UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

Filed by the Registrant                               Filed by a party other than the Registrant  

Check the appropriate box:

 

Preliminary Proxy Statement

 

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

 

Definitive Proxy Statement

 

 

Definitive Additional Materials

 

 

Soliciting Material Pursuant to §240.14a-12

Church & Dwight Co., Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

 

No fee required.

 

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

(1)

Title of each class of securities to which transaction applies:

     

 

 

(2)

Aggregate number of securities to which transaction applies:

     

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

     

 

 

(4)

Proposed maximum aggregate value of transaction:

     

 

 

(5)

Total fee paid:

     

 

 

 

Fee paid previously with preliminary materials.

 

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

 

 

(1)

Amount previously paid:

     

 

 

(2)

Form, Schedule or Registration Statement No.:

     

 

 

(3)

Filing party:

     

 

 

(4)

Date Filed:

     

 

 

 

 

 

 

 

 

 


Church & Dwight Co., Inc.

 

 

2020

NOTICE OF

ANNUAL MEETING OF

STOCKHOLDERS AND PROXY STATEMENT

 

 

Princeton South Corporate Park

500 Charles Ewing Boulevard

Ewing, New Jersey 08628

 

MEETING DATE: April 30, 2020



 

 

CHURCH & DWIGHT CO., INC.

 

 

 

LOCATION OF THE MEETING

 

CHURCH & DWIGHT CO., INC.

Princeton South Corporate Park

500 Charles Ewing Boulevard

Ewing, New Jersey 08628 USA

(609) 806-1200

www.churchdwight.com

 

Notice of Annual Meeting of Stockholders to be held Thursday, April 30, 2020.

The Annual Meeting of Stockholders of Church & Dwight Co., Inc. will be held at Church & Dwight Co., Inc., Princeton South Corporate Park, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628 on Thursday, April 30, 2020 at 12:00 p.m., Eastern Daylight Time, to consider and take action on the following:

 

1.

Election of five nominees to serve as directors for a term of one year;

 

2.

An advisory vote to approve compensation of our named executive officers;

 

3.

A proposal to amend and restate the Company’s Amended and Restated Certificate of Incorporation to give holders of 25% of Company stock that meet certain requirements the right to request a special meeting;

 

4.

A proposal to amend and restate the Company’s Amended and Restated Certificate of Incorporation to eliminate certain supermajority voting requirements to amend certain of its provisions;

 

5.

A proposal to amend and restate the Company’s Amended and Restated Certificate of Incorporation to move certain advance notice requirements with respect to director nominees and other proposals submitted by stockholders to the Company’s Bylaws (such requirements to be updated);

 

6.

Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2020; and

 

7.

Transaction of such other business as may properly be brought before the meeting or any adjournments thereof.

All stockholders are cordially invited to attend, although only those stockholders of record as of the close of business on March 3, 2020 will be entitled to notice of, and to vote at, the meeting or any adjournments thereof.

Your vote is important. Whether or not you expect to attend the meeting, we urge you to vote by submitting your proxy. You may vote your proxy four different ways: by mail, via the Internet, by telephone, or in person at the meeting. Please refer to detailed instructions included herein or with the Notice Regarding the Availability of Proxy Materials.

 

 

By Order of the Board of Directors,

 

PATRICK D. DE MAYNADIER

Corporate Secretary

 

Ewing, New Jersey

March 20, 2020

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON APRIL 30, 2020: The Notice of Annual Meeting, Proxy Statement and 2019 Annual Report to Stockholders are available at: https://materials.proxyvote.com/171340.


 

TABLE OF CONTENTS

 

 

 

PROXY STATEMENT SUMMARY

1

2020 ANNUAL MEETING OF STOCKHOLDERS

1

VOTING MATTERS AND BOARD OF DIRECTOR RECOMMENDATIONS

1

CORPORATE GOVERNANCE

3

 

 

PROXY STATEMENT

4

INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

4

 

 

PROPOSAL 1: ELECTION OF DIRECTORS

7

 

 

CORPORATE GOVERNANCE AND OTHER BOARD MATTERS

17

BOARD COMPOSITION

17

CORPORATE GOVERNANCE GUIDELINES AND OTHER CORPORATE GOVERNANCE DOCUMENTS

17

BOARD OF DIRECTORS INDEPENDENCE

17

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

18

EXECUTIVE SESSIONS OF INDEPENDENT DIRECTORS

18

BOARD OF DIRECTORS RISK OVERSIGHT

18

BOARD OF DIRECTORS LEADERSHIP STRUCTURE

19

COMMUNICATION WITH THE BOARD OF DIRECTORS

20

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

20

SUCCESSION PLANNING

23

CODE OF CONDUCT

23

SUSTAINABILITY

23

COMPENSATION OF DIRECTORS

25

2019 DIRECTOR COMPENSATION TABLE

26

STOCK OWNERSHIP GUIDELINES FOR DIRECTORS

27

OUR EXECUTIVE OFFICERS

27

 

 

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

30

 

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

32

REVIEW AND APPROVAL OF RELATED PERSON TRANSACTIONS

32

RELATED PERSON TRANSACTIONS

32

 

 

AUDIT COMMITTEE REPORT

33

 

 

FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

34

 

 

PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES

35

 

 

COMPENSATION DISCUSSION AND ANALYSIS

36

INTRODUCTION

36

2019 COMPENSATION

39

DETERMINATION OF COMPETITIVE COMPENSATION

40

MIX OF PAY

42

SALARIES

42

ANNUAL INCENTIVE PLAN

43

PROFIT SHARING AMOUNT

45

LONG-TERM INCENTIVES—STOCK OPTIONS

45

PERQUISITES AND CHARITABLE CONTRIBUTIONS

46

2020 COMPENSATION DECISIONS

47


 

STOCK OPTION GRANT PRACTICES

47

STOCK OWNERSHIP, TRADING GUIDELINES AND SHORT SALE, HEDGING AND PLEDGING POLICIES

48

ONGOING AND POST-EMPLOYMENT COMPENSATION

49

SAVINGS AND PROFIT SHARING PLAN FOR SALARIED EMPLOYEES

49

EXECUTIVE DEFERRED COMPENSATION PLAN

49

CHANGE IN CONTROL AND SEVERANCE AGREEMENTS

49

ACCOUNTING AND TAX CONSIDERATIONS

50

SAY-ON-PAY VOTE

50

ROLE OF EXECUTIVE OFFICERS IN DETERMINING EXECUTIVE COMPENSATION FOR NAMED EXECUTIVE OFFICERS

51

ROLE OF THE COMPENSATION & ORGANIZATION COMMITTEE IN EXECUTIVE COMPENSATION

51

ROLE OF INDEPENDENT COMPENSATION CONSULTANT

51

 

 

COMPENSATION & ORGANIZATION COMMITTEE REPORT

52

 

 

2019 SUMMARY COMPENSATION TABLE

53

 

 

2019 GRANTS OF PLAN-BASED AWARDS

54

 

 

2019 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

55

 

 

2019 OPTION EXERCISES AND STOCK VESTED

56

 

 

2019 NONQUALIFIED DEFERRED COMPENSATION

57

 

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

58

CHANGE IN CONTROL AND SEVERANCE AGREEMENTS

58

VESTING PROVISIONS PERTAINING TO STOCK OPTIONS AND RESTRICTED STOCK UPON A CHANGE IN CONTROL

59

TABLE OF BENEFITS UPON TERMINATION EVENTS

59

 

 

CEO PAY RATIO

62

 

 

EQUITY COMPENSATION PLAN INFORMATION AS OF DECEMBER 31, 2019

63

 

 

PROPOSAL 2: ADVISORY VOTE TO APPROVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

64

 

 

PROPOSAL 3: PROPOSAL TO AMEND AND RESTATE THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO GIVE HOLDERS OF 25% OF COMPANY STOCK THE RIGHT TO REQUEST A SPECIAL MEETING

65

 

 

PROPOSAL 4: PROPOSAL TO AMEND AND RESTATE THE COMPANY’S CERTIFICATE OF INCORPORATION TO ELIMINATE CERTAIN SUPERMAJORITY REQUIREMENTS TO AMEND CERTAIN OF ITS PROVISIONS

68

 

 

PROPOSAL 5: PROPOSAL TO AMEND AND RESTATE THE COMPANY’S CERTIFICATE OF INCORPORATION TO MOVE THE ADVANCE NOTICE REQUIREMENTS TO THE COMPANY’S BYLAWS (SUCH REQUIREMENTS TO BE UPDATED)

70

 

 

PROPOSAL 6: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

72

 

 

HOUSEHOLDING OF PROXY MATERIALS

73

 

 

OTHER BUSINESS

74

 

 

STOCKHOLDER PROPOSALS AND NOMINATION OF DIRECTOR CANDIDATES

75

 

 

ANNUAL REPORT AND FORM 10-K

76

 

 

APPENDIX A

77

 

 

APPENDIX B

82

 

 


PROXY STATEMENT SUMMARY

This summary highlights important information you will find in this proxy statement. This summary does not contain all of the information you should consider. You should read the complete proxy statement and our 2019 Annual Report before voting.

In this proxy statement, the words “Church & Dwight,” “Company,” “we,” “our,” “ours,” and “us” and similar terms refer to Church & Dwight Co., Inc. and its consolidated subsidiaries.

2020 ANNUAL MEETING OF STOCKHOLDERS

 

Date and Time:

Thursday, April 30, 2020 at 12:00 p.m., Eastern Daylight Time

 

 

Place:

Church & Dwight Co., Inc.

Princeton South Corporate Park

500 Charles Ewing Boulevard

Ewing, New Jersey 08628

 

 

Directions:

Directions to the Annual Meeting are included at the end of this proxy statement

 

 

Record Date:

March 3, 2020

VOTING MATTERS AND BOARD OF DIRECTORS RECOMMENDATIONS

 

 

 

 

Proposals

Board

Recommendation

Vote

Required

    1.

Election of five nominees to serve as directors for a term of one year each

FOR EACH NOMINEE

Majority of votes cast

    2.

Advisory vote to approve the compensation of our named executive officers

FOR

Majority of votes present
and entitled to vote

    3.

Proposal to amend and restate the Company’s Amended and Restated Certificate of Incorporation to give holders of 25% of Company stock the right to request a special meeting

FOR

Majority of votes outstanding
and entitled to vote

    4.

Proposal to amend and restate the Company’s Amended and Restated Certificate of Incorporation to eliminate certain supermajority voting requirements to amend certain of its provisions

FOR

Two-thirds of votes
outstanding and entitled to
vote

    5.

Proposal to amend and restate the Company’s Amended and Restated Certificate of Incorporation to move certain advance notice requirements to the Company’s Bylaws

FOR

Majority of votes outstanding
and entitled to vote

    6.

Ratification of the Appointment of Deloitte & Touche LLP as our Independent Registered Accounting Firm for 2020

FOR

Majority of votes present
and entitled to vote

 

1


James R. Craigie, Bradley C. Irwin, Penry W. Price, Janet S. Vergis and Arthur B. Winkleblack are the nominees to serve as members of the Company’s Board of Directors (“Board” or “Board of Directors”) until our 2021 Annual Meeting of Stockholders. As previously disclosed, after more than two decades of dedicated service to the Board, Robert D. LeBlanc has decided to retire from the Board as of the close of the Annual Meeting and is not standing for re-election at the Annual Meeting. Upon the recommendation of the Governance & Nominating Committee, the Board has decided that it will temporarily decrease the size of the Board from 10 to nine directors, effective as of the close of the Annual Meeting. The Governance & Nominating Committee is currently conducting a retained search for Mr. LeBlanc’s replacement. When a suitable candidate is identified, we expect that the Board will increase the size of the Board back to 10 directors and the candidate will be elected to the Board by the Board to fill the resulting vacancy. The new director, along with all other Board members, will serve until our 2021 Annual Meeting of Stockholders. Detailed information about all of our directors’ and director nominees’ backgrounds and areas of expertise can be found beginning on page 9.

 

 

 

 

 

 

 

 

 

 

Committees

 

 

 

 

 

 

 

 

Name

Position

Director

Since

Independent

Audit

Compensation

and

Organization

Governance

and

Nominating

Executive

James R. Craigie

Former Chairman and Retired Chief Executive Officer, Church & Dwight Co., Inc.

2007

X

 

 

 

 

 

 

 

 

 

 

 

 

Bradley C. Irwin

Retired President and Chief Executive Officer, Welch Foods, Inc.

2006

X

 

X

X

X

 

 

 

 

 

 

 

 

Penry W. Price

Vice President, Marketing Solutions, LinkedIn Corporation

2011

X

X

X

 

 

 

 

 

 

 

 

 

 

Janet S. Vergis

Executive Advisor for private equity firms

2014

X

X

 

X

 

 

 

 

 

 

 

 

 

Arthur B. Winkleblack

Retired Executive Vice President and Chief Financial Officer of HJ Heinz Company

2008

X

 

Chair

 

X

 

2


CORPORATE GOVERNANCE

We strive to maintain effective corporate governance practices and policies. We believe that the following practices and policies contribute to our strong governance profile:

 

Director

Independence

9 of 10 directors are independent under the NYSE listing standards

3 fully independent Board committees: Audit, Compensation & Organization, and Governance & Nominating

Independent Lead Director presides over executive sessions of the Board and facilitates communication with the independent directors

Board

Accountability

Our directors are subject to “majority voting”, and each incumbent director nominee submits, prior to the Annual Meeting, an irrevocable resignation in writing that our Board of Directors may accept if a majority of stockholders do not re-elect the director in an uncontested election

Board

Leadership

Annual assessment and determination of Board leadership structure

Annual appointment of independent Lead Director when Chairman/Chief Executive Officer (“CEO”) roles are combined or when the Chairman is not independent (or when the Board otherwise determines appropriate)

Lead Director has strong role and significant governance duties, including approval of Board agendas and chairing executive sessions of all independent directors

Board Evaluation

and Effectiveness

Annual Board, Committee, and individual director evaluations

Board

Refreshment

Board members submit resignation letters effective upon the election of their successor following their 72nd birthday (the Board may waive this requirement if in the best interest of stockholders)

Annual review of board succession plans

Director

Engagement

Each director attended at least 75 percent of the aggregate number of meetings held by the Board and all Committees of the Board on which such director served in 2019

Board policy limits director membership to four other public company boards (without the approval of the Governance & Nominating Committee)

Stockholder ability to contact directors (as described beginning on page 20)

Director

Access

Significant interaction with the Company’s senior business leaders through regular business reviews

Directors have direct access to senior management and other employees

Directors have authorization to hire outside experts and consultants and to conduct independent investigations

Proxy Access

Our Bylaws provide for proxy access by stockholders

Removing supermajority

voting for amendments to

governing documents

 

No supermajority requirement for shareholders to amend Bylaws

Proposal to remove supermajority voting for amendments to Amended and Restated Certificate of Incorporation

Clawback and Anti-
Hedging Policies

Clawback policy permits the Company to recoup certain compensation payments and grants, under the Company’s annual incentive plans, to the extent required by law or if otherwise agreed upon with the recipient. Insider trading policy prohibits non-employee directors, and employees from engaging in any pledging, short sales, or hedging involving Company stock

Share

Ownership

CEO is required to hold shares equivalent to 6x base salary

CFO is required to hold shares equivalent to 3x base salary

All other senior executives are required to hold shares equivalent to 2.5x base salary

Directors are required to hold shares equivalent to 5x the standard annual retainer

Compensation Practices

Target compensation opportunities are competitive in markets in which we compete for management talent

Use of short-term and long-term incentives ensure a strong connection between Company performance and actual compensation realized

No excise tax gross-ups for change-in-control payments

Our named executive officers will not receive cash severance, nor will equity granted after July 30, 2019 vest in the event of a change-in-control unless accompanied by a qualifying termination of the named executive officer

No defined pension benefit plan or similarly actuarially valued pension plan for executives

Limited perquisites

Repricing of stock options is prohibited without prior stockholder approval

Our Annual Incentive Plan utilizes four diverse metrics to avoid over-emphasis on any one measure

 

3


CHURCH & DWIGHT CO., INC.

Princeton South Corporate Park, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628

(609) 806-1200

PROXY STATEMENT

INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

This proxy statement is furnished in connection with the solicitation of proxies by our Board for use at the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on April 30, 2020 and at any adjournments thereof.

Who Can Vote

Each holder of record of our common stock at the close of business on March 3, 2020 is entitled to vote at the Annual Meeting. At the close of business on March 3, 2020, there were 245,776,372 shares of our common stock outstanding.

Distribution of Proxy Solicitation and Other Required Annual Meeting Materials

The rules of the Securities and Exchange Commission (“SEC”) allow us to mail a notice to our stockholders advising that our proxy statement, annual report to stockholders, electronic proxy card, and related materials are available for viewing, free of charge, on the Internet. These rules give us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and postage. Stockholders may access these materials and vote over the Internet or by telephone or request delivery of a full set of materials by mail or email. We have elected to utilize this process for the Annual Meeting. We began mailing the required notice, called a Notice Regarding Availability of Proxy Materials (“Notice”), to stockholders on or about March 20, 2020. The proxy materials have been posted on the Internet, at https://materials.proxyvote.com/171340. If you received a Notice by mail, you will not receive a paper or email copy of the proxy materials unless you request one in the manner set forth in the Notice.

How You Can Vote

You may vote by any of the following methods:

 

In person.    Stockholders of record and beneficial stockholders with shares held in street name (held in the name of a broker or other nominee) may vote in person at the Annual Meeting. If you hold shares in street name, you must obtain a legal proxy from your broker or other nominee to vote in person at the Annual Meeting.

 

By telephone or via the Internet.    You may vote by proxy, either by telephone or via the Internet, by following the instructions provided in the Notice, proxy card, or voting instruction card.

 

By mail.    If you request printed copies of the proxy materials by mail, you may vote by proxy by signing and returning the proxy card or voting instruction card.

If you vote by telephone or via the Internet, please have your Notice or proxy card available. The control number appearing on your Notice or proxy card is necessary to process your vote. A telephone or Internet vote authorizes the named proxies in the same manner as if you marked, signed, and returned a proxy card by mail.

How You May Revoke or Change Your Vote

You have the power to change or revoke your proxy at any time before it is voted at the Annual Meeting as follows:

 

Stockholders of record.    You may change or revoke your vote by submitting a written notice of change or revocation to our Secretary at the address listed above or by submitting another timely vote (including a vote via the Internet or by telephone). For all methods of voting, the last vote cast will supersede all previous votes.

 

Beneficial owners.    You may change or revoke your voting instructions by following the specific directions provided to you by your bank or broker.

4


 

Savings and Profit Sharing Plan participants.    You may change or revoke your voting instructions by April 27, 2020, by either revising your instructions via the Internet, by telephone, or by submitting to the trustee of the Savings and Profit Sharing Plan either a written notice of revocation or a properly completed and signed proxy card bearing a later date.

Required Vote

You are entitled to cast one vote for each share of common stock you own on March 3, 2020, the record date. The presence, in person or by proxy, of a majority of the votes entitled to be cast at the Annual Meeting constitutes a quorum. Abstentions and broker “non-votes” are counted as present and entitled to vote for purposes of determining a quorum. A broker “non-vote” occurs when a broker does not vote on a particular proposal because the broker does not have discretionary voting power with respect to the proposal and has not received voting instructions from the beneficial owner.

Our Bylaws provide for majority voting in uncontested director elections. As a result, at the Annual Meeting, directors will be elected by the affirmative vote of a majority of the votes cast (in person or by proxy) in an uncontested election. For this purpose, a majority of the votes cast means that the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee. Abstentions and broker “non-votes” are not counted as votes for or against a nominee. If you “abstain” from voting with respect to director nominees, your shares will be counted for purposes of a quorum but will have no effect on the election of the nominees. All of our director nominees are currently serving on our Board of Directors. If a nominee who is currently serving as a director is not re-elected, Delaware law provides that the director would continue to serve on our Board of Directors as a “holdover director.” Under our Corporate Governance Guidelines (“Corporate Governance Guidelines”), each incumbent director nominee submits, prior to the Annual Meeting, a contingent resignation that our Board of Directors may accept if stockholders do not re-elect the director. If a director is not re-elected by our stockholders, the Governance & Nominating Committee would make a recommendation to our Board of Directors on whether to accept or reject the resignation of that director, or whether to take other action. Our Board of Directors would act on the resignation, taking into account the Governance & Nominating Committee’s recommendation, and publicly disclose its decision and the rationale behind it within 90 days from the date that the election results are certified.

Our proposal to amend and restate our Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) for purposes of giving holders of 25% of Company stock the right to request a special meeting requires the affirmative vote of the majority of our outstanding shares of common stock entitled to vote at the Annual Meeting.  Our proposal to amend and restate our Certificate of Incorporation to eliminate certain supermajority voting requirements to amend certain of its provisions requires the affirmative vote of two-thirds or more of our outstanding shares of common stock entitled to vote at the Annual Meeting (meaning that of the outstanding shares of common stock, two-thirds of them must be voted “for” the proposal for it to be approved).  Our proposal to amend and restate the Certificate of Incorporation to move certain advance requirements with respect to director nominees and other proposals submitted by stockholders to the Company’s Bylaws (“Bylaws”) requires the affirmative vote of the majority of our outstanding shares of common stock entitled to vote at the Annual Meeting.  Brokers will not have discretionary voting authority to vote on these proposals, and abstentions and broker “non-votes” will have the same effect as a vote against these proposals.  Any other matters that may be acted upon at the Annual Meeting will be determined by the affirmative vote of the majority of votes represented at the meeting (in person or by proxy) and entitled to vote on the matter. An abstention will have the same effect as a vote against with respect to the advisory vote on the compensation of our named executive officers and the ratification of our independent registered public accounting firm for 2020. Brokers will not have discretionary authority to vote on the election of our directors or the advisory vote on the compensation of our named executive officers, and a broker “non-vote” is not counted for purposes of voting on these matters.

How Shares Will be Voted

Stockholders of record.    If you are a stockholder of record and you:

 

indicate when voting via the Internet or by telephone that you wish to vote as recommended by our Board of Directors, or

 

sign and return a proxy card without giving specific voting instructions,

then the proxy holders will vote your shares FOR the election of the nominees described in this proxy statement, FOR the compensation of our named executive officers, FOR the amendment of our Certificate of Incorporation to provide stockholders the right to request a special meeting, FOR the amendment of our Certificate of Incorporation to eliminate certain supermajority voting requirements, FOR the amendment of our Certificate of Incorporation to move certain advance notice requirements to the Company’s Bylaws and FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2020.

5


Beneficial owners.    If you hold shares in street name (in the name of a broker or other nominee), you must give instructions to your bank or broker on how you would like your shares to be voted. Under applicable New York Stock Exchange (“NYSE”) rules, your bank or broker has discretion to vote on “routine” matters, such as the ratification of the appointment of an independent registered public accounting firm, but does not have discretion to vote on “non-routine” matters, such as the election of directors, the proposal to approve the compensation of our named executive officers, or the proposals to amend our Certificate of Incorporation. Thus, if a bank or broker holds your shares and you do not instruct the bank or broker how to vote on the election of directors, on the proposal related to the advisory vote on compensation of our named executive officers, or on the proposals to amend our Certificate of Incorporation, no votes will be cast on your behalf.

Savings and Profit Sharing Plan participants.    If you participate in the Church & Dwight Co., Inc. Savings and Profit Sharing Plan for Salaried Employees or the Church & Dwight Co., Inc. Savings and Profit Sharing Plan for Hourly Employees (the “Plans”), you may have voting rights regarding shares of our common stock credited to your account in the Plans. In order to permit the trustee to tally and vote the shares held in the Plans (“Plan Shares”), your instructions, whether by Internet, by telephone, or by proxy card, must be submitted on or prior to April 27, 2020. If you do not instruct the trustee how to vote, your Plan Shares will be voted by the trustee in the same proportion that it votes Plan Shares for those accounts in the Plans for which it did receive timely voting instructions. The proportional voting policy is detailed under the terms of the Plans and the associated trust agreements.

Other matters.    Our Board of Directors is not aware of any matters that will be brought before the Annual Meeting other than those described in this proxy statement. However, if any other matters properly come before the Annual Meeting, the persons named on the enclosed proxy card will vote in their discretion on such matters.

Who can attend the Annual Meeting

Only stockholders as of the record date, March 3, 2020, or duly appointed proxies, may attend the Annual Meeting. No guests will be allowed to attend the Annual Meeting.

What do I need to attend the Annual Meeting and when should I arrive

The Annual Meeting will be held at Church & Dwight’s Headquarters, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628. Admission to the Annual Meeting will begin at 11:00 a.m., Eastern Daylight Time.

In order to be admitted to the Annual Meeting, you should:

 

arrive shortly after 11:00 a.m., Eastern Daylight Time, to ensure that you are seated by the commencement of the Annual Meeting at 12:00 p.m., Eastern Daylight Time;

 

be prepared to comply with security requirements, which may include security guards searching all bags, among other security measures;

 

 

leave your camera at home because cameras, transmission, broadcasting, and other recording devices will not be permitted in the meeting room (and we will ask that smart phones be turned off during the meeting); and

 

bring photo identification, such as a driver’s license, and proof of ownership of our common stock on the record date, March 3, 2020. If you are a holder of record, the top half of your proxy card or your Notice of Availability is your admission ticket. If you hold your shares in street name, a recent brokerage statement or a letter from your bank, broker, trustee, or other nominee are examples of proof of ownership. If you want to vote your shares held in street name in person, you must get a legal proxy in your name from the broker, bank, trustee, or other nominee that holds your shares of common stock.

Any holder of a proxy from a stockholder must present a properly executed legal proxy and a copy of the proof of ownership.

If you do not provide photo identification and comply with the other procedures outlined above for attending the Annual Meeting in person, you will not be admitted to the Annual Meeting.

Costs of Solicitation

Solicitation of proxies on our behalf may be made by our directors or employees by mail, in person, and by telephone. Directors and employees will not be paid any additional compensation for soliciting proxies. We have retained D.F. King & Co., Inc. (“D.F. King”) to aid in the solicitation of proxies for a fee estimated not to exceed $7,500 plus out-of-pocket expenses. We will pay all costs of the solicitation and will indemnify D.F. King against liabilities relating to or arising from their proxy solicitation services conducted on our behalf, other than those resulting from D.F. King’s willful misconduct or gross negligence. We also will reimburse banks, brokerage houses, and other custodians, nominees, and fiduciaries for forwarding Notices and proxy materials to beneficial owners.

 

6


PROPOSAL 1: ELECTION OF DIRECTORS

Our Certificate of Incorporation has historically provided for the division of our Board of Directors into three classes, with the directors in each class serving for a term of three years. At our 2018 Annual Meeting, our stockholders approved, and the Company adopted, an amendment to our Certificate of Incorporation to provide for the phased-in transition to the annual election of our Board of Directors. This year, five directors will stand for election for one-year terms on our Board of Directors. In 2021 all directors will stand for election for one-year terms. Our Board of Directors currently consists of 10 members. As previously disclosed, after more than two decades of dedicated service to the Board, Robert D. LeBlanc has decided to retire from the Board as of the close of the Annual Meeting and is not standing for re-election at the Annual Meeting. Upon the recommendation of the Governance & Nominating Committee, the Board has decided that it will temporarily decrease the size of the Board from 10 to nine directors, effective as of the close of the Annual Meeting. The Governance & Nominating Committee is currently conducting a retained search for Mr. LeBlanc’s replacement. When a suitable candidate is identified, we expect that the Board will increase the size of the Board back to 10 directors and the candidate will be elected to the Board by the Board to fill the resulting vacancy. The new director, along with all other Board members, will serve until our 2021 Annual Meeting of Stockholders. The current terms of four of our directors not up for election at this year’s Annual Meeting expire in 2021.

 

At the Annual Meeting, five directors will be elected to serve until the 2021 Annual Meeting, in each case, until their successors are elected and qualified. Our Board of Directors has nominated James R. Craigie, Bradley C. Irwin, Penry W. Price, Janet S. Vergis, and Arthur B. Winkleblack, all of whom currently serve as members of our Board of Directors. All nominees have agreed to be named in this proxy statement and to serve if elected.

SKILLS AND QUALIFICATIONS OF OUR BOARD OF DIRECTORS

Our Board of Directors, with support and recommendations from the Governance & Nominating Committee, oversees the composition and succession of its members. To this end, at least once a year, in connection with the Board’s annual evaluation, itself, its committees, and each director, each director’s performance, skills, qualifications and future plans, including any retirement objectives, are evaluated. As part of that evaluation, our Governance & Nominating Committee identifies areas of overall strength and opportunities for improvement with respect to the Board’s and its committees’ composition.

Our directors, including our director nominees, possess relevant experience, skills and qualifications that contribute to a well-functioning board. Our Corporate Governance Guidelines provide that the Board should consider whether individual directors possess the following personal characteristics: integrity, education, commitment to the Board, business judgment, business experience, accounting and financial expertise, diversity (which may include differences of viewpoint, professional experience, education, skills, race, gender, national origin or other individual qualities and attributes that contribute to board heterogeneity), reputation, civic and community relationships, high performance standards and the ability to act on behalf of stockholders.  Additionally, the skills and characteristics that the Board seeks in evaluating the composition of the Board, and which inform Board succession planning and director nomination processes, as well as the individual experiences, skills and characteristics of our Board members are highlighted in the following matrix:

 

7


 

Accounting + Finance

 

Senior Management

3.6

 

 

4.8

 

 

 

 

 

 

M&A/Business Development

 

Risk Management

4.5

 

 

3.7

 

 

 

 

 

 

CPG Industry

 

Cybersecurity/information technology

4.0

 

 

3.8

 

 

 

 

 

 

R&D/Innovation

 

Disruptive Innovation

3.5

 

 

3.6

 

 

 

 

 

 

Traditional Marketing & Sales

 

Strategy Development

4.5

 

 

4.8

 

 

 

 

 

 

Public Company Governance

 

International

3.9

 

 

3.8

 

 

 

 

 

 

Supply chain

 

Digital Marketing & Sales

3.6

 

 

3.4

 

 

 

 

 

 

Compensation/Human Resources

 

 

 

4.0

 

 

 

 

 

 

 

 

The rating for each skill presented above represents the average of self-ratings for all directors, expressed on a scale of 1 to 5, with the score for each director corresponding to the following ratings:

 

RATING KEY

1

Has insufficient experience and understanding

2

Has some knowledge and experience

3

Can hold their own with proper briefing

4

Has strong knowledge and experience

5

This is a top personal strength and core competency

 

 

The rating for each skill presented above is intended as a summary and is not an exhaustive list of the qualifications or contributions to the Board. Further biographical information about our directors, including our director nominees, is set forth below.

The Governance & Nominating Committee and our Board of Directors believe that the nominees listed below and the directors continuing in office collectively possess these attributes, which, together with their respective experience

8


described in the biographical summaries below, make each nominee or director, as applicable, well qualified to serve on our Board of Directors.

We do not anticipate that any of the nominees will become unavailable to serve as a director for any reason. However, if any of them becomes unavailable, the persons named in the enclosed form of proxy will vote for any substitute nominee designated by our Board of Directors, unless our Board of Directors determines to reduce the number of directors in the relevant class.

 

Your Board of Directors unanimously recommends a vote FOR all of the following nominees.

Information concerning the nominees and continuing members of our Board of Directors is provided below:

 

Standing for Election for Term Expiring in 2021

 

 

 

JAMES R. CRAIGIE

 

 

 

Director since 2004

Independent

Age: 66

 

 

Professional Experience

Mr. Craigie was our non-executive Chairman from January 2016 to May 2019. From May 2007 to January 2016, he was our Chairman and Chief Executive Officer. From July 2004 through May 2007, he was our President and Chief Executive Officer. From December 1998 through September 2003, he was President and Chief Executive Officer and a member of the Board of Directors of Spalding Sports Worldwide and its successor, Top-Flite Golf Co. From 1983 to November 1998, Mr. Craigie held various senior management positions with Kraft Foods Inc. Prior to entering private industry, he served for six years as an officer in the U.S. Navy.

Other Boards and Appointments

Mr. Craigie currently serves as a member of the Boards of Directors of Bloomin’ Brands, Inc., a casual dining company, Newell Brands, a leading global consumer goods company, and the New York Regional Board of UNICEF and is an Advisory Board member of Cove Hill Partners, LLC. From November 2006 to May 2014, he was a member of the Board of Directors of Meredith Corporation, a media and marketing company and from September 2013 to December 2017, Mr. Craigie was a member of the Board of Directors of TerraVia Holdings, Inc., a renewable oil and bioproducts company.

Director Qualifications

Mr. Craigie’s intimate knowledge of our Company, gained through over 10 years of service as our Chief Executive Officer, enables him to provide important insights regarding our operations, including finance, marketing, strategic planning, and senior management personnel matters. In addition, his leadership in connection with several of our acquisitions and dispositions, together with his stewardship over the sale of several businesses at Spalding Sports Worldwide, underscore his strong ability to evaluate business combination and disposition opportunities. Mr. Craigie’s experience as a member of other public company boards and their committees enables him to provide valuable insights into our corporate governance and risk management.

9


 

 

 

BRADLEY C. IRWIN

 

 

 

Lead Director since 2020

Director since 2006

Independent

Age: 61

 

   Compensation & Organization   Committee

   Governance & Nominating Committee

   Executive Committee

  

 

 

Professional Experience

Mr. Irwin retired in December 2018 as President and Chief Executive Officer of Welch Foods Inc., a global processor and marketer of juices and jams, where he served in that capacity since February 2009. Mr. Irwin was President of Cadbury Adams North America LLC, the North American confectionery business unit of Cadbury Schweppes plc. (“Cadbury Schweppes”), from June 2007 through November 2008. From April 2003 through June 2007, Mr. Irwin was President of Cadbury Adams USA LLC, the United States confectionery business unit of Cadbury Schweppes. Mr. Irwin served as President of Mott’s Inc., a business unit of Cadbury Schweppes, from May 2000 through April 2003. From 1980 through 1999, Mr. Irwin served in various capacities for The Procter & Gamble Company.

Director Qualifications

Mr. Irwin’s more than 30 years of experience in the consumer products industry, including his service in executive capacities at large multinational public companies that market products in the same categories as some of our products, enables him to provide valuable insights into a wide variety of matters relating to our operations. These matters include, among others, strategic planning, risk assessment, and international operations.

10


 

 

 

 

PENRY W. PRICE

 

 

 

Director since 2011

Independent

Age: 51

 

   Audit Committee

   Compensation & Organization Committee

 

 

Professional Experience

Mr. Price has been the Vice President, Marketing Solutions of LinkedIn Corporation (a subsidiary of Microsoft Corporation) since October 2013. From June 2011 through October 2013, he was President of Dstillery, Inc., a marketing technology company formerly known as Media6Degrees, LLC. From June 2004 through June 2011, he served in various capacities at Google, Inc., a provider of Internet-related products and services, the last of which was Vice President, Agency Sales and Partnerships, Worldwide. From July 2000 through June 2004, Mr. Price served as Sales Director of Wenner Media, LLC, a company engaged in the publication of magazines and production of radio and television programs, where he was principally responsible for revenue generation and strategic partnerships.

Other Boards and Appointments

Mr. Price was a member of the Board of Directors of Dstillery, Inc. from September 2013 until September 2014.

Director Qualifications

Mr. Price’s extensive experience as a senior executive in companies specializing in digital marketing, advertising, and social networks enables him to provide valuable perspectives on our marketing initiatives and strategies, including the use of social media and digital technology to reach new consumers.

 

 

 

JANET S. VERGIS

 

 

 

Director since 2014

Independent

Age: 55

 

   Audit Committee

   Governance & Nominating Committee

 

 

Professional Experience

Ms. Vergis served as an Executive Advisor for private equity firms from January 2013 to December 2019, where she identified and evaluated healthcare investment opportunities. From January 2011 to August 2012, she was the Chief Executive Officer of OraPharma, Inc., a specialty pharmaceutical company dedicated to oral health, where she led that company’s successful turnaround and its subsequent sale. From 2004 to 2009, Ms. Vergis served as President of Janssen Pharmaceuticals, McNeil Pediatrics and Ortho-McNeil Neurologics. From 1988 to 2004, she served in various positions of increasing responsibility in executive leadership, research and development, new product development, sales, and marketing with Johnson & Johnson and its subsidiaries.

11


Other Boards and Appointments

Ms. Vergis is currently a member of the Board of Directors of MedDay Pharmaceuticals, a biotechnology company that develops drugs for nervous system disorders and Dentsply Sirona, the world’s largest manufacturer of professional dental solutions. She was also a member of the Board of Directors of OraPharma, Inc., Lumara Health, and Amneal Pharmaceuticals, Inc. from 2011 to 2012, 2013 to 2014 and 2015 to 2019, respectively.

Director Qualifications

Ms. Vergis’ more than 30 years of pharmaceutical leadership experience, together with her extensive background in research and development, new product development (including products regulated by the U.S. Food and Drug Administration), sales, and marketing, combined with her focus in the areas of oral health and women’s health, enable her to provide important perspectives to our Board of Directors on a range of matters relating to our operations.

 

 

 

ARTHUR B. WINKLEBLACK

 

 

 

Director since 2008

Independent

Age: 62

 

   Chair, Compensation &   Organization Committee

   Executive Committee

 

 

Professional Experience

Mr. Winkleblack retired in June 2013 as Executive Vice President and Chief Financial Officer of the HJ Heinz Company, a global packaged food manufacturer, where he had served in such capacity since January 2002. From 1999 through 2001, Mr. Winkleblack was Acting Chief Operating Officer, Perform.com, and Chief Executive Officer, Freeride.com, at Indigo Capital. Earlier in his career, Mr. Winkleblack held senior finance positions at the C. Dean Metropoulos Group, Six Flags Entertainment Corporation, AlliedSignal, Inc., and PepsiCo, Inc. Mr. Winkleblack also provided financial and capital markets consulting services to Ritchie Brothers Auctioneers (“RBA”), an industrial auctioneer, from 2014 to 2019. He served as the Senior Advisor to RBA’s CEO, Ravichandra K. Saligram, who also serves on our Board of Directors.

 

Other Boards and Appointments

Mr. Winkleblack currently serves as a member of the Board of Directors of The Wendy’s Company, a global quick service restaurant company and Aramark, a global provider of food, facility and uniform services. He was a member of the Board of Directors of RTI International Metals, Inc., an NYSE-listed company specializing in advanced titanium products for the aerospace, defense and medical device markets and Performance Food Group, a company specializing in the distribution of food and food-related products to customers throughout the United States, from 2013 to 2015 and 2015 to 2019, respectively.

 

Director Qualifications

Mr. Winkleblack’s substantial executive experience across a broad range of industries enables him to provide our Board of Directors with knowledgeable perspectives on strategic planning, international operations, and mergers and acquisitions. In addition, his nearly 12 years of experience as the Chief Financial Officer of a large, multinational, consumer goods company enables him to bring important perspectives to our Board of Directors on performance management, business analytics, finance and capital structure, compliance, information technology, risk management, public company reporting, and investor relations.

12


Continuing Directors

 

Current Term Expires in 2021

 

 

 

MATTHEW T. FARRELL

 

 

 

Chairman since 2019

Director since 2016

Non-Independent

Age: 63

 

   Executive Committee

 

 

Professional Experience

Mr. Farrell has been our Chairman since May 2019 and President and Chief Executive Officer since January 2016. From November 2014 to December 2015, he was our Executive Vice President, Chief Operating Officer, and Chief Financial Officer, prior to which he served as our Executive Vice President, Finance and Chief Financial Officer since May 2007. From September 2006 through May 2007, he was our Vice President and Chief Financial Officer. Mr. Farrell was Executive Vice President and Chief Financial Officer of Alpharma Inc. from April 2002 through August 2006. From July 2000 through April 2002, he served as Vice President, Investor Relations & Communications at Ingersoll-Rand Ltd. From November 1994 through June 2000, he held various senior financial positions at AlliedSignal Inc.

Other Boards and Appointments

Mr. Farrell currently serves as a member of the Board of Directors of Lydall, Inc., a supplier of engineered thermal, acoustical, and filtration products.

 

Director Qualifications

Mr. Farrell’s intimate knowledge of our Company, gained through over 13 years of executive service as our Chief Executive Officer, Chief Operating Officer or Chief Financial Officer, combined with his four years of experience as the Chief Financial Officer of a pharmaceutical company and many years of experience in other finance and investor relations roles at large multinational companies, enable him to provide important insights and leadership to us and our Board of Directors regarding our operations, including marketing, strategic planning, mergers and acquisitions, finance and capital structure, performance management, business analytics, compliance, risk management, public company reporting and governance, and investor relations.

13


 

 

 

RAVICHANDRA K. SALIGRAM

 

 

 

Director since 2006

Independent

Age: 63

 

   Chair, Governance & Nominating

     Committee

   Executive Committee

 

 

Professional Experience

Mr. Saligram has been the President and Chief Executive Officer and a member of the Board of Directors of Newell Brands, a leading global consumer goods company, since October 2019. Prior to that, Mr. Saligram was the Chief Executive Officer and a member of the Board of Directors of Ritchie Bros. Auctioneers Incorporated, the world’s largest industrial equipment auctioneer, since July 2014. From November 2010 through November 2013, he served as the Chief Executive Officer, President, and a member of the Board of Directors of OfficeMax Incorporated, a company engaged in business-to-business and retail office products distribution. From 2003 through November 2010, he served in various executive management positions with ARAMARK Corporation, a global food services company, including Executive Vice President, President, ARAMARK International, and Chief Globalization Officer, and Senior Vice President of ARAMARK Corporation. From 1994 through 2002, Mr. Saligram served in various capacities for the InterContinental Hotels Group, a global hospitality company, including as President of Brands & Franchise, North America, Chief Marketing Officer & Managing Director, Global Strategy, President, International and President, Asia Pacific. Earlier in his career, Mr. Saligram held various general and brand management positions with S. C. Johnson & Son, Inc. in the United States and overseas.

Director Qualifications

Mr. Saligram’s extensive experience building businesses and brands in the industrial products, office products distribution, consumer packaged goods, hospitality, and consumer and managed services industries and leadership over operational teams in a large number of countries, enable him to provide our Board of Directors with a valuable global perspective on governance and control matters, as well as on strategic planning and risk assessment.

14


 

 

 

 

ROBERT K. SHEARER

 

 

 

Director since 2008

Independent

Age: 68

 

   Chair, Audit Committee

   Executive Committee

 

Professional Experience

Mr. Shearer retired in March 2015 as Senior Vice President and Chief Financial Officer of VF Corporation, a global lifestyle apparel company, where he served in that capacity since May 2005. He also served VF Corporation in several other capacities since 1986, including Vice President, Finance and Chief Financial Officer from July 1998 to May 2005. Earlier in his career, Mr. Shearer held a senior audit position with Ernst & Young LLP.

Other Boards and Appointments

Mr. Shearer currently serves on the Board of Directors of YETI Holdings, Inc., a designer, marketer, retailer, and distributor of a variety of innovative, branded, premium products to a wide-ranging customer base and Kontoor Brands, Inc. a global lifestyle apparel company. From May 2015 through April 2016, Mr. Shearer served as a member of the Board of Directors of The Fresh Market, Inc., a specialty grocery retailer.

Director Qualifications

Mr. Shearer’s recent role as Chief Financial Officer of VF Corporation, coupled with his 12 years of experience in public accounting, enables him to provide our Board of Directors and the Audit Committee with important insights on a range of financial and internal control matters, as well as on matters relating to capital structure, information systems, risk management, public reporting and investor relations. In addition, his participation in VF Corporation expansion initiatives, including a number of acquisitions and growth in international markets, enables him to provide important insights on international operations, business combination opportunities, and strategic planning.

15


 

 

 

LAURIE J. YOLER

 

 

 

Director since 2018

Independent

Age: 55

 

   Governance & Nominating Committee

   Compensation & Organization Committee

 

Professional Experience

Ms. Yoler is a General Partner at Playground Gobal, a technology venture capital firm in Silicon Valley.  She was the Senior Vice President, Business Development of Qualcomm, Inc. and President, Qualcomm Labs, a wholly-owned subsidiary of Qualcomm, Inc., from March 2013 to January 2016, driving internal innovation and exploring opportunities for new businesses, strategic partnerships, acquisitions, investments, and divestitures. From February 2006 to March 2013, Ms. Yoler was a partner and Managing Director at GrowthPoint Technology Partners, a Silicon Valley based investment bank. From September 2004 to July 2005, Ms. Yoler served as Chief Development Officer of Intellectual Ventures LLC, a private equity firm. From March 2001 to September 2004 Ms. Yoler was Vice President, Business Development and Marketing at Packet Design and Precision I/O, two early-stage technology firms. Prior to that, Ms. Yoler was an integral part of the development and launch of many new innovations and products in her roles at Visa Inc., Sun Microsystems, Accenture PLC and PricewaterhouseCoopers.

Other Boards and Appointments

Ms. Yoler serves on the Board of Directors of Bose Corporation, a company that designs, develops and sells audio equipment. In addition, since January 2016, Ms. Yoler has served as a board member and strategic advisor in the technology industry, and currently serves as a member of the boards of directors of two privately held technology companies, Zoox Inc. and Leaf Logistics. From 2003 to 2008, Ms. Yoler was a founding member of the Board of Directors of Tesla, Inc., a company that designs, develops, manufactures and sells electric vehicles and advanced electric vehicle powertrain components. Ms. Yoler served on Tesla’s Advisory Board from 2008 until 2013.

Director Qualifications

Ms. Yoler’s extensive experience in the technology industry, spanning strategy, product, corporate development, global sales and marketing, mergers and acquisitions and business development, enables her to provide valuable insights into a wide variety of matters relating to marketing, business development, international operations and technology.

 

16


CORPORATE GOVERNANCE AND OTHER BOARD MATTERS

BOARD COMPOSITION

Our Board of Directors is currently comprised of James R. Craigie, Matthew T. Farrell, Bradley C. Irwin, Robert D. LeBlanc, Penry W. Price, Ravichandra K. Saligram, Robert K. Shearer, Janet S. Vergis, Arthur B. Winkleblack, and Laurie J. Yoler. As previously disclosed, after more than two decades of dedicated service to the Board, Robert D. LeBlanc has decided to retire from the Board as of the close of the Annual Meeting and is not standing for re-election at the Annual Meeting. Upon the recommendation of the Governance & Nominating Committee, the Board has decided that it will temporarily decrease the size of the Board from 10 to nine directors, effective as of the close of the Annual Meeting. The Governance & Nominating Committee is currently conducting a retained search for Mr. LeBlanc’s replacement. When a suitable candidate is identified, we expect that the Board will increase the size of the Board back to 10 directors and the candidate will be elected to the Board by the Board to fill the resulting vacancy. The new director, along with all other Board members, will serve until our 2021 Annual Meeting of Stockholders.

CORPORATE GOVERNANCE GUIDELINES AND OTHER CORPORATE GOVERNANCE DOCUMENTS

Our Corporate Governance Guidelines, including guidelines for the determination of director independence, the responsibilities and duties of our Board of Directors, director access to management and independent advisors, director compensation, the committees of our Board of Directors, and other matters relating to our corporate governance, are available on the “Investors” page of our website, www.churchdwight.com. Also available on the “Investors” page are other corporate governance documents, including our Code of Conduct (“Code of Conduct”) and the Charters of the Audit Committee, Compensation & Organization Committee, and Governance & Nominating Committee.

Our website is not part of this proxy statement; references to our website address in this proxy statement are intended to be inactive textual references only.

BOARD OF DIRECTORS INDEPENDENCE

Our Corporate Governance Guidelines provide that a majority of our Board of Directors shall consist of independent directors who meet the criteria for independence required by the NYSE listing standards. A director will be considered independent if our Board of Directors affirmatively determines that the director has no material relationship with us (directly, or as a partner, stockholder, or officer of an organization that has a relationship with us). In assessing the materiality of a relationship, our Board of Directors considers all relevant facts and circumstances. In addition to the independence standards established by the NYSE, we have adopted categorical standards under the Corporate Governance Guidelines designed to assist our Board of Directors in assessing independence. Under these standards, none of the following relationships necessarily disqualifies a director or nominee from being considered “independent”:

 

A director’s or a director’s immediate family member’s ownership of five percent or less of the equity of an organization that has a relationship with us,

 

A director’s service as an executive officer of or employment by, or a director’s immediate family member’s service as an executive officer of, a company that makes payments to or receives payments from us for property or services in an amount which, in any of the last three fiscal years, is less than the greater of $1 million or two percent of such other company’s consolidated gross revenues, or

 

A director’s service as an executive officer of a charitable organization that received annual contributions from the Company that have not exceeded the greater of $1 million or two percent of such charitable organization’s annual gross revenues in any of such charitable organization’s last three fiscal years.

Our Board of Directors reviewed and analyzed the independence of each director and each nominee for director in January 2020 to determine whether any particular relationship or transaction involving any director, or any director’s affiliates or immediate family members, was inconsistent with a determination that the director is independent for purposes of serving on our Board of Directors and its committees. During this review, our Board examined transactions and relationships between directors or their affiliates and family members and Church & Dwight. As a result of this review, in January 2020, our Board affirmatively determined that each of James R. Craigie, Bradley C. Irwin, Robert D. LeBlanc, Penry W. Price, Ravichandra K. Saligram, Robert K. Shearer, Janet S. Vergis, Arthur B. Winkleblack, and Laurie J. Yoler, is independent within the meaning of the NYSE listing standards and under the categorical standards described in the Corporate Governance Guidelines. Until January of 2019, our Board had determined that Mr. Craigie was not “independent,” under the NYSE listing standards given his prior role as our Chief Executive Officer, which ended upon his retirement in January 2016.

17


Our Board of Directors has further determined that each of the members of the Audit Committee, Compensation & Organization Committee, and Governance & Nominating Committee is independent within the meaning of the NYSE listing standards, and that the members of the Audit Committee and the Compensation & Organization Committee meet the additional independence requirements of the NYSE listing standards applicable to audit committee members and compensation committee members, respectively.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the directors who served on the Compensation & Organization Committee in fiscal year 2019 has ever served as one of our officers or employees. In addition, none of the directors who served on the Compensation & Organization Committee had any relationship with us or any of our subsidiaries during fiscal year 2019 pursuant to which disclosure would be required under applicable rules and regulations of the SEC pertaining to the disclosure of transactions with related persons. During fiscal year 2019, none of our executive officers served as a member of the compensation committee (or other committee performing similar functions or, in the absence of any such committee, the entire board of directors), of any other entity of which an executive officer of such other entity served on our Board of Directors or the Compensation & Organization Committee.

EXECUTIVE SESSIONS OF INDEPENDENT DIRECTORS

Our Board of Directors meets in regularly scheduled executive sessions without any members of our management, including the CEO, present. The Lead Director, currently Mr. Irwin, is responsible for chairing the executive sessions of our Board of Directors. In addition, each of the Compensation & Organization, Governance & Nominating and Audit Committees regularly meet alone in scheduled executive sessions without any members of our management, including the CEO, present.

BOARD OF DIRECTORS RISK OVERSIGHT

Our Board of Directors, acting principally through the Audit Committee, is actively involved in the oversight of the significant risks affecting our business. Our Board of Directors’ and the Audit Committee’s risk oversight activities are focused on management’s risk assessment and management processes, as well as on our ethics and compliance program.

Our Internal Audit department administers a vigorous risk assessment effort every other year, in collaboration with all of our directors and executive officers. This process is designed to identify and rank the most significant risks that affect our Company, including consideration of a large number of risks associated with companies in the consumer products industry. The assessed risks encompass, among others, economic, industry, enterprise, operational, cybersecurity, data privacy, compliance, sustainability and financial risks. Our President and Chief Executive Officer assigns an executive officer to lead the management of each of those risks identified as among the most significant. As part of the risk management process, our Internal Audit department annually prepares an Internal Audit project plan under which it reviews activities directed to mitigate business and financial related risks. This plan is subject to Audit Committee approval.

Our Director, Internal Audit (“Internal Audit Director”) meets quarterly with our executive officers to assess any changes in the magnitude of identified risks, as well as the status of mitigation activities with regard to the most significant risks. Our Internal Audit Director reports directly to the Audit Committee and advises the Audit Committee on a quarterly basis regarding management’s risk assessment process and the progress of mitigation activities designed to facilitate the maintenance of risk within acceptable levels. The Audit Committee, in turn, reports to our Board of Directors with regard to these matters on a quarterly basis. Our Board of Directors also receives quarterly updates on cybersecurity risks from our Vice President, Global IT.

Our Executive Vice President and General Counsel leads our ethics and compliance risk oversight program through the Compliance Council, which is comprised of various functional representatives and compliance subject matter experts. The Compliance Council meets regularly to review the health of the program, opportunities for improvement, and the status of execution against agreed program priorities. Our Executive Vice President and General Counsel also meets regularly with the Audit Committee, either alone or together with subject matter experts from the Compliance Council, to review the health of our compliance and ethics program, its priorities, and the status of execution against those priorities. Annually, our Executive Vice President and General Counsel provides a comprehensive review of the compliance and ethics program to our Board of Directors, and supplements this review, from time to time, as requested by our Board of Directors or as appropriate with respect to specific compliance risk areas or issues.

Our Executive Vice President and General Counsel and Executive Vice Presidents of Global Research & Development, Global Operations and Global Human Resources lead our sustainability program through the Corporate Issues Council, which is comprised of various functional representatives and subject matter experts. The Corporate Issues Council meets regularly to review the health of the program, opportunities for improvement, and the status of execution against agreed program priorities. Our Executive Vice President and General Counsel also meets regularly with the Governance & Nominating Committee, together with subject matter experts from the Corporate Issues Council, to review

18


the health of our sustainability program, its priorities, and the status of execution against those priorities. The Chair of our Governance & Nominating Committee reviews the status of our sustainability program with our Board of Directors at each regularly scheduled Board meeting, and supplements this review, from time to time, as requested by our Board of Directors or as appropriate with respect to specific sustainability matters.

In addition to the efforts of our Board of Directors and the Audit Committee to address risk oversight, the Compensation & Organization Committee annually reviews our compensation policies and practices to confirm that such compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our Company. As a result of its most recent review in 2019, the Compensation & Organization Committee concluded that our incentive compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us for the following reasons:

 

The four 2019 performance metrics selected under our Annual Incentive Plan were counterbalanced so that, for example, an undue focus on net sales at the expense of gross margins would not result in a higher payout.

 

Awards are earned based on achievement of corporate performance objectives under the Annual Incentive Plan.

 

We cap maximum awards under the Annual Incentive Plan. The Annual Incentive Plan uses a performance rating system which corresponds to a payout range from 0.0 (0 percent of target) to a maximum of 2.0 (200 percent of target), which limits the potential for excessive emphasis on short-term incentives.

 

Stock options constitute a substantial portion of an executive’s total remuneration and vest as to all underlying shares on the third anniversary of the date of grant, which encourages a longer-term focus.

 

Annual stock option grants result in overlapping three-year vesting periods, which reduces the risk of an inappropriate focus on one vesting date.

 

Our stock ownership guidelines require that our executives hold a significant amount of our stock to further align their interests to the interests of our stockholders on a long-term basis.

Our Board of Directors believes that our compensation system, our division of risk oversight responsibilities, and our Board of Directors’ leadership structure comprise and support the most effective risk management approach.

BOARD OF DIRECTORS LEADERSHIP STRUCTURE

The Corporate Governance Guidelines provide that our Board of Directors may determine from time to time what leadership structure works best for our Company, including whether the same individual should serve both as Chairman of our Board of Directors and Chief Executive Officer (“CEO”). In addition, the guidelines provide that if the same individual serves as Chairman of our Board of Directors and CEO, or the Chairman is otherwise not independent, our Board of Directors shall have an independent Lead Director, as selected by the independent members of the Board.

The Board of Directors believes the most effective leadership structure for the Company at this time is one with a combined Chairman and CEO, coupled with an independent Lead Director. Having a combined Chairman and CEO promotes a cohesive vision and strategy for the Company and enhances our ability to execute effectively. We have found that this structure leads to leadership and communication advantages and efficiencies. Mr. Farrell, our current Chairman and CEO, is in an optimal position to identify, and to lead Board of Directors discussions on, important matters related to our business operations and related risk. Mr. Farrell’s in-depth knowledge of our strategic priorities and operations enables him to facilitate effective communication between management and our Board of Directors and ensure that key issues and recommendations are brought to the attention of our Board of Directors and management. We believe that Mr. Farrell is an effective spokesperson for management and our Board of Directors by serving in both positions. The Board created the Lead Director role as an integral part of a leadership structure that promotes strong, independent oversight of the Company’s management and affairs. Mr. Irwin, has served as the Lead Director since January 2020. The Lead Director presides over executive sessions and has the authority to call executive sessions. The Lead Director also consults with the entire Board of Directors and with our Chairman, President and CEO and our Secretary on Board of Directors meeting agendas. In addition, the Lead Director acts as a contact person to facilitate communications between employees, stockholders, and others with the independent directors.

19


We believe that the presence of a Lead Director enhances the ability of our Board of Directors to provide additional independent oversight and supplements the following corporate governance practices, which also facilitate independent oversight:

 

All of our directors, other than our Chairman, President and CEO, are independent.

 

All of the members of the Audit Committee, Compensation & Organization Committee, and Governance & Nominating Committee are independent.

 

Our Board of Directors and each of its standing committees meet in regularly scheduled executive sessions without the presence of management.

 

Our Board of Directors completes an annual assessment of the effectiveness of the full Board of Directors, each of its standing committees, and individual directors.

COMMUNICATION WITH THE BOARD OF DIRECTORS

While management has primary responsibility for stockholder engagement, our Board of Directors is regularly informed about management’s stockholder engagement efforts as part of its oversight role and is committed to enhancing stockholder value and to considering requests from our stockholders that will help us achieve this goal. Our stockholder engagement practices and controls, which are designed to support our commitment to constructive communications between our stockholders and the independent directors, include the ability of our stockholders to attend the Annual Meeting, an annual advisory vote on executive compensation (“say-on-pay”), the ability to submit stockholder proposals and recommend candidates for election to our Board, and the ability to communicate directly with our Board of Directors.

Our Lead Director acts as a contact person to facilitate communications between employees, stockholders and others with the independent directors. The Lead Director, is responsible for ensuring that stockholder requests, recommendations, and proposals regarding governance-related matters are evaluated by the Governance & Nominating Committee, the Compensation & Organization Committee, or Audit Committee, as appropriate, and then by our Board of Directors based on the applicable Committee’s recommendation.

Any person who wishes to communicate with our Board of Directors, including the Lead Director or the independent directors as a group, may direct a written communication to our Board of Directors, the Lead Director, or the independent directors, at: Church & Dwight Co., Inc., Princeton South Corporate Park, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628, Attention: Secretary. Such correspondence (other than solicitations) will be logged in and forwarded to the Lead Director.

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

Committees of the Board of Directors

The Board has four standing committees as set forth in the table below. During 2019, each incumbent director attended at least 75 percent of the aggregate number of meetings held by our Board and all Board committees on which such director served.

 

Director

Board

Audit

Compensation

and

Organization

Governance

and

Nominating

Executive

James R. Craigie

 

 

 

 

Matthew T. Farrell

Chair

 

 

 

Chair

Bradley C. Irwin

Lead Director

 

Robert D. LeBlanc

 

 

 

Penry W. Price

 

 

Ravichandra K. Saligram

 

 

Chair

Robert K. Shearer

Chair

 

 

Janet S. Vergis

 

 

Arthur B. Winkleblack

 

Chair

 

Laurie J. Yoler

 

 

Number of Meetings in 2019

10

5

4

5

0

20


Although we do not have a formal policy requiring attendance of directors at our Annual Meetings, we expect all directors to attend the Annual Meeting absent exceptional circumstances. All incumbent directors attended the 2019 Annual Meeting.

Audit Committee.    Under its Charter, the Audit Committee, among other responsibilities, (i) has sole authority to retain, set compensation and retention terms for, terminate, and oversee and evaluate the activities of, our independent registered public accounting firm; (ii) reviews and approves in advance the performance of all audit and permitted non-audit services, subject to the pre-approval policy discussed below under “Pre-Approval of Audit and Permissible Non-Audit Services”; (iii) reviews and discusses with management and our independent registered public accounting firm the annual audited financial statements and quarterly financial statements and certain other disclosures included in our filings with the SEC; (iv) reviews and discusses with management earnings press releases prior to their release; (v) discusses with management, internal audit personnel, and our independent registered public accounting firm, our risk assessment and risk management policies, including our major financial risk exposures and the security of the Company’s computerized information systems; (vi) oversees the internal audit function; (vii) discusses with management, internal audit personnel, and our independent registered public accounting firm the adequacy and effectiveness of our financial reporting processes, internal control over financial reporting, and disclosure controls and procedures; and (viii) oversees the adoption, periodic review, and oversight of policies and procedures regarding business conduct and oversees our compliance and ethics program.

Our Board of Directors has determined that each of Mr. Shearer and Mr. Winkleblack is an “audit committee financial expert” within the meaning of SEC regulations.

The Audit Committee has established procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls and auditing matters and the receipt of confidential, anonymous submissions by our employees with respect to concerns regarding potential violations of our compliance and ethics program, including questionable accounting or auditing matters. Such complaints and submissions may be made by writing to the following address: Church & Dwight Co., Inc., Princeton South Corporate Park, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628, Attention: Secretary. Complaints may also be made via the Internet at www.churchdwight.ethicspoint.com, or by calling our toll-free hotline. The Audit Committee regularly receives reports regarding potential violations of our compliance and ethics program and oversees certain investigations relating thereto. The number for calls placed within the United States and Canada is (855) 384-9879. The numbers for calls placed in other countries may be found on the Internet at www.churchdwight.ethicspoint.com. Such correspondence will be logged in and forwarded to the Chair of the Audit Committee or his/her designated delegates, who provide the Audit Committee with regular reports.

Compensation & Organization Committee.    Under its Charter, the Compensation & Organization Committee is responsible for approving the specific salary, bonuses, stock awards, and other compensation for our elected officers, which includes our named executive officers identified in the Summary Compensation Table on page 53. The Compensation & Organization Committee also, among other responsibilities, (i) oversees the design of our executive compensation programs, policies, and practices; (ii) reviews and approves the adoption, termination, and amendment of, and administers, our incentive and equity compensation plans; (iii) reviews and approves annually corporate goals and objectives as they relate to CEO and other executive officer compensation; (iv) evaluates at least annually the performance of the CEO and the other executive officers and establishes their respective compensation; (v) evaluates whether our compensation policies and practices for our executive officers and other employees create risks that are reasonably likely to have a material adverse effect on us; (vi) collaborates with the Governance & Nominating Committee, regarding recommendations to our Board of Directors concerning executive officer succession; (vii) collaborates with the Governance & Nominating Committee, regarding recommendations to our Board of Directors concerning non-employee director compensation; and (viii) recommends to the Board the development, selection, retention, and dismissal of elected officers. The Compensation & Organization Committee also oversees human capital management.

In considering executive compensation, the Compensation & Organization Committee considers the executive compensation recommendations as well as the comparative public company data provided by independent compensation consultants engaged directly by the Compensation & Organization Committee. Semler Brossy Consulting Group, LLC (“Semler Brossy”) serves as the Compensation & Organization Committee independent compensation consultant and does not provide any other services to us. See “Compensation Discussion and Analysis” for additional information regarding the services provided by Semler Brossy and information considered by the Compensation & Organization Committee. The Compensation & Organization Committee also takes into account statistical data and recommendations of our CEO. However, our CEO does not make recommendations regarding his own compensation.

21


Governance & Nominating Committee.    Under its Charter, the Governance & Nominating Committee, among other responsibilities, (i) develops and periodically reviews, and recommends to our Board of Directors, criteria for the selection of new directors to serve on our Board of Directors; (ii) identifies individuals qualified to become members of our Board of Directors consistent with our Board of Directors’ criteria for selecting new directors set forth in the Corporate Governance Guidelines; (iii) recommends to our Board of Directors nominees for the class of directors to be elected at the next annual meeting of stockholders and, where applicable, to fill vacancies; (iv) considers and makes recommendations to our Board of Directors on questions of independence and possible conflicts of interest of members of our Board of Directors and executive officers in accordance with the Corporate Governance Guidelines; (v) in collaboration with the Compensation & Organization Committee, makes recommendations to our Board of Directors concerning executive officer succession; (vi) oversees Board of Directors and committee evaluations; (vii) makes recommendations to our Board of Directors regarding corporate governance matters; (viii) in consultation with the Compensation & Organization Committee, periodically reviews and makes recommendations to our Board of Directors regarding the compensation of our non-employee directors, and the principles upon which such compensation is determined and (ix) oversees the Company’s sustainability program.

The Governance & Nominating Committee recommends to our Board of Directors candidates for nomination to our Board of Directors. When considering individuals to recommend for nomination, the Governance & Nominating Committee seeks persons with diverse backgrounds who possess the following characteristics: integrity, education, commitment to our Board of Directors, business judgment, business experience, accounting and financial expertise, diversity, reputation, civic and community relationships, high performance standards, and the ability to act on behalf of stockholders.

The Governance & Nominating Committee will consider recommendations for director candidates from stockholders. Stockholder recommendations of candidates should be submitted in writing to: Church & Dwight Co., Inc., Princeton South Corporate Park, 500 Charles Ewing Boulevard, Ewing, New Jersey 08628, Attention: Secretary. In order to enable consideration of a candidate in connection with the 2020 Annual Meeting of Stockholders, a stockholder must submit the following information by November 20, 2020: (i) the name of the candidate and information about the candidate that would be required to be included in a proxy statement under the rules of the SEC; (ii) information about the relationship between the candidate and the recommending stockholder; and (iii) the written consent of the candidate to be named in the proxy statement and to serve as a director if elected. In considering any candidate proposed by a stockholder, the Governance & Nominating Committee will reach a conclusion as to whether to recommend such candidate to our Board of Directors based on the criteria described above. The Governance & Nominating Committee may seek additional information regarding the candidate. After full consideration, the stockholder recommending the candidate will be notified of the decision of the Governance & Nominating Committee (and of our Board of Directors, if the candidate is recommended to our Board of Directors for consideration). The Governance & Nominating Committee will consider all potential candidates in the same manner regardless of the source of the recommendation.

As highlighted in our Corporate Governance Guidelines, the Board values diversity and recognizes the importance of having unique and complementary backgrounds and perspectives in the board room. The Board endeavors to include diverse skills, professional experience, perspectives, age, race, ethnicity, gender and cultural backgrounds that reflect our consumer and investor base, and to guide the Company in a way that reflects the best interests of all our stockholders. Although the Board does not establish specific goals with respect to diversity, the Board’s overall diversity is a significant consideration in the director nomination process. The Governance & Nominating Committee reviews the director nominees (including any stockholder nominees) and ascertains whether, as a whole, they meet the Corporate Governance Guidelines in this regard. For this year’s election, the Board has nominated five individuals who bring valuable diversity to the Board. Their collective experience covers a wide range of roles, geographies, and industries. Of these five director nominees one is a woman.  The Board also believes that tenure diversity should be considered in order to achieve an appropriate balance between the detailed Company knowledge and wisdom that comes with many years of service and the fresh perspective of newer Board members. We believe that our current Board has an appropriate balance of experienced and newer directors, with tenure of the current directors averaging 11 years, nine years after Mr. LeBlanc retires. The Governance & Nominating Committee balances these considerations when assessing the composition of our Board of Directors. The Governance & Nominating Committee may engage the services of third party search firms to assist in identifying and assessing the qualifications of director candidates.

 

Executive Committee.    The Executive Committee may exercise the authority of our Board of Directors, except as specifically reserved by Delaware law to our Board of Directors or as our Board of Directors otherwise provides.

 

Finance Committee.The Board also has a Finance Committee, which meets on an ad hoc basis. The Finance Committee reviews financing and capital markets issues but has no decision autonomy. Mr. Winkleblack is chair of the Finance Committee.

22


SUCCESSION PLANNING

Our Board of Directors recognizes that one of its most important duties is to ensure excellence and continuity in our senior leadership by overseeing the development of executive talent and planning for the effective succession of the Chairman of our Board of Directors and our CEO and other senior members of executive management. Our succession planning process was evidenced in January 2016 when Matthew T. Farrell, our former Executive Vice President, Chief Operating Officer, and Chief Financial Officer, succeeded Mr. Craigie as our President and CEO; Richard A. Dierker, our former Vice President, Corporate Finance, succeeded Mr. Farrell as our Executive Vice President and Chief Financial Officer; and Britta B. Bomhard, our former General Manager, Europe, was promoted to Executive Vice President and Chief Marketing Officer.

Our CEO and other senior executive succession planning process includes identifying external candidates and identifying and developing potential internal candidates on an ongoing basis. The criteria used when assessing the qualifications of potential CEO successors are included on a position specification developed by our Board of Directors. Our Board of Directors is committed to being prepared for a planned or unplanned change in our leadership in order to ensure our stability.

In continuation of this process, the Governance & Nominating Committee, in collaboration with the Compensation & Organization Committee, agrees upon and recommends to the Board a succession plan for our CEO and other senior members of executive management in the ordinary course of business and in emergency situations. Through this process, our Board of Directors receives from our CEO and the Executive Vice President of Global Human Resources qualitative evaluations of, and recommendations concerning, potential successors to our CEO and our other senior executives, along with a review of any development plans recommended for such individuals. At least once annually, our Board of Directors reviews our succession plans. Succession planning is also regularly discussed in executive sessions of our Board of Directors and in committee meetings, as applicable. Our directors become familiar with internal potential successors for key leadership positions through various means, including a comprehensive annual talent and succession review, Board of Directors and committee meeting presentations, and less formal interactions throughout the course of the year.

CODE OF CONDUCT

We have adopted a Code of Conduct that applies to all employees and directors of Church & Dwight and our global subsidiaries. Among other things, the Code of Conduct is designed to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, promote full, fair, accurate, timely and understandable disclosures in periodic reports we are required to file, promote compliance with applicable governmental laws, rules, and regulations and promote a harassment-free work environment. The Code of Conduct requires the prompt internal reporting of violations of the Code of Conduct and contains provisions regarding accountability for adherence to the Code of Conduct. The Code of Conduct is available on the “Investors” page of our website at www.churchdwight.com. We are committed to satisfying the disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Conduct, including the conduct of an executive officer or member of our Board, by making disclosures concerning such matters available on the “Investors” page of our website. See “Corporate Governance and Other Board Matters—Board of Directors Meetings and Committees—Audit Committee” for a summary of our procedures for the submission, receipt, retention, and treatment of complaints with respect to concerns regarding potential violations of our compliance and ethics program.

SUSTAINABILITY

Our Governance & Nominating Committee oversees our sustainability program. While management has primary responsibility for stakeholder engagement, our Board of Directors is regularly informed about our sustainability efforts through the Governance & Nominating Committee as a part of its oversight role. Our Lead Director is responsible for ensuring that stockholder sustainability requests, recommendations and proposals are evaluated by the Committee, additional committees within the Board as appropriate, and then by the Board of Directors, if needed.

We maintain a strong heritage of commitment to people and the planet and believe that sustainable operations are both financially beneficial and critical to the health of the communities in which we operate. Accordingly, each year we publish a Sustainability Report that highlights our business and corporate responsibility commitments by detailing our financial, environmental, social and governance performance, including our metrics and targets. Our 2019 Sustainability Report (“Report”) is available on our “Responsibility” page on our website.  

23


Our global sustainability platform is derived from our heritage and organizational values, and it is one of our leadership strategies. The following six pillars are the core focus of our sustainability efforts:

 

Our Brands: Delight consumers with our brands and contribute towards a more sustainable world.

 

Products: Provide safe and effective products for consumers and the environment.

 

Packaging: Utilize consumer friendly and environmentally responsible packaging.

 

Employees and Communities: Embrace the principles of good corporate citizenship and social responsibility    within the communities we can impact.

 

Responsible Sourcing: Improve our suppliers’ environmental, labor, health & safety and ethical practices.

 

Environment: Minimize environmental impact of our global operations, with a focus on increased renewable energy usage, reduced water consumption and greenhouse gas emissions and solid waste to landfills.

In 2019, our continued progress in key areas of sustainability earned recognition from various third parties, including the 2019 Barron’s Most Sustainable Companies list, Newsweek’s America’s Most Responsible Companies Top 100 List, the EPA’s Green Power Partnership Top 100 list, the JUST Capital “America’s Most Just Companies” list and the FTSE4Good Index Series.

Our Corporate Issues Council (the “Council”) guides the integration of sustainability with all parts of our business and drives continuous improvement in our sustainability approach and performance. The Council is comprised of senior executives representing all key functional areas across the company, including Human Resources, Law, Global Operations, Research & Development, Marketing and Sales. The Council takes the lead in defining and implementing our sustainability strategies across the six pillars of our global sustainability program. Its duties include allocating resources to appropriately address sustainability issues; reporting on our progress to drive continuous improvement in our sustainability approach and performance; and monitoring, prioritizing and addressing evolving standards and stakeholder requirements.

The Global Reporting Initiative defines “material issues” as those that “have a direct or indirect impact on an organization’s ability to create, preserve or erode economic, environmental or social value for itself, its stakeholders and society at large.” Defining our material issues, including environmental matters and reputational risk, is an ongoing process overseen by the Council. The Council established the six pillars of our sustainability program by collecting issues our various internal and external stakeholders expressed as sustainability priorities. The Council evaluates and ranks various risks and opportunities based on relative impact and likelihood. The Council evaluates and discusses the most significant sustainability issues, risks and opportunities we face and the functions within the Company that should be accountable for them. Our most significant sustainability issues, risks and opportunities are reflected within each of the six pillars of our sustainability program as set forth in our Report. There are additional topics included in the Report that may not have reached the same level of significance but are provided for informational purposes. Note that the concept of “material issues” under Global Reporting Initiatives guidelines used for purposes of the Report differs from the concept of “materiality” for purposes of securities laws and disclosures required by the SEC rules. In addition, the Report references the Sustainability Accounting Standards Board industry specific standards covering potential financially material issues.

24


 

COMPENSATION OF DIRECTORS

In 2019, our directors’ fees, other than the CEO, consisted of the following:

 

 

 

Annual Retainer 2019

Chairperson of the Board*

$

272,000

Lead Director

$

132,000

Chairperson of the Audit Committee

$

128,000

Chairperson of the Compensation & Organization Committee

$

125,000

Chairperson of the Governance & Nominating Committee

$

120,000

Other non-employee directors

$

110,000

 

 

 

Annual Equity 2019

 

 

Annual Equity Grant

$

130,000

 

 

 

Special Assignment 2019

 

 

Special Assignment (Per Meeting)

$

2,000

* Mr. Craigie received a pro-rated portion of the Chairperson of the Board retainer for his service as Chairman until May 2, 2019, at which time Mr. Farrell was appointed as Chairman of the Board.  

We pay fees to our directors in accordance with the Amended and Restated Compensation Plan for Directors (as amended), (the “Compensation Plan for Directors”). Any fees payable to our directors under this plan may be deferred in accordance with our Deferred Compensation Plan for Directors, provided that a timely election is made by the director seeking such deferral. We also provide annual stock option awards to our directors under the Amended and Restated Omnibus Equity Compensation Plan (the “Omnibus Equity Compensation Plan”). All of these arrangements are described below.

Compensation Plan for Directors.    Our Compensation Plan for Directors became effective as of January 1, 2015 and provides for the payment of fee-based compensation (i.e., an annual retainer and any special assignment meeting fees) and annual equity grants to our directors who are not full-time employees of the Company. Special assignment meeting fees are paid in consideration for attendance at meetings with respect to certain non-scheduled activities and projects requested by the Board. No special assignment meeting fees were paid in fiscal year 2019. The annual retainer amount is pro-rated for any director with less than a full year of service. Mr. Craigie received a pro-rated portion of the Chairperson of the Board retainer for his service as Chairman until May 2, 2019, at which time Mr. Farrell was appointed as Chairman of the Board.

The Compensation Plan for Directors provides each director with the choice of receiving (i) 100 percent of his/her fee-based compensation in cash if that director has fully satisfied the Company’s Stock Ownership Guidelines for Directors, (ii) 50 percent cash and 50 percent in shares of our common stock if specifically elected by a director or (iii) 100 percent in shares of our common stock (the default method of payment). For 2019, our directors made their elections for how to receive their fee-based compensation in December 2018. To determine the number of shares a director is entitled to receive under the plan, the annual retainer or special assignment meeting fee amount (as applicable) is divided by the closing price of a share of our common stock as reported on the NYSE on the applicable payment date.

Annual Equity Grants for Directors.    The Compensation Plan for Directors provides that, unless otherwise established by our Board of Directors, equity grants to our non-employee directors will be made annually on the same date each year on which we make annual equity grants to our employees (which date occurs on the Monday falling most closely to the midpoint between the dates of our first and second quarter earnings releases). A new director will receive his or her initial equity grant on the date such individual commences service with us as a director. In 2019, as in prior years, the annual equity grants were comprised of stock option awards. All shares underlying the stock options granted to non-employee directors vest in full on the third anniversary of the grant date, subject to the director’s continued service on our Board of Directors. Upon any cessation of service due to death or disability, the stock options (to the extent unvested) continue to vest and all unexercised options remain outstanding until the third anniversary of such death or disability (or earlier until expiration of the option term). For any director who retires after serving on our Board of Directors for at least six years, the stock options (to the extent unvested) continue to vest and all unexercised options remain outstanding for the remainder of the option term. Stock options to our non-employee directors are granted under the Omnibus Equity Compensation Plan with a ten-year term. No non-employee director may receive more than one equity grant in any calendar year.

Deferred Compensation Plan for Directors.    The Deferred Compensation Plan for Directors provides an opportunity for our directors to defer payment of all or a portion of their respective director fees into a notional account until after termination of service. A director electing to defer payment must decide whether to receive the deferred payment in a

25


lump sum or in annual installments over a period of up to 10 years. A director must make any of the foregoing elections prior to the beginning of the calendar year for which the deferred fees are earned. Also, newly elected directors may make such election within 30 days of becoming a director. A director’s election is deemed to remain in effect with respect to the following year unless the director revokes or changes such election prior to the commencement of such following year. Following a termination of service, the director generally receives a number of shares of our common stock in accordance with his or her timely filed election, either in a lump sum or in annual installments over a period of up to 10 years, equal to the number of notional shares then outstanding in the director’s deferred compensation account under the plan. On a change in control, any and all deferred accounts (including any account being paid in installments) will be immediately distributed. The number of notional shares represented by amounts in a participating director’s account is set forth in the table captioned “Securities Ownership of Certain Beneficial Owners and Management” on page 30.

 

2020 Director Compensation.    On October 30, 2019, the Governance & Nominating Committee, in consultation with the Compensation & Organization Committee, reviewed the compensation of our non-employee directors. As part of their review, the Committees consulted with Semler Brossy, the independent compensation consultant retained by the Compensation & Organization Committee. As part of its analysis of the compensation of our non-employee directors, Semler Brossy examined how the total compensation and each element of our non-employee director compensation program compared to the director compensation programs of our Compensation Peer Group, as identified and discussed in more detail on pages 40-41. The Governance & Nominating Committee targets the total compensation paid to our non-employee directors at a level that approximates the 50th percentile of the compensation paid to non-employee directors of the Compensation Peer Group. Based on its analysis, Semler Brossy concluded that the total compensation paid to our non-employee directors was below the median of the director compensation of the Compensation Peer Group. Based upon its review, the Governance & Nominating Committee recommended to the Board, and the Board approved, the following increased director compensation, which became effective January 1, 2020:

 

 

 

Annual Retainer 2020

Lead Director

$

142,000

Chairperson of the Audit Committee

$

140,000

Chairperson of the Compensation & Organization Committee

$

135,000

Chairperson of the Governance & Nominating Committee

$

132,500

Other non-employee directors

$

120,000

 

 

 

Annual Equity 2020

 

 

Annual Equity Grant

$

140,000

 

 

 

Special Assignment 2020

 

 

Special Assignment (Per Meeting)

$

2,000

 

 

 

The table above does not include a separate annual retainer for the Chairperson of the Board, as the Chairperson of the Board is currently our Chief Executive Officer.

 

The following table provides information regarding compensation for our non-employee directors in 2019.

2019 DIRECTOR COMPENSATION TABLE

 

 

 

 

 

 

 

Name

Fees Earned or
Paid in Cash
($)

Stock
Awards
($)(2)

Option
Awards
($)(3)

All Other
Compensation

Total
($)

James R. Craigie

164,000(1)

 

130,000

10,000(4)

304,000

Bradley C. Irwin

55,000

55,000

130,000

 

240,000

Robert D. LeBlanc

67,667

67,666

130,000

 

265,333

Penry W. Price

 

110,000

130,000

 

240,000

Ravichandra K. Saligram

 

116,667

130,000

 

246,667

Robert K. Shearer

64,000

64,000

130,000

 

258,000

Janet S. Vergis

55,000

55,000

130,000

 

240,000

Arthur B. Winkleblack

125,000

 

130,000

 

255,000

Laurie J. Yoler

 

110,000

130,000

 

240,000

 

(1) 

This amount for Mr. Craigie includes a pro-rated portion of the Chairperson of the Board retainer received for his service as Chairman until May 2, 2019.

 

(2) 

The amounts shown for stock awards relate to directors’ fees paid in shares of our common stock, including directors’ fees deferred by directors under the Deferred Compensation Plan for Directors into notional investments

26


 

in our common stock. The amounts shown for option awards related to stock options granted under the Omnibus Equity Compensation Plan. These amounts are based upon the grant date fair value of awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”). The assumptions used in determining these amounts are set forth in note 12 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on February 18, 2020.

See “Compensation Plan for Directors” and “Deferred Compensation Plan for Directors” for information regarding the computation of the number of shares or notional shares provided to a director in payment of director fees. Two directors deferred payment of all or a portion of their 2019 fees under the Deferred Compensation Plan for Directors, as follows: Mr. Saligram, $116,667; and Mr. Shearer, $64,000. As of December 31, 2019, none of our directors held any unvested stock awards.

 

(3) 

At December 31, 2019, the number of shares of our common stock underlying options held by each of the directors listed in the table was: Mr. Craigie, 2,956,706 (including options granted to Mr. Craigie in his capacity as the Company’s former Chief Executive Officer); Mr. Irwin, 94,058; Mr. LeBlanc, 53,514; Mr. Price, 123,408; Mr. Saligram,139,948; Mr. Shearer, 76,514; Ms. Vergis, 61,010; Mr. Winkleblack, 94,058; and Ms. Yoler, 22,350.

 

(4) 

Represents contributions made by the Company on behalf of Mr. Craigie to one charitable organization.

 

STOCK OWNERSHIP GUIDELINES FOR DIRECTORS

Our non-employee directors are expected to have a level of equity ownership in the Company in order to ensure that their interests are aligned with the interests of our stockholders. It is expected that each non-employee director will have, within five years from the date on which they join the Board, a number of shares having a value of at least five times the standard annual retainer (which is the annual retainer received by any director who is not a committee chair, the Lead Director or the Chairman). The annual retainer was $110,000 for 2019 and the dollar value of shares required to be held by our directors who have served five or more years was $550,000 as of December 31, 2019. The calculation of ownership includes:

 

shares owned by the director (or members of his or her immediate family residing in the same household);

 

notional shares held for the account of the director in the Deferred Compensation Plan for Directors;

 

shares held in a trust for which a director has shared voting or investment power; and

 

60 percent of the in-the-money value of vested and unvested stock options.

Until a non-employee director satisfies his or her stock ownership requirement, the director will be required to hold 50 percent of all shares of our common stock received upon the exercise of stock options, grants of stock, or upon lapse of the restrictions on restricted stock (in each case, net of any shares utilized to pay for the exercise price of an option and/or to satisfy tax withholding obligations). All of our non-employee directors who have been in their position for five years or more own enough shares to satisfy our guidelines.

OUR EXECUTIVE OFFICERS

Listed below are the names, ages and positions held by each of our executive officers and our Vice President, Controller and Chief Accounting Officer.

 

 

 

 

Name

Age

Position

Britta B. Bomhard

51

Executive Vice President and Chief Marketing Officer

Steven P. Cugine

57

Executive Vice President, International and Global New Products Innovation

Patrick D. de Maynadier

59

Executive Vice President, General Counsel and Secretary

Richard A. Dierker

40

Executive Vice President and Chief Financial Officer

Matthew T. Farrell

63

President and Chief Executive Officer

Steven J. Katz

61

Vice President, Controller and Chief Accounting Officer

Carlos Linares

56

Executive Vice President, Global Research & Development

Rick Spann

57

Executive Vice President, Global Operations

Paul R. Wood

47

Executive Vice President, U.S. Sales

Judy A. Zagorski

56

Executive Vice President for Global Human Resources

27


All executive officers serve at the discretion of our Board of Directors. Mr. Katz serves at the discretion of our CEO.

Biographical information for Mr. Farrell appears under “Current Term Expires in 2021” on page 13.

Ms. Bomhard has been our Executive Vice President and Chief Marketing Officer since January 2016, prior to which she served as General Manager, Europe since 2013. From 2005 to 2013, Ms. Bomhard served in a variety of Marketing and General Management assignments at Energizer. Prior to Energizer, Ms. Bomhard worked for Wella AG and GlaxoSmithKline in their marketing organizations. Ms. Bomhard currently serves as a member of the Board of Directors of Primo Water Corporation, a leading North America and European water, coffee and coffee extracts, tea and filtration solutions service company.

Mr. Cugine has been our Executive Vice President, International and Global New Products Innovation since January 2016. From June 2014 to December 2015, he was Executive Vice President, and President, International Consumer Products, from July 2013 to June 2014, he was Executive Vice President, Global New Products Innovation, and President, International Consumer Products and, from May 2007 through June 2013, he served as our Executive Vice President, Global New Products Innovation. From October 2000 through May 2007, Mr. Cugine served in a variety of management positions at the Company. Prior to that Mr. Cugine served in several capacities with FMC Corporation, including as Director of Human Resources for the Alkali, Peroxide, and Oxidant Chemical Divisions.

Mr. de Maynadier has been our Executive Vice President, General Counsel and Secretary since December 2011. He served in a number of capacities for Hill-Rom Holdings, Inc. and its predecessor, Hillenbrand Industries, Inc., from January 2002 through December 2010, including Senior Vice President, General Counsel and Secretary and Vice President, General Counsel and Secretary. Previously, Mr. de Maynadier served as Executive Vice President, General Counsel and Secretary for CombiMatrix Corporation, as President and Chief Executive Officer of SDI Investments, LLC, a spin-off of Sterling Diagnostic Imaging, Inc., and as Senior Vice President, General Counsel and Secretary of Sterling Diagnostic Imaging, Inc. Earlier in his career, Mr. de Maynadier was a corporate and securities Partner at the law firm Bracewell & Patterson, L.L.P.

Mr. Dierker has been our Executive Vice President and Chief Financial Officer since January 2016, prior to which he served as Vice President, Corporate Finance since 2012. From 2009 to 2012, Mr. Dierker led Supply Chain Finance as the Company’s Operations Controller. From 2008 to 2009, he held a senior financial management position at Alpharma, Inc., a leading international specialty pharmaceutical company. Prior to 2008, he held financial and business development management positions for Ingersoll-Rand Ltd, a major diversified industrial manufacturer.

Mr. Katz has been our Vice President, Controller and Chief Accounting Officer since May 2007. From January 2003 through May 2007, Mr. Katz was our Controller, and from April 1993 through December 2002, he was our Assistant Controller. Mr. Katz has been employed by us in various positions since 1986. As previously announced, Mr. Katz has informed the Company that he intends to retire by the end of the first quarter of 2021.

Mr. Linares has been our Executive Vice President, Global Research & Development since June 2017. He currently serves on the Board of Trustees for TRI Princeton (Vice Chair) and the Board of Directors for The American Cleaning Institute.  From 2012 to 2017, Mr. Linares was the Chief Technology Officer for Sun Products Corporation (“Sun Products”) and also served as the Corporate Innovation Captain for Sun Products’ innovation strategy. Prior to Sun Products, Mr. Linares was the Senior Vice President of Global R&D, Quality and Regulatory, at Alberto Culver. Earlier in his career Mr. Linares gained significant R&D product development and innovation experience at Johnson & Johnson and Procter & Gamble.

Mr. Spann has been our Executive Vice President, Global Operations since May 2017. He served in a number of capacities for Colgate-Palmolive Company from 1984 through 2017. His career there included assignments in Australia and Europe. His last role at Colgate was Vice President, Global Engineering where he led significant improvements in product and process development. Prior to that he was Vice President, Global Supply Chain for three different Colgate businesses: Personal Care, Home Care, and Toothbrush, where he had responsibility for operations in North America, Europe, Latin America, Asia, Australia, Africa and the Middle East. Mr. Spann started his career at Colgate-Palmolive Company as an Industrial Engineer and held positions of increasing responsibility in production management prior to his executive roles.

28


Mr. Wood has been Executive Vice President, U.S. Sales since October 2018. From August 2016 to February 2018, Mr. Wood was an Executive Vice President at Acosta, a large private-equity owned sales and marketing agency, where he managed several thousand employees focused on growing Consumer Packaged Goods client businesses, from December 2010 to August 2016, Mr. Wood was General Manager at Samsung Electronics America, and from August 2006 to December 2010, Mr. Wood was Vice President, Sales-Walmart for WhiteWave Foods. Previously, Mr. Wood also held various positions with increasing responsibility at H.J. Heinz and Frito Lay.

Ms. Zagorski has been our Executive Vice President for Global Human Resources since January 2017. From January 2011 to January 2017, Ms. Zagorski was Senior Vice President, Human Resources for BASF Corporation, where she was responsible for the North American and Central American human resources functions, and from September 2007 to January 2011, Ms. Zagorski was Vice President Talent Development and Strategy at BASF Corporation. Prior to BASF Corporation, Ms. Zagorski was Vice President, Human Resources for the Snackfoods division of Mars, Incorporated and Global Head of Talent Management for Mars, Inc. She previously held senior level global human resources positions at Honeywell International, Inc. and in management consulting at KPMG.

29


SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information concerning ownership of our common stock as of March 3, 2020 (unless otherwise noted), by (i) each stockholder that has indicated in public filings that the stockholder beneficially owns more than five percent of our common stock; (ii) each director and nominee for director; (iii) each current executive officer named in the 2019 Summary Compensation Table on page 53; and (iv) all directors and executive officers as a group. Except as otherwise noted, each person listed below, either alone or together with members of such person’s family sharing the same household, had sole voting and investment power with respect to the shares listed next to such person’s name. None of the shares held by directors and executive officers included in the table are pledged as security.

 

 

 

 

 

 

Amount and Nature of
Beneficial Ownership(1)

Notional
Shares in
Deferred
Compensation
Plans(2)

Name

Shares(2)(3)

Percent of
Class

BlackRock, Inc.(4)

20,921,302

9%

0

State Street Corporation(5)

13,147,218

5%

0

The Vanguard Group(6)

29,744,921

12%

0

James R. Craigie(7)

2,957,323

1%

0

Matthew T. Farrell(8)

1,486,300

*

90,482

Bradley C. Irwin

106,149

*

0

Robert D. LeBlanc(9)

85,590

*

0

Penry W. Price

110,775

*

0

Ravichandra K. Saligram(10)

151,915

*

48,272

Robert K. Shearer

72,232

*

20,921

Janet S. Vergis

39,008

*

0

Arthur B. Winkleblack(11)

79,797

*

0

Laurie J. Yoler(12)

2,886

*

0

Richard A. Dierker

33,434

*

6,465

Britta B. Bomhard

82,569

*

7,401

Steven P. Cugine

184,404

*

12,226

Patrick D. de Maynadier(13)

323,053

*

19,328

All executive officers and directors as a group (21 persons)

5,804,246

2%

228,065

 

*

Less than one percent.

 

(1) 

Applicable percentage of ownership is based on 245,776,372 shares of our common stock outstanding as of March 3, 2020. Beneficial ownership is determined in accordance with the rules of the SEC and means voting or investment power with respect to securities. Shares of our common stock issuable upon the exercise of stock options exercisable currently or within 60 days of March 3, 2020, are deemed outstanding and to be beneficially owned by the person holding such option for purposes of computing such person’s percentage ownership, but are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

 

(2) 

The shares listed in the “Shares” column do not include notional shares of our common stock credited to the account of directors under the Deferred Compensation Plan for Directors or credited to the account of executive officers under the Executive Deferred Compensation Plan. Notional shares do not represent actual shares, but represent interests equivalent in value to the fair market value of shares of our common stock; gains or losses in the interests are based upon gains or losses in the fair market value of our common stock. These notional shares are reflected in the table in the column labeled “Notional Shares in Deferred Compensation Plans.” Because notional shares do not represent actual shares, holders of notional share accounts are not entitled to vote with respect to the notional shares.

 

(3) 

The numbers in this column include shares that are subject to stock options exercisable currently, or within 60 days of March 3, 2020, as follows: Mr. Craigie, 2,923,316 shares; Mr. Farrell, 1,338,040 shares; Mr. Irwin, 60,668 shares; Mr. LeBlanc, 20,014 shares; Mr. Price, 90,018 shares; Mr. Saligram, 106,558 shares; Mr. Shearer, 43,124 shares; Ms. Vergis, 27,620 shares; Mr. Winkleblack, 60,668 shares; Ms. Yoler, 0 shares; Mr. Dierker, 25,060 shares; Ms. Bomhard, 77,120 shares; Mr. Cugine, 153,360 shares, Mr. de Maynadier, 308,640 shares; and all executive officers and directors as a group, 5,286,870 shares.

 

(4) 

BlackRock, Inc. provided the following information in Amendment No. 10 to its Schedule 13G, filed with the SEC on February 5, 2020. As of December 31, 2019, BlackRock, Inc. and its affiliates named in such report (collectively,

30


 

“BlackRock”) reported aggregate beneficial ownership of 20,921,302 shares of our common stock with sole voting power over 17,894,446 shares, shared voting power over no shares, sole dispositive power over 20,921,302 shares and shared dispositive power over no shares. The principal business address of BlackRock is 55 East 52nd Street, New York, NY 10055.

 

(5) 

State Street Corporation provided the following information in its Schedule 13G, filed with the SEC on February 14, 2020. As of December 31, 2019, State Street Corporation and its affiliates named in such report (collectively, “State Street”) reported aggregate beneficial ownership of 13,147,218 shares of our common stock with shared voting power over 11,916,454 shares, sole voting power over no shares, shared dispositive power over 13,132,340 shares and sole dispositive power over no shares. The principal business address of State Street is State Street Financial Center, One Lincoln Street, Boston, MA 02111.

 

(6) 

The Vanguard Group provided the following information in Amendment No. 8 to its Schedule 13G, filed with the SEC on February 11, 2020. As of December 31, 2019, The Vanguard Group and its affiliates named in such report (collectively, “TVG”) reported aggregate beneficial ownership of 29,744,921 shares of our common stock with sole voting power over 382,256 shares, shared voting power over 90,374 shares, sole dispositive power over 29,296,403 shares and shared dispositive power over 448,518 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 293,573 shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 239,622 shares as a result of its serving as investment manager of Australian investment offerings. The principal business address of TVG is 100 Vanguard Blvd., Malvern, PA 19355.

 

(7) 

Mr. Craigie’s ownership includes 7,604 shares of common stock held in two trusts for which Mr. Craigie holds either shared voting or shared investment power and 1,840 shares of common stock held by Mr. Craigie’s spouse for which he disclaims beneficial ownership.

 

(8) 

Mr. Farrell’s ownership includes 35,904 shares of common stock held by Mr. Farrell’s spouse for which he disclaims beneficial ownership.

 

(9) 

Mr. LeBlanc’s ownership includes 19,700 shares of common stock held by Mr. LeBlanc’s spouse, children and grandchildren for which Mr. LeBlanc holds sole voting and sole investment power.

 

(10) 

Mr. Saligram’s ownership includes 45,209 shares of common stock held in a trust for which Mr. Saligram holds sole voting and sole investment power.

 

(11) 

Mr. Winkleblack’s ownership includes 19,129 shares of common stock held in a trust for which Mr. Winkleblack holds sole voting and sole investment power.

 

(12) 

Ms. Yoler’s ownership of 2,886 shares of common stock held in a trust for which she shares voting and investment power.

 

(13)

The right to exercise and dispose of 142,908 of the shares subject to the options included in this table has been transferred to Mr. de Maynadier’s former spouse pursuant to a marital settlement agreement.

 

 

31


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

REVIEW AND APPROVAL OF RELATED PERSON TRANSACTIONS

The Code of Conduct includes our policy regarding the review and approval of related person transactions. In accordance with the Code of Conduct, all related person transactions that meet the minimum threshold for disclosure in the proxy statement under the relevant SEC rules must be reported to and approved by the Audit Committee.

RELATED PERSON TRANSACTIONS

There were no disclosable related person transactions during 2019.

 

32


AUDIT COMMITTEE REPORT

The Audit Committee assists the Board of Directors in its oversight of the integrity of Church & Dwight’s financial statements, compliance with legal and regulatory requirements, and the performance of the internal audit function. Management has primary responsibility for preparing the financial statements and for the financial reporting process. In addition, management has the responsibility to assess the effectiveness of Church & Dwight’s internal control over financial reporting. Deloitte & Touche LLP, Church & Dwight’s independent registered public accounting firm, is responsible for (i) expressing an opinion on the conformity of Church & Dwight’s audited financial statements to generally accepted accounting principles and on whether the financial statements present fairly in all material respects the financial position and results of operations of Church & Dwight, and (ii) expressing an opinion on the effectiveness of Church & Dwight’s internal control over financial reporting.

In this context, the Audit Committee hereby reports as follows:

 

1.

The Audit Committee has reviewed and discussed with management and Deloitte & Touche LLP the audited financial statements and Deloitte & Touche LLP’s evaluation of Church & Dwight’s internal control over financial reporting.

 

2.

The Audit Committee has discussed with Deloitte & Touche LLP the matters required to be discussed by the Public Company Accounting Oversight Board Standards and the Securities and Exchange Commission.

 

3.

The Audit Committee has received the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte & Touche LLP’s communications with the Audit Committee concerning independence and has discussed with Deloitte & Touche LLP that firm’s independence.

Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Church & Dwight’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, for filing with the Securities and Exchange Commission.

Respectfully submitted,

Robert K. Shearer, Chair

Robert D. LeBlanc

Penry W. Price

Janet S. Vergis

 

33


FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Fees related to the 2019 and 2018 fiscal years payable to our independent registered public accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Ltd., and their respective affiliates are as follows:

 

 

 

 

 

 

2019

($)

2018
($)

Audit Fees

3,532,349

3,226,250

Audit-Related Fees(1)

594,001

211,841

Tax Fees(2)

548,230

448,264

All Other Fees

0

0

Total

4,674,580

3,886,355

 

(1) 

Audit-related fees primarily include services for acquisition-related due diligence in both 2019 and 2018.

 

(2) 

Tax fees include services for filing for tax incentives from government agencies, assistance for tax audits from taxing authorities, tax compliance, and planning.

 

34


PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES

The Audit Committee pre-approved all audit and non-audit services provided by Deloitte & Touche LLP during 2019 in accordance with our policy described below.

The Audit Committee pre-approves all permitted non-audit services to be provided by our independent registered public accounting firm. However, the Audit Committee has delegated to Mr. Shearer, as Chair of the Audit Committee, authority to pre-approve permitted non-audit services, provided that any such pre-approved non-audit services are reported to the full Audit Committee at its next scheduled meeting.

 

35


COMPENSATION DISCUSSION AND ANALYSIS

INTRODUCTION

This Compensation Discussion and Analysis addresses the compensation paid for 2019 to our named executive officers, which include our Chief Executive Officer (CEO), our Chief Financial Officer (CFO), and our three other most highly-compensated executive officers. Our named executive officers for the year ended December 31, 2019 were as follows:

 

Matthew T. Farrell

Chairman, President and Chief Executive Officer

Richard A. Dierker

Executive Vice President and Chief Financial Officer

Britta B. Bomhard

Executive Vice President and Chief Marketing Officer

Steven P. Cugine

Executive Vice President, International and Global New Products Innovation

Patrick D. de Maynadier

Executive Vice President, General Counsel and Secretary

 

The Compensation & Organization Committee or the “Committee”, reviews the executive compensation program each year for alignment with our business strategy and evolving market and governance practices for executive compensation. We believe that our current programs are aligned with the Company’s business priorities and designed to encourage shareholder value creation.

As part of the foregoing analysis, the Committee evaluates the relationship between pay and performance of our named executive officers. The analysis includes a review of the relationship between the compensation paid to the CEO and the other named executive officers and Company performance relative to roles within other similarly sized companies that have generally corresponding responsibilities. For 2019, the analysis shows a strong link between Company pay and Company performance as it relates to key operating measures.

We focus on the following objectives in making compensation determinations:

 

Provide compensation that is competitive in markets in which we compete for management talent. We refer to this objective as “competitive compensation.”

 

Condition the majority of a named executive officer’s compensation on a combination of short and long-term performance. We refer to this objective as “performance incentives.”

 

Encourage the aggregation and maintenance of meaningful equity ownership, and the alignment of executive officer and stockholder interests as an incentive to increase stockholder value. We refer to this objective as “alignment with stockholder interests.”

 

Provide an incentive for long-term continued employment with us. We refer to this objective as “retention incentives.”

2019 Key Business Highlights and Strong Pay for Performance Alignment

2019 and 2018 Financial Results

During 2019 and 2018 we delivered the following results for Net Sales, Gross Margin, Diluted EPS, and Cash from Operations:

 

(In millions, except gross margin and per share data)

2019

2018

Net Sales

$4,345

$4,146

Gross Margin

45.5%

44.4%

Diluted EPS

$2.44

$2.27

Cash From Operations

$865

$764

 

As discussed further below, these metrics are used to measure performance under our Annual Incentive Plan.

 

Pay for Performance Alignment

Church & Dwight’s fiscal year 2019 results continued to be aligned with pay in the following ways:

 

 

Annual Incentive Plan:  The Annual Incentive Plan aligns the interests of our executives and stockholders by achieving goals that support long-term stockholder return.  The Annual Incentive Plan rating was set at 1.20, a level 20 percent higher than a 1.0 target rating because our budgeted EPS growth on a percentage

36


 

basis was significantly more challenging to achieve than the budgeted EPS growth of the TSR Peer Group.  The Company exceeded the plan rating by 33 percent (1.33) resulting in an actual performance rating of 1.60.

 

 

Long-Term Incentive:  The Committee utilizes stock options as the primary form of long-term compensation.  The Committee believes that stock options provide a strong incentive to increase stockholder value, since the value of stock options is directly dependent on the market performance of our common stock.  The Committee believes that options are an appropriate vehicle for long-term equity compensation because they directly reflect the stockholder experience, are straightforward to communicate, and provide value only if our stock price increases over time, which aligns our executives’ interests with those of our stockholders in delivering total shareholder return (“TSR”).

 

2019 Executive Compensation Highlights

In consideration of the strong financial performance outlined above and the competitive market for executive pay, the Committee made the following compensation decisions in 2019 with respect to the compensation of our named executive officers:

 

Element of Compensation

2019 Compensation Decision

Base Salary

The Committee increased each of our named executive officers’ base salaries by approximately 3 percent, to further align with the corresponding median levels of our Compensation Peer Group (as described below) and industry survey data.

 

Annual Incentive Plan

The Committee maintained the target bonus percentage for each named executive officer at the same level as in 2018. For more information, see the Annual Incentive Plan on page 43.

 

Option Grants

The Committee increased the stock option grant opportunities for Mr. Farrell, Mr. Dierker, Ms. Bomhard, Mr. Cugine, and Mr. de Maynadier taking into account their market positioning.  The new opportunities were 530 percent, 220 percent, 105 percent, 105 percent and 150 percent, respectively. For more information, see “Long Term Incentives—Stock Options and Restricted Stock” on pages 45-46.

 

Peer Groups.  The Committee utilizes two distinct peer groups for benchmarking compensation and measuring financial and plan performance.  

 

The compensation peer group is a group of 11 consumer-packaged goods companies, with similar distribution channels, a significant focus on brand recognition, and that have revenues in the range of approximately 50 – 200 percent of our revenues (the “Compensation Peer Group”). We believe there is a strong likelihood that the skills of our named executive officers are transferable among the companies in the Compensation Peer Group, so we would expect to compete with these companies for executive officer talent.  For 2019, the Compensation Peer Group consisted of: The Clorox Company, Coco-Cola Bottling Co. Consolidated, Dr. Pepper Snapple Group, Inc., Edgewell Personal Care Company, Flowers Foods, Inc., Hain Celestial Group, Inc., Hasbro, Inc., McCormick & Company Incorporated, Perrigo Company, The Scotts Miracle-Gro Company and Spectrum Brands, Inc.

37


 

The TSR peer group is a group of nine consumer-packaged goods companies closely aligned with the Company’s business (the “TSR Peer Group”).  The Committee compares the Company’s projected 2019 results with respect to EPS growth against the projected EPS growth of the TSR Peer Group.  This comparison against the TSR Peer Group is the key component used when determining the Company’s Annual Incentive Plan payout levels with respect to targeted financial performance against the Company’s Annual Incentive Plan metrics.  For 2019, the TSR Peer Group consisted of: Colgate-Palmolive Company, The Clorox Company, Edgewell Personal Care Company, Energizer Holdings Inc., Kimberly Clark Corporation, Newell Brands Inc, The Procter & Gamble Company, Reckitt Benckiser Group plc, and Unilever Plc.

 

 

38


2019 COMPENSATION

The principal components of 2019 compensation that we paid to our named executive officers were designed to meet our compensation objectives as follows:

 

 

39


The following table summarizes some highlights of our compensation practices that drive our compensation programs:

 

 

 

 

What We Do:

 

What We Do Not Do:

☑   Significant stock ownership and stock holding requirements are in place for senior executives.

☑   A majority of our executive compensation is performance based.

☑   Limited perquisites for executives.

☑   Appropriate balance between short-term and long-term compensation discourages short-term risk taking at the expense of long-term results.

☑   Our Annual Incentive Plan utilizes four diverse metrics to avoid over-emphasis on any one short-term measure.

☑   Change in control cash severance payments and vesting of stock options granted on or after July 30, 2019 require a “double trigger” before payment can be made or equity can vest (requiring a qualifying termination following a change-in-control).

☑   Our Compensation & Organization Committee engages an independent compensation consultant, who performs no other work for Church & Dwight, to advise on executive compensation matters.

☑   Clawback provisions permit the Compensation & Organization Committee to recoup certain compensation payments and stock grants made under our annual incentive plans, to the extent required by law or if otherwise agreed upon with the recipient.

 

☒   No gross-up payments to cover personal income taxes or excise taxes that pertain to executive or severance benefits.

☒   No hedging, pledging or short sales by our non-employee directors or employees with respect to Company securities.

☒   No repricing stock options without prior stockholder approval.

 

DETERMINATION OF COMPETITIVE COMPENSATION

In making executive compensation decisions for 2019, the Committee reviewed data provided by Semler Brossy Consulting Group, LLC, the Committee’s independent compensation consultant (“Semler Brossy”), to compare the compensation of our named executive officers to the compensation of executives in the competitive market. The Committee relies on various sources of compensation information to ascertain the competitive market for our named executive officers such as data obtained from proxy materials of the Compensation Peer Group and survey data provided by national compensation consulting firms such as Willis Towers Watson and Equilar, reflecting companies in the consumer staples and consumer discretionary sectors within the Company’s revenue scope, to assist in decisions regarding base pay, short-term incentive targets under our Annual Incentive Plan and long-term incentives.

The Compensation Peer Group is a group of 11 consumer-packaged goods companies that have revenues in the range of approximately 50 – 200 percent of our revenues. Within this classification, the Committee referenced companies with similar distribution channels and with a significant focus on brand recognition. We believe there is a strong likelihood that the skills of our named executive officers are transferable among the companies in the Compensation Peer Group, so we would expect to compete with these companies for executive officer talent. Below is a chart that shows the process used to determine the 2019 Compensation Peer Group:

40


Process for Determining Compensation Peer Group

 

During 2018, the Compensation Peer Group was updated to remove Mead Johnson who was acquired by Reckitt Benckiser.  In 2019 the Committee reviewed the Compensation Peer Group to determine potential changes to use when evaluating 2020 compensation.  This review focused on identifying the Company’s closest business comparators, including fast-growing companies, and adding similarly high valuation companies to ensure an appropriately sized analytical comparison within its disclosed peers. The peer group going forward will continue to include only companies with approximately 50-200 percent of our revenues.

The Committee primarily utilizes data from proxy materials with respect to the Compensation Peer Group for our CEO and CFO. With respect to our other named executive officers, the Committee primarily uses survey data in determining compensation due to the limited amount of comparable data available in the proxy materials from companies within the Compensation Peer Group, although the Committee does reference Compensation Peer Group data in determining our other named executive officers’ compensation when there is a meaningful level of relevant data for those positions.

In determining a 2019 competitive market guideline with respect to target total direct compensation, namely base salary, short-term incentive targets and long-term incentives, the Committee referenced a level that approximates the 50th percentile of the Compensation Peer Group, or the survey companies, as applicable. However, the Committee considers overall performance during the year, including TSR and other key financial performance metrics, when evaluating pay levels for our named executive officers. In addition, because a majority of our compensation is performance-based, actual cash compensation paid to our named executive officers could further vary from that paid to executive officers in the Compensation Peer Group or the survey companies, based on achievement of performance targets.

 

 

41


MIX OF PAY

For 2019, approximately 87 percent of the CEO’s target compensation and, on average 67 percent of the other named executive officers’ target compensation is variable, based on Company and individual performance. Variable compensation consists of the target Annual Incentive Plan payout, target Profit Sharing amount and the target value of stock options granted. The percentages below are calculated by dividing each compensation element by target total compensation, which consists of base salary, target Annual Incentive Plan compensation, target Profit Sharing amount plus target long-term incentives.

 

 

SALARIES

In 2019, all of our named executive officers received base salary increases of approximately 3 percent, which was consistent with market increases for this period.

Compensation of each of our named executive officers is set forth on the “2019 Summary Compensation Table” on page 53.

42


ANNUAL INCENTIVE PLAN

Our Annual Incentive Plan utilizes four equally weighted metrics, namely: Net Sales, Gross Margin, Diluted EPS and Cash from Operations. The table below summarizes the reasons the Committee utilizes these metrics for our Annual Incentive Plan.

 

The principal objective of the Annual Incentive Plan is to align executive and stockholder interests by providing an incentive to our named executive officers to achieve annual performance goals that also support long-term stockholder return. The performance goals are established each year to reflect specific objectives set in our annual budget. The Committee also considers competitive factors, including competitive market data for total cash compensation, which includes salary and target annual incentive bonus opportunities, in determining the amount of annual incentive award opportunities for our named executive officers.

 

 

To more accurately reflect the operating performance of our business, the Committee has approved adjustment principles to our reported financial results for the Annual Incentive Plan. Generally, these adjustments are made to exclude one-time or unusual items. The standard adjustments to reported financial results under our adjustment principles may vary from year to year and may have either a favorable or unfavorable impact on the Annual Incentive Plan. These standard adjustments include the amounts and percentages to eliminate the effect of foreign exchange rates that differed from budgeted amounts and the impact of unplanned acquisitions and divestitures. In 2019, the Annual Incentive Plan was adjusted to reflect the effect of changes in foreign exchange rates, the impact of the Flawless acquisition, the impact of the divestiture of the Brazil consumer business, and adjustments to the Passport and Flawless acquisitions earnout liabilities. The cumulative effect of these adjustments had no impact, as the reported rating of 1.60 equaled the adjusted rating of 1.60.  

43


As noted above, in structuring total direct compensation for our named executive officers, we have referenced the 50th percentile of direct compensation of the Compensation Peer Group and survey data. This median has influenced our incentive compensation target award levels, although we have from time to time, including in 2019, set target payouts above the median level when we believed that our planned performance was well ahead of our TSR Peer Group targets.

The Committee uses a numerical performance rating system with a range from 0.0 to 2.0 to determine the payout amounts under the Annual Incentive Plan. In late January or early February of each year, the Committee determines the specific rating for each year by comparing the Company's budgeted EPS growth for that year to the average budgeted EPS growth of the Company's TSR Peer Group. A rating of 1.0 normally represents the target achievement level for plan performance with each participant’s target payout based on his or her target percentage of his or her annual base salary. For 2019, we set payout amounts for performance at plan levels that were 20 percent above the amounts that would be paid with respect to a 1.0 rating (or a 1.2 rating) because our budgeted EPS growth of 8 percent was significantly more challenging to achieve than the average budgeted EPS growth of the TSR Peer Group. As a result, if 2019 operating plan level performance (i.e., target performance) was achieved, the participant would receive an award payout representing a 1.2 rating. In 2019, the Company delivered superior year over year EPS growth of 9 percent, significantly higher than the average of the TSR Peer Group.  The Company also exceeded its targets for Net Sales, Gross Margin, Diluted Earnings per Share, and Cash from Operations, resulting in an actual performance rating of 1.60. In addition to the strong absolute performance compared to the annual incentive targets, the Company demonstrated TSR of 8.3 percent (building on top of a 33 percent increase in TSR during 2018). The bonus payable under our Annual Incentive Plan is included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 53. The following table indicates the percentage of salary payable at a 1.0 target rating, the percentage of salary payable at a 1.2 plan rating and the award opportunity for 2019, based on a 1.2 plan rating for each of our named executive officers:

Named Executive Officers

Annual Incentive Plan Target Payouts

 

Name

Percentage of Salary

Payable at 1.0

Performance Rating

Percentage of Salary
Payable at 1.2
Performance Rating

Award

Opportunity

(Based on a 1.2

Performance Rating)

Matthew T. Farrell

115%

138%

$1,464,000

Richard A. Dierker

70%

84%

$505,300

Britta B. Bomhard

50%

60%

$278,700

Steven P. Cugine

50%

60%

$267,600

Patrick D. de Maynadier

60%

72%

$323,352

 

As described above, in 2019 the Committee referenced competitive compensation data provided by Semler Brossy in setting the percentage levels.

 

The following table indicates, with respect to each corporate performance measure, the threshold level of 2019 performance for which a payout could be made, the target performance level, the maximum performance level, and the actual performance and performance ratings.

 

2019 Annual Incentive Plan Performance Ranges, Actual Performance and Performance Ratings

(in millions, except gross margin percentage and per share data)

 

Performance Measure

Threshold
(0 rating)

Target
(1.2 rating)

Maximum
(2.0 rating)

Actual
Performance
(as adjusted)

Rating

Net Sales

$4,028

$4,283

$4,450

$4,315

1.35

Gross Margin

43.2%

44.4%

45.7%

45.1%

1.61

Diluted Earnings Per Share

$2.33

$2.45

$2.57

$2.49

1.46

Cash From Operations

$720

$800

$880

$877

1.97

Actual Performance Rating (Average)

 

 

 

 

1.60

 

44


The corporate performance rating for 2019 was equal to the weighted average number rating of these factors, or 1.60. Based on that performance rating, our named executive officers received award payments under the Annual Incentive Plan for 2019 as shown in the table below:

Named Executive Officers

2019 Annual Incentive Plan Payouts

 

Name

Plan Rating

Performance

Rating vs

Plan Rating

Actual
Performance
Rating

Actual Award
Payment(1)(2)

Actual Award as percentage
of Award Opportunity
(Based on a 1.2
Performance Rating)

Matthew T. Farrell

1.20

1.33

1.60

$1,937,800

133%

Richard A. Dierker

1.20

1.33

1.60

$668,800

133%

Britta B. Bomhard

1.20

1.33

1.60

$368,900

133%

Steven P. Cugine

1.20

1.33

1.60

$354,200

133%

Patrick D. de Maynadier

1.20

1.33

1.60

$428,000

133%

 

 

(1) 

Amounts rounded to nearest $100.

 

(2) 

The award payments are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.

PROFIT SHARING AMOUNT

 

Under our Savings and Profit Sharing Plan for Salaried Employees we make an annual contribution to each salaried employee’s account based on Company performance during the prior year. The performance metrics used to determine the profit sharing amount are the same ones used for the Annual Incentive Plan.   For 2019, the contribution was equal to 8 percent of each salaried employee’s base salary and Annual Incentive Plan payment.  Additional information on the profit sharing amount for 2019 is under the heading “Saving and Profit Sharing Plan for Salaried Employees” below on page 49.

The profit sharing contributions made to each named executive officer in 2019 are included in the “All Other Compensation” column of the Summary Compensation Table on page 53.

LONG-TERM INCENTIVES—STOCK OPTIONS

Stock Options

In 2019, the Committee continued to utilize options on our common stock as our principal form of long-term compensation. The number of shares underlying options granted to our named executive officers is calculated by designating an amount equal to a percentage of the named executive officer’s salary and dividing that amount by the grant date fair value of the shares underlying the option, in accordance with U.S. generally accepted accounting principles, rounded to the nearest 10 shares. The grant date fair value of the stock options is calculated in accordance with ASC Topic 718. Stock options granted in 2019:

 

have a 10-year term,

 

vest on the third anniversary of the date of grant,

 

vesting is subject to continued service through such vesting date,

 

the exercise price is equal to the fair market value per share on the date of grant, based on the closing price as reported on the NYSE on that date.

The Committee believes that stock options provide a strong incentive to increase stockholder value, because the value of the stock options is directly dependent on the market performance of our common stock following the date of grant.  Stock options also directly reflect the stockholder experience, are straightforward to communicate, and provide value only if our stock price increases over time, which aligns our executives’ interests with those of our stockholders in delivering TSR.  

 

45


Under our long-term incentive program, the Committee grants stock options to each of our named executive officers on an annual basis, based on a percentage of the executive officer’s salary. In connection with our 2019 grants, the Committee used the following percentages of salary based on market data for our named executive officers:

Named Executive Officers

Stock Option Grants as Percent of Salary

 

Name

Percentage of Salary

Matthew T. Farrell

530%

Richard A. Dierker

220%

Britta B. Bomhard

105%

Steven P. Cugine

105%

Patrick D. de Maynadier

150%

 

The number of shares underlying stock options granted to our named executive officers are set forth below in the “2019 Grants of Plan-Based Awards” table under the column heading, “All Other Option Awards: Number of Securities Underlying Options.” For additional information regarding stock option terms, see the narrative accompanying the “2019 Grants of Plan-Based Awards” table.

The Committee has, from time to time, considered the structure of our long-term incentive compensation, which continues to consist entirely of stock options. The Committee continues to believe that stock options are the most effective and appropriate form of long-term incentive compensation for the Company to use at this time. Stock options also directly reflect the stockholder experience, are straightforward to communicate, and provide value only if our stock price increases over time, which aligns our executives’ interests with those of our stockholders in delivering TSR.  On an ongoing basis, the Committee reviews with management and our Board the advisability of adopting alternative forms of long-term incentive compensation that are tied to, and provide incentives for, the long-term increase in stockholder value.

In 2018, the Committee amended the Stock Option Grant Agreement for Employees to allow for the exercise of option grants up to the expiration of their full term, post-retirement (the “Post Retirement Option Provision”). Options granted to our named executive officers in 2018 included the Post Retirement Option Provision. Since 2007, our stock option grants included a three-year post-termination vesting and exercise period (the “Old Option Provision” and, together with the Post Retirement Option Provision, the “Option Provisions”). The Option Provisions apply if (i) the option holder’s employment terminates due to retirement, as defined in the grant agreement, or is terminated by us without cause; (ii) the option holder is at least 55 years old and has completed at least five years of service with us; (iii) the sum of the option holder’s age and years of service is at least 65; and (iv) pursuant to our request, the option holder has signed a waiver and release agreement. We believe that the Option Provisions enable us to attract and retain seasoned executives who have considerable experience. Moreover, we believe the Option Provisions offset the effect of the three-year cliff vesting provisions of our stock options, which are less favorable than vesting provisions used by many of the Compensation Peer Group. Many of those companies provide for incremental vesting of stock options during the vesting period, while our options do not vest until they have been held for three years. We believe the Option Provisions encourage our employees to maintain employment with us for an extended period of time and to align their interests with longer-term Company performance. In 2019, the Committee amended the Stock Option Grant Agreements for the CEO and the Executive Vice Presidents to provide for a “double trigger” vesting of Options, granted on or after July 30, 2019, in the event of a change-in-control.  

 

PERQUISITES AND CHARITABLE CONTRIBUTIONS

We provide very limited perquisites to our named executive officers. Our named executive officers may receive a comprehensive physical examination through a provider selected by the executive from among three providers that we have approved. We believe it is in our best interest to ensure that our named executive officers’ health is monitored so that any health-related issues pertaining to an executive can be identified and addressed promptly. The average cost to us for providing this benefit in 2019 is approximately $2,600 per executive. We also offer a financial planning program to our named executive officers.  The average cost to us for providing this benefit in 2019 is approximately $15,000 per executive.

Except as noted above, we do not have programs for providing personal benefit perquisites to executive officers. From time to time the Company makes donations to non-profit organizations or educational institutions as requested by our executive officers and directors. The aggregate amount of all such donations with respect to named executive officers was $50,000 in 2019.

46


2020 COMPENSATION DECISIONS

The Compensation & Organization Committee approved the 2020 salary increases and target long-term incentive adjustments based on market data. The Compensation & Organization Committee approved the increase in target for the Annual Incentive Plan for Mr. Dierker from 70 percent to 85 percent.  The Compensation & Organization Committee also approved the increase of the percent of salary measurement for stock option grants for Mr. Farrell under the Company’s long-term incentive program from 530 percent to 565 percent, for Mr. Dierker from 220 percent to 235 percent, for Ms. Bomhard from 105 percent to 115 percent, and for Mr. Cugine from 105 percent to 115 percent. In addition, each named executive officer received a 3 percent increase in base salary as indicated in the table below.

2020 Base Salary

 

Named Executive Officer

2019 Base
Salary ($)

2020 Base
Salary ($)ry ($)

Base Salary

%

Increase

Matthew T. Farrell

1,060,900

1,092,800

3

Richard A. Dierker

601,500

619,600

3

Britta B. Bomhard

464,500

478,500

3

Steven P. Cugine

445,618

459,400

3

Patrick D. de Maynadier

449,100

462,600

3

 

STOCK OPTION GRANT PRACTICES

The Compensation & Organization Committee makes annual stock option grants to executive officers and other employees effective on the Monday falling most closely to the midpoint between the dates of the Company’s first and second quarter earnings releases. A grant to a new employee is effective on the date the employee commences employment with us, and special grants made to employees at times other than the time of the annual grant are effective on the first trading day of the month following approval of the grant. The per share exercise price of stock options is equal to the closing price of a share of our common stock on the date of grant. We believe that our stock option grant practices are appropriate and eliminate any questions regarding “timing” of grants in anticipation of material events, since grants become effective in accordance with a long-standing schedule.

The Compensation & Organization Committee delegates to our CEO and the Executive Vice President, Global Human Resources the ability to approve a specific number of stock option grants for employees who are not executive officers. The grants may be made at times other than the time of annual grant and are utilized for new hires and for performance recognition purposes. The Compensation & Organization Committee approved options to purchase 162,600 shares for these purposes in 2019. The timing and pricing of the option grants in 2019 conformed to the Compensation & Organization Committee practices described in the preceding paragraph.

We do not permit repricing of options without prior stockholder approval.

 

47


STOCK OWNERSHIP, TRADING GUIDELINES AND SHORT SALE, HEDGING AND PLEDGING POLICIES

Executive Stock Ownership Guidelines

In order to further align the interests of executive officers with the interests of our stockholders, we maintain stock ownership guidelines for our executive officers. The guidelines specify that each executive officer must hold equity in the Company’s stock equal to a multiple of each executive’s salary.

The stock ownership guidelines applicable to each of our named executive officers at the end of 2019 are shown in the following table:

 

Title

Multiple of
Salary Subject
to Guidelines

Chief Executive Officer

6.0x

Chief Financial Officer

3.0x

Executive Vice President

2.5x

 

The calculation of ownership includes:

 

shares acquired and held upon stock option exercises,

 

the value of any vested or unvested stock or restricted stock,

 

stock held in the Company’s Profit Sharing Plan,

 

stock held in the Company’s Employee Stock Purchase Plan,

 

share equivalents held in the Executive Deferred Compensation Plan,

 

shares held in trust,

 

shares held outright, and

 

60 percent of the in-the-money value of vested and unvested stock options.

Executives are generally expected to achieve the guidelines within five years from the date on which they become subject to our stock ownership guidelines. If an executive is ever below their ownership requirements, our guidelines require the executive to hold 50 percent of the net, after-tax value of any equity received from the Company’s ongoing compensation programs. As of December 31, 2019, all of our executive officers who have been in their position for five years were in compliance with our stock ownership guidelines.

Trading, Short Sale, Hedging and Pledging

Additionally, our insider trading policy prohibits our directors, executive officers, and other employees from (i) buying or selling the Company’s securities while in possession of material, non-public information relating to us, (ii) engaging in short sales of our securities, (iii) buying or selling puts or calls or other derivative securities on our securities, (iv) participating in equity swap transactions involving Company stock, (v) purchasing Company shares on margin, (vi) short-term trading, (vii) pledging Company shares, (viii) standing orders, (ix) entering into hedging or monetizing transactions or similar arrangements with respect to our securities, and (x) engaging in any other form of hedging or monetization transactions or similar arrangements or financial instruments with respect to the Company’s securities.

 

48


ONGOING AND POST-EMPLOYMENT COMPENSATION

We have plans and agreements addressing compensation for our named executive officers that accrue value as the executive officers continue to work for us, provide special benefits upon certain types of termination events, or provide retirement benefits. These plans and agreements were designed to be part of a competitive compensation package, in some cases not only for executive officers, but for other employees as well.

SAVINGS AND PROFIT SHARING PLAN FOR SALARIED EMPLOYEES

This plan, which we sometimes refer to below as the “Savings and Profit Sharing Plan,” is a tax-qualified defined contribution plan available to all of our domestic salaried and hourly employees. All of our named executive officers participate in the plan. Under the plan, an employee may contribute, subject to Internal Revenue Code limitations, up to a maximum of 70 percent of his or her eligible compensation (approximately 15 percent for highly compensated employees in 2019), which includes salary and payments under the Annual Incentive Plan, on a pre-tax basis or as Roth contributions. We provide a matching contribution equal to 100 percent of the first five percent of eligible compensation that an employee contributes in any year. In addition, the plan provides a profit-sharing feature under which we make an annual contribution to the account of each employee based on our performance in the preceding year. The performance measures and results used to calculate the annual contribution level are identical to the Company-wide measures described above under “2019 Compensation—Annual Incentive Plan.” Achievement of the target performance rating would have resulted in a contribution of five percent of a participant’s base salary and Annual Incentive Plan payments made in 2019. Based on 2019 performance results, the Compensation & Organization Committee approved a contribution equal to 8 percent (5 percent target X 1.20 plan rating X 1.33 performance rating) of a participant’s eligible compensation in 2019. Amounts credited to an employee’s account in the plan may be invested among a number of funds, including a Company stock fund. A participant’s account is adjusted to reflect the rate of return, positive or negative, on the investments. Employee contributions and compensation on which our profit sharing contributions may be based cannot exceed limits under the Internal Revenue Code (the eligible compensation limit was $280,000 in 2019).

EXECUTIVE DEFERRED COMPENSATION PLAN

The Executive Deferred Compensation Plan (“EDCP”) and its predecessors collectively have been in effect for over 20 years. The EDCP is a nonqualified deferred compensation plan that provides potential tax benefits for certain employees, including our named executive officers. Under the EDCP as currently in effect, an executive officer can defer up to 85 percent of his or her salary and up to 85 percent of amounts paid to the executive officer under the Annual Incentive Plan. In addition, an executive can make a separate deferral, which we refer to below as the “Excess Compensation Deferral,” of up to five percent of compensation that exceeds Internal Revenue Code limits on eligible contributions under the Savings and Profit Sharing Plan. We provide a contribution equal to (i) 100 percent of the Excess Contribution Deferral; (ii) five percent of other salary and Annual Incentive Plan deferrals; and (iii) the profit sharing contributions we would have made to the participant’s account under the Savings and Profit Sharing Plan were it not for the Internal Revenue Code limit on the amount of eligible compensation under that plan and the participant’s deferrals into the EDCP.

Amounts deferred under the EDCP generally are not subject to federal, and in many cases state, income taxes until they are distributed. An executive officer can choose to have his or her contributions allocated to one or more of several notional investments, including a notional investment in our common stock. A participant may not initially allocate more than 50 percent of his or her contributions to our common stock, although the participant can increase the notional common stock amount through intra-plan transfers of notional investments previously made. A participant’s account is adjusted to reflect the deemed rate of return, positive or negative, on the notional investments. An executive officer may choose to receive a payout following retirement, either in a lump sum or in annual installments, in accordance with the terms of the EDCP. The EDCP also includes provisions for payment upon termination (pre-retirement) death or disability. See the “2019 Nonqualified Deferred Compensation” table and accompanying narrative for additional information.

 

CHANGE IN CONTROL AND SEVERANCE AGREEMENTS

We have adopted change in control and severance agreements for our executive officers because we believe that these agreements can create management stability during a period of potential uncertainty. Absent such agreements, there is an increased risk that executive officers may be encouraged to seek other employment opportunities if they became concerned about their employment security following a change in control. We also believe that the agreements provide financial security to an executive officer in the event of an involuntary termination of the executive officer without cause or for good reason following a change in control by providing a meaningful payment to the executive officer. The agreements also provide clear statements of the rights of the executive officers and protect against a change in employment and other terms by an acquirer that would be unfavorable to the executive officer. We also provide severance benefits to our executive officers, although at a lower level, for certain types of employment terminations that do not follow a change in control. We believe these obligations provide a competitive benefit that enhances our ability to hire and retain capable executive officers.

49


The change in control and severance agreements provide for payments and other benefits if an executive officer’s employment is terminated without cause, or if an executive officer terminates employment for “good reason,” within two years following a change in control. These provisions require what is sometimes called a “double trigger,” namely both a change in control and a specified termination event, before payment is made. The agreements also provide for lesser payments if these types of terminations occur outside of the context of a change in control. The agreements do not contain an excise tax gross-up provision and, instead provide that, in the event that payments to be made to an executive under the agreements in connection with a change in control would result in the imposition of the excise tax under Internal Revenue Code Section 4999, the payments will be reduced to the highest amount that could be paid without triggering the excise tax if, following the reduction, the executive would retain a greater amount of net after-tax payments than if no reduction were made. If no reduction is made, the executive officer will pay any applicable excise tax.

See “Potential Payments Upon Termination or Change in Control” on pages 58-61 for further information regarding benefits under the change in control and severance agreements.

ACCOUNTING AND TAX CONSIDERATIONS

The Committee considers various accounting and tax implications of equity-based and other forms of compensation.

When determining the amounts of equity-based awards to be granted, the Committee examines the accounting cost associated with the grants.  Under ASC 718, grants of stock options result in an accounting charge for the Company equal to the fair value of the award issued.

Internal Revenue Code Section 162(m) (“Section 162(m)”) generally disallows a federal income tax deduction for compensation paid by publicly held companies to certain of their executive officers that is in excess of $1,000,000 per year, subject to an exception for performance-based compensation that was eliminated by tax reform legislation under the Tax Cuts and Jobs Act (“TCJA”) for tax years beginning on or after January 1, 2018.  The TCJA also expanded the scope of “covered employees” whose compensation may be subject to the deduction limitation by, among other things, including the principal financial officer and providing that once an individual becomes a covered employee for tax years beginning after December 31, 2016, that individual will remain a covered employee for all future years that the employee receives compensation (including after termination of employment).  The TCJA included a transition rule under which the changes to Section 162(m) would not apply to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and is not materially modified after that date.

We historically structured certain portions of our executive compensation program in a manner intended to be performance-based for purposes of Section 162(m) (as in effect prior to enactment of TCJA) in order to preserve deductibility for federal income tax purposes under this provision. Nevertheless, the Committee believes that stockholder interests are best served if the Company’s flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expenses. As a result, the Committee has approved salaries and other awards for executive officers that were not fully deductible because of Section 162(m) and, in light of the repeal of the performance-based compensation exception to Section 162(m), expects in the future to approve compensation to current and former executive officers that is not deductible for income tax purposes.

SAY-ON-PAY VOTE

At the 2019 Annual Meeting of Stockholders, we asked our stockholders to vote to approve, on an advisory basis, the compensation paid to our named executive officers, commonly referred to as a say-on-pay vote. Our stockholders overwhelmingly approved compensation to our named executive officers, with over 92 percent of votes cast in favor of our say-on-pay resolution. We value this positive endorsement by our stockholders of our executive compensation policies. As we evaluated our compensation practices in fiscal 2019, we were mindful of the strong support our stockholders expressed for our pay-for-performance philosophy. As a result, the Compensation & Organization Committee continued our general approach to executive compensation for 2019. We believe our programs are effectively designed, are working well, and are aligned with the interests of our stockholders. The Compensation & Organization Committee will continue to seek and consider stockholder feedback in the future.

50


ROLE OF EXECUTIVE OFFICERS IN DETERMINING EXECUTIVE COMPENSATION FOR NAMED EXECUTIVE OFFICERS

In connection with 2019 compensation for executive officers, Mr. Farrell, aided by our human resources department, provided statistical data and recommendations to the Compensation & Organization Committee. Mr. Farrell did not make recommendations as to his own compensation. While the Compensation & Organization Committee utilized this information, and valued Mr. Farrell’s observations with regard to compensation for our other executive officers, the ultimate decisions regarding executive compensation and goal setting were made by the Compensation & Organization Committee.

ROLE OF THE COMPENSATION & ORGANIZATION COMMITTEE IN EXECUTIVE COMPENSATION

As set forth in the Charter of the Compensation & Organization Committee, one of the Compensation & Organization Committee’s purposes is to administer our executive compensation program. It is the Compensation & Organization Committee’s responsibility to oversee the design of executive compensation programs, policies, and practices; to determine the types and amounts of compensation for executive officers; and to review and approve the adoption, termination, and amendment of, and to administer, our incentive compensation and stock option plans. All compensation for our executive officers ultimately must be approved by the Compensation & Organization Committee. Our human resources department supports the Compensation & Organization Committee’s work, and in some cases, acts under delegated authority to administer compensation programs. In addition, as described above, the Compensation & Organization Committee directly engages Semler Brossy, an outside independent compensation consulting firm, to assist in its review of compensation for executive officers.

ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT

 

Representatives from Semler Brossy attend Compensation & Organization Committee meetings, participate in executive sessions, and communicate directly with the Committee. Semler Brossy also provides independent consulting services to the Nominating & Governance Committee regarding non-employee director compensation.

 

51


COMPENSATION & ORGANIZATION COMMITTEE REPORT

The Compensation & Organization Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Securities and Exchange Commission regulations. Based on its review and discussions, the Compensation & Organization Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and, through incorporation by reference, in Church & Dwight’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Respectfully submitted,

Arthur B. Winkleblack, Chair

Bradley C. Irwin

Penry W. Price

Laurie J. Yoler

 

52


2019 SUMMARY COMPENSATION TABLE

The following table sets forth information regarding the compensation for 2019, 2018, and 2017 of our Chairman, President and CEO, our Executive Vice President and CFO, and each of the persons who were the next three most highly paid executive officers in 2019, or our “named executive officers,” as defined in Item 402 of Regulation S-K.  

 

Name and Principal Position

Year

Salary
($)(1)

Bonus(2)

($)

Stock
Awards(3)

Option
Awards
($)(3)

Non-Equity
Incentive
Plan
Compensation
($)(1)(4)

All Other
Compensation
($)

Total
($)

Matthew T. Farrell(5)

2019

1,053,175

 

 

5,622,770

1,937,800

371,377(6)

8,985,122

Chairman, President and

2018

1,022,500

208,100

 

4,377,524

1,387,500

272,089

7,267,713

Chief Executive Officer

2017

1,000,000

 

 

3,849,993

1,150,000

259,622

6,259,615

Richard A. Dierker(7)

2019

597,124

 

 

1,323,300

668,800

176,140(8)

2,765,364

Executive Vice President, Chief

2018

579,750

71,800

50,280

963,614

478,900

126,789

2,271,133

Financial Officer

2017

562,750

 

 

754,156

393,900

110,919

1,821,725

Britta B. Bomhard(9)

2019

461,125

 

 

487,725

368,900

127,290(10)

1,445,041

Executive Vice President,

Chief Marketing Officer

2018

447,750

39,600

50,280

450,959

264,200

91,338

1,344,127

Steven P. Cugine(11)

Executive Vice President, International and New Global Products Innovation

2019

442,750

 

 

468,300

354,200

123,466(12)

1,388,716

Patrick D. de Maynadier(13)

2019

445,825

 

 

673,650

428,000

105,858(14)

1,653,333

Executive Vice President,

2018

432,750

46,000

 

632,191

306,400

83,401

1,500,742

General Counsel & Secretary

2017

419,750

 

 

562,596

251,900

90,136

1,324,384

 

 

(1) 

Some of our named executive officers deferred a portion of their salary and non-equity incentive plan compensation in 2019 under the EDCP as follows: Mr. Farrell, $133,410; Mr. Dierker, $316,882; Ms. Bomhard, $288,715; Mr. Cugine, $24,804; and Mr. de Maynadier, $0.

 

(2) 

Includes 15 percent additional bonus as the Company delivered EPS growth of 17 percent and extraordinary TSR of 33.2 percent.

 

(3) 

The amounts shown for option and stock awards are based on the grant date fair value of awards calculated in accordance with ASC Topic 718. The assumptions used in determining the amounts in this column are set forth in note 12 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on February 18, 2020. For information regarding the number of shares subject to 2019 stock option and restricted stock grants and other features of those grants, see the “2019 Grants of Plan-Based Awards” table on page 54. Mr. Dierker and Ms. Bomhard received grants of restricted stock for their respective sustained superior performance and to encourage retention.

 

(4) 

Includes payments under the Annual Incentive Plan based on achievement of corporate performance measures. See “Compensation Discussion and Analysis—2019 Compensation—Annual Incentive Plan” for further information regarding payments for 2019.

 

(5) 

Mr. Farrell’s base salary increased to $1,060,900 effective April 1, 2019.

 

(6) 

Includes $344,341 of employer retirement savings contributions, of which $225,902 was contributed to Mr. Farrell’s account under the Savings and Profit Sharing Plan for Salaried Employees and $118,439 was contributed to his account under the EDCP, based on statutory limits. This also includes reimbursement for a physical examination, $15,000 for a Company provided financial planning program, and donations of $10,000 that we made to non-profit organizations with which Mr. Farrell is involved.

 

(7) 

Mr. Dierker’s base salary increased to $601,500 effective April 1, 2019.

 

(8) 

Includes $149,217 of the employer retirement savings contributions, of which $105,826 was contributed to Mr. Dierker’s account under the Savings and Profit Sharing Plan for Salaried Employees and $43,391 was contributed to his account under the EDCP, based on statutory limits. This also includes reimbursement for a physical examination, $15,000 for a Company provided financial planning program, and donations of $10,000 that we made to non-profit organizations with which Mr. Dierker is involved.

 

(9) 

Ms. Bomhard’s base salary increased to $464,500 effective April 1, 2019. 

 

(10) 

Includes $99,440 of employer retirement savings contributions, of which $75,194 was contributed to Ms. Bomhard’s account under the Savings and Profit Sharing Plan for Salaried Employees and $24,246 was contributed to her account under the EDCP, based on statutory limits. This also includes reimbursement for a physical examination, $15,000 for a Company provided financial planning program, and donations of $10,000 that we made to non-profit organizations with which Ms. Bomhard is involved.

 

(11) 

Mr. Cugine’s base salary increased to $446,000 effective April 1, 2019.

 

(12) 

Includes $95,466 of employer retirement savings contributions, of which $72,748 was contributed to Mr. Cugine’s account under the Savings and Profit Sharing Plan for Salaried Employees and $22,718 was contributed to his account under the EDCP, based on statutory limits. This also includes reimbursement for a physical examination, $15,000 for a Company provided financial planning program, and donations of $10,000 that we made to non-profit organizations with which Mr. Cugine is involved.

 

(13) 

Mr. De Maynadier’s base salary increased to $449,100 effective April 1, 2019.

53


 

(14) 

Includes $77,858 of employer retirement savings contributions, of which $77,858 was contributed to Mr. de Maynadier’s account under the Savings and Profit Sharing Plan for Salaried Employees and $0 was contributed to his account under the EDCP, based on statutory limits. This also includes reimbursement for a physical examination, $15,000 for a Company provided financial planning program, and donations of $10,000 that we made to non-profit organizations with which Mr. de Maynadier is involved.

 

2019 GRANTS OF PLAN-BASED AWARDS

The following table provides information regarding plan-based awards granted to our named executive officers in 2019.

 

Name

Grant

Date(1)

Approval

Date(1)

 

Estimated Possible

Payouts Under Non-Equity

Incentive Plan  Awards(3)

All Other

Stock

Awards: No

of Shares of

Common

Stock or

Units

(#)

All Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)(4)

Exercise or

Base Price

of Option

Awards

($ / Sh)

Grant Date

Fair Value

of Stock

and Option

Awards

($)(5)

Threshold

($)(2)

Target

(at 1.0 rating)

($)

Maximum

($)

Matthew T. Farrell

06/17/2019

04/30/2019

1,211,200

2,422,300