COMPENSATION DISCUSSION AND ANALYSIS
The following discussion provides an overview and analysis of our compensation programs and policies and the major factors that shape the
creation and implementation of those policies. In this discussion and analysis, and in the more detailed tables and narrative that follow, we will discuss compensation and compensation decisions for fiscal 2018 relating to the following persons,
whom we refer to as our named executive officers:
Carl R. Christenson, Chairman and Chief Executive Officer;
Christian Storch, Chief Financial Officer;
Glenn E. Deegan, Vice President, Legal and Human Resources, General Counsel and Secretary; and
Craig Schuele, Vice President of Marketing and Business Development;
Todd B. Patriacca, Vice President of Finance, Corporate Controller and Treasurer.
Executive Summary
Overview
The Compensation Committee believes that executive compensation should be structured to encourage and reward performance that leads to meaningful results for the Company. Both our cash and equity
incentive compensation programs are tied primarily to performance metrics designed to measure sales and earnings growth and working capital management of Altra. Our strategy is to compensate our executives at competitive levels through programs that
emphasize performance-based incentive compensation in the form of annual cash payments and equity-based awards. Our executives have the opportunity to earn above-median compensation for above-market performance while below-market performance will
result in below-median compensation.
Operating Performance
On October 1, 2018, Altra and Fortive Corporation (Fortive) consummated the combination of Altra with four operating
companies from Fortives Automation & Specialty platform (the A&S Business). In accordance with the terms and conditions of an Agreement and Plan of Merger and Reorganization (the Merger Agreement), dated
March 7, 2018, among Altra, Fortive, McHale Acquisition Corp. (Merger Sub) and Stevens Holding Company, Inc. (Stevens Holding), and a Separation and Distribution Agreement, dated March 7, 2018, among Altra, Fortive
and Stevens Holding (the Distribution Agreement), (1) Fortive transferred certain assets, liabilities and entities constituting a portion of the A&S Business to Stevens Holding, (2) Fortive distributed to its stockholders all of
the issued and outstanding shares of Stevens Holding common stock held by Fortive by way of an exchange offer (the Distribution) and (3) Merger Sub merged with and into Stevens Holding and Stevens Holding became a wholly-owned
subsidiary of Altra, and the issued and outstanding shares of Stevens Holding common stock converted into shares of Altra common stock (the Merger). In addition, pursuant to the Merger Agreement, prior to the effective time of the
Merger, Fortive transferred certain
non-U.S.
assets, liabilities and entities constituting the remaining portion of the A&S Business to certain subsidiaries of Altra, and the Altra subsidiaries assumed
substantially all of the liabilities associated with the transferred assets (the Direct Sales) (all of the foregoing, collectively, the Fortive Transaction). Upon consummation of the Fortive Transaction, the shares of Stevens
Holding common stock then outstanding were automatically converted into the right to receive 35.0 million shares of Altra common stock, which were issued by Altra on the Closing Date, and represented approximately 54% of the outstanding shares
of Altra common stock, together with cash in lieu of fractional shares. Altras
pre-Merger
shareholders continued to hold the remaining approximately 46% of the outstanding shares of Altra common stock.
The A&S Business, consisting of four key brands, Kollmorgen, Portescap, Thomson and Jacobs Vehicle Systems, designs,
manufactures, markets and sells electromechanical and electronic motion control products, including standard and custom motors, drives and controls; linear motion systems, ball screws, linear bearings,
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