Under the change in control agreements, a “change in control” is defined generally as: (i) the acquisition of beneficial ownership of 35 percent or more of the voting power of all of the Company’s voting securities
by a person or group; (ii) the consummation of certain mergers or consolidations; (iii) a change in the composition of a majority of the members of our Board of Directors; (iv) the consummation of a sale of substantially all of the Company’s
assets; or (v) the approval by our shareholders of a plan of complete liquidation of the Company.
The amounts potentially payable to our Named Executive Officers in connection with a change in control are set forth in the tables under the headings “Potential Payments Upon Termination” and “Change in Control
Benefits” in Part III below. Pending approval of the Stock Plan proposal by the Company’s shareholders, the Company intends to amend the change in control agreements described above to make corresponding changes and certain other updates to
reflect market practice in this area.
In addition to the compensation components discussed above, we also provide our Named Executive Officers, as well as certain other employees and officers, with other benefits as described below. We generally
disfavor providing extensive perquisites but do provide modest benefits intended to enhance the effectiveness of our Named Executive Officers and complement the highly variable, performance-oriented compensation components we utilize. We also
provide these benefits in order to remain competitive with the market and believe that these benefits help us to attract and retain qualified executives.
In connection with the Company’s compensation program, we have established certain policies that relate to executive compensation. The most significant of these policies are described below.
Our Named Executive Officers currently hold shares of our common stock or stock equivalents at levels greater than or equal to the Required Ownership Level. Shares owned outright and shares represented by RSUs or restricted stock awards,
whether vested or unvested, including performance-based shares at the target award level, count as share equivalents toward the Required Ownership Level. Unexercised stock options do not count toward the Required Ownership Level. Failure to
achieve or maintain the Required Ownership Level may result in (i) the applicable individual being required to hold all after-tax vested stock award shares and after-tax shares acquired upon exercise of stock options, or (ii) suspension of future
equity awards, until the Required Ownership Level is achieved. The Compensation Committee (or its designee) may make exceptions, in its sole discretion, in the event of disability or great financial hardship.
PART II: COMPENSATION COMMITTEE REPORT
Each member of the Compensation Committee of the Board of Directors of Hillenbrand, Inc. is “independent,” as that term is defined under (i) the New York Stock Exchange listing standards, (ii) the non-employee
director standards of Rule 16b-3 of the Securities Exchange Act of 1934, as amended, (iii) the outside director requirements of Section 162(m) of the Internal Revenue Code, and (iv) the Company’s Corporate Governance Standards. The Compensation
Committee currently consists of Gary L. Collar, Helen W. Cornell, F. Joseph Loughrey, Jennifer W. Rumsey, and Stuart A. Taylor, II.
As a committee, one of our obligations is to ensure Hillenbrand’s executive compensation program is performance-based, in order to align management interests with the short-term and long-term interests of
shareholders, and is competitive, in order to enable the Company to attract and retain superior executive personnel. We engage an independent executive compensation consulting firm to assist us in our review of the Company’s executive
compensation programs to ensure these programs are competitive and consistent with our stated objectives. The executive compensation consultant is retained by and directly accountable to us, and we generally approve all related fees paid to the
executive compensation consultant. We have no interlocks or insider participation, and we engage in annual self-evaluations to determine our effectiveness as a committee. We have adopted a Charter, which may be found on Hillenbrand’s web site
at www.hillenbrand.com.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and, based upon this review and discussion, recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in this proxy statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020.
|
Respectfully submitted,
|
|
|
|
Helen W. Cornell (Chairperson)
|
|
Gary L. Collar
|
|
F. Joseph Loughrey
|
|
Jennifer W. Rumsey
|
|
Stuart A. Taylor, II
|
PART III: EXECUTIVE COMPENSATION TABLES
Tabular Compensation Information
In the following pages we present numerous tables that set out various elements of compensation for our Named Executive Officers. No one table alone presents the “total picture”; instead, you should review all the
information carefully to understand the amounts and manner in which our Named Executive Officers have been paid. To understand all the numbers in the tables below, you need to carefully read the footnotes, which explain various assumptions and
calculations that give rise to the dollar amounts in the tables.
Compensation of Named Executive Officers
Summary Compensation Table
The following table summarizes the total compensation paid to or earned by each of the Named Executive Officers for the fiscal years ended September 30, 2020, 2019, and 2018, except where otherwise noted. We have
entered into employment agreements with each of the Named Executive Officers, which are described in detail in the “Employment Agreements and Termination Benefits” section of Part I above.
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
Name And Principal
Position
(As Of September 30, 2020)
|
|
Year
|
|
|
Salary
$ (1)
|
|
|
Bonus
$
|
|
|
Stock
Awards
$ (2)
|
|
|
Option
Awards
$ (3)
|
|
|
Non-Equity
Incentive Plan
Compensation
$ (4)
|
|
|
Change In
Pension Value
And
Nonqualified Deferred Compensation Earnings
$
|
|
|
All Other Compensation
$ (5)
|
|
|
Total
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joe A. Raver
President and Chief
Executive Officer
|
|
|
2020
2019
2018
|
|
|
$
$
$
|
723,197
844,178
809,685
|
|
|
$
$
$
|
–
–
–
|
|
|
$
$
$
|
2,417,254
2,233,248
1,999,942
|
|
|
$
$
$
|
1,199,999
1,116,640
999,999
|
|
|
$
$
$
|
663,800
1,250,897
1,420,254
|
|
|
$
$
$
|
–
–
–
|
|
|
$
$
$
|
47,779
17,765
100,616
|
|
|
$
$
$
|
5,052,029
5,462,728
5,330,496
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kristina A. Cerniglia
Senior Vice President,
Chief Financial
Officer, and
Integration Leader
|
|
|
2020
2019
2018
|
|
|
$
$
$
|
538,395
535,346
521,695
|
|
|
$
$
$
|
–
–
–
|
|
|
$
$
$
|
637,867
549,946
499,951
|
|
|
$
$
$
|
316,663
274,991
249,994
|
|
|
$
$
$
|
370,000
567,904
655,000
|
|
|
$
$
$
|
–
–
–
|
|
|
$
$
$
|
64,275
78,065
56,742
|
|
|
$
$
$
|
1,927,200
2,006,252
1,983,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly K. Ryan
Senior Vice President
and President of
Coperion
|
|
|
2020
2019
2018
|
|
|
$
$
$
|
501,496
498,644
485,892
|
|
|
$
$
$
|
–
–
–
|
|
|
$
$
$
|
570,696
466,613
433,287
|
|
|
$
$
$
|
283,329
233,327
216,661
|
|
|
$
$
$
|
368,600
550,569
570,600
|
|
|
$
$
$
|
–
–
–
|
|
|
$
$
$
|
465,540
2,023,261
1,731,089
|
|
|
$
$
$
|
2,189,661
3,772,414
3,437,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ling An-Heid (6)
Senior Vice President
and President of
Mold-Masters
|
|
|
2020
2019
2018
|
|
|
|
433,805
N/A
N/A
|
|
|
$
$
$
|
435,129
N/A
N/A
|
|
|
$
$
$
|
1,486,774
N/A
N/A
|
|
|
$
$
$
|
241,660
N/A
N/A
|
|
|
$
$
$
|
159,700
N/A
N/A
|
|
|
$
$
$
|
–
N/A
N/A
|
|
|
$
$
$
|
12,202
N/A
N/A
|
|
|
$
$
$
|
2,769,270
N/A
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher H. Trainor
Senior Vice President
and President of
Batesville
|
|
|
2020
2019
2018
|
|
|
$
$
$
|
450,895
447,834
434,746
|
|
|
$
$
$
|
–
–
–
|
|
|
$
$
$
|
402,833
399,972
399,924
|
|
|
$
$
$
|
199,998
199,991
200,000
|
|
|
$
$
$
|
539,400
252,975
264,200
|
|
|
$
$
$
|
–
–
–
|
|
|
$
$
$
|
58,186
58,665
44,153
|
|
|
$
$
$
|
1,651,312
1,359,437
1,343,023
|
|
(1)
|
The amounts indicated represent the dollar value of base salary earned during fiscal years 2020, 2019, and 2018, as applicable.
|
(2)
|
The amounts indicated represent the grant date fair value related to awards of restricted stock units granted during fiscal years 2020, 2019, and 2018, computed in accordance with stock-based accounting rules (FASB ASC Topic 718). The
determination of this value is based on the methodology set forth in Note 10 to our audited financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on November 12, 2020. Awards that are
performance-based are valued for purposes of this table above based on the targeted 100 percent performance achievement level. The maximum award amounts when the grants were made, at the highest possible performance achievement level,
were 175 percent of the values shown in the table.
|
(3)
|
The amounts indicated represent the grant date fair value related to stock option awards granted during fiscal years 2020, 2019, and 2018, computed in accordance with stock-based accounting rules (FASB ASC Topic 718). The
determination of this value is based on the methodology set forth in Note 10 to our audited financial statements included in our Annual Report on Form 10-K, which was filed with the SEC on November 12, 2020.
|
(4)
|
The amounts indicated represent cash awards earned for fiscal years 2020, 2019, and 2018, and paid in the first quarter of fiscal 2021, 2020, and 2019, respectively, under our STIC Plan. See the “Annual Cash Incentive Awards” section
of Part I above.
|
(5)
|
Includes, where applicable for fiscal year 2020 as set forth in the table below this note, (a) Company contributions to the Savings Plan and the SRP, (b) tax gross-ups and reimbursements received, and (c) other personal benefits (which
are itemized and further described in the table below this note).
|
Other Compensation – Additional Detail (Fiscal Year 2020)
|
|
Company Contribution
|
|
|
|
|
|
|
|
Name
|
|
|
401(K)
|
|
|
Supp 401(K)
|
|
|
Tax Reimbursements And Gross-Ups
|
|
|
Personal Benefits
Aggregating $10,000
Or More
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joe A. Raver
|
|
$
|
20,150
|
|
|
$
|
69,466
|
|
|
$
|
(41,837
|
)*
|
|
$
|
–
|
|
Kristina A. Cerniglia
|
|
$
|
19,676
|
|
|
$
|
34,591
|
|
|
$
|
–
|
|
|
$
|
10,008
|
**
|
Kimberly K. Ryan
|
|
$
|
19,085
|
|
|
$
|
31,200
|
|
|
$
|
415,255
|
*
|
|
$
|
–
|
|
Ling An-Heid
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
12,202
|
***
|
Christopher H. Trainor
|
|
$
|
20,211
|
|
|
$
|
25,762
|
|
|
$
|
–
|
|
|
$
|
12,213
|
****
|
|
*
|
Under the Company’s expatriation policies, the Company paid certain of Mr. Raver’s and Ms. Ryan’s foreign taxes. For Mr. Raver, the amount reported in this column reflects reimbursements made by Mr. Raver to the Company for correction
of a foreign tax gross-up paid by the Company on Mr. Raver’s behalf during fiscal year 2017 and relates to his work conducted on behalf of the Company while residing in Switzerland. Mr. Raver completed this work and returned to the
United States in 2013. For Ms. Ryan, the amount reported in this column reflects foreign tax payments made by the Company on Ms. Ryan’s behalf during fiscal year 2020 and relates to her work conducted on behalf of the Company while
residing in Germany.
|
|
**
|
The personal benefits amount reported for Ms. Cerniglia in the table above is attributed to payments made by the Company in fiscal 2020 for calendar year 2020 financial planning and tax preparation ($2,700), calendar year 2019
financial planning and tax preparation ($3,000), and long-term disability insurance premiums ($4,308).
|
|
***
|
The personal benefits amount reported for Ms. An-Heid in the table above is attributed to payments made by the Company in fiscal 2020 for a car allowance ($10,988) and long-term disability insurance premiums ($1,214). The Company
provided a car allowance for Ms. An-Heid because of the travel required for her position and given that her car is primarily used for business purposes.
|
|
****
|
The personal benefits amount reported for Mr. Trainor in the table above is attributed to payments made by the Company in fiscal 2020 for calendar year 2020 financial planning ($3,925), an executive physical ($2,100), transportation
and other costs related to Mr. Trainor’s spouse joining him as host of the annual Batesville sales performance trip ($2,308), and long-term disability insurance premiums ($3,880).
|
(6)
|
Ms. An-Heid was not a Named Executive Officer in 2018 and 2019 or for the first approximately seven weeks of fiscal 2020, becoming one in connection with the acquisition of Milacron. The compensation for Ms. An-Heid set forth in this
table includes only compensation paid by the Company (i.e., excluding compensation paid by Milacron in fiscal 2020 prior to its acquisition by the Company). Ms. An-Heid’s base salary earned during
fiscal 2020 included $51,651 of pay in lieu of vacation in connection with her joining the Company. Ms. An-Heid’s cash compensation was paid in Canadian dollars (“CAD”). The values throughout this Part III have been converted to U.S.
dollars at an average exchange rate for fiscal 2020 of 1.34409 CAD per $1.00 USD based on Bloomberg data.
|
Grants of Plan-Based Awards for Fiscal Year Ended September 30, 2020
The following table summarizes the grants of plan-based awards to each of the Named Executive Officers for the fiscal year ended September 30, 2020.
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (1)
|
|
|
Estimated Future Shares Earned Under
Equity Incentive Plan Awards (2)
|
|
|
All Other
Stock
Awards:
|
|
|
All Other
Option
|
|
|
|
|
|
|
Grant
Date Fair
Value Of
|
|
Awards:
Number Of
|
Exercise
Or
|
Grant
Date
|
Name
|
|
Grant
Date
|
|
Threshold
$
|
|
|
Target
$
|
|
|
Maximum
$
|
|
|
Threshold
#
|
|
|
Target
#
|
|
|
Maximum
#
|
|
|
Number
Of Shares
Or Units
#
|
|
|
Securities Underlying Options
# (3)
|
|
|
Base Price
Of Option
Awards
$/Sh
|
Closing
Market
Price
$/Sh
|
|
|
Stock And
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joe A. Raver
|
|
|
|
$
|
99,613
|
|
|
$
|
796,908
|
|
|
$
|
1,912,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2020 (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,392
|
|
|
|
37,570
|
|
|
|
65,747
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,103,431
|
|
|
|
12/5/2019 (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,392
|
|
|
|
37,570
|
|
|
|
65,747
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,313,823
|
|
|
|
12/5/2019 (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,968
|
|
|
$
|
31.94
|
|
|
|
$
|
1,199,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kristina A. Cerniglia
|
|
|
|
$
|
50,475
|
|
|
$
|
403,797
|
|
|
$
|
969,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2020 (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,478
|
|
|
|
9,914
|
|
|
|
17,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
291,174
|
|
|
|
12/5/2019 (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,478
|
|
|
|
9,914
|
|
|
|
17,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
346,693
|
|
|
|
12/5/2019 (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,755
|
|
|
$
|
31.94
|
|
|
|
$
|
316,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly K. Ryan
|
|
|
|
$
|
47,015
|
|
|
$
|
376,122
|
|
|
$
|
902,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2020 (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,217
|
|
|
|
8,870
|
|
|
|
15,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
260,512
|
|
|
|
12/5/2019 (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,217
|
|
|
|
8,870
|
|
|
|
15,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
310,184
|
|
|
|
12/5/2019 (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,728
|
|
|
$
|
31.94
|
|
|
|
$
|
283,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ling An-Heid
|
|
|
|
$
|
40,669
|
|
|
$
|
325,354
|
|
|
$
|
780,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2020 (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,891
|
|
|
|
7,566
|
|
|
|
13,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
222,213
|
|
|
|
12/5/2019 (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,891
|
|
|
|
7,566
|
|
|
|
13,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
264,583
|
|
|
|
12/5/2019 (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,444
|
|
|
$
|
31.94
|
|
|
|
$
|
241,660
|
|
|
|
12/5/2019 (8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,308
|
|
|
|
|
|
|
|
|
|
|
|
$
|
999,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher H. Trainor
|
|
|
|
$
|
42,271
|
|
|
$
|
338,172
|
|
|
$
|
710,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/5/2019 (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,565
|
|
|
|
6,261
|
|
|
|
10,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
183,886
|
|
|
|
12/5/2019 (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,565
|
|
|
|
6,261
|
|
|
|
10,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
218,947
|
|
|
|
12/5/2019 (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,161
|
|
|
$
|
31.94
|
|
|
|
$
|
199,998
|
|
(1)
|
The amounts indicated represent potential cash awards that could have been paid – at the threshold, target (100 percent), and maximum levels – under the STIC Plan. See the “Annual Cash Incentive Awards” section of Part I above for a
discussion of this plan. See the Non-Equity Incentive Plan Compensation column of the “Summary Compensation Table” above in this Part III for the actual amounts earned, which were paid in December 2020. Mr. Raver’s target STIC award is
calculated using his base salary paid taking into effect the COVID-19 related voluntary reduction.
|
(2)
|
The number of shares indicated represents a grant of performance-based restricted stock units subject to vesting conditions based on the financial performance of the Company during the three-fiscal-year measurement period 2020-2022.
During that period, shares represented by the RSUs that are issued based on the shareholder value formula (see footnote 5 below) accrue dividend equivalent amounts as dividends are declared on the Company’s common stock. These equivalent
amounts are deemed to be reinvested in additional shares of Company common stock and then ultimately paid in the form of additional shares on the distribution date of the underlying award, in proportion to the number of shares that vest
and are distributed in accordance with the award formula. Dividends do not accrue during the measurement period with respect to shares represented by the RSUs that are issued based on the relative TSR formula (see footnote 6 below). The
amounts in the table represent the number of shares that could be earned under the awards at the threshold, target (100 percent), and maximum achievement of the applicable performance targets. The vesting schedules for stock awards
granted during fiscal year 2020 are disclosed by individual Named Executive Officer in the footnotes to the “Outstanding Equity Awards at September 30, 2020” table below.
|
(3)
|
Options expire ten years from date of grant and will vest in equal increments on the first three anniversaries of the option grant date.
|
(4)
|
The valuations of stock options and RSUs are grant date fair values computed in accordance with stock-based accounting rules (FASB ASC Topic 718) and are based on the methodology set forth in Note 10 to our financial statements
included in our Annual Report on Form 10-K, which was filed with the SEC on November 12, 2020. The amounts used in column (l) for performance-based equity awards are based on an assumed 100 percent achievement of the applicable
performance targets.
|
(5)
|
The number of shares indicated represents a grant of performance-based restricted stock units subject to vesting conditions based on the increase in shareholder value of the Company during the three-fiscal-year measurement period
2020-2022. See the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Shareholder Value RSUs.” Ordinarily, these performance-based RSU awards are granted in December of each year; however, in
fiscal 2020, the Company required additional time to set the corresponding targets for such awards given that the acquisition of Milacron closed only weeks before the time the awards otherwise would have been approved and granted. As a
result, these awards were not granted until the next regularly scheduled Compensation Committee meeting, in February 2020, after the Company had completed its analysis and target-setting process that included adjustments for the Milacron
acquisition.
|
(6)
|
The number of shares indicated represents a grant of performance-based restricted stock units subject to vesting conditions based on the percentile ranking of the Company’s TSR compared to the Index Companies during the
three-fiscal-year measurement period 2020-2022. See the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Relative TSR RSUs.”
|
(7)
|
The number of shares indicated represents a grant of non-qualified stock options which vest 33‑1/3 percent per year over a three-year period.
|
(8)
|
See footnote 11 to the table below entitled “Outstanding Equity Awards at September 30, 2020.”
|
Outstanding Equity Awards at September 30, 2020
The following table summarizes the number and terms of awards of stock options and restricted stock units outstanding for each of the Named Executive Officers as of September 30, 2020.
|
|
Option Awards
|
|
Stock Awards (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number Of
Securities
Underlying
Unexercised
Options
#
Exercisable
|
|
|
Number Of
Securities
Underlying
Unexercised
Options
#
Unexercisable
|
|
Equity
Incentive
Plan
Awards:
Number Of
Securities
Underlying
Unexercised
Unearned
Options
#
|
|
Option
Exercise
Price
$
|
|
Option
Expiration
Date
|
|
Number Of
Shares Or
Units Of
Stock That
Have Not
Vested
#
|
|
Market Value
Of Shares Or
Units Of Stock
That Have
Not Vested
$ (2)
|
|
|
Equity Incentive
Plan Awards:
Number Of
Unearned Shares,
Units Or Other
Rights That Have
Not Vested
#
|
|
Equity Incentive
Plan Awards:
Market Or
Payout Value Of
Unearned Shares,
Units Or Other
Rights That Have
Not Vested
$ (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joe A. Raver
|
|
|
30,592
|
|
|
|
|
|
|
|
$
|
22.26
|
|
12/6/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,806
|
|
|
|
|
|
|
|
$
|
20.675
|
|
12/4/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,267
|
|
|
|
|
|
|
|
$
|
28.155
|
|
12/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,220
|
|
|
|
|
|
|
|
$
|
32.655
|
|
12/3/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,154
|
|
|
|
|
|
|
|
$
|
31.11
|
|
12/2/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,556
|
|
|
|
|
|
|
|
$
|
36.08
|
|
12/7/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,061
|
|
|
|
30,029
|
(3)
|
|
|
|
$
|
45.78
|
|
12/7/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,647
|
|
|
|
73,291
|
(4)
|
|
|
|
$
|
41.32
|
|
12/6/2028
|
|
|
|
|
|
|
|
|
67,128
|
(6)(8)
|
|
$
|
1,903,750
|
|
|
|
|
|
|
|
|
180,968
|
(5)
|
|
|
|
$
|
31.94
|
|
12/6/2029
|
|
|
|
|
|
|
|
|
64,064
|
(7)(8)
|
|
$
|
1,816,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kristina A. Cerniglia
|
|
|
17,891
|
|
|
|
|
|
|
|
|
$
|
32.655
|
|
12/3/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,627
|
|
|
|
|
|
|
|
|
$
|
31.11
|
|
12/2/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,870
|
|
|
|
|
|
|
|
|
$
|
36.08
|
|
12/7/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,015
|
|
|
|
7,507
|
(3)
|
|
|
|
$
|
45.78
|
|
12/7/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,025
|
|
|
|
18,049
|
(4)
|
|
|
|
$
|
41.32
|
|
12/6/2028
|
|
|
|
|
|
|
|
|
17,206
|
(6)(9)
|
|
$
|
487,962
|
|
|
|
|
|
|
|
|
47,755
|
(5)
|
|
|
|
$
|
31.94
|
|
12/6/2029
|
|
|
|
|
|
|
|
|
16,438
|
(7)(9)
|
|
$
|
466,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly K. Ryan
|
|
|
22,202
|
|
|
|
|
|
|
|
|
$
|
28.155
|
|
12/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,428
|
|
|
|
|
|
|
|
|
$
|
32.655
|
|
12/3/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,396
|
|
|
|
|
|
|
|
|
$
|
31.11
|
|
12/2/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,605
|
|
|
|
|
|
|
|
|
$
|
36.08
|
|
12/7/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,013
|
|
|
|
6,506
|
(3)
|
|
|
|
$
|
45.78
|
|
12/7/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,658
|
|
|
|
15,314
|
(4)
|
|
|
|
$
|
41.32
|
|
12/6/2028
|
|
|
|
|
|
|
|
|
15,069
|
(6)(10)
|
|
$
|
427,357
|
|
|
|
|
|
|
|
|
42,728
|
(5)
|
|
|
|
$
|
31.94
|
|
12/6/2029
|
|
|
|
|
|
|
|
|
14,406
|
(7)(10)
|
|
$
|
408,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ling An-Heid
|
|
|
|
|
|
|
36,444
|
(5)
|
|
|
|
$
|
31.94
|
|
12/6/2029
|
|
|
32,347
|
(11)
|
|
$
|
917,361
|
|
|
|
7,767
|
(6)(12)
|
|
$
|
220,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,566
|
(7)(12)
|
|
$
|
214,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher H. Trainor
|
|
|
4,993
|
|
|
|
|
|
|
|
|
$
|
28.155
|
|
12/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,454
|
|
|
|
|
|
|
|
|
$
|
32.655
|
|
12/3/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,813
|
|
|
|
|
|
|
|
|
$
|
31.11
|
|
12/2/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,903
|
|
|
|
|
|
|
|
|
$
|
36.08
|
|
12/7/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,013
|
|
|
|
6,005
|
(3)
|
|
|
|
$
|
45.78
|
|
12/7/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,564
|
|
|
|
13,126
|
(4)
|
|
|
|
$
|
41.32
|
|
12/6/2028
|
|
|
|
|
|
|
|
|
|
|
11,537
|
(6)(13)
|
|
$
|
327,189
|
|
|
|
|
|
|
|
|
30,161
|
(5)
|
|
|
|
$
|
31.94
|
|
12/6/2029
|
|
|
|
|
|
|
|
|
|
|
11,006
|
(7)(13)
|
|
$
|
312,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Figures below include accrued dividends where applicable.
|
(2)
|
Value is based on the closing price of Hillenbrand common stock of $28.36 on September 30, 2020, as reported on the New York Stock Exchange.
|
(3)
|
The options were granted on December 7, 2017. The options fully vested on December 7, 2020.
|
(4)
|
The options were granted on December 6, 2018. One-third of the options vested on each of December 6, 2019 and December 6, 2020. The remaining one-third will vest on December 6, 2021.
|
(5)
|
The options were granted on December 5, 2019. One-third of the options vested on December 5, 2020. The remaining two-thirds will vest in two equal portions on each of December 5, 2021 and December 5, 2022.
|
(6)
|
Such performance-based RSU awards are subject to vesting conditions based on the increase in shareholder value of the Company during a three-fiscal-year measurement period. For additional detail regarding these awards, including
information regarding how dividends accrue, see the discussion in the “Long-Term Incentive Compensation” section of Part I above under the heading “Shareholder Value RSUs.” The amounts in the table represent the award amounts at 100
percent achievement of the targeted increase in shareholder value associated with the award, plus accrued dividends where applicable. Generally, award vesting is contingent upon continued employment. See the section titled “Employment
Agreements and Termination Benefits” in Part I above for additional information regarding vesting.
|
(7)
|
Such performance-based RSU awards are subject to vesting conditions based on the percentile ranking of the Company’s TSR compared to its peers (either the Company’s compensation peer group or the Index Companies, as applicable) during
a three-fiscal-year measurement period. Whereas dividends accrue during the measurement period with respect to shares underlying RSU awards based on the increase in shareholder value (see footnote 6 above), dividends do not accrue during
the measurement period with respect to shares underlying RSU awards based on relative TSR. For additional detail regarding these awards, see the discussion in the “Long-Term Incentive Compensation” section of Part I above under the
heading “Relative TSR RSUs.” The amounts in the table represent the award amounts at the targeted percentile ranking of the Company’s relative TSR. Generally, award vesting is contingent upon continued employment. See the section titled
“Employment Agreements and Termination Benefits” in Part I above for additional information regarding vesting
|
(8)
|
Mr. Raver was awarded the following performance-based RSUs (excluding accrued dividends):
|
Award Date
|
|
Restricted Stock
Units Awarded
|
|
Vesting Schedule
|
December 6, 2018
|
|
27,024
|
|
Award will vest on September 30, 2021, assuming 100% achievement of the targeted increase in shareholder value.
|
December 6, 2018
|
|
26,494
|
|
Award will vest on September 30, 2021, assuming 100% achievement of the targeted percentile ranking of the Company’s relative TSR.
|
December 5, 2019
|
|
37,570
|
|
Award will vest on September 30, 2022, assuming 100% achievement of the targeted percentile ranking of the Company’s relative TSR.
|
February 12, 2020
|
|
37,570
|
|
Award will vest on September 30, 2022, assuming 100% achievement of the targeted increase in shareholder value.
|
(9)
|
Ms. Cerniglia was awarded the following performance-based RSUs (excluding accrued dividends):
|
Award Date
|
|
Restricted Stock
Units Awarded
|
|
Vesting Schedule
|
December 6, 2018
|
|
6,655
|
|
Award will vest on September 30, 2021, assuming 100% achievement of the targeted increase in shareholder value.
|
December 6, 2018
|
|
6,524
|
|
Award will vest on September 30, 2021, assuming 100% achievement of the targeted percentile ranking of the Company’s relative TSR.
|
December 5, 2019
|
|
9,914
|
|
Award will vest on September 30, 2022, assuming 100% achievement of the targeted percentile ranking of the Company’s relative TSR.
|
February 12, 2020
|
|
9,914
|
|
Award will vest on September 20, 2022, assuming 100% achievement of the targeted increase in shareholder value.
|
(10)
|
Ms. Ryan was awarded the following performance-based RSUs (excluding accrued dividends):
|
Award Date
|
|
Restricted Stock
Units Awarded
|
|
Vesting Schedule
|
December 6, 2018
|
|
5,646
|
|
Award will vest on September 30, 2021, assuming 100% achievement of the targeted increase in shareholder value.
|
December 6, 2018
|
|
5,536
|
|
Award will vest on September 30, 2021, assuming 100% achievement of the targeted percentile ranking of the Company’s relative TSR.
|
December 5, 2019
|
|
8,870
|
|
Award will vest on September 30, 2022, assuming 100% achievement of the targeted percentile ranking of the Company’s relative TSR.
|
February 12, 2020
|
|
8,870
|
|
Award will vest on September 30, 2022, assuming 100% achievement of the targeted increase in shareholder value.
|
(11)
|
Ms. An-Heid was awarded the following time-based RSUs as part of an initial, non-recurring sign-on award in connection with her joining the Company as part of the Milacron acquisition (excluding accrued dividends):
|
Award Date
|
|
Restricted Stock
Units Awarded
|
|
Vesting Schedule
|
December 5, 2019
|
|
31,308
|
|
Award will vest 50% on each of December 5, 2021 and December 5, 2022.
|
Ms. An-Heid was a key executive at Milacron prior to the acquisition, and the Compensation Committee determined to make this award as part of her retention and with the aim of facilitating a successful integration of
Milacron.
(12)
|
Ms. An-Heid was awarded the following performance-based RSUs (excluding accrued dividends):
|
Award Date
|
|
Restricted Stock
Units Awarded
|
|
Vesting Schedule
|
December 5, 2019
|
|
7,566
|
|
Award will vest on September 30, 2022, assuming 100% achievement of the targeted percentile ranking of the Company’s relative TSR.
|
February 12, 2020
|
|
7,566
|
|
Award will vest on September 30, 2022, assuming 100% achievement of the targeted increase in shareholder value.
|
(13)
|
Mr. Trainor was awarded the following performance-based RSUs (excluding accrued dividends):
|
Award Date
|
|
Restricted Stock
Units Awarded
|
|
Vesting Schedule
|
December 6, 2018
|
|
4,840
|
|
Award will vest on September 30, 2021, assuming 100% achievement of the targeted increase in shareholder value.
|
December 6, 2018
|
|
4,745
|
|
Award will vest on September 30, 2021, assuming 100% achievement of the targeted percentile ranking of the Company’s relative TSR.
|
December 5, 2019
|
|
6,261
|
|
Award will vest on September 30, 2022, assuming 100% achievement of the targeted percentile ranking of the Company’s relative TSR.
|
February 12, 2020
|
|
6,261
|
|
Award will vest on September 30, 2022, assuming 100% achievement of the targeted increase in shareholder value.
|
Option Exercises and Stock Vested for Fiscal Year Ended September 30, 2020
The following table summarizes the value realized upon vesting of stock awards (including the dividends accrued thereon) during the fiscal year ended September 30, 2020, for the Named Executive Officers.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number Of Shares
Acquired On
Exercise
#
|
|
|
Value Realized
On
Exercise
$
|
|
|
Number Of Shares
Acquired On
Vesting
#
|
|
|
Value Realized
On
Vesting
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joe A. Raver
|
|
|
–
|
|
|
$
|
–
|
|
|
|
27,247(2
|
)
|
|
$
|
1,037,293(1
|
)
|
|
|
|
–
|
|
|
$
|
–
|
|
|
|
16,228(3
|
)
|
|
$
|
617,800(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kristina A. Cerniglia
|
|
|
–
|
|
|
$
|
–
|
|
|
|
6,804(2
|
)
|
|
$
|
259,028(1
|
)
|
|
|
|
–
|
|
|
$
|
–
|
|
|
|
4,057(3
|
)
|
|
$
|
154,450(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly K. Ryan
|
|
|
31,586
|
|
|
$
|
387,781
|
|
|
|
5,897(2
|
)
|
|
$
|
224,499(1
|
)
|
|
|
|
–
|
|
|
$
|
–
|
|
|
|
3,516(3
|
)
|
|
$
|
133,854(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ling An-Heid
|
|
|
–
|
|
|
$
|
–
|
|
|
|
–
|
|
|
$
|
–
|
|
|
|
|
–
|
|
|
$
|
–
|
|
|
|
–
|
|
|
$
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher H. Trainor
|
|
|
–
|
|
|
$
|
–
|
|
|
|
5,440(2
|
)
|
|
$
|
207,101(1
|
)
|
|
|
|
–
|
|
|
$
|
–
|
|
|
|
3,245(3
|
)
|
|
$
|
123,537(1
|
)
|
(1)
|
Based upon the mean between the high and low sale prices of Hillenbrand common stock on the New York Stock Exchange on the date the Board of Directors of the Company approved distribution of the underlying awards.
|
(2)
|
These amounts are presented on a pre-tax basis (i.e., not accounting for withholding) and include dividends that were accrued during the measurement period and paid out upon vesting in
proportion to the number of shares that vested. These amounts reflect the vesting of shareholder value performance-based RSU awards granted by the Company under its LTIC program in fiscal year 2018, in accordance with the award formula
then in effect. Additional details regarding the LTIC awards granted in fiscal year 2018 are set forth under the heading “Long-Term Incentive Compensation” in the “Compensation Discussion and Analysis” section of our proxy statement for
our 2019 Annual Meeting of shareholders, which was filed with the SEC on January 2, 2019. See the discussion in the “Long-Term Incentive Compensation” section of Part I above for additional explanation of the Company’s LTIC program.
|
(3)
|
These amounts are presented on a pre-tax basis (i.e., not accounting for withholding) and do not include dividends. These amounts reflect the vesting of relative TSR performance-based RSU
awards granted by the Company under its LTIC program in fiscal year 2018, in accordance with the award formula then in effect. Whereas dividends accrue during the measurement period with respect to shares underlying RSU awards based on
the increase in shareholder value, dividends do not accrue during the measurement period with respect to shares underlying RSU awards based on relative TSR (for additional information, see footnotes 6 and 7 to the table above titled
“Outstanding Equity Awards at September 30, 2020”). Additional details regarding the LTIC awards granted in fiscal year 2018 are set forth under the heading “Long-Term Incentive Compensation” in the “Compensation Discussion and Analysis”
section of our proxy statement for our 2019 Annual Meeting of shareholders, which was filed with the SEC on January 2, 2019. See the discussion in the “Long-Term Incentive Compensation” section of Part I above for additional explanation
of the Company’s LTIC program.
|
Nonqualified Deferred Compensation for Fiscal Year Ended September 30, 2020
The following table quantifies the “defined contribution” benefits expected to be paid from the Supplemental Retirement Plan (the “SRP”).
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
Name
|
|
Executive
Contributions In
Last Fiscal
Year
$
|
|
|
Company
Contributions In
Last Fiscal
Year
$ (1)
|
|
|
Aggregate
Earnings In
Last Fiscal
Year
$
|
|
|
Aggregate
Withdrawals/
Distributions
$
|
|
|
Aggregate
Balance At
Last Fiscal
Year End
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joe A. Raver
|
|
$
|
–
|
|
|
$
|
69,466
|
|
|
$
|
69,185
|
|
|
$
|
–
|
|
|
$
|
1,060,159
|
|
Kristina A. Cerniglia
|
|
$
|
–
|
|
|
$
|
34,591
|
|
|
$
|
45,871
|
|
|
$
|
–
|
|
|
$
|
363,694
|
|
Kimberly K. Ryan
|
|
$
|
–
|
|
|
$
|
31,200
|
|
|
$
|
29,623
|
|
|
$
|
–
|
|
|
$
|
465,078
|
|
Ling An-Heid
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Christopher H. Trainor
|
|
$
|
–
|
|
|
$
|
25,762
|
|
|
$
|
25,483
|
|
|
$
|
–
|
|
|
$
|
193,042
|
|
(1)
|
The Company maintains the SRP to provide additional retirement benefits to certain employees selected by the Compensation Committee whose benefits under the Company’s Savings Plan are reduced, curtailed, or otherwise limited as a
result of certain limitations under the Internal Revenue Code and as a result of excluding their annual cash bonuses from the definition of “compensation” under the contribution formula in the Savings Plan. The additional benefits
provided by the SRP are designed to reflect the amount by which benefits under the Savings Plan are so reduced, curtailed, or limited by reason of the application of such limitations and exclusion.
|
“Compensation” under the SRP means the corresponding definition of compensation under the Savings Plan (which is generally equivalent to base salary) plus the participant’s targeted cash bonus as
determined under the Company’s Short-Term Incentive Compensation (STIC) Plan. Amounts reported here are also reported as Supplemental 401(k) in the “Summary Compensation Table” above in the column entitled All Other Compensation and are further
detailed in footnote 5 thereto. Generally, a lump sum cash payment is available to the participant within one year of retirement or termination of employment. In the alternative, a participant may defer receipt by electing a stream of equal
annual payments for up to 15 years.
See the more detailed description of the SRP under the heading “Retirement and Savings Plans” in Part I above. The Compensation Committee continues to oversee the selection of which executives are
permitted to participate in the plan.
The following amounts represent employer contributions and above-market earnings that have been reported as compensation in the “Summary Compensation Table” in fiscal year 2020 and previous fiscal years:
Name
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Joe A. Raver
|
|
$
|
69,466
|
|
|
$
|
130,025
|
|
|
$
|
74,218
|
|
Kristina A. Cerniglia
|
|
$
|
34,591
|
|
|
$
|
57,315
|
|
|
$
|
33,443
|
|
Kimberly K. Ryan
|
|
$
|
31,200
|
|
|
$
|
51,717
|
|
|
$
|
30,163
|
|
Ling An-Heid (1)
|
|
$
|
–
|
|
|
$
|
N/A
|
|
|
$
|
N/A
|
|
Christopher H. Trainor
|
|
$
|
25,762
|
|
|
$
|
39,248
|
|
|
$
|
22,064
|
|
(1)
|
Ms. An-Heid was not a Named Executive Officer for 2018 and 2019, becoming one in connection with the acquisition of Milacron in fiscal 2020.
|
Potential Payments Upon Termination
The following tables present the benefits that would be received by each of the Named Executive Officers in the event of a hypothetical termination as of September 30, 2020. For information regarding definitions of
termination events included in the employment agreements with the Named Executive Officers, see “Employment Agreements and Termination Benefits” in Part I above.
Joe A. Raver
Event
|
|
Salary
And Other
Cash Payments
(1)
|
|
|
Accelerated
Vesting Of
Stock Awards
(2)
|
|
|
Continuance Of
Health And
Welfare
Benefits
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent Disability
|
|
$
|
2,837,805
|
|
|
$
|
2,998,981
|
|
|
$
|
47,445
|
|
|
$
|
5,884,231
|
|
Death
|
|
$
|
1,163,824
|
|
|
$
|
2,998,981
|
|
|
$
|
25,298
|
|
|
$
|
4,188,103
|
|
Termination without Cause
|
|
$
|
1,853,824
|
|
|
$
|
2,998,981
|
|
|
$
|
47,445
|
|
|
$
|
4,900,250
|
|
Resignation with Good Reason
|
|
$
|
1,853,824
|
|
|
$
|
2,998,981
|
|
|
$
|
47,445
|
|
|
$
|
4,900,250
|
|
Termination for Cause
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Resignation without Good Reason
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Retirement
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Change in Control (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kristina A. Cerniglia
Event
|
|
Salary
And Other
Cash Payments
(1)
|
|
|
Accelerated
Vesting Of
Stock Awards
(2)
|
|
|
Continuance Of
Health And
Welfare
Benefits
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent Disability
|
|
$
|
2,557,855
|
|
|
$
|
755,523
|
|
|
$
|
23,722
|
|
|
$
|
3,337,100
|
|
Death
|
|
$
|
836,363
|
|
|
$
|
755,523
|
|
|
$
|
12,649
|
|
|
$
|
1,604,535
|
|
Termination without Cause
|
|
$
|
874,758
|
|
|
$
|
755,523
|
|
|
$
|
23,722
|
|
|
$
|
1,654,003
|
|
Resignation with Good Reason
|
|
$
|
874,758
|
|
|
$
|
755,523
|
|
|
$
|
23,722
|
|
|
$
|
1,654,003
|
|
Termination for Cause
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Resignation without Good Reason
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Retirement
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Change in Control (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly K. Ryan
Event
|
|
Salary
And Other
Cash Payments
(1)
|
|
|
Accelerated
Vesting Of
Stock Awards
(2)
|
|
|
Continuance Of
Health And
Welfare
Benefits
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent Disability
|
|
$
|
2,572,291
|
|
|
$
|
655,454
|
|
|
$
|
20,489
|
|
|
$
|
3,248,234
|
|
Death
|
|
$
|
835,031
|
|
|
$
|
655,454
|
|
|
$
|
11,114
|
|
|
$
|
1,501,599
|
|
Termination without Cause
|
|
$
|
836,527
|
|
|
$
|
655,454
|
|
|
$
|
20,489
|
|
|
$
|
1,512,470
|
|
Resignation with Good Reason
|
|
$
|
836,527
|
|
|
$
|
655,454
|
|
|
$
|
20,489
|
|
|
$
|
1,512,470
|
|
Termination for Cause
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Resignation without Good Reason
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Retirement
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Change in Control (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ling An-Heid
Event
(4)
|
|
Salary
And Other
Cash Payments
(1)
|
|
|
Accelerated
Vesting Of
Stock Awards
(2)
|
|
|
Continuance Of
Health And
Welfare
Benefits
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent Disability
|
|
$
|
2,038,362
|
|
|
$
|
1,062,309
|
|
|
$
|
15,405
|
|
|
$
|
3,116,076
|
|
Death
|
|
$
|
694,325
|
|
|
$
|
1,062,309
|
|
|
$
|
–
|
|
|
$
|
1,756,634
|
|
Termination without Cause
|
|
$
|
2,038,362
|
|
|
$
|
144,948
|
|
|
$
|
15,405
|
|
|
$
|
2,198,715
|
|
Termination for Cause
|
|
$
|
34,576
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
34,576
|
|
Retirement
|
|
$
|
194,325
|
|
|
$
|
1,062,309
|
|
|
$
|
–
|
|
|
$
|
1,256,634
|
|
Change in Control (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher H. Trainor
Event
|
|
Salary
And Other
Cash Payments
(1)
|
|
|
Accelerated
Vesting Of
Stock Awards
(2)
|
|
|
Continuance Of
Health And
Welfare
Benefits
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent Disability
|
|
$
|
3,142,846
|
|
|
$
|
553,663
|
|
|
$
|
21,954
|
|
|
$
|
3,718,463
|
|
Death
|
|
$
|
990,434
|
|
|
$
|
553,663
|
|
|
$
|
11,914
|
|
|
$
|
1,556,011
|
|
Termination without Cause
|
|
$
|
941,329
|
|
|
$
|
553,663
|
|
|
$
|
21,954
|
|
|
$
|
1,516,946
|
|
Resignation with Good Reason
|
|
$
|
941,329
|
|
|
$
|
553,663
|
|
|
$
|
21,954
|
|
|
$
|
1,516,946
|
|
Termination for Cause
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Resignation without Good Reason
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Retirement
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
Change in Control (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes, as applicable in each scenario, severance compensation, prorated STIC, and insurance proceeds.
|
(2)
|
For those Named Executive Officers who were employed at the relevant time, the accelerated vesting value of performance-based stock awards includes the annual LTIC awards granted in fiscal year 2018, which vested on September 30, 2020,
and the annual LTIC awards granted in fiscal years 2019 and 2020, which have not vested. The accelerated vesting value of the awards granted in fiscal year 2018 in the table is based on (a) the actual level of achievement of the targeted
shareholder value increase as described in footnote 2 to the table above titled “Option Exercises and Stock Vested for Fiscal Year Ended September 30, 2020,” and (b) the actual level of achievement of the targeted relative TSR as
described in footnote 3 to the table above titled “Option Exercises and Stock Vested for Fiscal Year Ended September 30, 2020.” The accelerated vesting values of the annual LTIC awards granted in fiscal years 2019 and 2020 assume 100
percent achievement of the applicable performance targets and the closing stock price on September 30, 2020. However, the actual value that would be realized would be based on the actual achievement of such performance targets at the end
of the applicable measurement period and the stock price on September 30, 2022, and September 30, 2021, which is unknown at this time.
|
In addition, Ms. An-Heid qualifies for special accelerated vesting in the retirement context due to her age at September 30, 2020. None of our other Named Executive Officers currently qualify for
the same; however, in the event of a qualifying retirement in the future, these executives would be entitled to accelerated vesting value.
(3)
|
See table below titled “Change in Control Benefits.”
|
(4)
|
Under Canadian law, Ms. An-Heid is entitled to payment for her accrued and unused vacation under each of the termination scenarios presented.
|
Change in Control Benefits
The change in control agreements we have with Named Executive Officers may provide the estimated benefits set forth in the following table, calculated assuming a hypothetical termination as of September 30, 2020.
For more detail regarding the change in control agreements generally, see the discussion under “Employment Agreements and Termination Benefits” in Part I above. Benefits under our change in control agreements are payable only upon a
“double-trigger.” Therefore, the amounts shown in the table below assume not only a change in control but also the requisite qualified termination of employment.
Name
|
|
Salary-Based
Compensation
|
|
|
Incentive
Compensation
|
|
|
Continuance Of
Health And
Welfare
Benefits
|
|
|
Pension
Benefits
|
|
|
Retirement
Savings Plan
Benefit
|
|
|
Accelerated
Vesting Of
Stock-Based
Awards
|
|
|
Tax
Gross-Up /
Cutback (1)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joe A. Raver
|
|
$
|
1,785,000
|
|
|
$
|
796,908
|
|
|
$
|
82,531
|
|
|
$
|
–
|
|
|
$
|
208,398
|
|
|
$
|
4,846,979
|
|
|
$
|
–
|
|
|
$
|
7,719,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kristina A. Cerniglia
|
|
$
|
1,076,791
|
|
|
$
|
403,797
|
|
|
$
|
52,240
|
|
|
$
|
–
|
|
|
$
|
69,182
|
|
|
$
|
1,235,560
|
|
|
$
|
–
|
|
|
$
|
2,837,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly K. Ryan
|
|
$
|
1,002,991
|
|
|
$
|
376,122
|
|
|
$
|
45,120
|
|
|
$
|
–
|
|
|
$
|
62,400
|
|
|
$
|
1,079,807
|
|
|
$
|
–
|
|
|
$
|
2,566,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ling An-Heid
|
|
$
|
922,019
|
|
|
$
|
325,354
|
|
|
$
|
8,481
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
1,352,205
|
|
|
$
|
–
|
|
|
$
|
2,608,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher H. Trainor
|
|
$
|
901,791
|
|
|
$
|
338,172
|
|
|
$
|
48,345
|
|
|
$
|
–
|
|
|
$
|
51,524
|
|
|
$
|
864,356
|
|
|
$
|
–
|
|
|
$
|
2,204,188
|
|
(1)
|
As discussed in Part I above under the heading “Employment Agreements and Termination Benefits,” our change in control agreements do not provide for any tax gross-up payments relating to the excise tax on excess “parachute payments”
imposed by Section 4999 of the Internal Revenue Code. If an executive is entitled to receive payments upon a change in control that may be subject to the excise tax, he or she will either be paid the full amount (and remain personally
liable for the excise tax) or be paid a reduced amount (cutback) that does not give rise to the excise tax, whichever is greater on an after-tax basis.
|
These calculations do not consider the value of non-compete provisions that executives must adhere to in order to receive certain payments upon a change in control. These provisions are valuable to the Company and are expected to be enforced
in the event of an actual transaction.
Pending approval of the Stock Plan proposal by the Company’s shareholders, the Company intends to amend these change in control agreements to make corresponding changes and certain other updates to reflect market
practice in this area.
PART IV: COMPENSATION CONSULTANT MATTERS
The Compensation Committee’s independent compensation consultant was regularly invited to attend Committee meetings during fiscal year 2020.
Deloitte Consulting was engaged as the independent compensation consultant by the Compensation Committee to assist the Committee in determining the form and amount of compensation paid to our Named Executive Officers
for fiscal year 2020. Deloitte Consulting provided advice and recommendations regarding the Company’s executive compensation levels and practices; the Company’s compensation philosophy and strategies; advice on the Company’s peer group;
evaluation of performance metrics and peer performance; analysis and recommendations regarding our STIC and LTIC programs, including changes in connection with the acquisition of Milacron; advice on the Company’s CEO pay ratio disclosure; review
and recommendations on CEO and other executive officer compensation for fiscal year 2021; and periodic reports to the Compensation Committee on market and industry compensation trends and regulatory developments. Fees for those services, which
were approved by the Compensation Committee, totaled $494,240 during fiscal year 2020. The Compensation Committee has reviewed the independence of Deloitte Consulting in light of applicable SEC rules and NYSE listing standards regarding
compensation consultant independence and has affirmatively concluded that Deloitte Consulting is independent from the Company and has no conflict of interest relating to its engagement by the Compensation Committee.
Other Engagements
The Company also engaged Deloitte Consulting or its affiliates during fiscal year 2020 to provide services unrelated to executive compensation. These engagements primarily consisted of (a) significant support for
integration planning and readiness activities in connection with the Milacron acquisition and first combined quarterly reporting; (b) purchase price accounting and related valuation services in connection with the Milacron acquisition; (c) tax
and other mobility advice on expatriate assignments; (d) international business tax and legal consulting for the Company and certain of its subsidiaries; and (e) support on Internal Revenue Code section 280G matters. Fees paid to Deloitte
Consulting and its affiliates for these engagements totaled $5,793,852 during fiscal year 2020. Management initiated these engagements – the Board was not asked to approve them. However, the Chairperson of the Compensation Committee was
consulted prior to each material engagement of Deloitte Consulting or any of its affiliates for non-executive compensation-related services. Given the nature and scope of these services, the Compensation Committee believes that these services
did not raise a conflict of interest and did not impair Deloitte Consulting’s ability to provide independent advice to the Committee concerning executive compensation matters. In making this determination, the Compensation Committee considered,
among other things, the following factors:
|
•
|
The types of non-compensation services provided by Deloitte Consulting;
|
|
•
|
The amounts of fees for such non-compensation services, noting in particular that such fees are negligible when considered in the context of Deloitte Consulting’s and its affiliates’ total revenues for the period;
|
|
•
|
Deloitte Consulting’s policies and procedures concerning conflicts of interest;
|
|
•
|
Deloitte Consulting representatives who advise the Compensation Committee do not provide any non-compensation-related services to the Company;
|
|
•
|
There are no other business or personal relationships between management of the Company or members of the Compensation Committee and the Deloitte Consulting representatives who provide compensation services to the Company; and
|
|
•
|
Neither Deloitte Consulting nor any of the Deloitte Consulting representatives who provide compensation services to the Company own any common stock or other securities of the Company.
|
PART V: COMPENSATION-RELATED RISK ASSESSMENT
The Compensation Committee analyzes on an annual basis the actual or anticipated effect (including, as appropriate, a deterrent effect) that our compensation policies and practices have had or may have on our
employees with respect to creating any excessive and undesirable risk-taking in the performance of their duties for the Company. The Compensation Committee then makes a determination, on an annual basis, as to whether any of our compensation
policies and practices creates risks that are reasonably likely to have a material adverse effect on the Company. At its regularly scheduled meeting held on December 2, 2020, the Compensation Committee determined that the Company’s current
compensation policies and practices do not create any such risks.
The Compensation Committee’s determination was based on an assessment of the Company’s variable compensation risk that was led by the Company’s internal audit personnel and supported by its Director of Compensation.
The Compensation Committee, with its independent compensation consultant, evaluated the results of this assessment and solicited feedback from a number of other sources, including Company management and internal legal, finance, and human
resources personnel. The Company’s executive management team discussed its review and analysis of the results of the assessment with the Company’s Audit Committee and the Compensation Committee before the Compensation Committee made its annual
determination regarding compensation-related risk.
The Compensation Committee seeks to discourage and deter inappropriate risk-taking through the compensation programs it adopts and implements for our Named Executive Officers and our employees generally. We believe
that the compensation-related programs employed by the Company are consistent with those objectives and align our employees’ incentives for risk-taking with the best long-term interests of our shareholders. These programs provide a holistic
approach to compensation that provides a mix of fixed and variable compensation, with the variable component impacting both short-term cash compensation and long-term equity compensation. Program features, such as stock ownership guidelines,
limits on the payout of variable compensation, and clawback policies, provide additional balance between risk and reward.
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and Regulation S-K under the Exchange Act, we are providing information regarding the relationship of annual total compensation of our CEO
and our median employee (the CEO pay ratio). Our CEO pay ratio is a reasonable good faith estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. The ratio set forth below may not be comparable to the ratio for other
companies due to differences in operations, industry, locations, employee populations, and compensation practices. Additionally, companies may utilize different methodologies, exclusions, estimates, and assumptions in calculating their CEO pay
ratio.
For purposes of the CEO pay ratio, we are required to identify a median employee, without regard to location, compensation arrangements, or employment status. The median employee was identified from our global
employee population as of September 30, 2019, using gross fiscal wages of all global employees. Gross fiscal wages includes base salary plus overtime, short-term incentive compensation, long-term incentive compensation distributions, and other
income. We did not perform any full-time equivalency adjustments for part-time or temporary employees, annualize for employees hired throughout the year, or exclude any non-US employees. Amounts in foreign currency were converted from local
currency to U.S. dollars. Additionally, we did not make any cost-of-living adjustments.
The rules adopted by the SEC require a registrant to identify its median employee only once every three years, and our median employee was originally identified in 2019. In fiscal 2020, there was no change in the
Company’s employee population or employee compensation arrangements that the Company believes would significantly impact the Company’s pay ratio disclosure, excluding for this purpose the employees who joined the Company as a result of the
Milacron acquisition that closed on November 21, 2019 (approximately 4,000 employees as of September 30, 2020), as permitted by the instructions to Item 402(u) of Regulation S-K. Once the median employee was identified, the employee’s annual
total compensation was calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.
The annual total compensation for fiscal year 2020 for our CEO was $5,052,029 and the median employee (excluding the CEO) was $53,446. The resulting CEO pay ratio for the fiscal year is estimated to be 95 to 1. Due
to the variability of the CEO’s performance-based compensation, the CEO pay ratio can differ significantly from year to year.
PART VII: ANTI-HEDGING AND ANTI-PLEDGING
Directors, officers, and all other employees of the Company, or any of their designees, are prohibited from purchasing financial instruments or otherwise engaging in transactions that hedge or offset, or are designed
to hedge or offset, any decrease in the market value of the Company’s securities either (i) granted to the employee or director by the Company as part of the compensation of the employee or director, or (ii) held (directly or indirectly) by the
employee or director.
Our policy also prohibits purchasing financial instruments or engaging in any transactions that suggest speculation in or hedging against the Company’s securities; engaging in “short sales”; and holding Company
securities in a margin account or otherwise pledging Company securities as collateral for a loan.
PROPOSAL NO. 3 – APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE HILLENBRAND, INC.
STOCK INCENTIVE PLAN
The Board of Directors is asking our shareholders to approve an amendment and restatement of the Stock Plan. The Stock Plan was adopted on December 19, 2008. The Stock Plan has since been amended and restated and
was most recently approved by our shareholders on February 26, 2014. On December 3, 2020, the Board of Directors, upon the recommendation of the Compensation Committee, approved another amendment and restatement of the Stock Plan, subject to
shareholder approval, in order to:
|
•
|
Increase the number of shares of our Common Stock (the “Shares”) reserved for issuance under the Stock Plan by 2,700,000 Shares;
|
|
•
|
Extend the expiration date of the Stock Plan from December 3, 2023 to December 1, 2030;
|
|
•
|
Impose a cap in the Stock Plan on the annual compensation paid to our non-employee directors; and
|
|
•
|
Reflect market practices.
|
The complete text of the Stock Plan is attached as Appendix A to this proxy statement. The following summary of the Stock Plan does not purport to be complete and is qualified in its entirety by reference to
Appendix A.
How We Calculated the Proposed Increase in Share Authorization
The Board of Directors believes that the future success of the Company depends, in large part, on our ability to attract, motivate and retain high-caliber employees and directors. Equity compensation is a key
component of our compensation program, because it helps us attract, motivate and retain talented employees and directors and align their interests with those of our shareholders.
As of December 14, 2020, and excluding the proposed Share increase, 1,284,907 Shares remained available for issuance or delivery under the Stock Plan. Based on our historical grant practices, as summarized below,
and our projected recruiting and retention needs, we anticipate that the Company will deplete the remaining Share reserve by the end of calendar year 2021 without sufficient Shares to make projected annual grants in December 2021 unless we
reserve more Shares for issuance under the Stock Plan.
In order to maintain the flexibility to keep pace with our competitors and effectively attract, motivate and retain the high-caliber employees and directors, we are asking our shareholders to authorize an additional
2,700,000 Shares for issuance as awards under the Stock Plan, which would increase the aggregate number of Shares reserved for issuance under the Stock Plan from 12,535,436 to 15,235,436 Shares. We intend to grant future equity awards under the
Stock Plan in amounts that are reasonable and consistent with market data prepared by the Compensation Committee’s independent consultant. Based on our projected recruiting and retention needs, we believe that the proposed Share increase would
allow us to continue granting equity awards under the Stock Plan to employees and directors for approximately three more years.
Without shareholder approval of the additional Shares under the Stock Plan, we may be required to increase the cash components of our compensation program, which would significantly inhibit our ability to attract,
motivate and retain high-caliber employees and directors in a competitive marketplace and align their interests with those of our shareholders.
In determining the size of this Share request, the Compensation Committee considered, among other things, our outstanding equity awards, our burn rate, our stock price and volatility, our projected recruiting and
retention needs, the potential dilution of our equity compensation program, the voting guidelines of certain institutional investors and proxy advisory firms, and competitive market practices. The results of this comprehensive analysis were
presented to the Compensation Committee and the Board of Directors for its consideration. Certain of these factors are outlined below:
Outstanding Awards. As of
December 14, 2020, there were 1,575,134 Shares subject to outstanding time- and performance-based RSU awards (calculated at maximum), and 2,302,023 Shares subject to outstanding stock options under the Stock Plan.34 The Company’s practice with respect to performance-based RSU awards is, during the measurement period, to reserve within the Stock Plan a number of shares equal to the maximum potential
payout to ensure sufficient availability of shares and for administrative purposes.
As of that date, the weighted average exercise price of the outstanding stock options was $35.60, the weighted average remaining contractual term for the stock options was 6.22 years, and the closing market price of
a Share as reported on the NYSE was $37.98 per Share.
Burn Rate. We use our burn rate to measure the potential life expectancy of the Stock Plan
and shareholder dilution. Our burn rate is summarized in the table below, which provides data on our Share usage (including awards to employees and non-employee directors) for the last three completed fiscal years.
Fiscal Year
|
Stock Options
Granted
|
Time-Based
RSUs
Granted
|
Performance-
Based RSUs
Earned
|
Total Shares
(1)
|
Burn Rate
|
2018
|
479,991
|
34,166
|
243,310
|
1,034,943
|
1.64%
|
2019
|
431,726
|
29,651
|
134,140
|
759,308
|
1.21%
|
2020
|
454,929
|
338,105
|
114,043
|
1,359,225
|
1.85%
|
3-year Average Burn Rate (2018-2020)
|
1.57%
|
(1)
|
The total number of Shares is calculated by multiplying (i) the sum of Time-Based RSUs Granted and Performance-Based RSUs Earned, by (ii) a factor of 2, which is intended to reflect our stock price volatility, and then adding that
amount to the Stock Options Granted.
|
Dilution and Overhang. We measure the dilutive impact of our equity program (the so-called
“overhang”) by dividing (i) the number of Shares subject to outstanding awards (with performance-based RSUs calculated at maximum) plus the number of Shares available to be granted under the Stock Plan (the “numerator”), by (ii) our total
Shares outstanding plus the Shares included in the numerator. As of December 14, 2020, our fully diluted overhang was approximately 6.23 percent. The 2,700,000 additional Shares being requested under the Stock Plan would bring our fully
diluted overhang to approximately 9.49 percent, which we believe to be within industry norms.
34 These amounts include the grant in December 2020 of 257,806 time-based RSUs and 359,931 performance-based RSUs (calculated at maximum).
Summary of Other Material Changes to the Stock Plan
In addition to the proposed increase in the Share reserve, as described above, the Board of Directors approved the following additional changes to the Stock Plan:
|
•
|
Extended Term. The term of the Stock Plan is
extended from December 3, 2023 to December 1, 2030.
|
|
•
|
Cap on Director Compensation. The Stock Plan
imposes a cap on equity awards granted to non-employee directors, so that the accounting value of those equity awards, when added to any cash retainers for service as a director, cannot exceed $600,000 per year.
|
|
•
|
Cap on Awards to Employees. The Stock Plan
increases the cap on equity awards granted to employees, so that no employee may be granted stock options and/or stock appreciation rights under the Stock Plan for more than 750,000 Shares in any fiscal year (up from 500,000 Shares
prior to the amendment), and no employee may be granted restricted stock, restricted stock units, and/or bonus stock awards for more than 500,000 Shares in any fiscal year (up from 300,000 Shares prior to the amendment).
|
|
•
|
Minimum Vesting Provisions. The amendment
provides that all awards granted under the Stock Plan are subject to a minimum vesting requirement of at least one year, with an exception for awards covering up to five percent of the Shares available for issuance as of the Annual
Meeting and for director awards that vest on the earlier of the first anniversary of the grant date or the next Annual Meeting of shareholders. Prior to the amendment, the Stock Plan imposed a minimum vesting requirement only on stock
options and appreciation rights (which could vest at a rate no faster than 1/3 per year).
|
|
•
|
Limit on Dividend Equivalents. Dividends or
dividend equivalents payable with respect to any awards granted under the Stock Plan will be accumulated or reinvested until such award is earned, and the dividends or dividend equivalents shall not be paid if the underlying award does
not become vested. Additionally, no dividend equivalents will be granted with respect to Shares underlying a stock option or appreciation right.
|
|
•
|
Clawback Policy. Awards granted under the
Stock Plan are subject to recoupment under our clawback policy, as described under the heading “Compensation Discussion and Analysis – Compensation-Related Policies” above.
|
|
•
|
Other Changes. The Stock Plan includes
additional changes to eliminate references to a prior spin-off transaction and to reflect the repeal of the performance-based compensation exception to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
|
Summary of the Other Material Provisions of the Stock Plan
The following is a summary of the other material provisions of the Stock Plan, as amended and proposed for approval by the shareholders.
|
•
|
Share Reserve. As noted above, the maximum
number of Shares that may be issued or transferred with respect to awards under the Stock Plan is 15,235,436, subject to adjustment as provided below (which includes the original 4,635,436 Shares reserved under the Stock Plan as of
December 19, 2008, the addition of 4,000,000 Shares to the Stock Plan as approved by shareholders on February 24, 2010, the addition of 3,900,000 Shares to the Stock Plan as approved by shareholders on February 26, 2014, and the
proposed addition of 2,700,000 Shares to the Stock Plan as set forth above). Shares issued under the Stock Plan may include authorized but unissued Shares, treasury Shares, Shares purchased in the open market, or a combination of the
foregoing. Shares underlying awards that are settled in cash or that terminate or are forfeited, cancelled or surrendered without the issuance of Shares will again be available for issuance under the Stock Plan. Shares delivered under
awards that are granted in assumption of, or in substitution or exchange for, outstanding awards previously granted by an entity acquired directly or indirectly by the Company or with which the Company directly or indirectly combines
(“Substitute Awards”), shall not count against the Stock Plan’s share limit, except as may be required by the rules and regulations of any stock exchange or trading market.
|
|
•
|
No Share Recycling. Shares surrendered to
pay the exercise price of stock options, repurchased by us with option proceeds, or withheld for taxes upon exercise or vesting of an award, will not again be available for issuance under the Stock Plan. When a stock appreciation right
is exercised and settled in Shares, all of the Shares underlying the stock appreciation right will be counted against the Share limit of the Stock Plan regardless of the number of Shares used to settle the stock appreciation right.
|
|
•
|
Adjustments. In the event of any equity
restructuring, such as a stock dividend, stock split, spin off, rights offering or recapitalization through a large, nonrecurring cash dividend, the Compensation Committee will adjust the number and kind of Shares that may be delivered
under the Stock Plan, the individual award limits, and, with respect to outstanding awards, the number and kind of Shares subject to outstanding awards and the exercise price or other price of Shares subject to outstanding awards, to
prevent dilution or enlargement of rights. In the event of any other change in corporate capitalization, such as a merger, consolidation or liquidation, the Compensation Committee may, in its discretion, make such equitable adjustment
as described in the foregoing sentence, to prevent dilution or enlargement of rights. Moreover, in the event of any such transaction or event, the Compensation Committee, in its discretion, may provide in substitution for any or all
outstanding awards such alternative consideration (including cash) as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced.
|
|
•
|
Eligibility. All employees, officers, and
non-employee directors of the Company and its subsidiaries are eligible to receive equity awards under the Stock Plan, except that Incentive Stock Options may not be granted to non-employee directors. Currently, there are approximately
10,700 worldwide employees (including our executive officers) and 10 non-employee directors eligible to participate in the Stock Plan. The Compensation Committee is authorized to select the employees who will receive awards under the
Stock Plan from time-to-time. Under our current director compensation program, each of the non-employee directors receives a grant of equity awards at the conclusion of each Annual Meeting of shareholders.
|
|
•
|
Administration. The Compensation Committee
has the authority and responsibility to administer the Stock Plan. The Compensation Committee consists solely of members intended to be “non-employee directors” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934,
as amended, and “independent directors” under the NYSE rules. The Compensation Committee may exercise broad discretionary authority in the administration of the Stock Plan, including the authority to determine the treatment of awards
upon an employee’s retirement, disability, death, termination for cause or other termination of employment, or during a leave of absence. In addition, the Compensation Committee is authorized to delegate some or all of its
administrative duties to one or more of its members or to one or more employees or agents of the Company. The Board of Directors retains authority to administer and issue awards under the Stock Plan and specifically reserves the
exclusive authority to approve and administer all awards granted to non-employee directors and to approve the compensation of our President and CEO.
|
|
•
|
Amendments and Termination. The Board of
Directors may amend or discontinue the Stock Plan at any time, with shareholder approval to the extent required by applicable laws. No such amendment or termination, however, may adversely affect any holder of outstanding awards
without his or her consent.
|
|
•
|
No Repricing. The Stock Plan does not permit
the “repricing” of stock options and stock appreciation rights without shareholder approval. This includes a prohibition on reducing the exercise price of stock options or appreciation rights, cancellation of stock options or
appreciation rights in exchange for an award having a lower exercise price, for another award, or for cash, and “reloads” in connection with the exercise of stock options or appreciation rights.
|
|
•
|
Types of Awards. The Stock Plan permits the
Board of Directors or Compensation Committee to grant the following types of awards:
|
|
o
|
Stock Options. Stock options entitle the holder to elect to purchase up to a specified number of Shares at a specified price (the
exercise price). The exercise price (other than Substitute Awards) cannot be less than the fair market value of the Shares when the options are granted. Under the Stock Plan, stock options may be Incentive Stock Options or
“Non-Qualified Options” under the Code. Stock options may not be exercised more than ten years from the date of grant, unless the Compensation Committee determines otherwise on an individual basis.
|
The applicable option exercise price is payable at the time of exercise in any of the following methods, to the extent permitted by the Compensation Committee: (i) cash, (ii) delivery of unrestricted Shares owned by
the optionee having a value at the time of exercise equal to the exercise price, (iii) a cashless exercise (including withholding of Shares otherwise deliverable on exercise or a broker-assisted arrangement as permitted by applicable laws), (iv)
any other manner permitted by law, or (v) any combination of the foregoing.
|
o
|
Stock Appreciation Rights. A stock appreciation right entitles the holder to receive, for each Share as to which the award is
granted, payment of an amount, in cash, in Shares, or in a combination, as determined by the Compensation Committee, equal in value to the excess of the fair market value of a Share on the date of exercise over the fair market value of
a Share on the day the stock appreciation right was granted.
|
|
o
|
Restricted Stock. Restricted stock means Shares that are actually issued to the recipient of the award, but the recipient has no
right to sell them, pledge them, or otherwise transfer any interest in them until it is determined in the future how many Shares the recipient is entitled to retain (free of such restrictions) and how many Shares must be forfeited back
to the Company. Such determination will be based on the conditions the Compensation Committee attaches to the award, which may include performance-based conditions (as described below).
|
|
o
|
Restricted Stock Unit (“RSU”). An RSU award is a promise by the Company to issue up to a fixed number of Shares to the award
recipient at some point in the future, with the number of Shares that are actually issued and the number of Shares that are forfeited being determined by the conditions attached to the award by the Compensation Committee (which may
include performance-based conditions, as described below). Except as provided by the Compensation Committee, RSU awards that are unvested at the time the holder’s employment or other relationship with the Company is terminated will be
forfeited.
|
|
o
|
Bonus Stock. Bonus stock means unrestricted Shares that are issued to an award recipient at no cost to the recipient or at a discount
from its fair market value.
|
|
•
|
Vesting and Forfeiture of Awards. Subject to
the minimum vesting requirements described above, the exercisability of stock options, and the vesting or forfeiture of all other equity awards under the Stock Plan may be conditioned in any manner that the Compensation Committee
chooses. The Stock Plan grants broad discretion to the Compensation Committee to determine the terms and conditions applicable to awards. For example, time-based equity awards may be granted with the condition that they will become
earned (vested) ratably over a period of years as long as the recipient remains employed. Performance-based equity awards may be granted with the condition that they will become earned (vested) or be forfeited in accordance with the
attainment of specified financial or other performance objectives.
|
|
•
|
Performance-Based Awards. The Compensation
Committee has the right under the Stock Plan to grant awards that will become earned (vested) or be forfeited based on the level of achievement of objective and pre-established performance objectives. These objectives are established
by the Compensation Committee based on one or more of the following criteria, in each case applied to the Company on a consolidated basis and/or to a business unit, and which the Compensation Committee may use as an absolute measure, as
a measure of improvement relative to prior performance, or as a measure of comparable performance relative to a peer group of companies: sales, operating profits, operating profits before taxes, operating profits before interest
expense and taxes, net earnings, earnings per share, return on equity, return on assets, return on invested capital, total shareholder return, cash flow, debt to equity ratio, market share, stock price, and shareholder, economic or
market value added. In establishing and measuring performance targets for a year, the Compensation Committee may provide for appropriate objectively determinable adjustments to any performance measure for extraordinary and/or
non-recurring items.
|
|
•
|
Transferability of Certain Awards. Unless
otherwise provided by the Compensation Committee, stock options and stock appreciation rights granted under the Stock Plan will not be transferable by a participant other than by will or the laws of descent and distribution, and
restricted stock and RSU awards may not be sold, assigned, transferred, pledged, or otherwise encumbered during the vesting period. In no event may the Compensation Committee permit a stock option to be transferred for consideration.
|
|
•
|
Change in Control. Unless an award is
granted with contrary provisions or the participant has a change in control agreement with the Company with contrary provisions, a “change in control” of the Company will result in the immediate full vesting of all Shares under
outstanding awards under the Stock Plan; provided that, any awards with respect to which the number of Shares earned depends upon performance shall vest based on the greater of: (i) an assumed achievement of all relevant performance
goals at their “target” level, or (ii) the actual level of achievement of all relevant performance goals against target as of the date immediately prior to the change in control (or as close to such date as administratively
practicable). In addition, the Compensation Committee has the right to cancel any outstanding awards in connection with a change in control, in exchange for a payment in cash or other property (including shares of the resulting entity)
in an amount equal to the excess of the fair market value of the Shares subject to the award over any exercise price related to the award, including the right to cancel any “underwater” stock options and stock appreciation rights
without payment therefor. Notwithstanding the default provisions of the Stock Plan, certain Company executives, including the Named Executive Officers, have superseding agreements with the Company that provide for vesting of
outstanding equity awards only if there has been both a change in control transaction and a qualifying termination of employment – referred to as “double-trigger” vesting. Pending approval of the amendments to the Stock Plan by the
Company’s shareholders, the Company intends to amend these agreements to make corresponding changes and certain other updates to reflect market practices.
|
The Stock Plan includes a provision that could result in a reduction of the amount paid to a participant in the event any payment or benefit resulting from an award, including accelerated vesting of any equity
compensation, would constitute a “parachute payment” within the meaning of Section 280G of the Code and could be subject to the excise tax imposed by Section 4999 of the Code. In that event, the payment would be either provided to the recipient
in full or provided to the recipient to such lesser extent which would result in no portion of such payment being subject to the excise tax, whichever of the foregoing amounts results in the receipt by the recipient, on an after-tax basis, of the
greatest amount of the payment.
A change in control generally means (i) the acquisition of securities representing 35 percent or more of the voting power of our outstanding securities; (ii) our incumbent directors ceasing to constitute at least a
majority of the members of our Board; (iii) a reorganization, merger or consolidation, unless (a) substantially all of the beneficial owners of our outstanding stock prior to the transaction continue to own (in the same proportions) shares
entitling them to 50 percent or more of the voting power of the outstanding securities of the combined or resulting entity, (b) no person owns 35 percent or more of the voting power of the outstanding securities of the combined or resulting
entity, and (c) at least a majority of the members of the board of the resulting corporation are individuals who were our incumbent directors prior to the transaction; (iv) a sale or other disposition of all or substantially all (i.e., 50 percent or more) of the assets of the Company in one transaction or a series of transactions within any period of 12 consecutive months; or (v) shareholder approval of our complete liquidation or
dissolution.
|
•
|
Waiver of Conditions. The authority of the
Compensation Committee under the Stock Plan includes the right to waive the satisfaction of any or all conditions in an award as to the vesting of the Shares awarded.
|
Federal Income Tax Consequences to Participants
Overview. The following discussion
is limited to a summary of the U.S. federal income tax consequences of the grant, exercise, and vesting of awards under the Stock Plan. The tax consequences of awards may vary according to country of participation. Also, the tax consequences
of the grant, exercise, or vesting of awards may vary depending upon the particular circumstances, and it should be noted that income tax laws, regulations, and interpretations change frequently. Participants should rely upon their own tax
advisors for advice concerning the specific tax consequences applicable to them, including the applicability and effect of state, local, and foreign tax laws.
|
•
|
Non-Qualified Stock Options. In general, (i) a participant will not recognize income at the time a Non-Qualified Option is granted;
(ii) a participant will recognize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the Shares on the date of exercise over the option exercise price paid for the Shares; and (iii) at
the time of sale of Shares acquired pursuant to the exercise of the non-qualified option, appreciation (or depreciation) in value of the Shares after the date of exercise will be treated as either short-term or long-term capital gain
(or loss) depending on how long the Shares have been held.
|
|
•
|
Incentive Stock Options. A participant will not recognize income at the time an Incentive Stock Option is granted or exercised.
However, the excess of the fair market value of the Shares on the date of exercise over the option exercise price paid may constitute a preference item for the alternative minimum tax. If Shares are issued to the optionee pursuant to
the exercise of an Incentive Stock Option, and if no disqualifying disposition of such Shares is made by such optionee within two years after the date of the grant or within one year after the issuance of such Shares to the optionee,
then upon sale of such Shares, any amount realized in excess of the option price will be taxed to the optionee as a long-term capital gain and any loss sustained will be a long-term capital loss. If Shares acquired upon the exercise of
an Incentive Stock Option are disposed of prior to the expiration of either holding period described above, the optionee generally will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of
the fair market value of such Shares as of the time of exercise (or, if less, the amount realized on the disposition of such Shares if a sale or exchange) over the option price paid for such Shares. Any further gain (or loss) realized
by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period.
|
|
•
|
Stock Appreciation Rights. A participant will not recognize income upon the grant of stock appreciation rights. The participant
generally will recognize ordinary income when the stock appreciation rights are exercised in an amount equal to the cash and the fair market value of any unrestricted Shares received on the exercise.
|
|
•
|
Restricted Stock. A participant will not be subject to tax until the Shares of restricted stock are no longer subject to forfeiture
or restrictions on transfer for purposes of Section 83 of the Code. At that time, the participant will be subject to tax at ordinary income rates on the fair market value of the restricted Shares (reduced by any amount paid by the
participant for such restricted Shares). However, a participant who so elects under Section 83(b) of the Code within 30 days of the date of transfer of the Shares will have taxable ordinary income on the date of transfer of the Shares
equal to the excess of the fair market value of such Shares (determined without regard to the restrictions) over the purchase price, if any, of such restricted Shares. Any appreciation (or depreciation) realized upon a later
disposition of such Shares will be treated as long-term or short-term capital gain depending upon how long the Shares have been held. If a Section 83(b) election has not been made, any dividends received with respect to restricted
Shares that are subject to forfeiture and transfer restrictions generally will be treated as compensation that is taxable as ordinary income to the participant.
|
|
•
|
RSUs. A participant will not recognize income upon the grant of an RSU award. Upon payment of the awards, the participant generally
will recognize ordinary income in an amount equal to the cash and the fair market value of any unrestricted Shares received.
|
|
•
|
Bonus Stock. A participant will recognize ordinary income upon the grant of a bonus stock award equal to the fair market value of the
unrestricted Shares received by the participant.
|
|
•
|
Dividends or Dividend Equivalents. Any dividend or dividend equivalents awarded with respect to awards granted under the Stock Plan
and paid in cash or unrestricted Shares will be taxed to the participant at ordinary income rates when such cash or unrestricted Shares are received by the participant.
|
|
•
|
Section 409A. The Stock Plan permits the grant of various types of awards that may or may not be exempt from Section 409A of the
Code. If an award is subject to Section 409A, and if the requirements of Section 409A are not met, the award could be subject to tax at an earlier time than described above and could be subject to additional taxes and penalties.
Awards granted under the Stock Plan generally will be designed either to be exempt from, or to comply with the requirements of, Section 409A.
|
Federal Income Tax Consequences to the Company. To the extent that a participant
recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding federal income tax deduction provided that, among other things, the income (i) meets the test of reasonableness, is an ordinary and
necessary business expense, and is not an “excess parachute payment” within the meaning of Section 280G of the Code; and (ii) is not disallowed by the $1 million limitation on executive compensation under Section 162(m) of the Code.
Registration with the SEC. The Company intends to file a Registration Statement on Form
S-8 relating to the issuance of additional Shares under the Stock Plan with the SEC pursuant to the Securities Act of 1933, as amended, after approval of the Stock Plan, as amended and restated, by the Company’s shareholders.
Plan Benefits Under the Stock Plan. Because it is within the discretion of the
Compensation Committee to determine which directors, officers, employees and consultants will receive awards and the amount and type of awards received, it is not presently possible to determine the number of individuals to whom awards will be
made in the future under the Stock Plan or the amount of the awards.
The Board of Directors has approved the Amended and Restated Hillenbrand, Inc. Stock Incentive Plan and recommends that the shareholders vote FOR Proposal No. 3 to approve and adopt such plan.
The affirmative vote of a majority of the votes cast on this Proposal No. 3 is required for approval of this Proposal. If you own Shares through a bank, broker, or other holder of record, you
must instruct your bank, broker, or other holder of record how to vote your Shares in order for your vote to be counted on this Proposal. Abstentions will have the same effect as votes against the Proposal and broker non-votes are not counted as
votes cast and, therefore, do not affect the outcome of the Proposal.
The Board of Directors does not know of any matters that will be brought before the 2021 Annual Meeting other than those listed in the notice of meeting. If any other matters are properly introduced at the meeting
for consideration, the individuals named on the proxy card will have authority to vote on such matters in their discretion.
December 29, 2020
Appendix A
The proposed amendment and restatement of the Hillenbrand, Inc. Stock Incentive Plan that the shareholders are being asked to approve is set forth below.
AMENDED AND RESTATED
HILLENBRAND, INC.
STOCK INCENTIVE PLAN
(Amended and Restated as of December 3, 2020)
R E C I T A L S
WHEREAS, the Board of Directors of Hillenbrand, Inc. (hereinafter referred to as “Hillenbrand” or the “Company”) adopted with shareholder approval the Hillenbrand, Inc. Stock Incentive Plan (the “Plan”) as of December 19, 2008, which was amended and restated, with shareholder approval, as of February 24, 2010 and December 4, 2013;
WHEREAS, the Board of Directors of the Company has determined that it is in the best interest of the Company and its shareholders to increase the total number of shares of Common Stock that can potentially be issued
under the Plan and to make certain other amendments to reflect market practices and the elimination of the performance-based compensation exception to Section 162(m) of the Internal Revenue Code; and
WHEREAS, the Board of Directors of the Company has, subject to shareholder approval, re-adopted the Plan in the form that follows to amend, restate, supersede and replace the form thereof previously adopted (when
approved by the shareholders of the Company).
SECTION 1.
|
Purpose and Types of Awards
|
1.1 The purposes of the Plan are to enable the Company to attract, retain and reward its employees, officers and directors, and
strengthen the mutuality of interests between such persons and the Company’s shareholders by offering such persons an equity interest in the Company and thereby enabling them to participate in the long-term success and growth of the Company.
1.2 Awards under the Plan may be in the form of (i) Stock Options; (ii) Stock Appreciation Rights; (iii) Restricted Stock; (iv)
Restricted Stock Units; (v) Bonus Stock and/or (vi) Substitute Awards. Each Award shall be subject to the minimum vesting provisions set forth in Section 15.8 of the Plan.
2.1 When capitalized in this Plan, the following terms shall have the meanings specified below (or as elsewhere defined), unless
the context otherwise requires:
“Award” means an award of Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Bonus Stock or Substitute
Awards granted pursuant to the terms and conditions of the Plan.
“Board” shall mean the Board of Directors of the Company.
“Bonus Stock” shall mean an Award described in Section 10 of the Plan.
“Change in Control” shall have the meaning set forth in Section 14.2.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
“Committee” shall mean the Compensation and Management Development Committee of the Board or such other committee of independent
directors (within the meaning of the applicable exchange listing standards) of the Board designated by the Board to administer the Plan, or if no committee is designated, and in any case with respect to Awards to non-employee directors, the
entire Board.
“Common Stock” shall mean the common stock of the Company, without par value.
“Company” shall mean Hillenbrand, Inc. and its successors.
“Employee” shall mean an employee of the Company or of any Subsidiary of the Company.
“Fair Market Value” of the Common Stock on any date shall mean the value determined in good faith by the Committee, by formula or other method consistent
with the determination of fair market value under Code Section 409A and its interpretive regulations; provided, however, that unless the Committee determines to use a different measure, the fair market value of the Common Stock shall be the
average of the high and the low sales prices of the Common Stock (on such exchange or market as is determined by the Board to be the primary market for the Common Stock) on the date in question (or if shares of Common Stock were not traded on
such date, then on the next preceding trading day on which a sale of Common Stock occurred).
“Full Value Award” shall mean any Award other than a Stock Option or Stock Appreciation Right.
“Incentive Option” shall mean a Stock Option granted under the Plan that both is designated as an Incentive Option and qualifies as an
incentive stock option within the meaning of Section 422 of the Code.
“Non-Employee Director” shall mean a director of the Company who is not employed by the Company or any of its Subsidiaries.
“Non-Qualified Option” shall mean a Stock Option granted under the Plan that either is designated as a Non-Qualified Option or does not
qualify as an incentive stock option within the meaning of Section 422 of the Code.
“Optionee” shall mean any person who has been granted a Stock Option under the Plan or who is otherwise entitled to exercise a Stock
Option.
“Option Period” shall mean, with respect to any portion of a Stock Option, the period after such portion has become exercisable and
before it has expired or terminated.
“Plan” shall have the meaning set forth in the recitals.
“Relationship” shall mean the status of employee, officer or director of the Company or any Subsidiary of the Company.
“Restricted Stock” shall mean an Award described in Section 8 of the Plan.
“Restricted Stock Units” or “RSUs” shall mean an Award described in Section
9 of the Plan.
“Shareholder Approval Date” shall mean the date of shareholder approval of the Plan as amended and restated as set forth herein.
“Stock Appreciation Right” shall mean an Award described in Section 7 of the Plan.
“Stock Option” shall mean an Incentive Option or a Non-Qualified Option and, unless the context requires otherwise, shall include
Director Options.
“Subsidiary” shall mean any corporation, partnership, joint venture or other entity in which the Company owns, directly or indirectly,
more than 50% of the ownership interests; provided, however, that for purposes of granting Incentive Options, the term “Subsidiary” shall mean any company (other than the Company) that is a “subsidiary corporation” within the meaning of Section
424 of the Code.
“Substitute Award” means an Award that is granted in assumption of, or in substitution or exchange for, an outstanding award previously
granted by an entity acquired directly or indirectly by the Company or with which the Company directly or indirectly combines.
2.2 The following rules shall govern in interpreting the Plan:
(a) The Plan and all Awards are intended to be exempt from, or to comply with, the provisions of Section 409A of the Code, and the Plan and all Awards
shall be administered to effect compliance with such intent.
(b) Any reference herein to a provision of law, regulation or rule shall be deemed to include a reference to the successor of such law, regulation or
rule.
(c) To the extent consistent with the context, any masculine term shall include the feminine, and vice versa, and the singular shall include the plural, and vice versa.
(d) If any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity
of that provision shall not affect the remaining parts of the Plan, and the Plan shall be interpreted and enforced as if the illegal or invalid provision had never been included herein.
SECTION 3.
|
Administration
|
3.1 The Plan shall be administered by the Committee. Notwithstanding anything to the contrary contained herein, only the Board
shall have authority to grant Awards to Non-Employee Directors and to amend and interpret such Awards.
3.2 The Committee shall have the authority and discretion with respect to Awards to take the following actions, if consistent with
Section 15.7 of the Plan and subject to the conditions of Section 3.2A of the Plan: to grant and amend (provided, however, that no amendment shall impair the rights of the Award holder without his or her written consent) Awards to eligible
persons under the Plan; to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award; and to make all factual and
other determinations necessary or advisable for the administration of the Plan. In particular, and without limiting its authority and powers, the Committee shall have the authority and discretion:
(a) to select the persons to whom Awards will be granted from among those eligible;
(b) to determine the number of shares of Common Stock to be covered by each Award, subject to the limitations
contained herein;
(c) subject to Section 15.8 of the Plan, to determine the terms and conditions of any Award, including, but not
limited to, any vesting or other restrictions based on such continued employment, performance objectives and such other factors as the Committee may establish, and to determine whether the terms and conditions of the Award have been satisfied;
(d) to determine the treatment of Awards upon an Employee’s retirement, disability, death, termination for
cause or other termination of employment, or during a leave of absence or upon a Non-Employee Director’s termination of Relationship as allowed by law;
(e) to determine, in establishing the terms of the Award agreement, that the Award holder has no rights with
respect to any dividends declared with respect to any shares covered by an Award or that amounts equal to the amount of any dividends declared with respect to the number of shares covered by an Award;
(f) to amend the terms of any Award, prospectively or retroactively, provided, however, that no amendment shall
impair the rights of the Award holder without his or her written consent;
(g) to determine the Fair Market Value of the Common Stock on a given date;
(h) to adopt one or more sub-plans or appendices to Award agreements containing such provisions as may be
necessary or desirable to enable Awards to comply with the laws of other jurisdictions and/or qualify for preferred tax treatment under such laws; and
(i) to delegate such administrative duties as it may deem advisable to one or more of its members or to one or
more Employees or agents.
3.2A Except for adjustments made pursuant to Sections 4.4 or 14.1 of the Plan, the Board or the Committee will not, without the
further approval of the shareholders of the Company, authorize the amendment of any outstanding Stock Option or Stock Appreciation Right to reduce the exercise price. No Stock Option or Stock Appreciation Right will be cancelled and replaced
with an Award having a lower exercise price, or for another Award, or for cash without further approval of the stockholders of the Company, except as provided in Sections 4.4 or 14.1. Furthermore, no Stock Option or Stock Appreciation Right
will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award without further approval of the stockholders of the Company. This Section 3.2A is intended to prohibit the repricing of “underwater” Stock
Options or Stock Appreciation Rights without shareholder approval and will not be construed to prohibit the adjustments provided for in Sections 4.4 or 14.1 of the Plan.
3.3 The Committee shall have the right to designate Awards as “performance Awards.” The grant or vesting of a performance Award
shall be subject to the achievement of performance objectives established by the Committee based on such criteria as determined by the Committee, which may include (without limitation) one or more of the following criteria: sales, operating
profits, operating profits before taxes, operating profits before interest expense and taxes, net earnings, earnings per share, return on equity, return on assets, return on invested capital, total shareholder return, cash flow, debt to equity
ratio, market share, stock price, and shareholder, economic or market value added. As determined by the Committee, any performance objectives may be applied to the Company on a consolidated basis and/or to a business unit and may be used as an
absolute measure, as a measure of improvement relative to prior performance, or as a measure of comparable performance relative to a peer group of companies. In establishing and measuring performance objectives for a performance period, the
Committee may provide for appropriate adjustments to any performance measure for extraordinary and/or non-recurring items. The Committee may establish minimum, target and maximum performance targets, with the Award amount based on the level of
the performance target(s) achieved.
3.4 All determinations and interpretations made by the Committee pursuant to the provisions of the Plan shall be final and binding
on all persons, including the Company and Award holders. Determinations by the Committee under the Plan relating to the form, amount and terms and conditions of Awards need not be uniform and may be made selectively among persons who receive
or are eligible to receive Awards, whether or not such persons are similarly situated.
3.5 No member of the Board or the Committee, nor any officer or Employee of the Company or its Subsidiaries acting on behalf of
the Board or the Committee, shall be personally liable for any action, determination or interpretation taken or made with respect to the Plan or any Award hereunder. The Company shall indemnify all members of the Board and the Committee and
all such officers and Employees acting on their behalf, to the extent permitted by law, from and against any and all liabilities, costs and expenses incurred by such persons as a result of any act, or omission to act, in connection with the
performance of such persons’ duties, responsibilities and obligations under the Plan.
SECTION 4.
|
Stock Subject to Plan
|
4.1 Subject to adjustment as provided in Section 4.4, the total number of shares of Common Stock which may be issued under the
Plan shall be 15,235,436 (all of which may be granted as Incentive Stock Options), which includes the original 4,635,436 shares reserved under the Plan as of December 19, 2008, the addition of 4,000,000 shares to the Plan as approved by
shareholders on February 24, 2010, the addition of 3,900,000 shares to the Plan as approved by shareholders on February 26, 2014, and the addition of 2,700,000 shares to the Plan as of December 3, 2020, subject to approval of the shareholders.
Such shares may consist of authorized but unissued shares or shares that have been issued and reacquired by the Company.
4.2 For the purposes hereof, the following shares of Common Stock covered by previously-granted Awards shall be deemed not to have
been issued under the Plan and will remain available for Awards: (a) shares of Common Stock covered by an Award that expires or is forfeited, canceled, surrendered, or otherwise terminated without the issuance of such shares; (b) shares of
Common Stock covered by an Award that is settled only in cash; and (c) Substitute Awards (except as may be required by reason of the rules and regulations of any stock exchange or other trading market on which the Shares are listed). The
following shares of Common Stock may not again be made available for issuance as Awards: (i) shares of Common Stock tendered in payment of the exercise price of a Stock Option; (ii) shares of Common Stock withheld by the Company or any
Subsidiary to satisfy a tax withholding obligation with respect to an Award; and (iii) shares of Common Stock that are repurchased by the Company with Stock Option proceeds. Without limiting the foregoing, with respect to any Stock
Appreciation Right that is settled in shares of Common Stock, the full number of shares subject to the Award shall count against the number of shares available for Awards under the Plan regardless of the number of shares used to settle the
Stock Appreciation Right upon exercise.
4.3 No Employee shall be granted Stock Options and/or Stock Appreciation Rights with respect to more than 750,000 shares of Common
Stock in any fiscal year, and no Employee shall be granted Restricted Stock, Restricted Stock Units and/or Bonus Stock with respect to more than 500,000 shares of Common Stock in any fiscal year, subject to adjustment as provided in Section
4.4.
4.4 In the event of any recapitalization, stock dividend, extraordinary cash dividend, stock split, spin-off, split-up, split-off,
distribution of assets or other change in corporate structure affecting the Common Stock such that an adjustment is determined by the Board in its discretion to be appropriate in order to prevent dilution or enlargement of benefits under the
Plan, then the Committee shall, in such a manner as it may in its discretion deem equitable, cause there to be an equitable adjustment in the number and kind of shares of Common Stock specified in Section 4.1 of the Plan and, with respect to
outstanding Awards, in the number and kind of shares of Common Stock subject to outstanding Awards and the exercise price or other price of shares subject to outstanding Awards, in each case to prevent dilution or enlargement of the rights of
participants. In the event of any merger, consolidation, liquidation, or similar transaction, the Committee may, in its sole discretion, cause there to be an equitable adjustment as described in the foregoing sentence, to prevent dilution or
enlargement of rights and may provide in substitution for any or all outstanding Awards such alternative consideration (including cash or other property) as it, in good faith, may determine to be equitable in the circumstances, and may require
in connection therewith the surrender of all Awards so replaced. Notwithstanding the foregoing, the Committee shall not make any adjustment pursuant to this Section 4.4 that would cause an Award that is otherwise exempt from Section 409A of the
Code to become subject to Section 409A or to cause an Award that is subject to Section 409A of the Code to fail to satisfy the requirements of Section 409A. The determination of the Committee as to the foregoing adjustments, if any, shall be
conclusive and binding on all persons.
4.5 No fractional shares shall be issued or delivered under the Plan. The Committee shall determine whether the value of
fractional shares shall be paid in cash or other property, or whether such fractional shares and any rights thereto shall be cancelled without payment.
5.1 The persons who are eligible for Awards under Sections 6, 7, 8, 9, and 10 of
the Plan are Employees, officers and directors of the Company or of any Subsidiary of the Company. In addition, Awards under such Sections may be granted to prospective Employees, officers or directors, but such Awards shall not become
effective until the recipient’s commencement of employment or service with the Company or a Subsidiary. Incentive Options may be granted only to Employees and prospective Employees, but such Awards shall not become effective until the
recipient’s commencement of employment or service with the Company or a Subsidiary. Award recipients under the Plan shall be selected from time to time by the Committee, in its sole discretion, from among those eligible.
5.2 Non-Employee Directors shall be granted Awards under Section 12 in addition to any Awards which may be granted to them under
other Sections of the Plan.
6.1 The Stock Options granted to eligible persons under the Plan may be of two types: (a) Incentive Options, and (b)
Non-Qualified Options. To the extent that any Stock Option granted to an Employee does not qualify as an Incentive Option, it shall constitute a Non-Qualified Option. All Stock Options granted to persons who are not Employees shall be
Non-Qualified Options.
6.2 Subject to the following provisions, Stock Options granted under Section 6 of the Plan shall be in such form and shall have
such terms and conditions as the Committee may determine.
(a) Option Price. The option price per share of Common Stock purchasable under a Stock Option (other
than a Substitute Award) shall be determined by the Committee and may not be less than the Fair Market Value of the Common Stock on the date of grant of the Stock Option (or, with respect to Awards to prospective Employees, on the first date of
employment).
(b) Option Term. Unless otherwise provided by the Committee in the applicable Award agreement, the term
of each Stock Option shall be fixed by the Committee and shall not exceed ten years.
(c) Exercisability. Stock Options shall be exercisable and shall vest at such time or times and subject
to such terms and conditions as shall be determined by the Committee, subject to the minimum vesting provisions of Section 15.8 of the Plan.
(d) Method of Exercise. Stock Options may be exercised in whole or in part at any time during the
Option Period by giving the Company notice of exercise in the form approved by the Committee (which may be written or electronic) specifying the number of whole shares to be purchased, accompanied by payment of the aggregate option price for
such shares. Payment of the option price shall be made in such manner as the Committee may provide in the Award agreement, which may include (i) cash (including cash equivalents), (ii) delivery of shares of Common Stock already owned by the
Optionee, (iii) by a cashless exercise (including by withholding shares deliverable upon exercise or through a broker-assisted arrangement to the extent permitted by applicable laws), (iv) any other manner permitted by law, or (v) any
combination of the foregoing.
(e) No Shareholder Rights. An Optionee shall have no rights to dividends or other rights of a
shareholder with respect to shares subject to a Stock Option until the Optionee has duly exercised the Stock Option and a certificate for such shares has been duly issued (or the Optionee has otherwise been duly recorded as the owner of the
shares on the books of the Company). Moreover, no dividend equivalents may be granted under the Plan with respect to the shares of Common Stock underlying any Stock Option.
(f) Termination of Employment or Relationship. Following the termination of an Optionee’s employment or
other Relationship with the Company or its Subsidiaries, the Stock Option shall be exercisable to the extent determined by the Committee. The Committee may provide different post-termination exercise provisions which may vary based on the
nature of and reason for the termination. The Committee shall have absolute discretion to determine the date and circumstances of any termination of employment or other Relationship.
(g) Non-transferability. Unless otherwise provided by the Committee in the applicable Award agreement,
(i) Stock Options shall not be transferable by the Optionee other than by will or the laws of descent and distribution, and (ii) during the Optionee’s lifetime, all Stock Options shall be exercisable only by such Optionee. The Committee, in
its sole discretion, may permit Stock Options to be transferred to such other transferees and on such terms and conditions as may be determined by the Committee; provided, however, that in no event shall the Committee permit a Stock Option to
be transferred for consideration.
6.3 Notwithstanding the provisions of Section 6.2, Incentive Options shall be subject to the following additional restrictions:
(a) Option Term. No Incentive Option shall be exercisable more than ten years after the date such
Incentive Option is granted.
(b) Additional Limitations for 10% Shareholders. No Incentive Option granted to an Employee who owns
more than 10% of the total combined voting power of all classes of stock of the Company or any of its parent or subsidiary corporations, as defined in Section 424 of the Code, shall (i) have an option price which is less than 110% of the Fair
Market Value of the Common Stock on the date of grant of the Incentive Option, or (ii) be exercisable more than five years after the date such Incentive Option is granted.
(c) Exercisability. The aggregate Fair Market Value (determined as of the time the Incentive Option is
granted) of the shares with respect to which Incentive Options (granted under the Plan and any other plans of the Company, its parent corporation or subsidiary corporations, as defined in Section 424 of the Code) are exercisable for the first
time by an Optionee in any calendar year shall not exceed $100,000. Any Stock Options in excess of such $100,000 limitation shall be treated as Non-Qualified Options.
(d) Notice of Disqualifying Disposition. An Optionee’s right to exercise an Incentive Option shall be
subject to the Optionee’s agreement to notify the Company of any “disqualifying disposition” (for purposes of Section 422 of the Code) of the shares acquired upon such exercise.
(e) Non-transferability. Incentive Options shall not be transferable by the Optionee, other than by
will or by the laws of descent and distribution. During the Optionee’s lifetime, all Incentive Options shall be exercisable only by such Optionee.
(f) Last Grant Date. No Incentive Option shall be granted more than ten years after the earlier of the
date of adoption or re-adoption of the Plan, as applicable, by the Board or approval of the Plan by the Company’s shareholders.
The Committee may, with the consent of the Optionee, amend an Incentive Option in a manner that would cause loss of Incentive Option status, provided the Stock Option as so amended satisfies the requirements of
Section 6.2.
SECTION 7.
|
Stock Appreciation Rights
|
7.1 A Stock Appreciation Right shall entitle the holder thereof to receive, for each share as to which the Award is granted,
payment of an amount, in cash, shares of Common Stock, or a combination thereof, as determined by the Committee, equal in value to the excess of the Fair Market Value of a share of Common Stock on the date of exercise over the Fair Market Value
of a share of Common Stock on the day such Stock Appreciation Right was granted. Any such Award shall be in such form and shall have such terms and conditions as the Committee may determine, subject to the minimum vesting provisions of Section
15.8 of the Plan. Unless otherwise provided by the Committee in the applicable Award agreement, the term of each Stock Appreciation Right shall not exceed ten years. The grant shall specify the number of shares of Common Stock as to which the
Stock Appreciation Right is granted. No dividend equivalents may be granted under the Plan with respect to the shares of Common Stock underlying any Stock Appreciation Right.
SECTION 8.
|
Restricted Stock
|
Subject to the following provisions, all grants of Restricted Stock shall be in such form and shall have such terms and conditions as the Committee may determine:
(a) The Restricted Stock agreement shall specify the number of shares of Restricted Stock to be granted, the
price, if any, to be paid by the recipient of the Restricted Stock and the date or dates on which, or the conditions upon the satisfaction of which, the Restricted Stock will vest. The grant and/or the vesting of Restricted Stock may be
conditioned upon the completion of a specified period of service with the Company and/or its Subsidiaries, upon the attainment of specified performance objectives, or upon such other criteria as the Committee may determine, in each case subject
to the minimum vesting provisions of Section 15.8 of the Plan.
(b) Stock certificates or book entry shares representing the Restricted Stock granted under the Plan shall be
registered in the Award holder’s name, but the Committee may direct that any such certificates, if applicable, be held by the Company on behalf of the Award holder. Except as may be permitted by the Committee, no share of Restricted Stock may
be sold, transferred, assigned, pledged or otherwise encumbered by the Award holder until such share has vested in accordance with the terms of the Restricted Stock agreement. At the time Restricted Stock vests, such vested shares shall be
delivered (via stock certificate or book entry) to the Award holder (or his or her designated beneficiary in the event of death), free of such restriction.
(c) The Committee may provide that the Award holder shall have the right to vote and/or receive dividends on
Restricted Stock; provided, however, that any dividends with respect to unvested Restricted Stock shall be accumulated or deemed reinvested in additional Restricted Stock (as determined by the Committee in its sole discretion and set forth in
the applicable Award agreement), subject to the same terms and conditions as the original Award until such Award is earned and vested.
(d) Except as may be provided by the Committee, in the event of an Award holder’s termination of employment or
other Relationship before all of his or her Restricted Stock has vested, or in the event any conditions to the vesting of Restricted Stock have not been satisfied prior to any deadline for the satisfaction of such conditions set forth in the
Award agreement, the shares of Restricted Stock which have not vested shall be forfeited, and the Committee may provide that (i) any purchase price paid by the Award holder shall be returned to the Award holder, or (ii) a cash payment equal to
the Restricted Stock’s Fair Market Value on the date of forfeiture, if lower, shall be paid to the Award holder.
SECTION 9.
|
Restricted Stock Units (RSUs)
|
Subject to the following provisions, all grants of Restricted Stock Units shall be in such form and shall have such terms and conditions as the Committee may determine:
(a) The Restricted Stock Unit agreement shall specify the number of shares of Common Stock to be paid and the
duration of the period (the “Vesting Period”) during which, and the conditions under which, receipt of the underlying Common Stock will be deferred. The Committee may condition the grant or vesting of RSUs, or receipt of Common Stock or cash
at the end of the Vesting Period, upon the completion of a specified period of service with the Company and/or its Subsidiaries, upon the attainment of specified performance objectives, or upon such other criteria as the Committee may
determine, in each case subject to the minimum vesting provisions of Section 15.8 of the Plan.
(b) Except as may be provided by the Committee, RSUs may not be sold, assigned, transferred, pledged or
otherwise encumbered during the Vesting Period.
(c) At the expiration of the Vesting Period, as soon as administratively practical and in no event later than
two and one-half months following the end of the Vesting Period, the Award holder (or his or her designated beneficiary, if applicable) shall receive (i) certificates for the appropriate number of shares of Common Stock designated by the RSU
agreement, (ii) cash equal to the Fair Market Value of such Common Stock, or (iii) a combination of shares and cash, as the Committee may determine.
(d) Except as may be provided by the Committee, in the event of an Award holder’s termination of employment or
other Relationship before the RSU has vested, such Award shall be forfeited.
(e) RSUs may provide the Award holder with dividend equivalents, payable on a contingent basis and either in
cash or in additional shares of Common Stock, as determined by the Committee in its sole discretion and set forth in the related Award agreement; provided, however, that any dividend equivalents with respect to unvested RSUs shall be
accumulated or deemed reinvested, subject to the same terms and conditions as the original RSUs until such Award is earned and vested.
The Committee may grant Bonus Stock to any eligible Award recipient subject to such terms and conditions as the Committee shall determine. The grant of Bonus Stock may, but need not, be conditioned
upon the attainment of specified performance objectives or upon such other criteria as the Committee may determine, subject to the minimum vesting provisions of Section 15.8 of the Plan. Unless otherwise specified by the Committee, no money
shall be paid by the recipient for the Bonus Stock. Alternatively, the Committee may, after considering any accounting impact to the Company, offer eligible Employees the opportunity to purchase Bonus Stock at a discount from its Fair Market
Value. The Bonus Stock may be satisfied by the delivery of the designated number of shares of Common Stock which are not subject to restriction. Bonus Stock may provide the Award holder with dividend equivalents, payable on a contingent basis
and either in cash or in additional shares of Common Stock, as determined by the Committee in its sole discretion and set forth in the related Award agreement; provided, however, that any dividend equivalents with respect to unvested Bonus Stock
shall be accumulated or deemed reinvested, subject to the same terms and conditions as the original Bonus Stock terms, until such Award is earned and vested.
SECTION 11.
|
Election to Defer
|
To the extent permitted by Section 409A of the Code, the Committee may permit an Award recipient to elect to defer payment of an Award other than a Stock Option for a specified period or until a
specified event, upon such terms as are determined by the Committee. An Award holder may elect to defer the distribution date of the payout of Restricted Stock Units or Bonus Stock, provided that such election is made and delivered to the
Company in compliance with Section 409A of the Code, when applicable.
SECTION 12.
|
Non-Employee Director Awards
|
The Board shall have the discretion to determine the number and types of Awards to be granted to Non-Employee Directors and the terms of such Awards, including
but not limited to the exercisability and the effect of a director’s termination of service, in each case subject to the minimum vesting provisions of Section 15.8 of the Plan. Notwithstanding any other provision of the Plan to the contrary,
the aggregate grant date fair value (determined as of the applicable date(s) of grant in accordance with applicable financial accounting rules) of all Awards granted to any Non-Employee Director during any single calendar year for services as a
director, taken together with any cash fees payable to such person during such calendar year (excluding any amounts payable for service as a Board or committee chairperson), shall not exceed $600,000.
SECTION 13.
|
Tax Withholding
|
13.1 Each Award holder shall, no later than the date as of which an amount with respect to an Award first becomes includible in
such person’s gross income for applicable tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any federal, state, local or other taxes of any kind required by law to be withheld with
respect to the Award. The obligations of the Company under the Plan shall be conditional on such payment or arrangements. The Company (and, where applicable, its Subsidiaries) shall, to the extent permitted by law, have the right to deduct
any applicable tax withholdings from any such taxes from any payment of any kind otherwise due to the Award holder.
13.2 To the extent permitted by the Committee, and subject to such terms and conditions as the Committee may provide, an Employee
may elect to have any applicable tax withholdings with respect to any Awards hereunder, satisfied by (a) having the Company withhold shares of Common Stock otherwise deliverable to such person with respect to the Award; (b) delivering to the
Company shares of unrestricted Common Stock already owned by the Employee; (c) broker-assisted “cashless exercise;” (d) any other manner permitted by law; or (e) any combination of the foregoing. Alternatively, the Committee may require that a
portion of the shares of Common Stock otherwise deliverable be applied to satisfy the withholding tax obligations with respect to the Award. In no event will the value of the shares of Common Stock to be withheld or tendered pursuant to this
Section 13 to satisfy applicable withholding taxes exceed the amount of taxes required to be withheld based on the maximum statutory tax rates in the applicable taxing jurisdictions.
SECTION 14.
|
Change in Control
|
14.1 In the event of a Change in Control, unless otherwise provided under the terms of any applicable change
in control agreement between the Company and an Award holder, and notwithstanding anything in Section 15.8 of the Plan to the contrary
:
(a) subject to Section 14.1(c) below, all outstanding Stock Options and all outstanding Stock Appreciation
Rights awarded under the Plan shall become fully exercisable and vested;
(b) subject to Section 14.1(c) below, the restrictions and vesting conditions applicable to any outstanding
Restricted Stock, Restricted Stock Unit and Bonus Stock awards under the Plan shall lapse and such shares and awards shall be deemed fully vested;
(c) any Awards with respect to which the number of shares of Common Stock earned
depends upon performance shall vest based on the greater of: (i) an assumed achievement of all relevant performance goals at their “target” level, or (ii) the actual level of achievement of all relevant performance goals against target measured
through the date immediately prior to the Change in Control (or as close to such date as administratively practicable);
(d) the Committee may, in its sole discretion, accelerate the payment date of all Restricted Stock Unit awards
to the extent permitted under Section 409A of the Code;
(e) the Committee may, in its sole discretion and without the consent of Award holders, provide that any
outstanding and vested Award (or a portion thereof), including those that vest by reason of this Section 14.1, shall, upon the occurrence of such Change in Control, be cancelled in exchange for a payment in cash or other property (including
shares of the resulting entity in connection with a Change in Control) in an amount equal to the excess, if any, of the Fair Market Value of the shares subject to the Award, over any exercise price related to the Award, which amount may be zero
if the Fair Market Value of a share does not exceed the exercise price per share of the applicable Awards.
14.2 A “Change in Control” shall be deemed to occur on:
(a) the date that any person, corporation, partnership,
syndicate, trust, estate or other group acting with a view to the acquisition, holding or disposition of securities of the Company, becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of securities of the Company representing 35% or more of the voting power of all securities of the Company having the right under ordinary circumstances to vote at an election of the Board (“Voting Securities”), other than by
reason of (i) the acquisition of securities of the Company by the Company or any of its Subsidiaries or any employee benefit plan of the Company or any of its Subsidiaries, or (ii) the acquisition of securities of the Company directly from the
Company;
(b) the consummation of a merger or consolidation of the Company with another corporation unless;
(i) the shareholders of the Company, immediately prior to the merger or consolidation, beneficially own,
immediately after the merger or consolidation, shares entitling such shareholders to 50% or more of the voting power of all securities of the corporation surviving the merger or consolidation having the right under ordinary circumstances to
vote at an election of directors in substantially the same proportions as their ownership, immediately prior to such merger or consolidation, of Voting Securities of the Company;
(ii) no person, corporation, partnership, syndicate, trust, estate or other group beneficially owns, directly
or indirectly, 35% or more of the voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation except to the extent that such ownership existed prior to such merger or consolidation; and
(iii) the members of the Company’s Board, immediately prior to the merger or consolidation, constitute,
immediately after the merger or consolidation, a majority of the board of directors of the corporation issuing cash or securities in the merger;
(c) the date on which individuals who at the beginning of the 24-month period ending on such date constituted the entire Board (“Current
Directors”) shall cease for any reason to constitute a majority of the Board, unless the nomination or election of each new director was approved by a majority vote of the Current Directors;
(d) the consummation of a sale or other disposition of all or substantially all (i.e., 50% or more) of the assets of the Company in one transaction or a series of transactions within any period of 12 consecutive months; or
(e) the date of approval by the shareholders of the Company of a plan of complete liquidation of the Company.
Notwithstanding any other provision of this Section to the contrary, to the extent an Award is subject to Section 409A of the Code, then to the extent required to comply with
Section 409A of the Code, an occurrence shall not constitute a Change in Control if it does not constitute a change in the ownership or effective control, or in the ownership of a substantial portion of the assets of, the Company or another
allowable acceleration event under Section 409A of the Code and its interpretive regulations.
14.3 This Section 14 shall apply only to Awards granted on and after the Shareholder Approval Date. All Awards granted prior to
the Shareholder Approval Date shall be subject to the applicable change in control provisions of the Plan as in effect before the Shareholder Approval Date.
SECTION 15.
|
General Provisions
|
15.1 Each Award shall be subject to the requirement that, if at any time the Committee shall determine that (a) the listing,
registration or qualification of the Common Stock subject or related thereto upon any securities exchange or market or under any state or federal law, or (b) the consent or approval of any government regulatory body, or (c) an agreement by the
recipient of an Award with respect to the disposition of Common Stock, is necessary or desirable in order to satisfy any legal requirements, or (d) the issuance, sale or delivery of any shares of Common Stock is or may in the circumstances be
unlawful under the laws or regulations of any applicable jurisdiction, the right to exercise such Stock Option shall be suspended, such Award shall not be granted and such shares will not be issued, sold or delivered, in whole or in part,
unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee, and the Committee determines that the issuance, sale or delivery of
the shares is lawful. The application of this Section shall not extend the term of any Stock Option or other Award. The Company shall have no obligation to effect any registration or qualification of the Common Stock under federal or state
laws or to compensate the Award holder for any loss caused by the implementation of this Section 15.1.
15.2 Any Award shall be subject to forfeiture or repayment pursuant to the terms of any applicable compensation recovery policy
maintained by the Company from time to time, including any such policy that may be maintained to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act or any rules or regulations issued by the SEC or applicable securities
exchange. In addition, the Committee may provide, at the time of grant or by amendment with the Award holder’s consent, that an Award and/or Common Stock acquired under the Plan shall be forfeited, including after exercise or vesting, if
within a specified period of time the Award holder engages in any of the following disqualifying conduct: (a) the Award holder’s performance of service for a competitor of the Company and/or its Subsidiaries, including service as an employee,
director or consultant, or the establishing by the Award holder of a business which competes with the Company and/or its Subsidiaries; (b) the Award holder’s solicitation of employees or customers of the Company and/or its Subsidiaries; (c) the
Award holder’s improper use or disclosure of confidential information of the Company and/or its Subsidiaries; or (d) material misconduct by the Award holder in the performance of such Award holder’s duties for the Company and/or its
Subsidiaries, as determined by the Committee.
15.3 Nothing set forth in this Plan shall prevent the Board or Committee from adopting other or additional compensation
arrangements.
15.4 Nothing in the Plan nor in any Award hereunder shall confer upon any Award holder any right to continuation of his or her
employment by or other Relationship with the Company or its Subsidiaries or interfere in any way with the rights of any such company to terminate such employment or other Relationship.
15.5 Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or Subsidiary and an Award recipient, and no Award recipient will, by participation in the Plan, acquire any right in any specific Company property, including any property the Company may set aside in connection
with the Plan. To the extent that any Award recipient acquires a right to receive payments from the Company or any Subsidiary pursuant to an Award, such right shall not be greater than the right of an unsecured general creditor of the Company
or its Subsidiaries.
15.6 Except to the extent preempted by United States federal law or as otherwise expressly provided herein, the Plan and all Awards shall be interpreted in accordance
with and governed by the internal laws of the State of Indiana without giving effect to any choice or conflict of law provisions, principles or rules.
15.7 The Plan and all Awards shall be interpreted and applied in a manner consistent with the applicable standards for nonqualified deferred compensation plans
established by Code Section 409A and its interpretive regulations and other regulatory guidance. To the extent that any terms of the Plan or an Award would subject an Employee to gross income inclusion, interest or additional tax pursuant to Code Section 409A, those terms are to that extent superseded by, and shall be adjusted to the minimum extent necessary to satisfy or to be exempt from, the Code Section 409A standards. If as of
the date Employee’s employment terminates, an Employee is a “key employee,” within the meaning of Code Section 416(i), without regard to paragraph 416(i)(5), and if the Company has stock that is publicly traded on an established securities market
or otherwise, any payment of deferred compensation, within the meaning of Code Section 409A, otherwise payable because of employment termination will be suspended until, and will be paid to the Employee on, the first day of the seventh month
following the month in which the Employee’s last day of employment occurs.
15.8 Notwithstanding any other provision of the Plan to the contrary, all Awards granted on and after the Shareholder Approval Date shall vest or become exercisable no earlier than the first anniversary of the
date of grant of the Award (excluding, for this purpose, any (a) Substitute Awards, and (b) Awards to Non-Employee Directors that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of shareholders
(provided that such vesting period may not be less than 50 weeks after grant)); provided, however, that the Committee may grant Awards without regard to the foregoing minimum vesting requirement with respect to a maximum of five percent (5%) of
the shares of Common Stock remaining available for issuance under the Plan under Section 4.1 as of the Shareholder Approval Date (subject to adjustment thereafter under Section 4.4); and, provided further that the foregoing restriction does not
apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award as provided in Section 3.2(d) of the Plan, by the terms of the Award agreement or otherwise.
15.9 Adjustments.
(a) Except as otherwise provided in any award agreement or in any applicable change in control agreement between the Company and an Award recipient, if any payment or benefit resulting
from an Award under the Plan or otherwise, including accelerated vesting of any equity compensation (all such payments and/or benefits hereinafter, “Payment”), would (i) constitute a “parachute payment” within the meaning of Section 280G of the
Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be either (x) provided to the recipient in full, or (y) provided to the recipient to such lesser
extent which would result in no portion of such Payment being subject to the excise tax, further reduced by $5,000 (including such further reduction, the “Cutback Amount”), whichever of the foregoing amounts, when taking into account applicable
federal, state, local and foreign income and employment taxes, such excise tax and other applicable taxes, (all computed at the highest applicable marginal rates), results in the receipt by the recipient, on an after-tax basis, of the greatest
amount of the Payment, notwithstanding that all or a portion of such Payment may be subject to the excise tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Cutback Amount,
reduction shall occur in the following order: (A) cash payments of accelerated Awards under the Plan shall be reduced first and in reverse chronological order such that the cash payment owed on the latest date following the occurrence of the
event triggering such excise tax will be the first cash payment to be reduced; (B) accelerated vesting of performance-based equity Awards shall be cancelled or reduced next and in the reverse order of the date of grant for such Awards (i.e., the vesting of the most recently granted Awards will be reduced first), with Full Value Awards reduced before any performance-based stock option or stock appreciation rights are reduced; and (C)
accelerated vesting of time-based equity Awards shall be cancelled or reduced last and in the reverse order of the date of grant for such Awards (i.e., the vesting of the most recently granted Awards will
be reduced first), with Full Value Awards reduced before any time-based stock option or stock appreciation rights are reduced.
(b) The Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder and perform the foregoing calculations. The Company shall bear all
expenses with respect to the determinations by such accounting firm required to be made hereunder. The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation,
to the Company and the Award recipient within fifteen (15) calendar days after the date on which right to a Payment is triggered (if requested at that time by the Company or recipient). Any good faith determinations of the accounting firm made
hereunder shall be final, binding and conclusive upon the Company and the recipient.
SECTION 16.
|
Amendments and Termination
|
16.1 The Plan shall terminate at the close of business on December 1, 2030. The Board may discontinue the Plan at any time prior
to the date referenced in the prior sentence and may amend it from time to time. No amendment or discontinuation of the Plan shall adversely affect any Award previously granted without the Award holder’s written consent. Amendments may be
made without shareholder approval except as required to satisfy applicable laws or regulations or the requirements of any stock exchange or market on which the Common Stock is listed or traded.
16.2 The Committee may amend the terms of any Award prospectively or retroactively; provided, however, that no amendment shall
impair the rights of the Award holder without his or her written consent.
SECTION 17.
|
Effective Date of Plan
|
17.1 This revised version of the Plan was approved and adopted by the Board on December 3, 2020, and is to be effective as of such
date, and is to amend, restate, supersede, and replace prior versions of the Plan adopted by the Board, contingent upon the approval thereof by the shareholders of the Company within 12 months following the adoption by the Board.
* * * * * *
|
|
HILLENBRAND, INC.
ONE BATESVILLE BLVD
BATESVILLE, IN 47006
|
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information.
Vote by 11:59 P.M. ET on 02/10/2021. 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. Vote by 11:59 P.M. ET on
02/10/2021. 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:
|
|
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
DETACH AND RETURN THIS PORTION ONLY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
All
|
Withhold
All
|
For All
Except
|
|
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.
|
|
|
|
|
|
|
|
The Board of Directors recommends you vote FOR the following:
|
☐
|
☐
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Election of Directors - Election of these Directors is for three-year terms expiring in 2024.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
01)
|
Helen W. Cornell 02) Jennifer W. Rumsey 03) Stuart A. Taylor, II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors recommends you vote FOR proposals 2, 3 and 4:
|
|
|
|
For
|
Against
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
To approve, by a non-binding advisory vote, the compensation paid by the Company to its Named Executive Officers.
|
|
☐
|
☐
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
To approve the amendment and restatement of the Company's Stock Incentive Plan.
|
|
☐
|
☐
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
To ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal
year 2021.
|
|
☐
|
☐
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary,
please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
Date
|
|
|
|
|
Signature (Joint Owners)
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0000477745_1 R1.0.1.18
HILLENBRAND, INC.
|
2021 ANNUAL MEETING OF SHAREHOLDERS
ADMISSION TICKET
|
Shareholders are cordially invited to attend
the Annual Meeting of shareholders on Thursday, February 11, 2021. The Meeting will be held at the Company's headquarters at One Batesville
Boulevard, Batesville, Indiana 47006, at 10:00 a.m., Eastern Standard Time.
(Please detach this ticket from your proxy
card and bring it as identification. Directions to the meeting site are included on this ticket for convenience. The use of an Admission
Ticket is for mutual convenience; however, the right to attend without an Admission Ticket, upon proper identification, is not affected.)
Nicholas R. Farrell
Secretary
(FOR THE PERSONAL
USE OF THE NAMED SHAREHOLDER(S) ON THE BACK – NOT TRANSFERABLE)
Directions to Hillenbrand, Inc.
Hillenbrand, Inc. is located between
Cincinnati, Ohio and Indianapolis, Indiana. Shareholders traveling from the Cincinnati area should take 1-74 West toward Indianapolis to
Exit 149 (Batesville) and turn left off the exit ramp. Go straight through the first stop light to the next light and turn left at the
intersection of State Road 229 and Highway 46.
Shareholders traveling from the Indianapolis
area should take 1-74 East toward Cincinnati to Exit 149 (Batesville) and turn right off the exit ramp. Go to the first stop light and turn
left at the intersection of State Road 229 and Highway 46.
To reach Hillenbrand, Inc.'s headquarters,
travel on Highway 46 through three stop lights and turn left onto Batesville Boulevard. Hillenbrand, Inc. is the second office building on Batesville Boulevard.
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com
|
|
|
|
|
|
|
|
|
This Proxy and Voting Instruction is solicited on
behalf of the Board of Directors for the Annual Meeting of
Shareholders on February 11, 2021
|
|
|
|
|
|
|
|
|
|
The undersigned appoints F. Joseph Loughrey and Joe A. Raver, or either of them, with full power of substitution, as proxies to vote all the
shares of the undersigned of Hillenbrand, Inc. (the "Company") at the Annual Meeting of Shareholders to be held at the Company's headquarters, One Batesville Boulevard, Batesville, Indiana 47006-7798, on February 11, 2021, at 10:00
a.m., local time (Eastern Standard Time), and any adjournments of the meeting, on the matters listed on the reverse.
|
|
|
|
|
|
SIGNED PROXIES RETURNED WITHOUT SPECIFIC VOTING DIRECTIONS WILL BE VOTED: (1) in favor of the election of the Board of Directors' nominees
for three directors; (2) To approve, by a non-binding advisory vote, the compensation paid by the Company to its Named Executive Officers; (3) To approve the amendment and restatement of the Company’s Stock Incentive Plan; (4) To
ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2021; and (5) in the discretion of the proxy holders upon such other business as may properly come before
the Annual Meeting.
|
|
|
|
|
|
This proxy may be revoked at any time before it is exercised.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continued and to be signed on reverse side
|
|
|
|
|
|
|
|
0000477745_2 R1.0.1.18