors most familiar with the Company’s business and industry. The Board of Directors believes that
combining the roles of Chief Executive Officer and Chairman of the Board of Directors provides an efficient and effective leadership model for the Company by fostering clear accountability, effective decision-making, and alignment of corporate
strategy. The independent Directors bring experience, oversight, and expertise from outside the Company and its industry, while the
Chief Executive Officer brings Company and industry-specific experience and expertise. One of the key responsibilities of the Board of Directors is to develop strategic direction and hold
management accountable for the execution of management’s strategy once it is developed.
The Corporate Governance Guidelines provide for a Lead Director, and
define such Lead Director’s role and responsibilities. The Lead Director:
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presides at all executive sessions of the independent Directors or other meetings at which the Chairman of the Board is not present;
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is authorized to call meetings of the independent Directors;
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works with the Chairman of the Board to call Board meetings;
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serves as a liaison between the Chairman of the Board and the independent Directors as required (each Director is free, however, to communicate directly with the Chairman of the Board);
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works with the Chairman of the Board to set and approve the Board schedule and agenda to assure sufficient time for discussion of all agenda items;
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approves the materials to be provided to the Board;
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consults with other Directors and facilitates communication between the Board and the Chief Executive Officer;
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serves as focal point for stockholder communications and requests for consultation addressed to the independent Directors;
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has the ability to retain outside professionals on behalf of the Board as the Board may determine is necessary or appropriate; and
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performs such other functions either specified in the Corporate Governance Guidelines or assigned from time to time by the Board.
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INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF
DIRECTORS
(CONTINUED)
The Board of Directors believes the combined role of Chief Executive Officer and Chairman of the Board of Directors,
together with independent Directors having the duties described above, is in the best interests of stockholders because it strikes an appropriate balance for the Company. With the Chief Executive Officer also serving as Chairman of the Board of
Directors, there is unified leadership and a focus on strategic development and execution, while the independent Directors help assure independent oversight of management.
Role in Risk Oversight
Risk is inherent in any business and the Company’s management is responsible for
the
day-to-day
management of risks that the Company faces. The Board of Directors, on the other hand, has responsibility for the oversight of risk management. In its
risk oversight role, the Board of Directors has the responsibility to evaluate the risk management process to ensure its adequacy and that it is implemented properly by management.
The Board of Directors believes that full and open communication between management and the Board of Directors is essential for effective risk management and oversight. Senior management, which includes the Chief
Compliance Officer, attends quarterly meetings of the Board of Directors, as well as certain committee meetings, in order to address any questions or concerns raised by the Board of Directors on risk management and any other matters. Each quarter,
the Board of Directors receives presentations from senior management on business operations, financial results, and strategic issues. In addition, senior management holds an annual strategic planning retreat attended by members of the Board of
Directors, as well as periodic strategic planning sessions, to discuss strategies, key challenges, and risks and opportunities for the Company. Senior management then reviews the results of each strategic planning session with the Board of
Directors. Finally, each year senior management reviews with the Board of Directors an assessment of the key risks the Company faces and then prioritizes them in a consolidated enterprise risk map.
The Board Committees assist the Board of Directors in fulfilling its oversight responsibilities in certain areas of risk. The Audit Committee assists the Board of
Directors in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls, and compliance with legal and regulatory requirements. Risk assessment reports are regularly provided by
management and the Company’s internal auditors to the Audit Committee. The Compensation Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to the
management of risks arising from the Company’s compensation policies and programs, including overseeing the Company’s compensation-related risk assessment described further below in
this Proxy Statement. The Governance and Nominating Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to the management of risks associated with the organization of the Board of Directors and its
membership and structure, succession planning for Directors and executive officers, and corporate governance, including the annual monitoring of corporate governance issues, administering regular self-evaluations of the Board and its committees, and
reviewing potential conflicts of interest.
All of these Board Committees report back to the full Board of Directors at meetings of the Board of
Directors as to the Board Committees’ activities and matters discussed and reviewed at the Board Committees’ meetings. In addition, the Board of Directors is encouraged to participate in external Director education courses to keep apprised
of current issues, including areas of risk.
Succession Planning
The Company actively engages in succession planning in order to assure that it has sufficient depth and breadth of executive talent. While effective succession planning is a fluid process, there are certain annual
processes in which the Company engages to determine appropriate candidates and leadership potential. Information is gathered and analyzed to assess the staffing of the Company’s key positions to identify and develop employees for such
positions. To further this process, an offsite leadership development program is conducted each year for purposes of recognizing the Company’s emerging leaders and uniting them in a
three-day
formal
program with peers and representatives from the Board of Directors. In addition, after completing this leadership development program, certain employees are selected to work with a
top-ranked
global provider
of executive education to enhance senior level personal leadership development and leadership team strategy development.
Communications with the
Board of Directors
Stockholders and other persons may communicate with the
non-management
Directors as a
group or any chair of a Board Committee. Such communications may be confidential or anonymous, if so designated, and may be submitted in writing to Board of Directors Communications c/o General Counsel, RPM International Inc., P.O. Box 777, Medina,
Ohio 44258 or by email to directors@rpminc.com. Unless specifically directed to one of the Committee chairs, communications will be forwarded to the Lead Director for the next scheduled meeting of independent Directors.
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF
DIRECTORS
(CONTINUED)
All communications received in accordance with these procedures will be reviewed initially by the Company’s
General Counsel, who will relay all such communications (or a summary thereof) to the appropriate Director or Directors unless he determines that such communication:
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does not relate to the business or affairs of the Company or the functioning or constitution of the Board of Directors or any of its Committees; or
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relates to routine or insignificant matters that do not warrant the attention of the Board of Directors.
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In the alternative to the procedures outlined above, any stockholder or interested party may report any suspected
accounting or financial misconduct confidentially through our compliance hotline. Information regarding our compliance hotline is available on our website, www.rpminc.com.
Attendance at Annual Meetings of Stockholders
It is a policy of the Board of Directors that all its members
attend the Annual Meeting absent exceptional cause. All of the Directors who were at that time members of the Board of Directors were present at the October 2016 Annual Meeting.
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
The Dodd-Frank Act also contains a provision enabling our stockholders to indicate how frequently we should have a “Say on Pay” vote. This “frequency”
vote is required to be held at least once every six years. We last held a frequency vote at our Annual Meeting of Stockholders in 2011. At that meeting, our stockholders voted in favor of holding annual advisory votes on the compensation of the
named executive officers, and we have held annual votes each year since 2011.
After careful consideration, the Board of Directors believes we should continue to hold
annual advisory votes on the compensation of the named executive officers. In reaching its recommendation, the Board of Directors believes that an annual vote will continue to allow our stockholders to provide us with timely input on our executive
compensation philosophy, policies and programs.
Although this vote is advisory and not binding, the Board of Directors and the Company highly value the opinions of our
stockholders, and will consider the outcome of this vote when determining the frequency of future “Say on Pay” votes.
The option of every three, two, or
one years that receives the most votes cast by stockholders will be considered the advisory vote of the stockholders.
Our Board of Directors unanimously recommends
you vote for “
EVERY YEAR
” on Proposal 3 relating to the frequency of future advisory votes on executive compensation.
Compensation Discussion and Analysis
Executive Summary
In this section, we describe the material components of our
executive compensation program for our named executive officers whose compensation is set forth in the Summary Compensation Table and other compensation tables contained in this Proxy Statement:
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Frank C. Sullivan, our Chairman and Chief Executive Officer;
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Ronald A. Rice, our President and Chief Operating Officer;
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Russell L. Gordon, our Vice President and Chief Financial Officer;
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Edward W. Moore, our Senior Vice President, General Counsel and Chief Compliance Officer; and
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Janeen B. Kastner, our Vice President – Corporate Benefits and Risk Management.
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We also provide an
overview of our executive compensation philosophy and our executive compensation program. In addition, we explain how and why the Compensation Committee arrives at specific compensation policies and decisions involving the named executive officers.
Our Business
RPM International Inc. owns subsidiaries that
are world leaders in specialty coatings, sealants, building materials and related services across three segments. The Company’s industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and other
construction chemicals. Industrial companies include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Euclid Chemical and RPM Belgium Vandex. The Company’s consumer products are used by professionals and
do-it-yourselfers
for home maintenance and improvement and by hobbyists. Consumer brands include Rust-Oleum, DAP, Zinsser, Varathane and Testors. The Company’s specialty products include industrial
cleaners, colorants, exterior finishes, specialty OEM coatings, edible coatings, restoration services equipment and specialty glazes for the pharmaceutical and food industries. Specialty segment companies include
Day-Glo,
Dryvit, RPM Wood Finishes, Mantrose-Haeuser, Legend Brands,
Kop-Coat
and TCI.
For more information about our business, please see “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in our Annual Report on Form
10-K
filed with the Commission on July 24, 2017.
Fiscal 2017 Business Highlights
The Company’s consolidated net sales, net income, and diluted earnings per share for the fiscal year ended May 31, 2017 were as follows:
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Consolidated net sales increased 3.0% to a record $4.96 billion in fiscal 2017 from $4.81 billion in fiscal 2016;
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Net income decreased 48.7% to $181.8 million in fiscal 2017 from $354.7 million in fiscal 2016 (adjusted net income* decreased 3.5% to $333.4 million in fiscal 2017 from $345.5 million in fiscal 2016); and
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Diluted earnings per share decreased 48.3% to $1.36 in fiscal 2017 from $2.63 in fiscal 2016 (adjusted earnings per share* decreased 3.9% to $2.47 in fiscal 2017 from $2.57 in fiscal 2016).
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*
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Fiscal 2016 adjusted net income of $345.5 million and adjusted earnings per share of $2.57 exclude the reversal of contingent obligations for earnout targets that were not met at our Kirker reporting unit for $14.5
million ($9.2 million after-tax), with a $0.06 impact on diluted earnings per share. Fiscal 2017 adjusted net income of $333.4 million and adjusted earnings per share of $2.47 exclude (i) a charge of $12.3 million related to the Flowcrete decision
to exit the Middle East with a $0.09 impact on diluted earnings per share; (ii) a pretax charge of $188.3 million ($129.0 million after-tax) of goodwill and intangible asset impairment losses related to our Kirker reporting unit with a $0.94 impact
on diluted earnings per share; and (iii) the pretax impact of $15.0 million ($10.2 million after-tax) for severance charges incurred during the fourth quarter of fiscal 2017 pursuant to a plan to reduce future SG&A expense with a $0.08 impact on
diluted earnings per share. See our Annual Report to Stockholders, which can be found on our website at www.rpminc.com, for more information about these adjustments. The Compensation Committee considered our fiscal 2017 operating results, including
our adjusted net income and our adjusted earnings per share, in connection with its compensation decisions.
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In fiscal 2017, we continued to benefit
from effective capital management, which remains a significant priority. Maintaining robust capital and liquidity positions provides us with a protective cushion during difficult periods, as well as the ability to pursue new opportunities.
Fiscal 2017 Executive Compensation Highlights
For fiscal 2017,
the Compensation Committee:
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Did not increase the base salaries of Messrs. Sullivan, Rice, Gordon and Moore, and increased the base salary of Ms. Kastner by 1.6%;
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Awarded stock appreciation rights consistent with fiscal 2016 awards, but did not award Performance Earned Restricted Stock (PERS) grants; and
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Decreased cash awards under the Incentive Plan for fiscal 2017 compared to fiscal 2016 by $320,000 for Mr. Sullivan; by $240,000 for Mr. Rice; by $100,000 for Mr. Gordon; by $75,000 for Mr. Moore;
and by $20,000 for Ms. Kastner.
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EXECUTIVE COMPENSATION
(CONTINUED)
As a result, total fiscal 2017 compensation, as set forth in the Summary Compensation Table, decreased compared to total
fiscal 2016 compensation for all of our named executive officers.
Fiscal 2017 Corporate Governance Highlights
We place a high priority on maintaining good governance standards, including the oversight of our executive compensation policies and practices. The following policies
and practices were in effect during fiscal 2017:
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The leadership structure of our Board consists of a Chairman (who is also our Chief Executive Officer), a Lead Director (who leads the meetings of our independent Directors held in January, April and July of each year),
and strong Board committee chairs.
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We maintain a majority voting policy for the election of Directors in uncontested elections, and require an offer to resign by any incumbent Director who does not receive more votes “for” election than
“withheld.”
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The Compensation Committee is composed solely of independent Directors who have established methods to communicate with stockholders regarding their executive compensation ideas and concerns.
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The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review of our compensation-related risk profile, to ensure that our compensation-related risks are not
reasonably likely to have a material adverse effect on the Company.
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We maintain stock ownership guidelines for our executive officers and Directors, each of whom either satisfied the applicable ownership guidelines as of May 31, 2017 or is within the grace period for achieving such
ownership thresholds.
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Our insider trading policy prohibits short sales, pledging, and hedging transactions of shares of our Common Stock by Directors, officers and employees.
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Performance-based compensation arrangements that use a variety of performance measures, including performance-based equity awards.
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We maintain a clawback of executive compensation policy, which applies to the Company’s executive officers.
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Our 2014 Omnibus Plan prohibits the repricing of stock options or stock appreciation rights without stockholder approval.
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Our 2014 Omnibus Plan provides double-trigger vesting provisions for long-term equity awards.
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Consideration of Last Year’s “Say on Pay” Vote
Following our Annual Meeting of Stockholders in October 2016, the Compensation Committee reviewed the results of the stockholder advisory vote on executive compensation
that was held at the meeting with respect to the fiscal 2016 compensation actions and decisions for Mr. Sullivan and the other named executive officers. Ninety-seven percent (97%) of the votes cast on the
“say-on-pay”
proposal last year were voted in support of the compensation of our named executive officers set forth in the Compensation Discussion and Analysis, the Summary Compensation Table and
the related compensation tables and narratives in last year’s Proxy Statement. The Compensation Committee will continue to consider results from future stockholder advisory votes, as well as input from its stockholders, in its ongoing
evaluation of the Company’s executive compensation programs and practices.
Opportunity for Stockholder Feedback
The Compensation Committee carefully considers feedback from our stockholders regarding our executive compensation program. Stockholders are invited to express their
views to the Compensation Committee as described under the heading “Communications with the Board of Directors” in this Proxy Statement. In addition, the advisory vote on the compensation of the named executive officers provides
stockholders with an opportunity to communicate their views on our executive compensation program.
You should read this Compensation Discussion and Analysis in
conjunction with the advisory votes that we are conducting on the compensation of the named executive officers (see “Proposal Two – Advisory Vote on Executive Compensation” and “Proposal Three – Advisory
Vote on the Frequency of Future Advisory Votes on Executive Compensation”). This Compensation Discussion and Analysis, as well as the accompanying compensation tables, contains information that is relevant to your voting decisions.
Overview
RPM’s compensation programs are designed to support our
founder’s philosophy:
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Hire the best people you can find.
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Create an atmosphere that will keep them.
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Then let them do their jobs.
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Our general compensation philosophy is performance-based in that our executive officers
should be well compensated for achieving strong operating and financial results that contribute to enhanced stockholder value. We engage in a rigorous process intended to provide our executive officers a fair level
EXECUTIVE COMPENSATION
(CONTINUED)
of compensation that reflects RPM’s operating and financial results, the relative skills and experience of the individuals involved, peer group compensation levels and other similar
benchmarks.
The Compensation Committee has designed compensation policies and programs for our executive officers which are intended to compensate the executive
officers at about the market median for a relevant group of
similarly-sized
companies and competitors within RPM’s industry, with the potential for higher than average compensation when our performance
levels exceed our annual business plan. Our primary compensation goals are to retain key leaders, reward good past performance, incentivize strong future performance and align executives’ long-term interests with those of our stockholders.
Role of the Compensation Committee
The Compensation Committee Charter provides
for the Compensation Committee to oversee RPM’s compensation programs and, in consultation with the Chief Executive Officer and the President and Chief Operating Officer, develop and recommend to the Board of Directors an appropriate
compensation and benefits philosophy and strategy for RPM. The Compensation Committee consists of three independent Directors who are appointed to the Compensation Committee by, and report to, the entire Board of Directors. Each member of the
Compensation Committee qualifies as a
“non-employee
director” within the definition of
Rule 16b-3
under the Exchange Act, as an “outside
director” within the meaning of Section 162(m) of the Internal Revenue Code, and as an “independent” director under the rules of the NYSE. The
Compensation Committee Charter is available on our website at www.rpminc.com.
Role of Executives in
Determining Compensation
Our Chief Executive Officer and our President and Chief Operating Officer, together with the Compensation Committee, review assessments
of executive compensation practices at least annually against our defined comparative framework. These assessments involve the gathering of compensation data, such as base salary, cash incentive and equity awards for similarly situated officers at
companies in the diversified chemicals and specialty chemicals industries which fall within a reasonable size range (in terms of sales) and operate businesses similar to that of the Company. See “Comparative Framework” for more information
about this review. With this information in hand, and as stated under the heading “Overview,” our Chief Executive Officer and our President and Chief Operating Officer recommend to the Compensation Committee levels of compensation for
themselves and for the other named executive officers that are “at about the market median for a relevant group of
similarly-sized
companies and competitors within RPM’s industry” and aligned
with our intended pay philosophy. After receiving the recommendations of our Chief Executive Officer and our President and Chief Operating Officer, the Compensation Committee meets without our Chief Executive Officer and our President and Chief
Operating Officer present to consider their recommendations. The Compensation Committee must approve any recommended changes before they can be made.
Comparative Framework
We periodically evaluate the competitiveness of our executive compensation programs. In 2016, the Compensation Committee retained the professional compensation consulting
firm of Willis Towers Watson to conduct a compensation benchmark study. Willis Towers Watson reviewed and evaluated our compensation packages for our key officers in light of the levels of compensation being offered by companies in the specialty
chemicals industry and other related industries which fall within a reasonable size range (in terms of revenues) and operate businesses similar to that of the Company. The compensation peer group companies included in Willis Towers Watson’s
compensation benchmark study were:
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A. Schulman, Inc.
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Albemarle Corporation
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Eastman Chemical Company
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Ecolab Inc.
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Ferro Corporation
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FMC Corporation
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PolyOne Corporation
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PPG Industries Inc.
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The Sherwin-Williams Company
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The Valspar Corporation
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EXECUTIVE COMPENSATION
(CONTINUED)
Willis Towers Watson reviewed both published survey data from the 2015 Willis Towers Watson CDB General Industry Executive
Compensation Survey Report and compensation peer group proxy statement data to determine competitive pay levels for the executives for the following elements of compensation: base salary, actual total cash compensation (the sum of salary and
actual bonuses received), long-term incentives, and actual total direct compensation (the sum of base salary, actual annual bonuses and long-term incentives). Based on its analysis and findings, Willis Towers Watson
concluded that our Chief Executive Officer’s actual total direct compensation was competitive with the market median, and that his compensation was weighted more toward long-term incentives
than is typical in the market. Overall, Willis Towers Watson concluded that our named executive officers’ salaries and total cash compensation are generally at or below the market median, and that their long-term incentives and total direct
compensation are generally at or above the market median.
Specifically with regard to our Chief Executive Officer, Willis Towers Watson found that compared to similarly sized
general industry companies, his base salary was 7% below the market median, and that his actual total cash compensation was 21% below the market median. Long-term incentives for our Chief Executive Officer were 41% above the market median. Overall,
our Chief Executive Officer’s actual total direct compensation was 18% above the market median. Willis Towers Watson considers long-term incentives and actual total direct compensation to be competitive with the market if such amounts are
within 20% of the market median.
Elements of Compensation
Our
named executive officer compensation program for fiscal 2017 included three main elements:
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Annual cash incentive compensation; and
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Performance-based equity incentives, including restricted stock and stock appreciation rights.
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Pay Mix
We use these particular elements of compensation because we believe that they provide a balanced mix of fixed compensation and
at-risk
compensation that produces short-term and long-term performance incentives and rewards. With this balanced portfolio, we provide the executive with a competitive base salary while motivating the
executive to focus on the business metrics that will produce a high level of performance for the Company and provide the executive with additional compensation through short- and long-term incentives.
EXECUTIVE COMPENSATION
(CONTINUED)
The mix of compensation for our named executive officers is weighted toward
at-risk
pay (consisting of cash and equity compensation). Maintaining this pay mix is intended to result in a
pay-for-performance
orientation, which aligns to our
compensation philosophy of paying total direct compensation that is competitive with peer group levels based on relative company performance.
Elements of Our Named
Executive Officer Compensation Program
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Compensation Component
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Key Characteristics
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Purpose
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Base Salary
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Fixed compensation, reviewed and adjusted annually if and when appropriate
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Compensate named executive officers fairly for the responsibility level of the position held
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Annual Cash Incentive Compensation
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Variable, performance-based compensation, awarded under the Incentive Compensation Plan
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Motivate and reward named executive officers for achieving annual business objectives based on Company performance and individual
achievements
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Equity Compensation —
Performance Earned Restricted Stock
(PERS)
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Variable, performance-based compensation, awarded under the 2014 Omnibus Plan
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Motivate and reward named executive officers for achieving long-term business objectives; the threshold and maximum number of and performance goals for
the award of PERS for a given fiscal year are set in July of that year; PERS are single- year performance awards
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Equity Compensation —
Performance Contingent Restricted Stock
(PCRS)
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Variable, performance-based compensation, awarded under the 2014 Omnibus Plan
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Motivate and reward named executive officers for achieving long-term, multi-year business objectives
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Equity Compensation —
Stock Appreciation Rights (SARs)
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Variable, performance-based compensation, awarded under the 2014 Omnibus Plan
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Motivate and reward named executive officers for achieving long-term business objectives by tying incentives to the performance of our Common
Stock
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Equity Compensation —
Supplemental Executive Retirement Plan (SERP) Restricted
Stock
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Fixed compensation awarded under the 2014 Omnibus Plan
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Provides stock-based supplemental retirement benefits to officers and other key employees whose retirement plan benefits may be limited under
applicable law
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Health and Retirement Plans
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Fixed compensation
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Intended to provide benefits that promote employee health and support employees in attaining financial security
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Perks and other Personal Benefits
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Fixed compensation
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Intended to provide a business-related benefit to the Company, and to assist in attracting and retaining executive officers
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Post-Employment Compensation and Change in Control
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Fixed compensation
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Intended to provide temporary income following a named executive officer’s involuntary termination of employment and, in the case of a change of
control, to also provide continuity of management
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EXECUTIVE COMPENSATION
(CONTINUED)
Base Salary
Base salary
represents amounts paid during the fiscal year to named executive officers as direct compensation for their services to us. Base salary and increases to base salary recognize the overall experience, position and responsibilities within RPM and
expected contributions to RPM of each named executive officer. Adjustments to salaries are used to reward superior individual performance of our named executive officers on a
day-to-day
basis during the year and to encourage them to perform at their highest levels. We also use our base salary to retain top quality executives and attract
management employees from other companies.
In July 2017, our Chief Executive Officer and our President and Chief Operating Officer recommended that the Compensation
Committee not increase the base salaries of the named executive officers with the exception of a 1.6% increase to Ms. Kastner’s base salary. As in the past, this recommendation was based upon an analysis of:
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RPM’s fiscal 2017 operating results;
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A comparison of the Five-Year Cumulative Total Returns among RPM, the S&P 500 Index and Proxy Statement peer group of companies; and
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Base salary and bonus compensation information for 2016 and 2017 and proposed amounts for 2018.
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NAMED EXECUTIVE OFFICER BASE
SALARY AMOUNTS
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Fiscal
2018
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Fiscal
2017
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Fiscal
2016
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Frank C. Sullivan
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$
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970,000
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$
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970,000
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$
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960,000
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Ronald A. Rice
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$
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730,000
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$
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730,000
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$
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720,000
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Russell L. Gordon
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$
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475,000
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$
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475,000
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$
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465,000
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Edward W. Moore
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$
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370,000
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$
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370,000
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$
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360,000
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Janeen B. Kastner
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$
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315,000
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$
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310,000
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$
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295,000
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Annual Cash Incentive Compensation
For fiscal
2017, we provided annual cash incentive compensation under the Amended and Restated 1995 Incentive Compensation Plan, which was designed to motivate participants to achieve our financial objectives and reward executives for their achievements when
those objectives are met. All named executive officers who are Covered Employees under Section 162(m) of the Internal Revenue Code, namely the Chief Executive Officer and the next three highest paid
executive officers, excluding the Chief Financial Officer, participated in the fiscal 2017 incentives. In addition, although the Chief Financial Officer is not a Covered Employee by definition,
the Compensation Committee evaluated Mr. Gordon under performance criteria similar to that used to determine the cash incentive compensation of the other named executive officers. The amount of cash incentive compensation earned by our named
executive officers in fiscal 2017 is set forth in the
“Non-Equity
Incentive Plan Compensation” column of the Summary Compensation Table. We paid these amounts in July 2017.
In July 2016, the Compensation Committee determined, on a percentage basis, the portion of the aggregate cash incentive compensation award pool under the Incentive
Compensation Plan, or the Incentive Plan, to be awarded to each of the Covered Employees in respect of the Company’s performance for the fiscal year ending May 31, 2017 as follows: Mr. Sullivan, 40%; Mr. Rice, 30%;
Mr. Moore, 15%; and Ms. Kastner, 15%. The Compensation Committee determined that cash incentives paid would range from zero to 150% of salary with a target of 100% for all direct reports of the Chief Executive Officer, regardless of title,
namely, Messrs. Rice, Gordon, Moore and Ms. Kastner. The Compensation Committee may reduce or eliminate the amount of a named executive officer’s annual cash incentive award, at the Compensation Committee’s sole discretion, based
solely on individual performance.
The Incentive Plan in place for fiscal 2017 provided for an aggregate cash incentive compensation award pool of 1.5% of our
pre-tax
income for fiscal 2017. In July 2017, the Compensation Committee calculated the aggregate
non-equity
compensation award pool based on our audited
pre-tax
income and each individual’s cash incentive payout amount. For fiscal 2017, the Company’s
pre-tax
income as defined in the Incentive Plan was
$473 million, providing a cash incentive compensation award pool under the Incentive Plan for the Covered Employees of approximately $7.0 million. Upon the recommendation of our Chief Executive Officer, and after a review of a variety of
factors described below, the Compensation Committee awarded cash incentives totaling $1,820,000 to the Covered Employees, which was significantly below the aggregate amount authorized to be paid pursuant to the award pool formula. The cash incentive
compensation paid to the Covered Employees equaled approximately 76% of their salaries for fiscal 2017.
EXECUTIVE COMPENSATION
(CONTINUED)
In July 2017, the Compensation Committee determined, on a percentage basis, the portion of the aggregate cash incentive
award pool under the Incentive Plan to be awarded to each of the Covered Employees under Section 162(m) of the Internal Revenue Code in respect of the Company’s performance for the fiscal year ending May 31, 2018 as follows:
Mr. Sullivan, 40%; Mr. Rice, 30%; Mr. Moore, 15%; and Ms. Kastner, 15%. Mr. Gordon, the Chief Financial Officer of the Company, although not a Covered Employee under the Section 162(m) definition, is eligible to receive
cash incentive compensation for fiscal 2018 based on the same performance criteria as the Covered Employees listed above. The Compensation Committee also determined that for fiscal 2018 the cash incentive compensation paid would range from zero to
150% of salary with a target of 100% of salary for each of the Covered Employees and Mr. Gordon.
As disclosed above, the Incentive Plan in place for fiscal 2017
provided for an aggregate cash incentive compensation award pool of approximately $7.0 million. The maximum portion of the award pool, subject to the limitations of the Incentive Plan, that each Covered Employee could be awarded was:
Mr. Sullivan – 40% or $2,800,000; Mr. Rice – 30% or $2,100,000; Mr. Moore – 15% or $1,050,000; and Ms. Kastner – 15% or $1,050,000. However, the Compensation Committee
had set a maximum award of 150% of the Covered Employee’s base salary as a limit, with a target award of 100% of the Covered Employee’s base salary. As a result, the maximum award that could be earned by the Covered Employee was:
Mr. Sullivan – $1,455,000; Mr. Rice – $1,095,000; Mr. Moore – $555,000; and Ms. Kastner – $465,000. The actual awards were as follows: Mr. Sullivan, $730,000;
Mr. Rice, $550,000; Mr. Moore, $350,000; and Ms. Kastner, $190,000.
EXECUTIVE COMPENSATION
(CONTINUED)
In determining the actual incentive compensation awards for fiscal 2017, the named executive would receive a portion of his
or her award equal to:
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40% of his or her base salary, if the Company achieved a 1.9% increase in adjusted earnings before interest and taxes (“EBIT”)*. The Company achieved a 1.6% increase in adjusted EBIT, taking into account
foreign exchange rates. Although the Company did not achieve its adjusted EBIT goal in its entirety, the Compensation Committee elected to award
one-half
of this portion of each named executive officer’s
award (i.e., 20% of his or her base salary) in light of narrowly missing the adjusted EBIT growth goal, taking into account foreign exchange rates;
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30% of his or her base salary, if the Company achieved revenue growth of 8.0% or above. The Company achieved revenue growth of 4.3%, as adjusted, taking into account foreign exchange rates. Although the Company did not
achieve its revenue growth goal in its entirety, the Compensation Committee elected to award
one-half
of this portion of each named executive officer’s award (i.e., 15% of his or her base salary) in light
of revenue growth, taking into account foreign exchange rates, in a difficult economic environment.
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40% of his or her base salary, if the Company achieved growth in other financially measured objectives, which for fiscal 2017 were improvement in (i) gross profit margin and (ii) capital adjusted net earnings.
For fiscal 2017, gross profit margin improved compared to fiscal 2016, however, capital adjusted net earnings decreased. Based on gross profit margin improvement, the Compensation Committee elected to award one-fourth of this portion of each named
executive officer’s award (i.e., 10% of his or her base salary); and
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40% of his or her base salary, in the discretion of the Chief Executive Officer, based upon the achievement of
non-financially
measured management objectives, which were the
Company’s overall return to stockholders versus both the market and the Company’s peers, and such named executive officer’s involvement in the Company’s merger and acquisition transactions in fiscal 2017 and significant
restructuring action completed in fiscal 2017. Each named executive earned a portion of his or her award based upon achievement of applicable individual objectives.
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For a description of EBIT, including why we consider EBIT and a reconciliation of EBIT to income (loss) before income taxes, see “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” included in our Annual Report to Stockholders, which can be found on our website at www.rpminc.com.
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As a result, Messrs. Sullivan, Rice, Gordon, Moore and Ms. Kastner were awarded incentive compensation equal to
approximately 75%, 75%, 95%, 95% and 61% of their respective base salaries.
Equity Compensation
We use equity compensation to align our named executive officers’ interests with those of our stockholders and to attract and retain high-caliber executives through
recognition of anticipated future performance. Under our 2014 Omnibus Plan, we can grant a variety of stock-based awards, including awards of restricted stock and stock appreciation rights. After reviewing executive compensation practices against
our defined comparative framework, including reviewing equity awards for similarly situated officers at companies in the diversified chemicals and specialty chemicals industries which fall within a reasonable size range (in terms of sales) and
operate businesses similar to that of the Company, our Chief Executive Officer and our President and Chief Operating Officer make annual recommendations to the Compensation Committee of the type and amount of equity awards for the Chief Executive
Officer, the President and Chief Operating Officer, and the other executive officers. In determining the equity incentive compensation component of Chief Executive Officer compensation, the Compensation Committee considers, in addition to the
factors used to determine salary and cash incentive compensation:
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the value of similar incentive awards to chief executive officers in our peer group and other similar companies, and
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awards given to the Chief Executive Officer in past years.
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In determining the equity incentive compensation of the other
executive officers, the Compensation Committee reviews and approves a mix of business plan goals, with a significant amount of emphasis placed on the compensation recommendations of our Chief Executive Officer and our President and Chief Operating
Officer. After receiving the recommendations of our Chief Executive Officer and our President and Chief Operating Officer, the Compensation Committee meets without our Chief Executive Officer and our President and Chief Operating Officer present to
consider their recommendations. The Compensation Committee must approve any recommended equity grants before they can be made.
EXECUTIVE COMPENSATION
(CONTINUED)
The Compensation Committee uses the various equity incentive awards available to it under the 2014 Omnibus Plan to retain
executives and other key employees and achieve the following additional goals:
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to reward past performance;
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to incentivize future performance (both short-term and long-term);
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to align executives’ long-term interest with that of the stockholders; and
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•
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to enhance the longer-term performance and profitability of the Company.
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The Compensation Committee’s current
intention is to achieve these goals by making annual awards to the Company’s executive officers and other key employees, using a combination of restricted stock and stock-settled stock appreciation rights.
Performance Earned Restricted Stock (PERS)
. The Compensation Committee currently awards Performance Earned Restricted Stock, or PERS, under the 2014 Omnibus
Plan. The threshold and maximum number of and performance goals for the award of PERS for a given fiscal year are set in July of that year. The determination of whether and to what extent the PERS have been achieved for a fiscal year is made at the
July meeting of the Compensation Committee following the close of that fiscal year. Based on that determination, the actual grants, if any, with respect to a fiscal year are made at that same meeting. With respect to fiscal 2017, the maximum number
and performance goals were set in July 2016 and the Compensation Committee determined whether and to what extent the PERS were achieved at its meeting in July 2017.
The percentage of shares with respect to which the performance goal has been achieved is determined by reference to the percentage increase of planned EBIT which is
attained. In making the determination of whether the planned increase has been attained, the actual fiscal year results are adjusted for the exclusion of restructuring and other similar charges or credits that are not central to the Company’s
operations as shown on the Company’s financial statements as certified by the Company’s independent registered public accounting firm. If less than 75% of the planned increase is attained, then the performance goal will not be achieved
with respect to any shares. If 75% to 100% of the planned increase is attained, then the performance goal will be achieved with respect to an equivalent percentage of shares. For example, if 91% of the planned increase is attained, then the
performance goal will be achieved with respect to a
maximum amount of 91% of the shares. The percentage of the planned increase attained will be rounded down to the closest whole number (
e.g.
, 85.5% would be rounded down to 85%). If more
than 100% of the planned increase is attained, then the performance goal will be achieved with respect to 100% of the shares.
In July 2016, pursuant to the 2014
Omnibus Plan, the Compensation Committee approved a contingent award of PERS to the Covered Employees of up to 125,000 shares (including 60,000 shares for the Chief Executive Officer) to be based on the level of attainment of fiscal 2017 performance
goals related to an increase in planned EBIT. In July 2016, the Compensation Committee established a 7.6% increase in adjusted EBIT over fiscal 2016 levels as the target for purposes of determining the amount of PERS awards earned by the named
executive officers with respect to fiscal 2017. Adjusted EBIT for fiscal 2017 compared to fiscal 2016 was below goal. As a result, the Compensation Committee did not award any of these PERS to the Covered Employees and Mr. Gordon.
Stock Appreciation Rights (SARs)
.
In July 2017, pursuant to the 2014 Omnibus Plan, the Compensation Committee awarded SARs totaling 390,000 shares to
the executive officers. The SARs awards granted to the named executive officers in July 2017 are set forth below in the Grants of Plan-Based Awards for Fiscal 2017 table. The value of SARs is one component of the named executive officers’ long
term incentive compensation intended to maintain such compensation competitive with the market median.
Supplemental Executive Retirement Plan (SERP) Restricted
Stock
.
The RPM International Inc. 2007 Restricted Stock Plan was previously established to provide for supplemental retirement benefits to officers and other key employees of the Company designated by the Board of Directors
whose retirement plan benefits may be limited under applicable law and the Internal Revenue Code. During fiscal 2017, the Compensation Committee determined that there were insufficient shares available under the 2007 Restricted Stock Plan for future
SERP grants, and that such SERP grants will instead be awarded under the 2014 Omnibus Plan. In July 2016, the Compensation Committee awarded 20,175 shares of restricted stock to the executive officers under a combination of the 2007 Restricted Stock
Plan and the 2014 Omnibus Plan.
Performance Contingent Restricted Stock (PCRS)
.
In July 2015, the Compensation Committee approved contingent awards of PCRS to Messrs. Sullivan, Rice, Gordon, Moore and Ms. Kastner, of up to 168,000 shares.
Awarded pursuant to the 2014 Omnibus Plan, the purpose of the PCRS
EXECUTIVE COMPENSATION
(CONTINUED)
awards is to provide an added incentive to key officers to improve the long-term performance of the Company.
The PCRS awards were made contingent upon the level of attainment of performance goals for the three-year performance period from June 1, 2015 ending May 31,
2018. Vesting of 67% of the PCRS relates to an increase in EBIT for the period, and vesting of the remaining 33% relates to an increase in EBIT margin for the period. Actual results will be adjusted for the exclusion of restructuring and other
similar unusual charges or credits that are not central to the operations of the Company as shown on the Company’s consolidated financial statements as audited by the Company’s independent registered public accounting firm.
With respect to that portion of the PCRS that may vest based upon achievement of improvement in EBIT, if the increase in EBIT is less than 75% of the planned increase in
EBIT, then the performance goals are not achieved with respect to any of that portion of the PCRS. If the increase in EBIT is 75% to 100% of the planned increase in EBIT, then the performance goals are achieved with respect to a pro rata amount of
that portion of the PCRS. If the increase in EBIT is more than 100% of the planned increase in EBIT, then the performance goals are achieved with respect to all of that portion of the PCRS.
With respect to that portion of the PCRS that may vest based upon achievement of improvement in EBIT margin, if EBIT margin does not increase, then the performance goals
are not achieved with respect to any of that portion of the PCRS. If EBIT margin increases, then that portion of the PCRS will vest in a pro rata amount based on the percentage of the EBIT margin performance goal achieved. If the increase in EBIT
margin is more than 100% of the planned increase in EBIT margin, then the performance goals are achieved with respect to all of that portion of the PCRS.
The
Compensation Committee set the performance goals related to the PCRS awards at levels it believed to be achievable but would require the Company to meaningfully grow earnings.
Certain Fiscal 2018 Compensation Determinations
2018 PERS.
In July
2017, the Compensation Committee determined that the performance goals for fiscal 2018 PERS will be (i) increase in planned EBIT and (ii) improvement in capital adjusted net earnings. For fiscal 2018 PERS awards, 67% of each named executive
officer’s PERS award will be based upon achievement of increase in planned EBIT goals, and 33% of each named executive officer’s PERS award will be based upon achievement of improvement in capital adjusted net earnings. By contrast, fiscal
2017 PERS awards
were based upon achievement of increase in planned EBIT alone. The Compensation Committee will determine whether and to what extent the 2018 PERS were achieved at its meeting in July 2018.
Timing of Equity Grants
Equity grants to the named executive officers are made
in July at regularly scheduled meetings of the Compensation Committee. Board and Compensation Committee meetings are generally scheduled at least a year in advance. Scheduling decisions are made without regard to anticipated earnings or other major
announcements by the Company.
Minimum Stock Ownership Guidelines
The
Company adopted minimum stock ownership guidelines for its executive officers and Directors in July 2012. Under the stock ownership guidelines certain executive officers are required to maintain the following minimum equity stakes in the Company:
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for the Company’s Chief Executive Officer, Common Stock equivalent to five times annual base salary;
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for the Company’s President and Chief Operating Officer, Common Stock equivalent to four times annual base salary; and
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•
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for those other executive officers of the Company who report directly to the Chief Executive Officer, Common Stock equivalent to three times annual base salary.
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Executives are expected to achieve targets within five years of the later of the date of the adoption of the minimum stock ownership guidelines or the date of assuming
their positions. Each of the Company’s executive officers met the minimum stock ownership guidelines as of May 31, 2017.
Employment Agreements and
Related Arrangements
We are a party to the following employment agreements with our named executive officers, each of which has been in effect since
December 31, 2008:
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Frank C. Sullivan.
Pursuant to an employment agreement whereby Frank C. Sullivan serves as our Chairman and Chief Executive Officer, Frank C. Sullivan is entitled to an annual base salary of not less than
$970,000 effective as of June 1, 2017.
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•
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Ronald A. Rice.
Pursuant to an employment agreement whereby Mr. Rice serves as our President and Chief Operating Officer, Mr. Rice is entitled to an annual base salary of not less than $730,000
effective as of June 1, 2017.
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•
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Russell L. Gordon.
Pursuant to an employment agreement that the Company had entered into with Mr. Gordon
prior
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EXECUTIVE COMPENSATION
(CONTINUED)
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to his promotion to Chief Financial Officer, Mr. Gordon is entitled to an annual base salary of not less than $475,000 effective as of June 1, 2017.
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•
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Edward W. Moore.
Pursuant to an employment agreement whereby Mr. Moore serves as our Senior Vice President, General Counsel, Chief Compliance Officer and Secretary, Mr. Moore is entitled to an
annual base salary of not less than $370,000 effective as of June 1, 2017.
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•
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Janeen B. Kastner.
Pursuant to an employment agreement whereby Ms. Kastner serves as our Vice President –Corporate Benefits and Risk Management, Ms. Kastner is entitled to an annual base
salary of not less than $315,000 effective as of June 1, 2017.
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Pursuant to the employment agreements, each of Messrs. Sullivan, Rice, Gordon,
Moore and Ms. Kastner serves for a term ending on May 31, 2017, which is automatically extended for additional
one-year
periods unless either party gives the other party notice of nonrenewal two
months in advance of the annual renewal date. In accordance with these automatic extension provisions, the employment agreement with each of these named executive officers has been extended to May 31, 2018. Each of Messrs. Sullivan, Rice,
Gordon, Moore and Ms. Kastner is also eligible to receive such annual cash incentive compensation or bonuses as our Compensation Committee may determine based upon our results of operations and other relevant factors. Messrs. Sullivan,
Rice, Gordon, Moore and Ms. Kastner are also generally entitled to participate in our employee benefit plans. Under the employment agreements, each of these named executive officers is entitled to receive fringe benefits in line with our
present practice relating to the officer’s position, including the use of the most recent model of a
full-sized
automobile.
See “Other Potential Post-Employment Compensation” for a discussion of additional terms of the employment agreements related to restrictive covenants and
potential post-employment compensation.
New Form of Employment Agreement
In April 2016, the Compensation Committee approved a new form of employment agreement that will be used for any new employment agreements with our executives in the
future. The new form of employment agreement generally follows the current employment agreements with our named executive officers, except that the new form of employment agreement removes a provision that accelerates equity awards upon a
termination of employment following a change in control. Instead, any outstanding equity awards will be subject to the terms of their respective plans and award agreements (for
example, equity awards granted under the 2014 Omnibus Plan will follow the double-trigger vesting provisions set forth in the 2014 Omnibus Plan). Further, the new form of employment agreement
does not provide for a tax
gross-up
for excise taxes triggered under Section 280G of the Internal Revenue Code, but instead includes a
“best-net
alternative” provision, under which the executive would receive the greater of the total parachute payments, after taxes (including the excise tax) have been paid, or reduced parachute payments equal to the highest amount that may be paid
without triggering the excise tax under Section 280G. The definitions of “change in control” and “good reason” were also revised to match the definitions for such terms in the 2014 Omnibus Plan.
Policy on Clawback of Executive Compensation
In July 2012, the Board of
Directors adopted a policy regarding the clawback of executive compensation. If, as the result of the gross negligence or willful misconduct of any executive officer of the Company, the Company is required to restate all or a portion of its
financial statements, the Board of Directors will, to the extent permitted by governing law, require reimbursement of any bonus or incentive compensation awarded to such executive officer or effect the cancellation of unvested restricted or deferred
stock awards or stock options previously granted to the executive officer if:
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the amount of the bonus, incentive compensation or stock or option award was calculated based upon the achievement of certain financial results that were subsequently the subject of a restatement,
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the amount of the bonus, incentive compensation or stock or option award that would have been awarded to the executive officer had the financial results been properly reported would have been lower than the amount
actually awarded, and
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•
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it is reasonable to do so (e.g., the expense of recovering the compensation does not exceed the amount recovered).
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Post-Employment Compensation and Change in Control
Each of the employment
agreements with Messrs. Sullivan, Rice, Gordon, Moore and Ms. Kastner provides for payments and other benefits if the named executive officer’s employment terminates under certain circumstances, such as being terminated without cause
within two years of a change in control, which is often referred to as a “double-trigger.” We believe that these payments and other benefits are important to recruiting and retaining our named executive officers, as many of the companies
with which we compete for executive talent provide for similar payments to their senior employees. Additional information regarding these payments and other benefits is found under the heading “Other Potential
Post-Employment
Compensation.”
EXECUTIVE COMPENSATION
(CONTINUED)
Section 162(m) of the Internal Revenue Code
In the course of fulfilling its responsibilities, the Compensation Committee routinely reviews the impact of Section 162(m) of the Internal Revenue Code, which
disallows a tax deduction for certain compensation paid in excess of $1,000,000 to the Chief Executive Officer and the next three highest paid executive officers of the Company, excluding the Chief Financial Officer. The regulations under
Section 162(m), however, exempt from this $1,000,000 limit various forms of compensation, including “performance-based” compensation. The Company’s performance-based Incentive Plan, described above, and the 2014 Omnibus Plan
satisfy the requirements of this Section 162(m) exemption. Although the Compensation Committee considers the impact of Section 162(m) when administering the Company’s compensation programs, the Compensation Committee does not make
decisions regarding executive compensation solely based on the expected tax treatment of such compensation.
In order to maintain flexibility in designing
compensation programs that retain key leaders, reward past performance, incentivize strong future performance and align executives’ long-term interests with stockholders, the Compensation Committee may deem it appropriate at times to forgo
Section 162(m) qualified awards in favor of awards that may not be fully
tax-deductible.
This has occurred, for example, when the Company’s operating results were adversely impacted by restructuring
or other
non-operating
charges, yet the Company performed significantly better than its business plan notwithstanding the charges.
Perks and Other Benefits
Our named executive officers participate in various
employee benefit plans that are generally available to all employees and on the same terms and conditions as with respect to other similarly situated employees. These include normal and customary programs for life insurance, health insurance,
prescription drug insurance, dental insurance, short and long term disability insurance, pension benefits, and matching gifts for charitable contributions. While these benefits are considered to be an important and appropriate employment benefit for
all employees, they are not considered to be a material component of a named executive officer’s annual compensation program. Because the named executive officers receive these benefits on the same basis as other employees, these benefits are
not established or determined by the Compensation Committee separately for each named executive officer as part of the named executive officer’s annual compensation package.
In addition, we maintain a 401(k) retirement savings plan for the benefit of all of our employees, including our named
executive officers. In fiscal 2017, we provided a Company match of up to 4% of the qualified retirement plan compensation limit per employee, which executives also were able to receive.
RPM’s company match is fully vested to all employees, including executives, at the time of contribution. As is the case with all employees, unless they elect to make their contributions on an
after-tax
basis, named executive officers are not taxed on their contributions to the 401(k) retirement savings plan or earnings on those contributions until they receive distributions from the 401(k) retirement savings plan, and all RPM contributions are tax
deductible by us when made.
During fiscal 2017 we provided the use of cars to our named executive officers. Also during fiscal 2017, we made financial and estate
planning services available to Messrs. Sullivan, Rice and Moore, and we paid executive life insurance premiums for the benefit of our named executive officers.
We periodically review the perquisites that named executive officers receive.
Other Plans
In addition to the above described plans, the Company offers a tax
qualified defined benefit retirement plan. Information about this plan can be found under the heading “Pension Benefits for Fiscal 2017.” The Company also offers a deferred compensation plan. Under this plan, selected management employees,
certain highly compensated employees and Directors are eligible to defer a portion of their salary, bonus, incentive plan amounts and Director fees until a future date. A participant’s account will be credited with investment gains or losses as
if the amounts credited to the account were invested in selected investment funds. Any compensation deferred under the plan is not included in the $1,000,000 limit provided for under Section 162(m) of the Internal Revenue Code until the year in
which the compensation actually is paid. Additional information about this plan can be found under the heading, “Nonqualified Deferred Compensation for Fiscal 2017.”
Report of the Compensation Committee
The Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation
S-K
with the Company’s management and legal counsel. Based on that review and discussion, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form
10-K
and in the Company’s definitive proxy statement
EXECUTIVE COMPENSATION
(CONTINUED)
prepared in connection with its 2017 Annual Meeting of Stockholders.
COMPENSATION COMMITTEE
David A. Daberko, Chairman
John P. Abizaid
Thomas S. Gross
The above Report of the Compensation Committee does
not constitute soliciting material and should not be deemed filed with the Commission or subject to Regulation 14A or 14C (other than as provided in Item 407 of
Regulation S-K)
or to the liabilities
of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that the information in this Report be treated as soliciting material or specifically incorporates it by reference into a document filed under the
Securities Act of 1933 (the “Securities Act”) or the Exchange Act. If this Report is incorporated by reference into the Company’s Annual Report on Form
10-K,
such disclosure will be furnished in
such Annual Report on Form
10-K
and will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act as a result of furnishing the disclosure in this manner.
Compensation-Related Risk Assessment
The Compensation Committee considers risks related to the attraction and retention of talent and risks relating to the design of compensation programs and arrangements
affecting executive officers and employees. Our compensation programs reward outstanding performance by our operating companies, and do not encourage excessive risk taking on the part of our executive officers and employees. Further, elements of our
compensation programs, including our minimum stock ownership guidelines, our clawback policy, and the three-year performance period structure of our PCRS awards, help mitigate compensation-related risk. After considering the Company’s
compensation program as a whole and receiving the input of the Compensation Committee, we have concluded that risks arising from our compensation policies and practices applicable to our employees are not reasonably likely to have a material adverse
effect on the Company. In reaching that conclusion, we considered, among other things, the general performance-based philosophy of our compensation program, the material consistency of our compensation structure throughout all key employee levels of
the Company, the balance of long and short term components of compensation, and the Company’s risk profile generally.
EXECUTIVE COMPENSATION
(CONTINUED)
Summary Compensation Table
The following table sets forth information regarding the compensation of our Chief Executive Officer, our Chief Financial Officer and our other three highest paid
executive officers for fiscal 2017, fiscal 2016 and fiscal 2015.
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Name and Principal
Position
(a)
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Year
(b)
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Salary
($)
(c)
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Bonus
($)
(1)
(d)
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Stock
Awards
($)
(2)(3)
(e)
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Option
Awards
($)
(2)(3)
(f)
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Non-Equity
Incentive
Plan
Compensation
($)
(4)
(g)
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Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(5)
(h)
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All
Other
Compensation
($)
(6)
(i)
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Total
($)
(j)
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Frank C. Sullivan
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2017
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970,000
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0
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214,158
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2,580,000
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730,000
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17,248
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146,485
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4,657,891
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Chairman and Chief Executive
Officer
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2016
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960,000
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0
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8,111,067
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2,186,000
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1,050,000
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98,174
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132,532
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12,537,773
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2015
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940,000
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0
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2,499,062
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2,146,000
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900,000
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65,192
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125,347
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6,675,601
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Ronald A. Rice
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2017
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730,000
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0
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223,795
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1,290,000
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550,000
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19,412
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127,009
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2,940,216
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President and Chief Operating
Officer
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2016
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720,000
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0
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3,735,376
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1,093,000
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790,000
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85,202
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148,587
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6,572,165
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2015
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700,000
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0
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1,556,661
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1,073,000
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650,000
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55,385
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113,398
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4,148,444
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Russell L. Gordon
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2017
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475,000
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0
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213,546
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387,000
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450,000
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16,671
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40,791
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1,583,008
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Vice President and Chief
Financial Officer
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2016
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465,000
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0
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1,609,089
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327,900
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550,000
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73,273
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40,835
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3,066,097
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2015
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450,000
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0
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691,053
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321,900
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450,000
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44,937
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46,179
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2,004,069
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Edward W. Moore
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2017
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370,000
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0
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106,722
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387,000
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350,000
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28,174
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94,980
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1,336,876
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Senior Vice President, General
Counsel and Chief Compliance Officer
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2016
2015
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360,000
330,000
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0
0
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2,443,655
616,214
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327,900
321,900
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425,000
400,000
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61,672
46,470
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86,051
80,748
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3,704,278
1,795,332
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Janeen B. Kastner
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2017
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310,000
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0
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86,530
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387,000
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190,000
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17,369
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41,383
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1,032,282
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Vice President – Corporate Benefits
and Risk Management
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2016
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295,000
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0
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1,238,025
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327,900
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210,000
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65,964
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35,948
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2,172,837
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2015
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285,000
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0
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359,106
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321,900
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175,000
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45,772
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37,227
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1,224,005
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(1)
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Amounts earned under the Incentive Plan are reported in the
Non-Equity
Incentive Plan Compensation column.
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(2)
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The dollar value of restricted stock, SARs and stock options set forth in these columns is equal to the fair market value as of the date of the respective grant.
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(3)
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Information regarding the shares of SARs granted to our named executive officers in July 2017 is set forth in the Grants of Plan-Based Awards for Fiscal 2017 table. The Grants of Plan-Based Awards for Fiscal 2017 table
also sets forth the aggregate grant date fair value of the restricted stock granted during fiscal 2017 computed in accordance with ASC 718. Shares of restricted stock and SARs are subject to risk of forfeiture.
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2016 Stock Awards include PCRS grants for each named executive officer. Such grants assume the maximum amount of PCRS is awarded, although the grants are contingent upon the level of attainment of performance goals for
the three-year period from June 1, 2015 ending May 31, 2018.
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(4)
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The amounts set forth in this column were earned during fiscal 2017 and paid in July 2017, earned during fiscal 2016 and paid in July 2016 and earned during fiscal 2015 and paid in July 2015 for 2017, 2016 and 2015,
respectively, under our Incentive Plan.
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(5)
|
The amounts set forth in this column reflect the change in present value of the executive officer’s accumulated benefits under the RPM International Inc. Retirement Plan (the “Retirement Plan”). During
2017, 2016 and 2015, there were no above-market or preferential earnings on nonqualified deferred compensation.
|
|
(6)
|
All Other Compensation includes Company contributions to the 401(k) plan, life insurance premiums, automobile allowances, financial/estate planning, periodic executive physical examinations and charitable matching
programs. For each named executive officer for whom the total value of all personal benefits exceed $10,000 in fiscal 2017, the amount of incremental cost to the Company for each personal benefit listed below, if applicable and to the extent such
cost exceeded the greater of $25,000 or 10% of the total personal benefits for such named executive officer is as follows: automobile allowance: Mr. Sullivan $29,874 and Mr. Rice $31,379; life insurance premiums: Mr. Sullivan
$104,391, Mr. Rice $80,580, and Mr. Moore $59,964. The value of the automobile allowance is determined by adding all of the costs of the program, including lease costs and costs of maintenance, fuel, license and taxes and includes personal
and business use.
|
EXECUTIVE COMPENSATION
(CONTINUED)
Grants of Plan-Based Awards For Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards
(1)
|
|
|
Estimated Possible Payouts
Under Equity Incentive Plan
Awards
|
|
|
All Other
Stock
Awards:
Number
of Shares
of
Stock
or Units
(#)
(i)
|
|
|
All Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
(j)
|
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
(k)
|
|
|
|
|
|
Name
(a)
|
|
Grant Date
(b)
|
|
Threshold
($)
(c)
|
|
|
Target
($)
(d)
|
|
|
Maximum
($)
(e)
|
|
|
Threshold
(#)
(f)
|
|
|
Target
(#) (g)
|
|
|
Maximum
(#)
(h)
|
|
|
|
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
($)
(2)
(I)
|
|
|
Frank C. Sullivan
|
|
7/25/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,200
|
|
|
|
|
|
|
|
|
|
|
|
214,158
|
|
|
|
|
Incentive Plan Award
|
|
|
970,000
|
|
|
|
|
|
|
|
1,455,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/17 PERS
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
|
|
|
60,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
7/17/17 SARs
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
55.19
|
|
|
|
2,580,000
|
|
|
Ronald A. Rice
|
|
7/25/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,389
|
|
|
|
|
|
|
|
|
|
|
|
223,795
|
|
|
|
|
Incentive Plan Award
|
|
|
730,000
|
|
|
|
|
|
|
|
1,095,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/17 PERS
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,250
|
|
|
|
|
|
|
|
35,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
7/17/17 SARs
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
55.19
|
|
|
|
1,290,000
|
|
|
Russell L. Gordon
|
|
7/25/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,188
|
|
|
|
|
|
|
|
|
|
|
|
213,546
|
|
|
|
|
Incentive Plan Award
|
|
|
475,000
|
|
|
|
|
|
|
|
712,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/17 PERS
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
7/17/17 SARs
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
55.19
|
|
|
|
387,000
|
|
|
Edward W. Moore
|
|
7/25/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,093
|
|
|
|
|
|
|
|
|
|
|
|
106,722
|
|
|
|
|
Incentive Plan Award
|
|
|
370,000
|
|
|
|
|
|
|
|
555,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/17 PERS
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,250
|
|
|
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
7/17/17 SARs
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
55.19
|
|
|
|
387,000
|
|
|
Janeen B. Kastner
|
|
7/25/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,697
|
|
|
|
|
|
|
|
|
|
|
|
86,530
|
|
|
|
|
Incentive Plan Award
|
|
|
310,000
|
|
|
|
|
|
|
|
465,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/17/17 PERS
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,250
|
|
|
|
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
|
7/17/17 SARs
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
55.19
|
|
|
|
387,000
|
|
|
(1)
|
These columns show the possible payouts for each named executive officer under the Incentive Plan for fiscal 2017 based on the goals set in July 2016. Detail regarding actual awards under the Incentive Plan is reported
in the Summary Compensation Table and is included in the Compensation Discussion and Analysis.
|
|
(2)
|
The values included in this column represent the grant date fair value of restricted stock computed in accordance with ASC 718, except no assumptions for forfeitures were included. A discussion of the assumptions used
in calculating the compensation cost is set forth in Note H of the Notes to Consolidated Financial Statements of our 2017 Annual Report to Stockholders.
|
|
(3)
|
Shares of SERP restricted stock awarded under the 2007 Restricted Stock Plan and 2014 Omnibus Plan. These shares vest on the earliest to occur of (a) the later of either the employee’s attainment of age 55 or
the fifth anniversary of the May 31st immediately preceding the date on which the shares of restricted stock were awarded, (b) the retirement of the employee on or after the attainment of age 65 or (c) a change in control with respect to
the Company.
|
|
(4)
|
PERS for which the threshold and maximum number of shares and performance goals with respect to fiscal 2017 were determined in July 2016 and are disclosed herein pursuant to Commission rules.
|
|
(5)
|
SARs granted pursuant to the 2014 Omnibus Plan. These SARs vest in four equal installments, beginning July 17, 2018.
|
EXECUTIVE COMPENSATION
(CONTINUED)
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Salary.
Salaries paid to our named executive officers pursuant to their employment arrangements with us are set forth in the Summary Compensation Table. For fiscal
2017, salaries paid to our named executive officers accounted for the following percentages of their total compensation reported in the “Total” column of the Summary Compensation Table: Mr. Sullivan (21%), Mr. Rice (25%),
Mr. Gordon (30%), Mr. Moore (28%), and Ms. Kastner (30%). For fiscal 2016, salaries paid to our named executive officers accounted for the following percentages of their total compensation reported in the “Total” column of
the Summary Compensation Table: Mr. Sullivan (8%), Mr. Rice (11%), Mr. Gordon (15%), Mr. Moore (10%), and Ms. Kastner (14%). For fiscal 2015, salaries paid to our current named executive officers accounted for the following
percentages of their total compensation reported in the “Total” column of the Summary Compensation Table: Mr. Sullivan (14%), Mr. Rice (17%), Mr. Gordon (22%), Mr. Moore (18%), and Ms. Kastner (23%).
Bonus.
No bonuses were awarded to our named executive officers during fiscal 2017, fiscal 2016 or fiscal 2015, although the named executive officers did receive
cash awards under our Incentive Plan, as further described under the caption
“Non-Equity
Incentive Plan Compensation” below.
Stock Awards.
The amounts in the “Stock Awards” column of the “Grants of Plan-Based Awards for Fiscal 2017” table consist of restricted stock
and performance earned restricted stock grants. Each of these grants is described in further detail under the heading “Compensation Discussion and Analysis – Equity Compensation.”
|
•
|
|
SERP Restricted Stock.
We granted restricted stock under our 2007 Restricted Stock Plan and 2014 Omnibus Plan. The SERP restricted stock awards granted to our named executive officers are set forth in the table
“Grants of Plan-Based Awards for Fiscal 2017.” The vesting of SERP restricted stock upon either the death or disability of the named executive officer or upon a change in control of our Company is described under the heading “Other
Potential Post-Employment Compensation.”
|
|
•
|
|
PCRS
. Pursuant to our 2014 Omnibus Plan, we awarded performance contingent restricted stock grants, or PCRS, to our named executive officers. The PCRS awards are contingent upon the level of attainment of
performance goals for the three-year period from June 1, 2015 ending May 31, 2018.
|
|
•
|
|
PERS
. Pursuant to our 2014 Omnibus Plan, we award performance earned restricted stock grants, or PERS, to our named executive officers. No PERS were granted to our named executive officers for fiscal 2017.
|
The amounts included in the “Stock Awards” column of the Summary Compensation Table represent the grant date fair value of grants made in
accordance with ASC 718.
Option Awards.
Pursuant to our 2014 Omnibus Plan, we awarded stock appreciation rights, or SARs, to our named executive
officers. The SARs granted to our named executive officers are set forth in the table “Grants of Plan-Based Awards for Fiscal 2017.” These grants are described in further detail under the heading “Compensation Discussion and
Analysis – Equity Compensation – Stock Appreciation Rights (SARs).” The amounts included in the “Option Awards” column of the Summary Compensation Table represent the grant date fair value of grants made
in accordance with ASC 718.
Non-Equity
Incentive Plan Compensation.
The
non-equity
incentive plan compensation set forth in the Summary Compensation Table reflects annual cash incentive compensation under our Incentive Plan. Annual cash incentive compensation is earned based upon
the achievement of performance objectives as described under the heading “Compensation Discussion and Analysis – Annual Cash Incentive Compensation.”
Change in Pension Value and Nonqualified Deferred Compensation Earnings.
The change in the present value of each of our named executive officer’s accrued
pension benefits under our Retirement Plan from May 31, 2016 to May 31, 2017 was based upon the RP2014 retiree generational mortality table for males and females with mortality improvements backed off to 2006 using scale MP2014, projected
using scale MP2016, blended 50% blue collar and 50% white collar. The change from May 31, 2015 to May 31, 2016 and from May 31, 2014 to May 31, 2015 was based upon the RP2014 retiree generational mortality table for males and
females, projected using scale MP2014, blended 50% blue collar and 50% white collar. The interest rate used to determine the present values was 4.25% as of May 31, 2015, 3.85% as of May 31, 2016 and 3.81% as of May 31, 2017. The
present values were determined assuming that such amounts were payable to each of our named executive officers at their earliest unreduced retirement age in our Retirement Plan – 65 years with five years of participation in our
Retirement Plan. The present value for 2015 also assumed that 35% of our named executive officers will be paid a life annuity and 65% will be paid a lump sum. The present values for 2016
EXECUTIVE COMPENSATION
(CONTINUED)
and 2017 assumed that 15% of our named executive officers will be paid a life annuity and 85% will be paid a lump sum.
The lump sums were determined using a 4.25% interest rate for May 31, 2015 and a 3.85% interest rate for May 31, 2016. The interest rates used for May 31,
2017 were 4.20% for the first five years, 4.77% for the next 15 years and 5.07% thereafter. The lump sums were determined using the applicable mortality table outlined in IRC Section 417(e) projected to 2023 for 2015 and 2016 calculations, and
projected to 2027 for the 2017 calculations. No
pre-retirement
decrements, including mortality, were assumed in these calculations.
All Other Compensation.
All other compensation of our named executive officers is set forth in the Summary Compensation Table and described in detail in
footnote (6) of the table.
These benefits are discussed in further detail under the heading “Compensation Discussion and Analysis – Perks and Other Benefits.”
Employment Agreements and Related Arrangements.
Each named executive officer is employed under an employment agreement. The terms of the employment agreements are
described under the headings “Compensation Discussion and Analysis – Employment Agreements and Related Arrangements” and “Other Potential Post-Employment Compensation.”
Additional Information.
We have provided additional information regarding the compensation we pay to our named executive officers under the headings
“Compensation Discussion and Analysis” and “Other Potential Post-Employment Compensation.”
The Company offers both an active defined benefit pension plan and a matching 401(k) plan for U.S. employees. The Company’s
worldwide employees have comprehensive health coverage and other competitive benefit packages, in keeping with local laws and customs.
EXECUTIVE COMPENSATION
(CONTINUED)
Outstanding Equity Awards at Fiscal
Year-End
for 2017
The following table provides information on the holdings of stock options, SARs and restricted stock by the named executive officers at May 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Stock Awards
|
|
Name
(a)
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(c)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
|
|
|
Option
Exercise
Price
($)
(e)
|
|
|
Option
Expiration
Date
(f)
|
|
|
Number
of Shares
or Units
of Stock
That Have
Not
Vested
(#)
(g)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
(1)
(h)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
(2)
(i)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value
of Unearned
Shares,
Units
or Other
Rights That
Have Not
Vested
($)
(3)
(j)
|
|
|
Frank C. Sullivan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,516
|
(4)
|
|
|
1,763,343
|
|
|
|
|
|
|
|
|
|
|
PERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
179,000
|
(5)
|
|
|
9,707,170
|
|
|
|
|
|
|
|
|
|
|
PERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
(6)
|
|
|
3,253,800
|
(6)
|
|
PCRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(7)
|
|
|
4,338,400
|
(7)
|
|
SARs
|
|
|
200,000
|
|
|
|
0
|
|
|
|
|
|
|
|
20.7300
|
|
|
|
10/07/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
0
|
|
|
|
|
|
|
|
22.1600
|
|
|
|
7/18/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
0
|
|
|
|
|
|
|
|
25.8700
|
|
|
|
7/16/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
50,000
|
(8)
|
|
|
|
|
|
|
33.8000
|
|
|
|
7/18/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
100,000
|
(9)
|
|
|
|
|
|
|
44.6000
|
|
|
|
7/21/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
150,000
|
(10)
|
|
|
|
|
|
|
47.1400
|
|
|
|
7/20/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
200,000
|
(11)
|
|
|
|
|
|
|
50.9900
|
|
|
|
7/25/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald A. Rice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,241
|
(12)
|
|
|
6,520,669
|
|
|
|
|
|
|
|
|
|
|
PERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,500
|
(13)
|
|
|
4,745,125
|
|
|
|
|
|
|
|
|
|
|
PERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
(6)
|
|
|
1,898,050
|
(6)
|
|
PCRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
(7)
|
|
|
2,169,200
|
(7)
|
|
SARs
|
|
|
100,000
|
|
|
|
0
|
|
|
|
|
|
|
|
22.1600
|
|
|
|
7/18/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
|
|
|
|
25.8700
|
|
|
|
7/16/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
25,000
|
(8)
|
|
|
|
|
|
|
33.8000
|
|
|
|
7/18/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
50,000
|
(9)
|
|
|
|
|
|
|
44.6000
|
|
|
|
7/21/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
75,000
|
(10)
|
|
|
|
|
|
|
47.1400
|
|
|
|
7/20/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
100,000
|
(11)
|
|
|
|
|
|
|
50.9900
|
|
|
|
7/25/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell L. Gordon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,469
|
(14)
|
|
|
1,543,874
|
|
|
|
|
|
|
|
|
|
|
PERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,000
|
(15)
|
|
|
2,006,510
|
|
|
|
|
|
|
|
|
|
|
PERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(6)
|
|
|
813,450
|
(6)
|
|
PCRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
(7)
|
|
|
867,680
|
(7)
|
|
SARs
|
|
|
20,000
|
|
|
|
0
|
|
|
|
|
|
|
|
25.8700
|
|
|
|
7/16/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
|
7,500
|
(8)
|
|
|
|
|
|
|
33.8000
|
|
|
|
7/18/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
15,000
|
(9)
|
|
|
|
|
|
|
44.6000
|
|
|
|
7/21/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
22,500
|
(10)
|
|
|
|
|
|
|
47.1400
|
|
|
|
7/20/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
30,000
|
(11)
|
|
|
|
|
|
|
50.9900
|
|
|
|
7/25/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXECUTIVE COMPENSATION
(CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Stock Awards
|
|
Name
(a)
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(c)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
|
|
|
Option
Exercise
Price
($)
(e)
|
|
|
Option
Expiration
Date
(f)
|
|
|
Number
of Shares
or Units
of Stock
That Have
Not
Vested
(#)
(g)
|
|
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)
(1)
(h)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
(2)
(i)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value
of Unearned
Shares,
Units
or Other
Rights That
Have Not
Vested
($)
(3)
(j)
|
|
|
Edward W. Moore
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,048
|
(16)
|
|
|
436,443
|
|
|
|
|
|
|
|
|
|
|
PERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,000
|
(17)
|
|
|
3,091,110
|
|
|
|
|
|
|
|
|
|
|
PERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(6)
|
|
|
813,450
|
(6)
|
|
PCRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
(7)
|
|
|
867,680
|
(7)
|
|
SARs
|
|
|
0
|
|
|
|
7,500
|
(8)
|
|
|
|
|
|
|
33.8000
|
|
|
|
7/18/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
15,000
|
(9)
|
|
|
|
|
|
|
44.6000
|
|
|
|
7/21/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
22,500
|
(10)
|
|
|
|
|
|
|
47.1400
|
|
|
|
7/20/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
30,000
|
(11)
|
|
|
|
|
|
|
50.9900
|
|
|
|
7/25/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Janeen B. Kastner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,848
|
(18)
|
|
|
967,897
|
|
|
|
|
|
|
|
|
|
|
PERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,200
|
(19)
|
|
|
1,149,676
|
|
|
|
|
|
|
|
|
|
|
PERS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(6)
|
|
|
813,450
|
(6)
|
|
PCRS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
(7)
|
|
|
867,680
|
(7)
|
|
SARs
|
|
|
15,000
|
|
|
|
15,000
|
(9)
|
|
|
|
|
|
|
44.6000
|
|
|
|
7/21/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
22,500
|
(10)
|
|
|
|
|
|
|
47.1400
|
|
|
|
7/20/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
30,000
|
(11)
|
|
|
|
|
|
|
50.9900
|
|
|
|
7/25/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Market value of Common Stock reported in column (h) was calculated by multiplying $54.23, the closing market price of the Company’s Common Stock on May 31, 2017, the last business day of fiscal 2017, by
the number of shares.
|
|
(2)
|
Represents the maximum number of shares that could be paid out.
|
|
(3)
|
Market value of equity incentive awards of stock reported in column (j) was calculated by multiplying the closing market price of the Company’s Common Stock on May 31, 2017, the last business day of
fiscal 2017, by the maximum number of shares that could be paid out.
|
|
(4)
|
These shares of SERP restricted stock vest on the fifth anniversary of the May 31st immediately preceding the date on which each grant of restricted stock was made. These shares could vest earlier upon the death or
disability of Mr. Sullivan or upon a change of control of the Company prior to those dates.
|
|
(5)
|
These PERS vest according to the following schedule: 54,000 shares on July 21, 2017, 75,000 shares on July 20, 2018 and 50,000 shares on July 25, 2019.
|
|
(6)
|
In July 2016, the Compensation Committee determined the maximum number of and performance goals for the award of PERS with respect to fiscal 2017. Market value reported in column (j) was calculated by multiplying
the closing market price of the Company’s Common Stock on May 31, 2017 by the estimated number of shares in column (i). The performance goals for such PERS were not achieved in fiscal 2017, and therefore the Compensation Committee elected
not to grant PERS to the Covered Employees and Mr. Gordon.
|
|
(7)
|
The PCRS awards were made pursuant to the 2014 Omnibus Plan and are contingent upon the level of attainment of performance goals for the three-year period from June 1, 2015 ending May 31, 2018. The
determination of whether and to what extent the PCRS awards are achieved will be made following the close of fiscal year 2018. The amounts set forth in columns (i) and (j) assume the maximum amount of PCRS are awarded.
|
|
(8)
|
These SARs become exercisable on July 18, 2017.
|
|
(9)
|
These SARs become exercisable in two equal installments on July 21, 2017 and July 21, 2018.
|
|
(10)
|
These SARs become exercisable in three equal installments on July 20, 2017, July 20, 2018 and July 20, 2019.
|
|
(11)
|
These SARs become exercisable in four equal installments on July 25, 2017, July 25, 2018, July 25, 2019 and July 25, 2020.
|
|
(12)
|
These shares of SERP restricted stock vest on November 7, 2017, except for the 2013, 2014, 2015 and 2016 grants which will vest according to schedule on May 31, 2018, May 31, 2019, May 31,
2020 and May 31, 2021, respectively, or earlier upon the death or disability of Mr. Rice or upon a change in control of the Company prior to that date.
|
EXECUTIVE COMPENSATION
(CONTINUED)
|
(13)
|
These PERS vest according to the following schedule: 31,500 shares on July 21, 2017, 26,000 shares on July 20, 2018 and 30,000 shares on July 25, 2019.
|
|
(14)
|
These shares of SERP restricted stock vest on January 26, 2021, except for the 2016 grant which will vest according to schedule on May 31, 2021, or earlier upon the
death or disability of Mr. Gordon or upon a change in control of the Company prior to that date.
|
|
(15)
|
These PERS vest according to the following schedule: 13,500 shares on July 21, 2017, 11,000 shares on July 20, 2018 and 12,500 shares on July 25, 2019.
|
|
(16)
|
These shares of SERP restricted stock vest on the fifth anniversary of the May 31st immediately preceding the date on which each grant of restricted stock was made. These shares
could vest earlier upon the death or disability of Mr. Moore or upon a change in control of the Company prior to those dates.
|
|
(17)
|
These PERS vest according to the following schedule: 13,500 shares on July 21, 2017, 31,000 shares on July 20, 2018 and 12,500 shares on July 25, 2019.
|
|
(18)
|
These shares of SERP restricted stock vest on November 26, 2021 or earlier upon the death or disability of Ms. Kastner or upon a change in control of the Company prior
to that date.
|
|
(19)
|
These PERS vest according to the following schedule: 7,200 shares on July 21, 2017, 6,000 shares on July 20, 2018 and 8,000 shares on July 25, 2019.
|
EXECUTIVE COMPENSATION
(CONTINUED)
Option Exercises and Stock Vested During Fiscal 2017
This table provides information for the named executive officers on stock option and SAR exercises and restricted stock vesting during fiscal 2017, including the number
of shares acquired upon exercise and the value realized, before payment of any applicable withholding tax and broker commissions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
(a)
|
|
Number of
Shares
Acquired on
Exercise
(#)(b)
|
|
|
Value
Realized
on
Exercise
($)
(c)
|
|
|
Number of
Shares
Acquired on
Vesting
(#)
(d)
|
|
|
Value
Realized
on
Vesting
($)
(e)
|
|
|
Frank C. Sullivan
|
|
|
400,000
|
|
|
|
15,048,000
|
|
|
|
73,866
|
|
|
|
3,871,953
|
|
|
Ronald A. Rice
|
|
|
60,000
|
|
|
|
2,068,500
|
|
|
|
35,000
|
|
|
|
1,820,000
|
|
|
Russell L. Gordon
|
|
|
0
|
|
|
|
0
|
|
|
|
15,000
|
|
|
|
780,000
|
|
|
Edward W. Moore
|
|
|
12,500
|
|
|
|
291,775
|
|
|
|
16,590
|
|
|
|
866,226
|
|
|
Janeen B. Kastner
|
|
|
0
|
|
|
|
0
|
|
|
|
8,000
|
|
|
|
416,000
|
|
Pension Benefits for Fiscal 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Plan Name
(b)
|
|
Number
of
Years
Credited
Service
at
5/31/15
(c)
|
|
|
Present
Value of
Accumulated
Benefit
($)
(d)
|
|
|
Payments
During
Last
Fiscal
Year
($)
(e)
|
|
|
Frank C. Sullivan
|
|
RPM International Inc. Retirement Plan
|
|
|
28.3
|
|
|
|
676,207
|
|
|
|
0
|
|
|
Ronald A. Rice
|
|
RPM International Inc. Retirement Plan
|
|
|
22.3
|
|
|
|
540,936
|
|
|
|
0
|
|
|
Russell L. Gordon
|
|
RPM International Inc. Retirement Plan
|
|
|
22.3
|
|
|
|
442,760
|
|
|
|
0
|
|
|
Edward W. Moore
|
|
RPM International Inc. Retirement Plan
|
|
|
10.6
|
|
|
|
337,516
|
|
|
|
0
|
|
|
Janeen B. Kastner
|
|
RPM International Inc. Retirement Plan
|
|
|
20.3
|
|
|
|
407,269
|
|
|
|
0
|
|
The preceding table shows the present value of accumulated benefits payable to each named executive officer, including each
such named executive officer’s number of years of credited service, under our Retirement Plan determined using interest rate and mortality rate assumptions consistent with those used in our financial statements.
The Retirement Plan is a funded and tax qualified retirement plan. The monthly benefit provided by the Retirement Plan’s formula on a single life annuity basis is
equal to the sum of 22.5% of a participant’s average monthly compensation, reduced pro rata for years of benefit service (as defined in the Retirement Plan) less than 30 years, plus 22.5% of a participant’s average monthly
compensation in excess of his or her monthly Social Security covered compensation, reduced pro rata for years of benefit service less than 35 years. Average monthly compensation is the average
monthly compensation earned during the 60 consecutive months providing the highest such average during the last 120 months preceding the applicable determination date. The compensation used to
determine benefits under the Retirement Plan is generally a participant’s
W-2
compensation, adjusted for certain amounts, but may not exceed the limit under the Internal Revenue Code which is applicable
to tax qualified plans ($265,000 for 2016). Compensation for each of the named executive officers during 2016 only includes $265,000 of the amount shown for 2016 in column (c) of the Summary Compensation Table. A participant’s Social
Security covered compensation is based on the average of the Social Security taxable wage bases in effect during the
35-year
period ending with his attainment of the Social Security retirement age assuming his
compensation is and has always been at least equal to the taxable wage base.
EXECUTIVE COMPENSATION
(CONTINUED)
Benefits are payable as an annuity or in a single lump sum payment and are actuarially adjusted to reflect payment in a
form other than a life annuity. Life annuity benefits are unreduced if paid on account of normal retirement or completion of 40 years of vesting service (as defined in the Retirement Plan). Normal retirement age is when a participant
attains age 65 and, in general, has completed 5 years of service. Benefits are reduced for early commencement by multiplying the accrued benefit by an early retirement factor.
Participants vest in the Retirement Plan after 5 years of vesting service.
Nonqualified Deferred Compensation for Fiscal
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name (a)
|
|
Executive
Contributions
in Last FY ($)
(b)
|
|
|
Registrant
Contributions
in Last FY ($)
(c)
|
|
|
Aggregate
Earnings
in Last FY ($)
(1)
(d)
|
|
|
Aggregate
Withdrawals/
Distributions ($)
(e)
|
|
|
Aggregate
Balance
at Last FYE ($)
(f)
|
|
|
Frank C. Sullivan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Ronald A. Rice
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Russell L. Gordon
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Edward W. Moore
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Janeen B. Kastner
|
|
|
105,000
|
|
|
|
0
|
|
|
|
14,914
|
|
|
|
0
|
|
|
|
119,914
|
|
|
(1)
|
None of the earnings in this column, if any, would be included in the Summary Compensation Table because they were not preferential or above market.
|
The preceding table provides information on the
non-qualified
deferred compensation
of the named executive officers in 2016. Participants in the RPM International Inc. Deferred Compensation Plan (“Deferred Compensation Plan”), including the named executive officers, may defer up to 90% of their base salary and
non-equity
incentive plan compensation.
A participant’s deferrals and any matching contributions are credited to a bookkeeping
account under the Deferred Compensation Plan. A participant may direct that his or her account be deemed to be invested in Company stock or in mutual funds that are selected by the administrative committee of the Deferred Compensation Plan. The
participant’s account is credited with phantom earnings or losses based on the investment performance of the deemed investment. A participant may change the investment funds used to calculate the investment performance of his or her account on
a daily basis.
Deferrals of base salary, annual bonus amounts and deferred equity grants, earnings on such amounts and stock dividends credited to a
participant’s account are 100% vested.
Distribution from a participant’s account is payable in a lump sum at a specified time, or upon retirement, death,
termination of employment or disability prior to retirement. In the case of retirement, a participant may also elect annual installments for up to 10 years. Upon approval of the Compensation Committee, amounts can also be distributed as a
result of an unforeseeable financial emergency. Earlier withdrawal of deferred compensation earned and vested as of
December 31, 2004 is available but is subject to a 10% penalty.
Other Potential
Post-Employment Compensation
The following table reflects the amount of compensation payable to each of the named executive officers (a) in the event of
termination of the executive’s employment due to retirement, death, disability, voluntary termination, termination for cause, involuntary termination without cause and not within two years of a change in control and involuntary termination
without cause or resignation with good reason within two years of a change in control, and (b) upon a change in control. The amounts shown assume that the termination was effective as of May 31, 2017 (the last business day of fiscal 2017).
Consequently, the table reflects amounts earned as of May 31, 2017 (the last business day of fiscal 2017) and includes estimates of amounts that would be paid to the named executive officer upon the occurrence of the event. The estimates
are considered forward-looking information that falls within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Due to the number of factors that affect the nature and amount of any benefits provided upon the events
discussed below, any actual amounts paid or distributed may differ materially. Factors that could affect these amounts include the timing during the year of such event and the amount of future
non-equity
incentive compensation. Please see “Forward-Looking Statements.”
EXECUTIVE COMPENSATION
(CONTINUED)
Estimated Payments on Termination or Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Event
|
|
Frank C.
Sullivan
|
|
|
Ronald
A. Rice
|
|
|
Russell
L. Gordon
|
|
|
Edward
W. Moore
|
|
|
Janeen
B. Kastner
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated SARs
|
|
$
|
3,696,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
554,400
|
|
|
$
|
0
|
|
|
Accelerated PERS
|
|
|
9,707,170
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,091,110
|
|
|
|
0
|
|
|
Accelerated SERP restricted stock
|
|
|
1,763,343
|
|
|
|
0
|
|
|
|
0
|
|
|
|
436,443
|
|
|
|
0
|
|
|
Total
|
|
$
|
15,166,513
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,081,953
|
|
|
$
|
0
|
|
|
Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned incentive compensation
|
|
$
|
730,000
|
|
|
$
|
550,000
|
|
|
$
|
483,333
|
|
|
$
|
391,667
|
|
|
$
|
191,667
|
|
|
Accelerated SARs
|
|
|
3,696,000
|
|
|
|
1,848,000
|
|
|
|
554,400
|
|
|
|
554,400
|
|
|
|
401,175
|
|
|
Accelerated PERS
|
|
|
9,707,170
|
|
|
|
4,745,125
|
|
|
|
2,006,510
|
|
|
|
3,091,110
|
|
|
|
1,149,676
|
|
|
Accelerated SERP restricted stock
|
|
|
1,763,343
|
|
|
|
6,520,669
|
|
|
|
1,543,874
|
|
|
|
436,443
|
|
|
|
967,897
|
|
|
Total
|
|
$
|
15,896,513
|
|
|
$
|
13,663,794
|
|
|
$
|
4,588,117
|
|
|
$
|
4,473,620
|
|
|
$
|
2,710,415
|
|
|
Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned incentive compensation
|
|
$
|
730,000
|
|
|
$
|
550,000
|
|
|
$
|
483,333
|
|
|
$
|
391,667
|
|
|
$
|
191,667
|
|
|
Accelerated SARs
|
|
|
3,696,000
|
|
|
|
1,848,000
|
|
|
|
554,400
|
|
|
|
554,400
|
|
|
|
401,175
|
|
|
Accelerated PERS
|
|
|
9,707,170
|
|
|
|
4,745,125
|
|
|
|
2,006,510
|
|
|
|
3,091,110
|
|
|
|
1,149,676
|
|
|
Accelerated SERP restricted stock
|
|
|
1,763,343
|
|
|
|
6,520,669
|
|
|
|
1,543,874
|
|
|
|
436,443
|
|
|
|
967,897
|
|
|
Total
|
|
$
|
15,896,513
|
|
|
$
|
13,663,794
|
|
|
$
|
4,588,117
|
|
|
$
|
4,473,620
|
|
|
$
|
2,710,415
|
|
|
Voluntary Termination and Termination for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No payments
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
Total
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
Involuntary Termination Without Cause and not within Two Years of a Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum
|
|
$
|
6,915,000
|
|
|
$
|
3,450,000
|
|
|
$
|
1,437,500
|
|
|
$
|
1,523,334
|
|
|
$
|
752,501
|
|
|
Health and welfare benefits
|
|
|
69,048
|
|
|
|
46,032
|
|
|
|
34,524
|
|
|
|
46,032
|
|
|
|
31,860
|
|
|
Estate and financial planning
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
Executive life insurance coverage
|
|
|
376,626
|
|
|
|
184,746
|
|
|
|
28,246
|
|
|
|
136,360
|
|
|
|
20,636
|
|
|
Cash value of benefits under restricted stock plan
|
|
|
683,298
|
|
|
|
714,046
|
|
|
|
340,673
|
|
|
|
340,510
|
|
|
|
138,042
|
|
|
Accelerated SERP restricted stock
|
|
|
1,763,343
|
|
|
|
6,520,669
|
|
|
|
1,543,874
|
|
|
|
436,443
|
|
|
|
967,897
|
|
|
Total
|
|
$
|
9,812,315
|
|
|
$
|
10,920,493
|
|
|
$
|
3,389,817
|
|
|
$
|
2,487,679
|
|
|
$
|
1,915,936
|
|
|
Involuntary Termination Without Cause or Resignation for Good Reason within Two Years of a Change in
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum
|
|
$
|
6,915,000
|
|
|
$
|
5,175,000
|
|
|
$
|
1,437,500
|
|
|
$
|
2,285,001
|
|
|
$
|
752,501
|
|
|
Health and welfare benefits
|
|
|
69,048
|
|
|
|
69,048
|
|
|
|
34,524
|
|
|
|
69,048
|
|
|
|
31,860
|
|
|
Estate and financial planning
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
5,000
|
|
|
|
10,000
|
|
|
|
5,000
|
|
|
Executive life insurance coverage
|
|
|
686,898
|
|
|
|
529,818
|
|
|
|
51,515
|
|
|
|
390,058
|
|
|
|
37,635
|
|
|
Cash value of benefits under restricted stock plan
|
|
|
683,298
|
|
|
|
714,046
|
|
|
|
340,673
|
|
|
|
340,510
|
|
|
|
138,042
|
|
|
Accelerated SERP restricted stock
|
|
|
1,763,343
|
|
|
|
6,520,669
|
|
|
|
1,543,874
|
|
|
|
436,443
|
|
|
|
967,897
|
|
|
Accelerated PCRS, PERS and SARs
|
|
|
17,741,570
|
|
|
|
8,762,325
|
|
|
|
3,428,590
|
|
|
|
4,513,190
|
|
|
|
2,418,531
|
|
|
Outplacement assistance
|
|
|
26,000
|
|
|
|
26,000
|
|
|
|
26,000
|
|
|
|
26,000
|
|
|
|
26,000
|
|
|
Excise taxes
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,191,082
|
|
|
Total
|
|
$
|
27,895,157
|
|
|
$
|
21,806,906
|
|
|
$
|
6,867,676
|
|
|
$
|
8,070,250
|
|
|
$
|
5,568,548
|
|
|
Change in Control Only
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated SERP restricted stock
|
|
$
|
1,763,343
|
|
|
$
|
6,520,669
|
|
|
$
|
1,543,874
|
|
|
$
|
436,443
|
|
|
$
|
967,897
|
|
|
Accelerated PCRS, PERS and SARs
|
|
|
17,741,570
|
|
|
|
8,762,325
|
|
|
|
3,428,590
|
|
|
|
4,513,190
|
|
|
|
2,418,531
|
|
|
Excise taxes
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Total
|
|
$
|
19,504,913
|
|
|
$
|
15,282,994
|
|
|
$
|
4,972,464
|
|
|
$
|
4,949,633
|
|
|
$
|
3,386,428
|
|
EXECUTIVE COMPENSATION
(CONTINUED)
Payments upon Retirement
Treatment of SARs.
Under the terms of the stock appreciation rights agreements under which SARs were granted, in the event of the executive’s voluntary retirement after attaining age 55 and
completing five years of consecutive service with the Company the executive will be entitled to immediately exercise all unvested SARs. None of the named executive officers were eligible for retirement as of May 31, 2017, with the exception of
Messrs. Moore and Sullivan.
Treatment of PERS Awards.
Under the terms of the Performance Earned Restricted Stock (PERS) and escrow
agreements, in the event of the executive’s voluntary retirement after attaining age 55 and completing at least five years of consecutive service with the Company, the restrictions on unvested PERS will lapse. None of the named executive
officers were eligible for retirement as of May 31, 2017, with the exception of Messrs. Moore and Sullivan.
Treatment of SERP Restricted
Stock.
Under the terms of the 2007 Restricted Stock Plan and the 1997 Restricted Stock Plan, upon (a) the later of the executive’s attainment of age 55 or the fifth anniversary of the May 31 immediately before the date of the
SERP restricted stock grant or (b) the executive’s retirement on or after the age of 65, the restrictions on SERP restricted stock will lapse. None of the named executive officers were eligible for retirement as of May 31, 2017, with
the exception of Messrs. Moore and Sullivan.
Payments upon Death
Non-Equity
Incentive Compensation.
Under the terms of the employment agreements with Messrs. Sullivan, Rice, Gordon, Moore and Ms. Kastner, in the event of the
executive’s death, the executive is entitled to receive any earned incentive compensation. Earned incentive compensation is calculated as the sum of (a) any incentive compensation payable but not yet paid for the fiscal year preceding the
fiscal year in which the termination date occurs, and (b) a pro rata portion of (i) for Messrs. Sullivan and Rice, the annual incentive compensation for the most recently completed fiscal year and (ii) for Messrs. Gordon, Moore
and Ms. Kastner, the average incentive compensation for the three most recently completed fiscal years. The pro rata portion is determined by multiplying the annual or average incentive compensation, as the case may be, by a fraction, the
numerator of which is the number of days in the current fiscal year of the Company that have expired prior to the termination date and the denominator of which is 365.
Treatment of SARs.
Under the terms of the stock appreciation rights agreement under which SARs were granted, in the event of the executive’s death all unvested SARs will become immediately exercisable.
The amounts set forth in the table for
SARs reflect the difference between the closing price of our Common Stock on May 31, 2017, the last business day of fiscal 2017, and the exercise prices for the SARs for which vesting would
be accelerated and for which the closing price exceeded the SAR exercise price.
Treatment of PERS Awards.
Under the terms of the Performance
Earned Restricted Stock (PERS) and escrow agreements, PERS awards vest automatically in the event of the executive’s death, and vesting for such PERS is reflected in the foregoing table.
Treatment of SERP Restricted Stock.
Under the terms of the 2007 Restricted Stock Plan and the 1997 Restricted Stock Plan, in the event of the executive’s death, the restrictions on SERP restricted stock
will lapse. The amounts set forth in the table for restricted stock reflect the number of shares of restricted stock for which vesting would be accelerated multiplied by the closing price of our Common Stock on May 31, 2017, the last business
day of fiscal 2017.
Payments upon Disability
Non-Equity
Incentive Compensation.
Under the terms of the employment agreements with Messrs. Sullivan, Rice, Gordon, Moore and Ms. Kastner, in the event of the executive’s disability, the executive is
entitled to receive any earned incentive compensation. Earned incentive compensation is calculated as the sum of (a) any incentive compensation payable but not yet paid for the fiscal year preceding the fiscal year in which the termination date
occurs, and (b) a pro rata portion of (i) for Messrs. Sullivan and Rice, the annual incentive compensation for the most recently completed fiscal year and (ii) for Messrs. Gordon, Moore and Ms. Kastner, the average incentive
compensation for the three most recently completed fiscal years. The pro rata portion is determined by multiplying the annual or average incentive compensation, as the case may be, by a fraction, the numerator of which is the number of days in the
current fiscal year of the Company that have expired prior to the termination date and the denominator of which is 365.
Treatment of SARs.
Under
the terms of the stock appreciation rights agreements under which SARs were granted, in the event of the executive’s disability, the executive will be entitled to immediately exercise all unvested SARs. The amounts set forth in the table for
SARs reflect the difference between the closing price of our Common Stock on May 31, 2017, the last business day of fiscal 2017, and the exercise prices for the SARs for which vesting would be accelerated and for which the closing price
exceeded the SAR exercise price.
Treatment of PERS Awards.
Under the terms of the Performance Earned Restricted Stock (PERS) and escrow
agreements, PERS awards vest automatically in the event of
EXECUTIVE COMPENSATION
(CONTINUED)
the executive’s total disability, and vesting for such PERS is reflected in the foregoing table.
Treatment of SERP Restricted Stock.
Under the terms of the 2007 Restricted Stock Plan and the 1997 Restricted Stock Plan, in the event of the
executive’s disability, the restrictions on SERP restricted stock will lapse. The amounts set forth in the table for restricted stock reflect the number of shares of restricted stock for which vesting would be accelerated multiplied by the
closing price of our Common Stock on May 31, 2017, the last business day of fiscal 2017.
Payments upon Voluntary Termination and Termination for
Cause
A named executive officer is not entitled to receive any additional forms of severance payments or benefits upon his or her voluntary decision
to terminate employment with RPM prior to being eligible for retirement or upon termination for cause.
Payments upon Involuntary Termination Without
Cause and not within Two Years of a Change in Control
Under the terms of the employment agreements with Messrs. Sullivan, Rice, Gordon, Moore and
Ms. Kastner, in the event that the executive is terminated without cause and the termination does not occur during a
two-year
period following a change in control, the executive would be entitled to the
following:
|
•
|
|
for Messrs. Sullivan and Rice, a lump sum amount equal to the executive’s incentive compensation for the preceding fiscal year (if not yet paid) plus, for
Mr. Sullivan, three times the sum of, and for Mr. Rice, two times the sum of: (i) the greater of the executive’s annual base salary in effect on the date of termination or the highest base salary in effect at any time during the
three years immediately preceding the termination date, and (ii) for Messrs. Sullivan and Rice, the highest annual incentive compensation received by the executive in the five years prior to the termination date. Messrs. Gordon, Moore and
Ms. Kastner would be entitled to receive a lump sum amount equal to the executive’s incentive compensation for the preceding fiscal year (if not yet paid), plus the sum of (x) for Mr. Moore, two times, and for Mr. Gordon and
Ms. Kastner, one and
one-half
times the executive’s annual base salary in effect on the date of termination, and (y) a pro rata portion of the executive’s average incentive compensation for
the three most recently completed fiscal years. The pro rata portion is determined by multiplying the average incentive compensation by a fraction, the numerator of which is the number of days in the current fiscal year of the Company that have
expired prior to the termination date and the denominator of which is 365;
|
|
•
|
|
continuation of health and welfare benefits for three years for Mr. Sullivan, for two years for Messrs. Rice and Moore, and for 18 months for
Mr. Gordon and Ms. Kastner;
|
|
•
|
|
estate and financial planning services for a period of six months;
|
|
•
|
|
a lump sum payment equal to three times, for Mr. Sullivan, two times, for Messrs. Rice and Moore, and one and
one-half
times for Mr. Gordon and Ms. Kastner, the most recent annual premium or other cost for the executive life insurance coverage in effect on the date of termination (or, if greater, the next
scheduled annual premium shown on the then current schedule of coverage);
|
|
•
|
|
a lump sum amount equal to the cash value of three years for Mr. Sullivan, two years for Messrs. Rice and Moore, and 18 months for Mr. Gordon and
Ms. Kastner, of benefits that the executive would have received had he continued to participate and receive awards under the Restricted Stock Plan (as determined in accordance with the Company’s past practice); and
|
|
•
|
|
the lapse of all transfer restrictions and forfeiture provisions on restricted stock awarded under the 1997 and 2007 Restricted Stock Plans.
|
The employment agreements provide that the Company will not be obligated to make the lump sum payments or provide the additional
benefits described above unless the executive signs a release and waiver of claims and refrains from revoking, rescinding or otherwise repudiating the release of claims during certain time periods.
Payments upon Involuntary Termination Without Cause or Resignation for Good Reason within Two Years of a Change in Control
Under the terms of each named executive officer’s employment agreement, in the event that the executive is terminated without cause or resigns for good reason
within two years following a change in control, the executive would be entitled to the following:
|
•
|
|
for Messrs. Sullivan and Rice, a lump sum amount equal to the executive’s incentive compensation for the preceding fiscal year (if not yet paid) plus three
times the sum of (i) the greater of the executive’s annual base salary in effect on the date of termination or the highest base salary in effect at any time during the three years immediately preceding the change in control, and
(ii) the highest annual incentive compensation received by the executive in the five years prior to the change in control. Messrs. Gordon, Moore and Ms. Kastner would be entitled to receive a lump sum amount equal to the
executive’s
|
EXECUTIVE COMPENSATION
(CONTINUED)
|
|
|
incentive compensation for the preceding fiscal year (if not yet paid), plus the sum of (x) for Mr. Moore, three times and for Mr. Gordon and Ms. Kastner, one and
one-half
times the executive’s annual base salary in effect on the date of termination, and (y) a pro rata portion of the executive’s average incentive compensation for the three most recently
completed fiscal years. The pro rata portion is determined by multiplying the average incentive compensation by a fraction, the numerator of which is the number of days in the current fiscal year of the Company that have expired prior to the
termination date and the denominator of which is 365;
|
|
•
|
|
continuation of health and welfare benefits for a period of three years for Messrs. Sullivan, Rice and Moore, and for a period of 18 months for Mr. Gordon
and Ms. Kastner;
|
|
•
|
|
estate and financial planning services for a period of one year for Messrs. Sullivan, Rice and Moore, and for a period of 6 months for Mr. Gordon and
Ms. Kastner;
|
|
•
|
|
a lump sum payment equal to, for Messrs. Sullivan, Rice and Moore, three times and for Mr. Gordon and Ms. Kastner, one and
one-half
times the most recent annual premium or other cost for the executive life insurance coverage in effect on the date of termination, grossed up to compensate for the tax impact of the payment (or, if greater,
the next scheduled annual premium payment shown on the then-current schedule of coverage);
|
|
•
|
|
a lump sum amount equal to the cash value of, for Messrs. Sullivan, Rice and Moore, three years, and for Mr. Gordon and Ms. Kastner, 18 months of
benefits that the executive would have received had he continued to participate and received awards under the Restricted Stock Plan (as determined in accordance with the Company’s past practice);
|
|
•
|
|
the lapse of all transfer restrictions and forfeiture provisions on restricted stock awarded under the 1997 and 2007 Restricted Stock Plans;
|
|
•
|
|
the lapse of transfer restrictions on any awards under the 2004 Omnibus Plan;
|
|
•
|
|
outplacement assistance for two years following the change in control;
|
|
•
|
|
a lump sum payment, or
gross-up,
equal to the amount of any excise tax imposed on the executive under Section 4999
of the Internal Revenue Code, or any similar state or local tax law, and any taxes, interest or penalties incurred with respect thereto;
|
|
•
|
|
interest on certain of the above payments if not made in a timely manner in accordance with the employment agreement or change in control agreement; and
|
|
•
|
|
up to an amount of $250,000 in legal fees incurred by the executive in each of the two calendar years following termination of employment in the event that,
following a change in control, he or she may be caused to institute or defend legal proceedings to enforce his or her rights under the employment agreement or change in control agreement.
|
The employment agreements provide that the Company will not be obligated to make the lump sum payments or provide the additional benefits described above unless the
executive signs a release and waiver of claims and refrains from revoking, rescinding or otherwise repudiating the release of claims during certain time periods. In the table above, we have assumed that the Company timely made all payments and
the executive did not incur legal fees.
Restrictive Covenants that Apply During and After Termination of Employment
Pursuant to the terms of the employment agreements, each of our named executive officers is subject to certain restrictive covenants that apply during and after
their termination of employment. Each named executive officer is subject to a covenant not to disclose our confidential information during their term of employment with us and at all times thereafter. During their employment with us and for a period
of two years thereafter our named executive officers are also subject to covenants not to (i) compete with us (or any of our subsidiaries) or (ii) solicit our employees or customers.
Payments upon a Change in Control Only
Treatment of SARs.
Under the terms of the stock appreciation
rights agreements under which SARs were granted, in the event of a change in control, the executive will be entitled to immediately exercise all unvested SARs. The amounts set forth in the table for SARs reflect the difference between the
closing price of our Common Stock on May 31, 2017, the last business day of fiscal 2017, and the exercise prices for the SARs for which vesting would be accelerated and for which the closing price exceeded the SAR exercise price.
Treatment of PERS Awards.
Under the terms of the Performance Earned Restricted Stock (PERS) and escrow agreements under which PERS were granted, in the event
of a
change in control, the restrictions on unvested PERS will lapse. The amounts set forth in the table for PERS reflect the number of PERS for
which vesting would be accelerated multiplied by the closing price of our Common Stock on May 31, 2017, the last business day of fiscal 2017.
EXECUTIVE COMPENSATION
(CONTINUED)
Treatment of PCRS Awards.
Under the terms of the Performance Contingent Restricted Stock (PCRS) and
escrow agreements under which PCRS were granted, in the event of a change in control, the restrictions on unvested PCRS will lapse. The amounts set forth in the table for PCRS reflect the number of PCRS for which vesting would be accelerated
multiplied by the closing price of our Common Stock on May 31, 2017, the last business day of fiscal 2017.
Treatment of SERP Restricted
Stock.
Under the terms of the 2007 Restricted Stock Plan and the 1997 Restricted Stock Plan, in the event of a change in control, the restrictions on SERP restricted stock will lapse. The amounts set forth in the table for restricted stock
reflect the number of shares of
restricted stock for which vesting would be accelerated multiplied by the closing price of our Common Stock on May 31, 2017, the last business day of fiscal 2017.
Excise Taxes.
The employment agreements provide that to the extent that any payment or distribution by the Company for the benefit of the executive would be
subject to any excise tax imposed on the executive under Section 4999 of the Internal Revenue Code, the executive will be entitled to a lump sum payment, or
gross-up,
equal to the amount of any excise tax
imposed on the executive under Section 4999 of the Internal Revenue Code, or any similar state or local tax law, and any taxes, interest or penalties incurred with respect thereto.
Director
Compensation for Fiscal 2017
The following table sets forth information regarding the compensation of our
non-employee
Directors for fiscal 2017. Frank C. Sullivan, our Chairman and Chief Executive Officer, does not receive any additional compensation for his service as a Director.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Fees
Earned
or
Paid in
Cash
($)
(1)
(b)
|
|
|
Stock
Awards
($)
(2)
(c)
|
|
|
Option
Awards
($)
(d)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(e)
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(f)
|
|
|
All
Other
Compensation
($)
(g)
|
|
|
Total
($)
(h)
|
|
|
John P. Abizaid
|
|
|
90,000
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
201,342
|
|
|
Bruce A. Carbonari
|
|
|
110,000
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
221,342
|
|
|
David A. Daberko
|
|
|
105,000
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,500
|
(3)
|
|
|
218,842
|
|
|
Jenniffer D. Deckard
|
|
|
90,000
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
201,342
|
|
|
Salvatore D. Fazzolari
|
|
|
110,000
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,500
|
(3)
|
|
|
222,842
|
|
|
Thomas S. Gross
|
|
|
90,000
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
201,342
|
|
|
Craig S. Morford
(4)
|
|
|
90,000
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
201,342
|
|
|
Frederick R. Nance
|
|
|
90,000
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,500
|
(3)
|
|
|
203,842
|
|
|
Charles A. Ratner
(5)
|
|
|
67,500
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
178,842
|
|
|
Thomas C. Sullivan
(6)
|
|
|
45,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
45,000
|
|
|
William B. Summers, Jr.
|
|
|
90,000
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
201,342
|
|
|
Dr. Jerry Sue Thornton
(4)
(7)
|
|
|
90,000
|
|
|
|
111,342
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,500
|
(3)
|
|
|
203,842
|
|
|
(1)
|
Cash fees include fees for attending Board and Committee meetings in fiscal 2017 as well as the quarterly retainer amount for serving on the Board of Directors and as the chair for a committee during fiscal 2017. These
cash fee amounts have not been reduced to reflect a Director’s election to defer receipt of cash fees pursuant to the Deferred Compensation Plan. These deferrals are indicated in note (4) below.
|
|
(2)
|
The amounts set forth in this column reflect the fair market value of shares of restricted stock granted during fiscal 2017 under the 2003 Restricted Stock Plan for Directors.
|
|
|
The unvested number of shares of restricted stock held by Directors under the 2003 Restricted Stock Plan for Directors at May 31, 2017 was as follows: Mr. Abizaid (7,300), Mr. Carbonari (7,300),
Mr. Daberko (7,300), Ms. Deckard (4,800), Mr. Fazzolari (7,300), Mr. Gross (7,300), Mr. Morford (7,300), Mr. Nance (7,300), Mr. Summers (7,300) and Dr. Thornton (7,300). Dividends are paid on shares of
restricted stock at the same rate as paid on our Common Stock that is not restricted. On October 31, 2016, shares of restricted stock awarded in 2013 vested and were delivered to the Directors.
|
|
(3)
|
These amounts represent the dollar value that RPM matches of the Director’s charitable contributions made in accordance with our employee charitable contributions matching program. RPM matches a Director’s
charitable contributions by up to $2,500 per year under this program, which is also available to RPM International Inc. employees. These amounts are not taxable to the Directors.
|
|
(4)
|
During fiscal 2017, Mr. Morford elected to defer $90,000 of his Director fees and Dr. Thornton elected to defer $90,000 of her Director fees into our Deferred Compensation Plan.
|
|
(5)
|
Mr. Ratner retired from the Board effective January 24, 2017.
|
|
(6)
|
Thomas C. Sullivan retired from the Board effective October 6, 2016.
|
|
(7)
|
Dr. Jerry Sue Thornton retired from the Board effective July 18, 2017.
|
DIRECTOR COMPENSATION
(CONTINUED)
For fiscal 2017, Directors who were not employees of or consultants to the Company received a quarterly fee of
$22,500. In addition, each of the Compensation Committee Chair and the Chair of the Governance and Nominating Committee received a quarterly fee of $3,750, and the Audit Committee Chair received a quarterly fee of $5,000. The Lead Director also
received a quarterly fee of $3,750. With respect to equity compensation, Directors who were eligible to participate in the Restricted Stock Plan for Directors were granted a number of shares of restricted stock under the Restricted Stock Plan for
Directors in an amount approximately equal to $110,000.
In July 2012, the Company adopted minimum stock ownership guidelines for its executive officers
and Directors under which each Director who had served on the Board of Directors for at least five years was expected to own Common Stock with a value of at least four times the annual cash retainer for Directors. In July 2014, the Company increased
the minimum stock ownership guidelines for its Directors from four times to five times the annual cash retainer for Directors. Directors are expected to achieve targets within five years of the later of the date of initial adoption of the minimum
stock ownership guidelines or the date of such Director’s initial appointment as a Director. Each of the Company’s Directors met the guidelines in effect as of May 31, 2017, except for the Company’s three newest Directors,
Mr. Morford, Ms. Deckard and Ms. Lagacy. Mr. Morford joined the Board of Directors in April 2013, and is expected to achieve compliance with the minimum stock ownership guidelines before April 2018. Ms. Deckard joined the
Board of Directors in October 2015, and is expected to achieve compliance with the minimum stock ownership guidelines before October 2020. Ms. Lagacy joined the Board of Directors in July 2017, and is expected to achieve compliance with the
minimum stock ownership guidelines before July 2022.
Under the Company’s stock ownership guidelines for Directors, each Director who has served on the Board of Directors for at
least five years is expected to own Common Stock with a value of at least five times the annual cash retainer for Directors.
RELATED PERSON TRANSACTIONS
The Related Person Transaction Policy of the Board of Directors ensures that the Company’s transactions with certain
persons are not inconsistent with the best interests of the Company. A “Related Person Transaction” is a transaction with the Company in an amount exceeding $120,000 in which a Related Person has a direct or indirect material interest. A
Related Person includes the executive officers, Directors, and 5% stockholders of the Company, and any immediate family member of such a person. Under the Related Person Transaction Policy, Company management screens for any potential Related Person
Transactions, primarily through the annual circulation of a Directors and Officers Questionnaire to each member of the Board of Directors and each officer of the Company that is a reporting person under Section 16 of the Exchange Act. If
Company management identifies a Related Person Transaction, such transaction is brought to the attention of the Audit Committee for its approval, ratification, revision, or rejection in consideration of all of the relevant facts and circumstances.
Thomas C. Sullivan, Jr., the brother of Frank C. Sullivan, is Vice President – Corporate Development
for the Company and earned $475,000 in salary and annual bonus in fiscal 2017. His compensation is commensurate with his peers. He has also received equity awards in the past. Thomas C. Sullivan, Jr., has been employed by the Company or its
subsidiaries for more than 31 years, including at Republic Powdered Metals, Inc. from 1987 to 1993, Consolidated Coatings Corporation from 1993 to 1995, ESPAN Corporation PTE LTD. and RPM Asia PTE LTD. from 1995 to 1998, Tremco Incorporated from
1998 to 2002, and the Company’s corporate offices since 2002.
Terry Tabler, the
brother-in-law
of Ronald A. Rice, is Vice President – Customer Care of Sapphire Scientific Inc., an indirect, wholly owned subsidiary of the Company, and
earned $180,000 in salary and annual bonus for fiscal 2017. His compensation is commensurate with his peers. He is also eligible to receive equity awards. Mr. Tabler has been employed by affiliates of the Company since March 2009.
FORWARD-LOOKING
STATEMENTS
Some of the amounts set forth in this Proxy Statement in the disclosure regarding executive and director compensation
are “forward-looking statements” within the meaning of the federal securities laws. These amounts include estimates of future amounts payable under awards, plans and agreements or the present value of such future amounts, as well as the
estimated value at May 31, 2017 of awards, the vesting of which will depend on performance over future periods. Estimating future payments of this nature is necessarily subject to contingencies and uncertainties, many of which are difficult to
predict. In order to estimate amounts that may be paid in the future, we had to make assumptions as to a
number of variables, which may, and in many cases will, differ from future actual conditions. These variables include the price of our Common Stock, the date of termination of employment,
applicable tax rates and other assumptions. In estimating the
year-end
values of unvested awards, we were required to make certain assumptions about the extent to which the performance or other conditions will
be satisfied and, accordingly, the rate at which those awards will ultimately vest and/or payout. Accordingly, amounts and awards paid out in future periods may vary from the related estimates and values set forth in this Proxy Statement.
EQUITY COMPENSATION PLAN INFORMATION
The following table
sets forth information concerning shares of Common Stock authorized or available for issuance under the Company’s equity compensation plans as of May 31, 2017.
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Plan Category
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Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
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Weighted-
average exercise
price of
outstanding
options, warrants
and rights
(b)
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Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in
column (a))
(c)
(1)
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Equity compensation plans approved by stockholders
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0
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(2)
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$0.00
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3,583,974
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Equity compensation plans not approved by stockholders
(3)
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—
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—
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—
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Total
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0
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$0.00
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3,583,974
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(1)
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Includes 3,506,624 shares available for future issuance under the 2014 Omnibus Plan of which 1,676,624 shares may be subject to full value awards such as restricted stock, and 77,350 shares available for future issuance
under the Company’s 2003 Restricted Stock Plan for Directors.
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(2)
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At May 31, 2017, 3,055,000 SARs were outstanding at a weighted-average grant price of $38.77. The number of shares to be issued upon exercise will be determined at vesting based on the difference between the grant
price and the market price at the date of exercise. No such shares have been included in this total.
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(3)
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The Company does not maintain equity compensation plans that have not been approved by its stockholders.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s officers and Directors and persons who own 10% or more
of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Commission. Officers, Directors and 10% or greater stockholders are required by Commission regulations
to furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company’s review of the copies of such forms it has received, the Company believes that all of its
officers and Directors complied with all filing requirements applicable to them with respect to transactions during the fiscal year ended May 31, 2017.
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has reappointed Deloitte & Touche LLP as our independent registered public accounting firm to audit our financial statements for the current
year. The Board of Directors recommends ratification of the Audit Committee’s appointment of Deloitte & Touche LLP.
The selection of
Deloitte & Touche LLP as our independent registered public accounting firm is not required to be submitted to a vote of our stockholders for ratification. The Sarbanes-Oxley Act of 2002 requires that the Audit Committee be directly
responsible for the appointment, compensation and oversight of our independent auditors. If our stockholders fail to vote on an advisory basis in favor of the selection, the Audit Committee will reconsider whether to retain Deloitte &
Touche LLP, and may retain that firm or another firm without
re-submitting
the matter to our stockholders. Even if our stockholders ratify the appointment, the Audit Committee may, in its discretion, direct
the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interests and the interests of our stockholders. The affirmative vote of a majority of
the shares voting on this proposal is required for ratification.
A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting.
The representative will be given an opportunity to make a statement if desired, and will be available to respond to stockholder questions.
Our Board of Directors
unanimously recommends a vote
FOR
Proposal Four to ratify the Audit Committee’s appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2018.
The decision to engage Deloitte & Touche LLP was made by the Company’s Audit Committee.
Independent Registered Public Accounting Firm Services and Related Fee Arrangements
During the fiscal years ended May 31, 2017 and 2016, various audit services and
non-audit
services were provided to the
Company by Deloitte & Touche LLP. Set forth below are the aggregate fees billed for these services, all of which were
pre-approved
by the Audit Committee, for the last two fiscal years:
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May 31,
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2017
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2016
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Audit Fees
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$
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6,900,000
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$
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Audit-Related Fees
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230,000
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242,000
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Tax Services
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476,000
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13,000
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All Other Fees
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—
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117,000
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Total Fees
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$
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7,606,000
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$
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5,457,000
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Audit Fees:
The aggregate fees billed for professional services rendered for the audit of the Company’s financial statements
for the fiscal years ended May 31, 2017 and 2016 and for the reviews of the financial statements included in the Company’s quarterly reports on Form
10-Q
for the fiscal years ended May 31, 2017
and 2016 were $6,900,000 and $5,085,000, respectively.
Audit-Related Fees:
The aggregate fees relating primarily to attention to other advisory services
related to the implementation of new accounting standards billed by Deloitte & Touche LLP were $230,000 and $242,000 for the fiscal years ended May 31, 2017 and 2016, respectively.
Tax Fees:
The aggregate fees relating to tax compliance, advice and planning billed by Deloitte & Touche LLP were $476,000 and $13,000 for the fiscal
years ended May 31, 2017 and 2016, respectively.
All Other Fees:
All other fees of $117,000 billed by Deloitte & Touche LLP for the fiscal year
ended May 31, 2016 pertain to
non-audit
related services provided to assess certain strategic activities contemplated by the Company.
REPORT OF THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS
The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight of the integrity of the Company’s financial statements, the Company’s compliance with legal and
regulatory requirements, the independent registered public accounting firm’s qualifications and independence, and the performance of the Company’s internal audit function and independent registered public accounting firm. The Audit
Committee’s activities are governed by a written charter adopted by the Board of Directors. Among other responsibilities specified in the charter, the Audit Committee has the sole authority to appoint, retain and where appropriate, terminate,
the Company’s independent registered public accounting firm. The Audit Committee is also directly responsible for, among other things, the evaluation, compensation and oversight of the work of the Company’s independent registered public
accounting firm for the purpose of preparing or issuing an audit report or related work. In addition, the Audit Committee must
pre-approve
all audit and permitted
non-audit
services performed by the Company’s independent registered public accounting firm. It is not the duty of the Audit Committee to plan or conduct audits or determine that the Company’s
financial statements and disclosures are complete and accurate and in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent registered public
accounting firm.
In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited financial statements contained in the
2017 Annual Report on Form
10-K
with the Company’s management and Deloitte & Touche LLP, the independent registered public accounting firm for fiscal 2017.
The Audit Committee discussed with Deloitte & Touche LLP the matters required to be discussed by Auditing Standard No. 16, “Communications with
Audit Committees” as adopted by the Public Company Accounting Oversight Board (“PCAOB”). In addition, the Audit Committee has discussed with Deloitte & Touche LLP the auditor’s independence from the Company and its
management, including the matters in the written disclosures and the letter from Deloitte & Touche LLP pursuant to the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications
with the Audit Committee regarding independence, which the Company has received.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board of Directors has approved) that the audited financial statements be included in the Company’s Annual Report on Form
10-K
for the fiscal year
ended May 31, 2017, for filing with the Securities and Exchange Commission.
The Audit Committee has determined that the rendering of the
non-audit
services by Deloitte & Touche LLP was compatible with maintaining the auditor’s independence.
As described above under the heading “Proposal Four – Ratification of Appointment of Independent Registered Public Accounting Firm,” the
Audit Committee has appointed Deloitte & Touche LLP as the Company’s independent registered public accounting firm for fiscal 2018 and is seeking ratification of the appointment at the Annual Meeting.
Submitted by the Audit Committee of the Board of Directors as of July 17, 2017.
Salvatore D. Fazzolari, Chairman
Bruce A. Carbonari
Thomas S. Gross
William B. Summers, Jr.
STOCKHOLDER PROPOSALS FOR 2018
ANNUAL MEETING
Any stockholder proposal intended to be presented at the 2018 Annual Meeting of Stockholders (the “2018 Annual
Meeting”) must be received by the Company’s Secretary at its principal executive offices no later than April 26, 2018 for inclusion in the Board of Directors’ Proxy Statement and form of Proxy relating to the 2018 Annual Meeting.
Each proposal submitted must be accompanied by the name and address of the stockholder submitting the proposal and the number of shares of Common Stock owned. If the proponent is not a stockholder of record, proof of beneficial ownership also must
be submitted. All proposals must be a proper subject for action and comply with the Proxy Rules of the Commission.
In addition, in accordance with the
By-Laws,
if a stockholder intends to present a proposal (including with respect to Director nominations) at the 2018 Annual Meeting without the inclusion of that proposal in the Company’s proxy materials for
the 2018 Annual Meeting, that stockholder must deliver the
proposal, along with all information relating to the proposal required by the
By-Laws,
to the Company’s Secretary so that it is received no earlier
than June 7, 2018 and no later than July 7, 2018. If not submitted within this timeframe and containing the required information in accordance with the
By-Laws,
the notice would be considered
untimely.
If, however, the date of the 2018 Annual Meeting is more than 30 days before or more than 60 days after the first anniversary of this
year’s Annual Meeting, notice by the stockholder to be timely must be delivered no earlier than the close of business on the 120th day prior to the date of the 2018 Annual Meeting and no later than the close of business on the later of the 90th
day prior to the date of the 2018 Annual Meeting or, if the first public announcement of the date of the 2018 Annual Meeting is less than 100 days prior to the date of the 2018 Annual Meeting, the 10th day following the day on which public
announcement of the date of the 2018 Annual Meeting is first made by the Company.
The Board of Directors is not aware of any matter to come before the Annual Meeting other than those mentioned in the accompanying Notice. However, if other matters shall properly come before the Annual Meeting, it
is the intention of the persons named in the accompanying Proxy to vote in accordance with their best judgment on such matters.
Upon the receipt of a
written request from any stockholder entitled to vote at the forthcoming Annual Meeting, the Company will mail, at no charge to the stockholder, a copy of the Company’s Annual Report on Form
10-K,
including the financial statements and schedules required to be filed with the Commission pursuant to Rule
13a-1
under the Exchange Act for the Company’s most recent fiscal year. Requests from beneficial
owners of the Company’s voting securities must set forth a good-faith representation that as of the record date for the Annual Meeting, the person making the request was the beneficial owner of securities entitled to vote at such Annual
Meeting. Written requests for the Annual Report on Form
10-K
should be directed to:
Secretary
RPM International Inc.
P.O. Box 777
Medina, Ohio 44258
You are urged to sign and return your Proxy promptly in order to make certain your shares
will be voted at the Annual Meeting. For your convenience a return envelope is enclosed requiring no additional postage if mailed in the United States. You may also vote by the Internet at www.proxyvote.com or by phone at
1-800-690-6903.
Please refer to the Proxy for more details about how you may vote.
By Order of the Board of Directors.
Edward W. Moore
Secretary
August 24, 2017
Please make sure to vote your proxy!
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Please note that if you do not vote your shares, your broker will not be able to vote your shares for you and your shares will not be represented at the meeting. New York Stock Exchange Rule 452 eliminates broker
discretionary voting on the election of directors.
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Please note that state laws require shares of corporate stock or outstanding funds held in an account to be considered abandoned property if no written or electronic communication regarding the account has been made within the
statutory timeframe (typically three to five years). If you do not vote your proxy, we suggest that you otherwise contact your broker at least once every year and request that your broker note in its records that you have made direct contact
regarding your account. If no s
uch contact is made within the statutory timeframe, you risk having the property in your account turned over to your state. If your account is turned over to your state, you must work directly with your state to
reclaim your property.
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Please
sign, date and mail the enclosed voting form
to give your broker specific instructions on how to vote your shares. Depending upon your broker, you may be able to vote electronically, either by
toll-free telephone or by the Internet. Please refer to the enclosed voting form for instructions on how to vote electronically.
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Regardless of how many shares you own, your vote is very important!
Thank you – The RPM Board of Directors
RPM International Inc. • 2628 Pearl Road, P.O. Box 777, Medina, Ohio 44258 • (800) 776-4488
RPM INTERNATIONAL INC.
C/O WELLS FARGO SHAREOWNER SERVICES
P.O. BOX 64874
ST. PAUL, MN
55164-0874
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy
cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have
your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51
Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS:
E31929-Z70760-P96623 KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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RPM INTERNATIONAL INC.
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For All
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Withhold
All
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For All Except
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To withhold authority to vote for any individual nominee(s), mark “For All
Except” and write the number(s) of the nominee(s) on the line below.
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THE RPM BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR
THE FOLLOWING NOMINEES:
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☐
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☐
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☐
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1. ELECTION OF DIRECTORS
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01) Julie A. Lagacy
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02) Robert A. Livingston
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03) Frederick R. Nance
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04) William B. Summers, Jr.
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THE RPM BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR
PROPOSALS 2 AND 4, AND “EVERY YEAR” ON PROPOSAL
3.
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For
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Against
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Abstain
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For
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Against
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Abstain
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2. Approve the Company’s executive compensation.
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☐
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☐
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☐
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4. Ratify the appointment of Deloitte & Touche LLP as
the Company’s independent registered public accounting firm.
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☐
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☐
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☐
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Every
Year
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Every
Two
Years
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Every
Three
Years
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Abstain
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3. Vote on the frequency of future votes on the Company's
executive compensation.
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☐
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☐
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☐
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☐
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For address changes and/or comments, please check this box and write them on the back where indicated.
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☐
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Note
:
If any other matters properly come before the Annual Meeting or any
adjournment thereof, the Proxy holders will vote the shares represented by this Proxy in their discretion.
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Please indicate if you plan to attend the Annual Meeting.
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☐
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☐
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Yes
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No
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Note:Please sign exactly as name appears hereon. Joint owners should each sign. When signing
as attorney, executor, administrator, trustee, or guardian, please give full title as such.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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V.1.1
DIRECTIONS TO THE RPM ANNUAL MEETING
THURSDAY, OCTOBER 5, 2017 AT 2:00 P.M. EDT
THE
HOLIDAY INN STRONGSVILLE
15471 Royalton Road, Strongsville, OH
Phone: (440) 238-8800
FROM CLEVELAND AND
POINTS NORTH
(INCLUDING HOPKINS AIRPORT)
I-71 South to the North Royalton exit (#231A).
Cross
over bridge and the hotel is on the right-hand side.
FROM THE OHIO TURNPIKE EAST AND WEST
Ohio Turnpike (I-80) to I-71 South (exit 161). Exit at the
North Royalton exit (#231A).
Cross over bridge and the
hotel is on the right-hand side.
FROM THE EAST
I-480 West to I-71 South. Exit at the North Royalton
exit
(#231A).
Cross over bridge and the hotel is on the right-hand side.
FROM THE SOUTH
I-71 North to the Strongsville
exit (#231).
Turn right at end of ramp and hotel is on the right-hand side.
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
E31930-Z70760-P96623
RPM INTERNATIONAL INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS ON THE REVERSE SIDE.
The undersigned hereby appoints FRANK C. SULLIVAN and RONALD A. RICE, and each of them, as Proxy
holders, with full power of substitution, to appear and vote as designated on the reverse side all the shares of Common Stock of RPM International Inc., which the undersigned shall be entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Holiday Inn, located at Interstate 71 and Route 82 East, Strongsville, Ohio, on Thursday, October 5, 2017 at 2:00 P.M. EDT, and at any adjournment or postponement thereof, hereby revoking any and all proxies heretofore
given.
IF A SIGNED PROXY CARD IS RETURNED WITH NO DIRECTIONS GIVEN ON THE REVERSE SIDE, SAID
SHARES OF COMMON STOCK WILL BE VOTED “FOR” THE ELECTION OF THE FOUR DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS, “FOR” PROPOSAL TWO, “EVERY YEAR” ON PROPOSAL THREE AND “FOR” PROPOSAL FOUR.
SPECIAL INSTRUCTIONS FOR
PARTICIPANTS IN
THE RPM INTERNATIONAL INC. 401(k) TRUST AND PLAN
AND/OR THE RPM INTERNATIONAL INC. UNION 401(k) TRUST AND PLAN
This Proxy Card also instructs Wells Fargo Bank, N.A., as Trustee of the RPM International Inc. 401(k)
Trust and Plan and/or the RPM International Inc. Union 401(k) Trust and Plan (collectively and individually, the “Plan”), to vote in person or by Proxy at the Annual Meeting of Stockholders, all the shares of Common Stock of RPM
International Inc. credited to the account of the undersigned under the Plan in the manner appointed on the reverse side hereof.
In addition, the undersigned directs Wells Fargo Bank, N.A., as Trustee of the Plan, to vote in person
or by Proxy at the Annual Meeting of Stockholders a portion of the shares of Common Stock of RPM International Inc. held in the Plan for which no instructions are given, in the manner designated by the undersigned on the reverse side hereof. The
portion of such unvoted shares subject to the undersigned’s direction shall be the total number of unvoted shares under the Plan multiplied by a fraction equal to the shares for which voting directions were given by the undersigned divided by
the total number of shares of all participants in the Plan for which voting directions were given. AS A RESULT, IF YOU ARE A PARTICIPANT IN THE PLAN AND YOU DO NOT VOTE THE SHARES, THE SHARES WILL BE VOTED IN THE SAME MANNER AND PROPORTION AS THOSE
SHARES HELD BY PARTICIPANTS IN THE PLAN WHO VOTE THEIR SHARES.
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Address Changes/Comments:
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.
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