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 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for use of the Commission only (as
permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to ss.240.14a-12
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LIVENT CORPORATION
(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):
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No
fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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PRELIMINARY
COPY SUBJECT TO COMPLETION DATED MARCH 5, 2021
In
accordance with Rule 14a-6(d) under Regulation 14A, please be advised that Livent Corporation intends to release definitive copies
of this Proxy Statement to security holders on or about March 19, 2021.
DEAR STOCKHOLDER
PIERRE BRONDEAU
CHAIRMAN OF THE BOARD
March 19, 2021
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It is my pleasure to invite you to attend
the Company’s 2021 Annual Meeting of Stockholders. The meeting will be held virtually via live webcast on Thursday, April
29, 2021, at 2:00 p.m. EDT. The meeting can be accessed by visiting www.virtualshareholdermeeting. com/LTHM2021, where you will
be able to listen to the meeting live, submit questions and vote online. There will be no physical location for stockholders to
attend. The Notice of Annual Meeting and Proxy Statement accompanying this letter describe the business to be conducted at the
meeting.
During the meeting, we will report to you on
the Company’s earnings results and other achievements during 2020. We welcome this opportunity
to have a dialogue with our stockholders and look forward to your comments and questions.
Your vote is important. Please vote your proxy
promptly so your shares can be represented. Please see your proxy card for specific instructions on how to vote.
Sincerely,
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PRELIMINARY
COPY SUBJECT TO COMPLETION DATED MARCH 5, 2021
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, APRIL 29, 2021
2:00
p.m. EDT
The meeting can be accessed by visiting www.virtualshareholdermeeting.com
/LTHM2021. There will be no physical location for stockholders to attend.
Dear Stockholder:
You are invited to the Annual Meeting of Stockholders
of Livent Corporation. We will hold the meeting virtually via live webcast at the time and web page noted to the left. At the meeting,
we will ask you to:
1.
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Elect
three Class III directors to terms expiring in 2024.
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2.
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Ratify
the appointment of KPMG LLP as our independent registered public accounting firm for
2021.
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3.
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Hold
an advisory (non-binding) vote on named executive officer compensation.
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4.
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Approve
proposed amendments to the Company’s Amended and Restated Certificate of Incorporation
and Amended and Restated By-Laws to declassify the board of directors.
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5.
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Approve
a proposed amendment to the Company’s Amended and Restated Certificate of Incorporation
to eliminate supermajority voting requirements.
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6.
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Consider
and act upon any other business properly brought before the meeting.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ITS NOMINEES FOR DIRECTOR, AND VOTES FOR PROPOSALS 2, 3, 4 AND 5.
Your vote is important. To be sure your vote
counts and assure a quorum, please vote, sign, date and return the enclosed proxy card whether or not you plan to attend the virtual
meeting; or if you prefer, please follow the instructions on the enclosed proxy card for voting by Internet or by telephone whether
or not you plan to attend the virtual meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON APRIL 29, 2021:
The proxy statement and the annual report
to security holders are available at www.livent.com
By order of the Board of Directors,
SARA PONESSA
Vice President,
General Counsel and Secretary
March 19, 2021
SOLICITATION OF PROXIES
The Board of Directors (“Board”)
of Livent Corporation (the “Company”, “Livent” or “we”) is soliciting proxies for use at the
Company’s 2021 Annual Meeting of Stockholders and any postponements or adjournments of that meeting (as so postponed or adjourned,
the “Annual Meeting”). On or about March 19, 2021, we will mail to each of our stockholders (other than those who previously
requested electronic delivery or previously elected to receive delivery of a paper copy of the proxy materials) a Notice of Internet
Availability of Proxy Materials containing instructions on how to access and review the proxy materials via the internet and how
to submit a proxy electronically using the internet.
AGENDA ITEMS
The agenda for the Annual Meeting is to:
1.
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Elect three Class III directors to terms expiring in 2024;
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2.
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Ratify the appointment of KPMG LLP as the Company’s independent registered public accounting
firm for 2021;
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3.
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Conduct an Advisory (Non-Binding) vote on named executive officer compensation;
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4.
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Approve proposed amendments to the Company’s Amended and Restated Certificate of Incorporation
(“Certificate of Incorporation”) and Amended and Restated By-Laws (“By-Laws”) to declassify the board
of directors;
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5.
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Approve a proposed amendment to the Company’s Certificate of Incorporation to eliminate
supermajority voting requirements; and
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6.
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Conduct other business properly brought before the meeting.
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INSTRUCTIONS FOR THE VIRTUAL ANNUAL
MEETING
This year our Annual Meeting will be a completely
virtual meeting. There will be no physical meeting location. The meeting will only be conducted via live webcast. We have adopted
a virtual format for the Annual Meeting to make participation accessible for stockholders from any geographic location with internet
connectivity. We have worked to offer the same participation opportunities as would be provided at an in-person meeting while further
enhancing the online experience available to all stockholders regardless of their location.
To participate in the virtual meeting, visit
www.virtualshareholdermeeting.com/LTHM2021 and enter the 16-digit control number included on your Notice of Internet Availability
of Proxy Materials, on your proxy card, or on the instructions that accompanied your proxy materials. You may begin to log into
the meeting platform beginning at 1:30 p.m. Eastern Daylight Savings Time (“EDT”) on April 29, 2021. The meeting will
begin promptly at 2:00 p.m. EDT on April 29, 2021.
Whether or not you
participate in the virtual meeting, it is important that your shares be part of the voting process. You may log on to
proxyvote.com and enter your 16-digit control number. The virtual meeting platform is fully supported across browsers
(Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most
updated version of applicable software and plugins. Participants should ensure that they have a strong WiFi connection
wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and
ensure that they can hear streaming audio prior to the start of the meeting.
This year’s stockholders question and answer
session will include questions submitted in advance of, and questions submitted live during, the Annual Meeting. You may submit
a question in advance of the meeting at www.proxyvote.com after logging in with your 16-digit control number. Questions may be
submitted during the Annual Meeting through www.virtualshareholdermeeting.com/LTHM2021. We will post questions and answers, if
applicable to our business, on our Investor Relations website shortly after the meeting.
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 5
INFORMATION ABOUT VOTING
WHO CAN VOTE
You can vote at the Annual Meeting
if you were a holder of the Company’s common stock, par value of $0.001 per share (“Common Stock”), on the record
date. The record date is the close of business on March 1, 2021. You will have one vote for each share of Common Stock. As of the
record date, there were 146,606,239 shares of Common
Stock outstanding.
HOW TO VOTE
You may vote in one of four ways:
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You can vote by signing and returning the enclosed proxy card. If you do, the individuals named on the card will vote your shares in the way you indicate;
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You can vote by internet;
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You can vote by telephone; or
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You can cast your vote at the Annual Meeting.
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The meeting can be accessed by visiting www.virtualshareholdermeeting.com/LTHM2021, where you will be able to listen to the meeting live, submit questions and vote online.
You will need the 16 digit control number provided on your proxy card, voting instruction form or Notice of Internet Availability
of Proxy Materials.
USE OF PROXIES
Unless you tell us on the proxy card to vote
differently, we plan to vote signed and returned proxies FOR the Board nominees for director, FOR Proposals 2, 3, 4 and 5, and
in the discretion of the proxy holders as to any other matters that may properly come before the Annual Meeting.
QUORUM REQUIREMENT
We need a quorum of stockholders to hold a valid
Annual Meeting. A quorum will be present if the holders of at least a majority of the outstanding Common Stock entitled to vote
at the meeting either attend the Annual Meeting in person or are represented by proxy at the Annual Meeting. Abstentions, broker
non-votes (described below) and votes withheld are counted as present for the purpose of establishing a quorum.
VOTE REQUIRED FOR ACTION
Directors are elected by a majority of the votes
cast in an uncontested election. Because the number of nominees properly nominated for the Annual Meeting is the same as the number
of directors to be elected at the Annual Meeting, the election of directors is an uncontested election. As a result, any nominee
who receives a majority of the votes cast with respect to his or her election at the Annual Meeting will be elected to the Board
(or re-elected, in the case of any nominee who is an incumbent director). Incumbent nominees have tendered a contingent resignation
which would become effective if (i) the nominee does not receive a majority of the votes cast with respect to his or her election
at the Annual Meeting and (ii) the Board of Directors accepts such resignation. Adoption of Proposals 2 and 3 (which is non-binding)
require the affirmative vote of the majority of shares present in person or represented by proxy and entitled to vote at the meeting,
and adoption of Proposals 4 and 5 require the affirmative vote of the holders of at least 80% of all outstanding shares of the
Company entitled to vote at the meeting.
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 6
ABSTENTIONS OR LACK OF INSTRUCTIONS TO
BANKS OR BROKERS
Abstentions will not be counted as votes cast
for the election of directors, and thus will have no effect on the election of directors. With respect to Proposals 2 through 5,
abstentions will have the effect of a vote against such proposals.
A broker non-vote
occurs when a bank, broker or other nominee holding shares on behalf of a stockholder does not receive voting instructions
from the beneficial owner with respect to a non-routine matter to be voted on at the Annual Meeting by a specified date
before the Annual Meeting. Banks, brokers and other nominees may vote undirected shares on matters deemed routine in
accordance with New York Stock Exchange (“NYSE”) rules, but they may not vote undirected shares on matters deemed
non-routine in accordance with such rules. For this purpose, the ratification of the appointment of the independent
registered public accounting firm is considered a routine matter, but the election of directors, the non-binding advisory
vote regarding named executive officer compensation, the amendments to the Certificate of Incorporation and By-Laws to
declassify the Board of Directors, and the amendment to the Certificate of Incorporation to eliminate supermajority voting
requirements are considered non-routine matters.
In the event of a
broker non-vote in the election of directors or the non-binding advisory vote regarding named executive officer compensation
at the Annual Meeting, the broker non-vote will not have any effect on the outcome in as much as broker non-votes are not
counted as votes cast or as shares present and entitled to be voted with respect to any matter on which the broker has
expressly not voted. In the event of a broker non-vote with respect to the amendments to the Certificate of Incorporation and
By-Laws to declassify the Board of Directors or the amendment to the Certificate of Incorporation to eliminate supermajority
voting requirements, the broker non-vote will have the effect of a vote against the proposals inasmuch as adoption of
Proposals 4 and 5 require the affirmative vote of the holders of at least 80% of all outstanding shares of common stock
entitled to vote at the meeting.
If you are entitled to vote shares under an employee
benefit plan and you either do not direct the trustee by April 27, 2021 how to vote your shares, or if you vote on some but not
all matters that come before the Annual Meeting, the trustee will, in the case of shares held in the Livent Savings and Investment
Plan, vote your undirected shares in proportion to the votes received from other participants, and in the case of the Company’s
other employee plans, vote your shares in the trustee’s discretion, except to the extent that the plan or applicable law
provides otherwise.
REVOKING A PROXY
You may revoke your proxy at any time before
it is exercised. You can revoke a proxy by:
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Sending a written notice to the Corporate Secretary of Livent;
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Delivering a properly executed, later-dated proxy;
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Attending the Annual Meeting and voting in person, provided that you comply with the conditions set forth in the section of this proxy statement above entitled “How to Vote”; or
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If your shares are held through an employee benefit plan, your revocation must be received by the trustee by April 27, 2021.
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LIVENT
CORPORATION | 2021 PROXY
STATEMENT 7
II.
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THE PROPOSALS TO BE VOTED
ON
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PROPOSAL 1
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ELECTION OF DIRECTORS
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NOMINEES FOR DIRECTOR
The Board of Directors is divided into three
classes, with one class of our directors standing for election each year, for a three-year term. Directors for each class are elected
at the annual meeting of stockholders held in the year in which the term for their class expires and hold office until their death,
resignation or removal or their successors are duly elected and qualified. Vacancies on the Board of Directors may be filled by
a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected
to fill a vacancy resulting from an increase in the number of directors shall hold office for a term that shall coincide with the
remaining term of the class of directors to which he or she is elected. A director elected to fill a vacancy not resulting from
an increase in the number of directors shall have the same remaining term as that of his or her predecessor.
The Board of Directors currently consists of
nine directors, divided into the following three classes:
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The Class I directors are Michael F. Barry, Steven T. Merkt and Pablo
Marcet, and their terms will expire at the 2022 annual meeting of stockholders (the “2022 Annual Meeting”);
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The Class II directors are Paul W. Graves, Andrea E. Utecht and Christina Lampe-Önnerud,
and their terms will expire at the 2023 annual meeting of stockholders; and
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The Class III directors are Pierre Brondeau, G. Peter D’Aloia, and Robert C. Pallash,
and their terms will expire at the Annual Meeting.
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All of our Class III directors have been nominated
to serve as Class III directors and have agreed to stand for election. If elected, the Class III directors’ next term will
expire at the 2024 annual meeting of stockholders. Information about the nominees is contained in the section of this proxy statement
entitled “Board of Directors”.
The Board of Directors expects that each of the
nominees will be able and willing to serve as directors. If any nominee becomes unavailable, the proxies may be voted for another
person nominated by the Board of Directors to fill the vacancy, or the size of the Board of Directors may be reduced.
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THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE
ELECTION OF PIERRE BRONDEAU, G. PETER D’ALOIA, AND ROBERT C. PALLASH TO THE BOARD OF DIRECTORS AS CLASS III DIRECTORS
AS DESCRIBED ABOVE.
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LIVENT
CORPORATION | 2021 PROXY
STATEMENT 8
PROPOSAL 2
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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The Audit Committee of the Board
of Directors is directly responsible for the appointment, compensation, retention and oversight of the independent external audit
firm retained to audit the Company’s financial statements. The Audit Committee has approved KPMG LLP (“KPMG”)
continuing to serve as the Company’s independent registered public accounting firm for 2021.
The Audit Committee periodically
reviews the performance of the independent external audit firm. In conjunction with the mandated rotation of KPMG’s lead
engagement partner, the Audit Committee and its chairperson also evaluate and approve the selection of KPMG’s new lead engagement
partner.
The Audit Committee is responsible
for the audit fee negotiations associated with the Company’s retention of KPMG. For the fiscal years 2019 and 2020, KPMG’s
fees, all of which were approved by the Audit Committee, are included in the table below.
($000)
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2019
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2020
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Audit Fees(1)
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$
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2,290
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$
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2,100
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Audit Related Fees(2)
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197
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445
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Tax Fees(3)
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9
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164
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All Other Fees(4)
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85
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0
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TOTAL
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$
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2,581
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$
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2,709
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(1)
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Fees for professional services performed
by KPMG for the integrated audit of the Company’s annual consolidated and combined financial statements included in
the Company’s Form 10-K filing and review of the financial statements included in the Company’s Form 10-Q filings.
The amount also includes other services that are normally provided by KPMG in connection with statutory and regulatory filings
or engagements.
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(2)
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Fees for services performed by KPMG that are reasonably
related to the performance of the audit or review of the Company’s financial statements. This includes employee benefit
and compensation plan audits, as well as audit related services in connection with attestations by KPMG that are required
by statute, regulation, or contractual requirements.
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(3)
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Fees for professional services performed by KPMG with
respect to tax compliance, tax advice and tax planning.
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(4)
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Fees for other permissible work performed by KPMG that
does not fall within the categories set forth above.
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PRE-APPROVAL OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM SERVICES
The Audit Committee has adopted
a Pre-Approval Policy with respect to audit and non-audit services performed by its independent registered public accounting firm.
The following is a summary of the Pre-Approval Policy.
Prior to the commencement of
services for a given year, the Audit Committee will grant pre-approvals of expected services and estimated fees, as presented by
the independent registered public accounting firm. The independent registered public accounting firm will routinely update the
Audit Committee during the year in which the services are performed as to the actual services provided and related fees pursuant
to the Pre-Approval Policy.
Unexpected services or services
for which the fees to be incurred would exceed pre-approved amounts, will require specific approval before the services may be
rendered. Requests or applications to provide such services that require specific approval by the Audit Committee will be submitted
to the Chairman of the Audit Committee by both the Company’s Chief Financial Officer and the independent registered public
accounting firm.
The request or application must
include a statement as to whether, in the view of both the independent registered public accounting firm and the Chief Financial
Officer, such request or application is consistent with the rules of the Securities and Exchange Commission (“SEC”)
regarding auditor independence. Authority to grant approval for such services has been delegated to the Chairman of the Audit Committee
subject to a $100,000 limit for each request, provided that any such approval would then be reviewed by the full Audit Committee
at the next regularly scheduled meeting.
The Audit Committee has determined
that the independence of KPMG has not been adversely impacted as a result of the non-audit services performed by such accounting
firm.
We expect a representative of
KPMG to attend the Annual Meeting. The representative will have an opportunity to make a statement if he or she desires and also
will be available to respond to appropriate questions.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021.
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LIVENT CORPORATION | 2021 PROXY STATEMENT 9
PROPOSAL 3
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ADVISORY (NON-BINDING) VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
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In accordance with the requirements
of Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”) and the related rules of the SEC, our Board
of Directors is submitting a proposal providing our stockholders the opportunity to cast a non-binding advisory vote on the executive
compensation paid to the Company’s executive officers named in this proxy statement (“named executive officers”
or “NEOs”). In 2020, our stockholders voted that we should conduct a non-binding advisory vote on executive compensation
(“Say on Pay”) on an annual basis. In line with that advisory vote, our Board of Directors has determined that Livent
will conduct a Say on Pay vote annually.
This advisory vote on named executive
officer compensation is non-binding on the Board, will not overrule any decision by the Board and does not compel the Board to
take any action. However, the Board and the Compensation and Organization Committee of the Board (the “Compensation Committee”)
may consider the outcome of the vote when considering future executive compensation decisions. Specifically, to the extent there
is any significant vote against the named executive officer compensation as disclosed in this proxy statement, the Board will consider
our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those
concerns.
The Board and the Compensation
Committee believe that the Company’s executive compensation programs and policies and the compensation decisions described
in this proxy statement (i) support the Company’s business objectives, (ii) link the interests of the executive officers
and stockholders, (iii) align NEO pay with individual and the Company’s performance, without encouraging excessive risk-taking
that could have a material adverse effect on the Company, (iv) provide NEOs with a competitive level of compensation and (v) promote
retention of the NEOs and other senior leaders.
For the reasons discussed above
(and further amplified in the compensation disclosures made in this proxy statement), the Board recommends that stockholders vote
in favor of the following resolution:
RESOLVED that the stockholders approve, on an advisory basis, the compensation of the Company’s
named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission
(which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and other related tabular and
narrative disclosures set forth in this proxy statement).
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ABOVE RESOLUTION.
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LIVENT CORPORATION | 2021 PROXY STATEMENT 10
PROPOSAL 4
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AMENDMENTS TO THE COMPANY’S CERTIFICATE OF INCORPORATION AND
BY-LAWS TO DECLASSIFY THE BOARD OF DIRECTORS
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The Board of Directors is submitting
for approval by stockholders the following proposed amendments to the Certificate of Incorporation and By-Laws to eliminate, over
a period of three years, the classification of its Board of Directors, without affecting the unexpired terms of directors.
The Company’s Certificate
of Incorporation and By-Laws currently provide that the Board of Directors shall be divided into three classes of directors, with
each class elected every three years for a three-year term. The structure was put into place by the Company’s former parent
at the time of the spin-off of the Company to provide the then-new Company with stability and continuity to develop and implement
the best long-term strategic course for the Company to create value. After considering the advantages and disadvantages of declassification,
including feedback from stockholders and views of commentators, the Board of Directors has determined it is in the best interests
of the Company and its stockholders to amend the Certificate of Incorporation and By-Laws to declassify the Board of Directors
over the next three years. The Board of Directors believes that a declassified board structure should be phased-in so that directors
serving immediately following the 2021 Annual Meeting can serve out the terms to which they have been elected. Approval by stockholders
of this proposal would result in a fully declassified Board of Directors by the 2024 annual meeting of stockholders.
The Company presented this proposal
to stockholders at the 2020 Annual Meeting, but the proposal did not receive the requisite affirmative vote of 80% of the total
voting power of all outstanding shares of the Company, so the proposal was not approved. The Board of Directors is presenting this
proposal to stockholders again in the hope that it will be approved by the requisite vote of stockholders.
If the proposed amendments are
adopted and become effective, directors in office immediately after the 2021 Annual Meeting would serve out their three-year terms,
but directors elected by stockholders beginning at the 2022 annual meeting of stockholders would be elected to one-year terms.
Beginning at the 2024 annual meeting of stockholders, all directors would be subject to annual election for one-year terms.
The pertinent sections of Article
5 of the Certificate of Incorporation and Article 4 of the By-Laws, as they would be amended upon stockholder approval of this
proposal to declassify the Board of Directors and make related changes, are attached as Appendices A-1 and A-2 to this Proxy Statement,
respectively.
The Board of Directors has unanimously
approved, adopted and declared advisable the amendments to the Certificate of Incorporation and By-Laws to declassify our Board
of Directors in phases and make related changes as described above. The Board of Directors has also adopted resolutions recommending
that these proposed amendments be submitted to stockholders and recommending that stockholders approve them.
The affirmative vote of 80% of
the total voting power of all outstanding shares of the Company is required to approve this Proposal 4 to amend the Certificate
of Incorporation and By-Laws to declassify the Company’s Board of Directors as described above. See information about the
voting standard for this proposal on page 6.
Consistent with Delaware law,
because the Board of Directors is classified, the Certificate of Incorporation currently provides that the directors are removable
by stockholders only “for cause.” Upon the full declassification of the Board of Directors as of the 2024 annual meeting
of stockholders, all directors would be removable “with or without cause” upon the vote of stockholders holding a majority
of the voting power of the then-outstanding shares of all classes and series of capital stock of the Company entitled to vote
at any annual or special meeting of stockholders.
If approved, this proposal would
become effective, and the amendments to Article 5 of the Certificate of Incorporation and Article 4 of the By-laws described in
Appendices A-1 and A-2 to this Proxy Statement would be implemented, upon the filing of a Certificate of Amendment containing the
proposed amendments with the Secretary of State of Delaware, which the Company intends to do promptly after the required stockholder
approval is obtained.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE APPROVAL OF THE AMENDMENTS TO THE CERTIFICATE OF INCORPORATION AND
BY-LAWS TO DECLASSIFY THE BOARD OF DIRECTORS.
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LIVENT CORPORATION | 2021 PROXY STATEMENT 11
PROPOSAL 5
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AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO
ELIMINATE SUPERMAJORITY VOTING REQUIREMENTS
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The Board of Directors is submitting
for approval by stockholders the following proposed amendment to the Certificate of Incorporation to replace supermajority voting
requirements with a simple majority of outstanding shares requirement.
The Certificate of Incorporation
currently requires a supermajority vote of at least 80% of outstanding stock of the Company to (i) approve certain business combinations
with an “interested stockholder,” which is defined generally as a person owning 10% or more of the Company’s
voting stock, or any affiliate or associate of that person, and (ii) alter, amend or repeal provisions of the Certificate of Incorporation
relating to (A) the election and removal of directors, (B) special meetings and shareholder actions by written consent, (C) Section
203 of the Delaware Act, (D) certain corporate opportunities, (E) certain business combinations, (F) exclusive forum and (G) amendments
to the Certificate of Incorporation. This proposed amendment would reduce the required stockholder approval for these actions to
a simple majority of the voting power of the Company’s outstanding shares.
A copy of Articles 8 and 9 of
the Certificate of Incorporation, as such Articles would be amended upon stockholder approval of this proposal to replace supermajority
voting requirements with a simple majority of outstanding shares requirement, is attached as Appendix B to this Proxy Statement.
Our Nominating and Corporate
Governance Committee and the Board frequently review the Company’s governance structure and practices. Based on that review,
which included consideration of current good governance practices and the advantages and disadvantages of the supermajority provisions,
the Board of Directors has unanimously approved and recommends that stockholders approve the amendment to the Certificate of Incorporation
to replace supermajority voting requirements with a simple majority of outstanding shares requirement.
The Company presented this proposal
to stockholders at the 2020 Annual Meeting, but the proposal did not receive the requisite affirmative vote of 80% of the total
voting power of all outstanding shares of the Company, so the proposal was not approved. The Board of Directors is presenting this
proposal to stockholders again in the hope that it will be approved by the requisite vote of stockholders.
The affirmative vote of 80% of
the total voting power of all outstanding shares of the Company is required to approve this Proposal 5 to amend the Certificate
of Incorporation to replace supermajority voting requirements with a simple majority of outstanding shares requirement as described
above. See information about the voting standard for this proposal on page 6.
If approved, this proposal would
become effective, and the amendments to Articles 8 and 9 of the Certificate of Incorporation described in Appendix B to this Proxy
Statement would be implemented, upon the filing of a Certificate of Amendment containing the proposed amendments with the Secretary
of State of Delaware, which the Company intends to do promptly after the required stockholder approval is obtained.
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE APPROVAL OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO ELIMINATE
SUPERMAJORITY VOTING REQUIREMENTS.
|
LIVENT CORPORATION | 2021 PROXY STATEMENT 12
DIRECTOR QUALIFICATIONS
Directors are selected based
on integrity, successful business experience, stature in their own fields of endeavor and diversity of perspectives they bring
to the Board. Desired attributes of all directors include (i) ability to reach thoughtful, independent and logical judgments on
difficult and complex issues; (ii) demonstrated leadership; (iii) knowledge, experience and skills in areas relevant to the Company’s
lines of business; (iv) objectivity; and (v) willingness and ability to cooperate and engage with other members of the Board openly
and constructively. Directors must also be able to view the issues the Company faces from the stockholders’ perspective and
be committed to representing the long-term interests of our stockholders. We also require that our directors be able to commit
the time necessary to ensure the diligent performance of their duties. Our Statement of Governance Principles, Policies and Procedures
requires that a majority of directors must be ‘independent’ within
the meaning of the Sarbanes Oxley Act and NYSE Listing Standards.
BOARD DIVERSITY
We believe that maintaining
a diverse Board membership with varying backgrounds, skills, expertise and other differentiating personal characteristics enhances
the quality and diversity of thought in the Board’s deliberations and enables the Board to better represent all of the Company’s
constituents. In seeking candidates who possess diversity of experience, background and perspective, the Nominating and Corporate
Governance Committee casts a wide net and considers candidates whose diversity is based on race, gender, industry experience, type
of position held, and other board experience. In addition to reviewing a candidate’s background and accomplishments, candidates
are evaluated in the context of the current composition of the Board and the evolving needs of the Company.
The professional experience, qualifications,
skills and expertise of each director is set forth below.
NOMINEES FOR DIRECTOR
CLASS III DIRECTORS, NEW TERM
EXPIRING IN 2024
PIERRE BRONDEAU
Age 63
Director
since: 2018
|
|
PRINCIPAL OCCUPATION:
Chairman, Livent since 2018, and Executive Chairman, FMC Corporation since 2020
Mr. Brondeau
joined FMC as President and Chief Executive Officer in January 2010 and became its Chairman in October 2010. He resigned
as President in June 2018 and as Chief Executive Officer in June 2020, and now serves as FMC’s Executive
Chairman. Mr. Brondeau will transition from his role as Executive Chairman of FMC effective on April 27, 2021,
and will retire as an employee of FMC coincident with this transition. Before joining FMC, Mr. Brondeau served
as President and Chief Executive Officer, Dow Advanced Materials Division, until his
retirement in September 2009. Prior to Dow’s acquisition of Rohm and Haas
Company in April 2009, he was President and Chief Operating Officer of Rohm and Haas from May 2008. Mr. Brondeau held
numerous executive positions during his tenure at Rohm and Haas from 1989 through May 2008.
OTHER BOARD EXPERIENCE:
Mr. Brondeau
is the Executive Chairman of the Board of Directors of FMC. Assuming his re-election as a Director at FMC’s
2021 Annual Meeting of Stockholders, the Board of Directors of FMC intends that he continue to serve as the Chairman
of the Board of Directors as a non-employee Director for the remainder of his term after his transition from his
role as Executive Chairman of FMC on April 27, 2021. Mr. Brondeau is also a member of the Board of Directors of
TE Connectivity. Until March 2016, Mr. Brondeau served on the Board of Directors of Marathon Oil Corporation.
QUALIFICATIONS:
Mr. Brondeau’s
role as Executive Chairman of FMC, and his past role as CEO of FMC, where he was responsible for
the Lithium Division, and his former senior executive positions in the chemical industry, make him an important contributor
to the Board of Directors.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 13
G. PETER D’ALOIA
Age 76
Director
since: 2018
|
|
PRINCIPAL OCCUPATION:
Former Managing Director and member
of the Board of Directors of Ascend Performance Materials Holdings, Inc., a producer
of Nylon 66 and related chemicals
Mr. D’Aloia served as Managing Director and a member of the Board of Directors of Ascend Performance Materials Holdings, Inc. from June 1, 2009 until March 31, 2017. From February 2000 until June 2008, Mr. D’Aloia served as Senior Vice President and Chief Financial Officer of Trane, Inc. (formerly American Standard Companies, Inc.). Prior to that, he was employed by Honeywell (formerly AlliedSignal Inc.), a diversified industrial company, most recently serving as Vice President-Strategic Planning and Business Development. He spent 28 years with AlliedSignal Inc. in diverse management positions, including Vice President-Taxes, Vice President and Treasurer, Vice President and Controller, and Vice President and Chief Financial Officer for the Engineered Materials sector.
OTHER BOARD EXPERIENCE:
Mr. D’Aloia is a member of the Board of Directors of Wabco, Inc. Mr. D’Aloia served as a member of the Board of Directors of FMC from 2002 until April 2020 (including service on its Audit Committee). Mr. D’Aloia also served on the Board of Directors of ITT Inc. until May 2017.
QUALIFICATIONS:
Mr. D’Aloia’s significant financial and business experience resulting from senior executive and financial roles in large manufacturing operations, and his service as a director of other public companies, make him highly qualified to be a director of the Company.
|
ROBERT C. PALLASH
Age 69
Director
since: 2018
|
|
PRINCIPAL OCCUPATION:
Retired President, Global Customer Group and Senior Vice President of Visteon Corporation, an automotive parts manufacturer
From January 2008 until December 2013, Mr. Pallash served as President, Global Customer Group and Senior Vice President of Visteon Corporation, an automotive parts manufacturer. From August 2005 to January 2008, Mr. Pallash was Senior Vice President, Asia Customer Group for Visteon. He joined Visteon in September 2001 as Vice President, Asia Pacific. Visteon filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in May 2009 and emerged from bankruptcy in October 2010. Prior to joining Visteon, Mr. Pallash served as President of TRW Automotive Japan from 1999.
OTHER BOARD EXPERIENCE:
Mr. Pallash has served as a member of the Board of Directors of FMC since 2008, and he served on the Board of Directors of Halla Climate Controls in South Korea, a majority-owned subsidiary of Visteon Corporation until December 2013.
QUALIFICATIONS:
Mr. Pallash’s international experience, particularly in Asia where the Company seeks to grow its business, and his automotive industry experience enable him to bring significant value as a member of the Board of Directors.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 14
CONTINUING DIRECTORS
CLASS I DIRECTORS,TERM EXPIRING IN 2022
MICHAEL F. BARRY
Age 62
Director
since: 2018
|
|
PRINCIPAL OCCUPATION:
Chief Executive Officer and President of Quaker Chemical Corporation d/b/a Quaker Houghton since October 2008 and Chairman of the Board of Quaker since May 2009
Mr. Barry has held leadership and executive positions of increasing responsibility since joining Quaker in 1998, including Senior Vice President and Managing Director–North America from January 2006 to October 2008; Senior Vice President and Global Industry Leader–Metalworking and Coatings from July to December 2005; Vice President and Global Industry Leader–Industrial Metalworking and Coatings from January 2004 to June 2005; and Vice President and Chief Financial Officer from 1998 to August 2004. He intends to retire as Chief Executive Officer and President of Quaker Chemical Corporation on December 31, 2021, but intends to remain in his role as Chairman of the Board of Directors.
OTHER BOARD EXPERIENCE:
Mr. Barry serves as the Chairman of Quaker’s Board of Directors. Mr. Barry was also a member of the Board of Directors of Rogers Corporation, from which he retired in May 2020. Furthermore, Mr. Barry serves on the Board of Trustees of Drexel University and the Advisory Board of Drexel University’s Gupta Governance Institute.
QUALIFICATIONS:
Mr. Barry’s significant business experience resulting from senior executive positions in the global chemical industry, and his service as a director of other public companies, make him a valuable contributor to our Board of Directors.
|
STEVEN T. MERKT
Age 53
Director
since: 2018
|
|
PRINCIPAL OCCUPATION:
President
of the Transportation Solutions segment at TE Connectivity Ltd., one of the world’s largest suppliers of connectivity and
sensor solutions to the automotive and commercial vehicle marketplaces, since August 2012
Before August 2012, Mr. Merkt was President of TE’s Automotive business. Since joining TE in 1989, Mr. Merkt has held various leadership positions in general management, operations, engineering, marketing, supply chain, and new product launches.
OTHER BOARD EXPERIENCE:
Mr. Merkt is a member of the Board of Directors of the Isonoma Foundation, a foundation whose mission is to help diminish disparities in healthcare, housing and education in the Philadelphia and Harrisburg regions of Pennsylvania.
QUALIFICATIONS:
Mr. Merkt’s experience particularly in the automotive and commercial vehicle sectors makes him a valuable contributor to our Board.
|
PABLO MARCET
Age 57
Director
since:
February,
2020
|
|
PRINCIPAL OCCUPATION:
Founder and President, Geo Logic S.A. since 2003
Mr. Marcet is the founder of Geo Logic S.A., a management consulting company that services the mining sector, and has served as President since 2003. He also served as the President and Chief Executive Officer of Waymar Resources Limited, a Canadian mineral exploration company, from 2010 to 2014, until its acquisition by Orosur Mining Inc. Prior to this, Mr. Marcet served as President, Subsidiaries and Operations, Argentina, of Northern Orion Resources Inc. from 2003 until 2007, and held senior roles with BHP Billiton from 1988 until 2003.
OTHER BOARD EXPERIENCE:
Mr. Marcet serves on the Board of Directors of St. George’s College, a private school in Argentina. Previously, Mr. Marcet was a member of the Board of Directors of U3O8 Corp., a uranium and battery commodities company, from 2011 until August 2020, Esrey Resources Ltd. from 2017 until 2020, Barrick Gold Corporation from 2016 until 2019, Orosur Mining Inc. from 2014 until 2016, and Waymar Resources Limited from 2010 until 2014.
QUALIFICATIONS:
Mr. Marcet’s significant business experience in the mining industry in Latin America, and particularly in Argentina, make him a valuable contributor to the Board of Directors.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 15
CLASS II DIRECTORS,TERM EXPIRING IN 2023
PAUL W. GRAVES
Age 50
Director
since: 2018
|
|
PRINCIPAL OCCUPATION:
President, Chief Executive Officer and Director of Livent since 2018
Before joining Livent, Mr. Graves served as Executive Vice President and Chief Financial Officer of FMC from 2012 to 2018. Mr. Graves previously served as a managing director and partner in the Investment Banking Division at Goldman Sachs Group in Hong Kong and was the co-head of Natural Resources for Asia (excluding Japan). In that capacity, he was responsible for managing the company’s Pan-Asian Natural Resources Investment business. Mr. Graves also served as Global Head of Chemical Investment Banking for Goldman Sachs, which he joined in 2000. Mr. Graves previously held finance and auditing roles of increasing responsibility at Ernst & Young, British Sky Broadcasting Group, ING Barings and J. Henry Schroder & Co.
QUALIFICATIONS:
Mr. Graves’s in-depth knowledge of the lithium business, his experience as FMC’s Chief Financial Officer and his financial expertise enables him to offer valuable insights to our Board of Directors.
|
ANDREA E. UTECHT
Age 72
Director
since: 2018
|
|
PRINCIPAL OCCUPATION:
Retired Executive Vice President, General Counsel and Secretary of FMC Corporation
Ms. Utecht joined FMC in July 2001 as Chief Legal Officer and served as FMC’s Vice President, General Counsel and Secretary from January 2002, and as Executive Vice President from 2011 until her retirement from FMC on March 31, 2019. Prior to joining FMC, Ms. Utecht was Senior Vice President, Secretary and General Counsel of ATOFINA Chemicals, Inc. (now known as Arkema Inc.). She was with ATOFINA and its predecessor companies for 20 years, including three years as Vice President for acquisitions and divestitures.
QUALIFICATIONS:
Ms. Utecht’s legal experience and intimate knowledge of the lithium business make her a significant contributor to the Board of Directors.
|
CHRISTINA LAMPE-ÖNNERUD
Age 54
Director
since: February,
2020
|
|
PRINCIPAL OCCUPATION:
Founder, Chairperson and Chief Executive Officer of Cadenza Innovation, Inc. since 2012
Ms. Lampe-Önnerud is the founder of Cadenza Innovation, Inc., a lithium battery technology company, and has served as Chairperson and Chief Executive Officer since 2012. Prior to this, she was the founder of Boston-Power, Inc. a lithiumion battery manufacturer, and served as its Chairperson and Chief Executive Officer from 2004 until 2012. She also served as a Senior Manager at Bridgewater Associates, LP from 2013 through 2014, and as a Director and Partner in the Technology and Innovation Practice at Arthur D. Little, Inc., a private management consulting firm, from 1998 to 2004.
OTHER BOARD EXPERIENCE:
Ms. Lampe-Önnerud serves on the Board of Directors of Cadenza Innovation, Inc. Previously, Ms. Lampe-Önnerud was also a member of the Board of Directors of FuelCell Energy, Inc. from 2018 until 2019, Syrah Resources Limited from 2016 until 2019, and Boston-Power, Inc. from 2005 until 2012.
QUALIFICATIONS:
Ms. Lampe-Önnerud
is a member of the Royal Swedish Academy of Sciences, a two-time World Economic Forum Technology
Pioneer winner, and chairs the World Economic Forum’s Global Futures Council on Energy Technologies. Ms.
Lampe-Önnerud’s lithium battery industry experience and her executive positions at technology-based businesses
makes her a significant contributor to the Board of Directors.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 16
IV.
|
INFORMATION ABOUT THE BOARD OF DIRECTORS AND CORPORATE
GOVERNANCE
|
MEETINGS
During 2020, the Board of
Directors held one regular meeting and five telephonic meetings. All incumbent directors attended all of the meetings of the Board
and all Committees on which they served.
COMMITTEES AND INDEPENDENCE OF DIRECTORS
The Board of Directors has
five standing Committees: an Audit Committee, a Compensation and Organization Committee, a Nominating and Corporate Governance
Committee, an Executive Committee and a Sustainability Committee.The Audit Committee, the Compensation and Organization Committee,
and the Nominating and Corporate Governance Committee are entirely composed of independent directors as determined by the Board
on the basis set forth above.
The Board has affirmatively
determined that each of Messrs. Barry, D’Aloia, Marcet, Merkt and Pallash, and Ms. Lampe-Önnerud meets the NYSE rules
regarding independence and has no relationship with the Company that would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director.
While Mr. Brondeau will not
meet the independence standards set forth in the NYSE rules regarding independence until March 1, 2022, the Board believes
that having Mr. Brondeau serve as Chairman is the appropriate structure for our shareholders and the Company given our current
circumstances and operating strategies. Livent is no longer a ‘controlled company’ (i.e., of FMC) under NYSE rules.
Furthermore, Mr. Brondeau is transitioning from his role as Executive Chairman of FMC effective on April 27, 2021, and will retire
as an employee of FMC coincident with this transition, at which time he will be a non-employee director of FMC assuming his re-election
at the FMC 2021 Annual Meeting of Stockholders. Retaining Mr. Brondeau as Chairman of the Board of Livent will help to ensure a
stable and orderly succession of the leadership of the Company and provide business continuity that is in the best interest of
the Company’s stockholders. The Company continues to benefit from Mr. Brondeau’s strategic vision, depth of experience
in Board and business matters, and his ability to engage as needed with key stakeholders.
AUDIT COMMITTEE
The Board of Directors has
adopted a written charter that outlines the duties of the Audit Committee, including conducting an annual self-assessment. A current
copy of the Charter is posted on the Company’s website, as described in the section below entitled “Corporate Governance
Documents”. The principal duties of this Committee, among other things, include:
■
|
Review the annual report, proxy statement and periodic SEC filings such as the Company’s reports on Form 10-K and 10-Q, including Management’s Discussion and Analysis, and ensure that the Company’s financial reports fairly represent its operations
|
■
|
Review with management the Company’s earnings releases
|
■
|
Monitor the Company’s compliance with legal and regulatory requirements
|
■
|
Review the effectiveness and adequacy of the Company’s internal controls
|
■
|
Review federal income tax issues
|
■
|
Review the Company’s policies with respect to risk assessment, risk management, workplace discrimination and harassment
|
■
|
Review environmental matters
|
■
|
Review significant changes in accounting policies
|
■
|
Review potentially significant litigation
|
■
|
Select the independent registered public accounting firm and confirm its independence
|
■
|
Pre-approve audit and non-audit services provided by the independent registered public accounting firm
|
■
|
Review the effectiveness, scope and performance of activities of the independent registered public accounting firm and the internal auditor function
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 17
Members: Mr. Barry
(Chair), Mr. D’Aloia, Mr. Merkt and Ms. Lampe-Önnerud. The Board of Directors has determined that each member of
the Audit Committee is “independent” as defined by SEC and NYSE rules, that Messrs. Barry, D’Aloia, and
Merkt meet the SEC requirements for an “audit committee financial expert,” and that Ms. Lampe-Önnerud is “financially
literate” as required by the NYSE.The Board has also determined that no current Audit Committee member sits on the audit
committee of more than three public companies.
Number of Meetings in 2020: seven (one in person;
six by teleconference).
COMPENSATION AND ORGANIZATION COMMITTEE
The Board of Directors has
adopted a written charter that outlines the duties of the Compensation and Organization Committee (the “Compensation Committee”),
including conducting an annual self-assessment. A current copy of the Charter is posted on the Company’s website, as described
in the section below entitled “Corporate Governance Documents”.
The principal duties of this
Committee include, among other things:
■
|
Review and approve compensation policies and practices for senior executives
|
■
|
Review and approve corporate goals and objectives relevant to the compensation of the Chief Executive Officer and the other executive officers
|
■
|
Review as necessary the Company’s compensation programs, policies and practices with respect to risk assessment
|
■
|
Review performance and establish the total compensation for the Chief Executive Officer and other senior executives
|
■
|
Approve issuances of equity and other incentive awards to the Chief Executive Officer and other executive officers
|
■
|
Administer the Company’s Incentive Compensation and Stock Plan and determine whether to authorize any delegation permitted under the plan
|
■
|
Review significant organizational changes and their business impact, and management succession planning
|
■
|
Recommend to the Board of Directors candidates for officers of the Company
|
■
|
Review the terms of employment agreements, severance agreements, change in control agreements and other compensatory arrangements for senior executives
|
■
|
Conduct an annual self-assessment
|
■
|
Assess stockholder Say on Pay advisory votes and recommend to the Board of Directors the frequency of future Say on Pay votes
|
■
|
Oversee evaluation of management performance and development
|
■
|
Review executive stock ownership guidelines and oversee clawback, hedging, and pledging policies
|
■
|
Assist the Board of Directors in its oversight of the Company’s policies and strategies relating to human capital management, and reviewing human capital management disclosures in the Company’s SEC filings
|
■
|
Review the Compensation Discussion and Analysis and based on such review, recommend to the Board of Directors that it be included in the annual proxy statement
|
■
|
Review stockholder votes (to the extent applicable) and other input on executive compensation practices and independently determine if any changes are necessary
|
■
|
Prepare the Compensation Committee Report to be included in the Company’s annual proxy statement or Form 10-K, if required
|
■
|
Oversee engagement with stockholders and proxy advisory firms on executive compensation matters.
|
Members: Mr. D’Aloia (Chair), Mr.
Barry and Mr. Marcet. The Board of Directors has determined that each member of the Compensation and Organization Committee
is independent as defined by NYSE rules.
Number of Meetings in 2020: six (one in person;
five by teleconference).
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The role
and responsibilities of the Nominating and Corporate Governance Committee are set forth in the Statement of Governance Principles,
Policies and Procedures adopted by our Board of Directors. A current copy of this document is posted on the Company’s website,
as described in the section below entitled “Corporate Governance Documents”. The principal duties of this Committee,
among other things, include:
■
|
Review and recommend candidates for director
|
■
|
Review,
recommend and prioritize criteria for Board of Directors composition
|
■
|
Recommend
Board of Directors meeting formats and processes
|
■
|
Recommend
the number, function, composition and Chairmen of Board of Directors’ Committees
|
■
|
Oversee
corporate governance, including an annual review of governance principles
|
■
|
Review
and approve director compensation policies, including the determination of director compensation
|
■
|
Oversee
Board of Directors and Committee evaluation procedures
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 18
■
|
Determine director independence
|
■
|
Recommend whether to accept or reject a director resignation or take other action, where a director has failed to receive a majority of votes cast in an uncontested director election
|
Members: Mr. Merkt (Chair), Ms. Lampe-Önnerud
and Mr. Pallash. The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee
is independent as defined by NYSE rules.
Number of Meetings in 2020: three (one in person,
two by teleconference).
EXECUTIVE COMMITTEE
The Executive Committee will act in place of the
Board of Directors when the full Board of Directors is not in session.
Members: Mr. Brondeau (Chair), Mr. D’Aloia,
and Mr. Graves.
Number of Meetings in 2020: none.
SUSTAINABILITY COMMITTEE
The Board of Directors has
adopted a written charter that outlines the duties of the Sustainability Committee, including conducting an annual self-assessment.
A current copy of the Charter is posted on the Company’s website, as described in the section below entitled “Corporate
Governance Documents”. The Committee’s scope will encompass safety, environmental and sustainability programs of the
Company and its principal duties include:
■
|
Monitoring
the Company’s Sustainability Program, including program development and advancement, goals and objectives, and progress
toward achieving those objectives
|
■
|
Employee
occupational safety and health, and process safety programs
|
■
|
Monitoring environmental responsibility and risk mitigation programs, including those relating to green house gases, water, waste, energy and biodiversity
|
■
|
Monitoring corporate social responsibility programs, including those relating to community, health and safety, human rights, responsible supply chain, and diversity, equity and inclusion
|
■
|
Reviewing sustainability disclosures, including the Company’s Annual Sustainability Report
|
■
|
Audits and assurance of sustainability data and data collection methodology, including through independent third party audits, studies, and sustainability rating bodies
|
■
|
Sustainability
management systems
|
Members:
Mr. Pallash (Chair), Mr. Brondeau, Mr. Marcet
and Ms. Utecht.
Number of Meetings in 2020: three (all by teleconference).
DIRECTOR WHO PRESIDES OVER EXECUTIVE SESSIONS
In accordance with the Livent Corporation Statement
of Governance Principles, Policies and Procedures, the non-employee members of the Board of Directors meet in regularly scheduled
executive sessions without management. These “outside director only” sessions are led by the Chairman of the Board,
unless the positions of Chairman of the Board and Chief Executive Officer are not held by separate individuals, in which case these
sessions are led by the Lead Director.
DIRECTOR COMPENSATION
COMPENSATION POLICY
The Company maintains
the Livent Corporation Compensation Policy for Non-Employee Directors (“Director Compensation Policy”) to provide
for the compensation described below. The Board administers the Director Compensation Policy. Competitive market data on director
pay levels and design practices are prepared by and reviewed with the Company’s consultant, Aon. The Director Compensation
Policy is not applicable to directors who are also employees of the Company or its affiliates. Accordingly, Mr. Graves, our CEO,
receives no additional compensation for his service as a director. For a description of the compensation paid to Mr. Graves for
his service during 2020 as our CEO, see below under the heading “Executive Compensation”.
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 19
RETAINER AND FEES
Currently, each non-employee
director is paid an annual retainer of $75,000 or a pro rata amount for any portion of a year served. The retainer is paid in four
installments in cash, unless the director elects to receive all or part of it in restricted stock units (“RSUs”). Restricted
stock units granted in lieu of an annual cash retainer are awarded on May 1 of the relevant calendar year, and are subject to forfeiture
on a pro rata basis if the director does not serve for the full year in respect of which the retainer is paid. The forfeiture condition
is waived in the event of a change in control of the Company or if the director’s service ceases due to his or her death
or disability. Each director who chairs a committee is paid an additional $10,000 per year, except the Chairman of the Compensation
Committee is paid an additional $15,000 per year, and the Chairman of the Audit Committee is paid an additional $20,000 per year.
The chair of the Executive Committee does not receive any additional compensation with respect to such service. Audit Committee
members (other than the Chairman of the Audit Committee) also receive an additional $5,000 annual retainer. The non-executive Chairman
is entitled to an additional $20,000 annual retainer. All such annual retainer, committee and Chairman payments are paid in four
installments.
ANNUAL GRANT OF RESTRICTED STOCK UNITS
Each non-employee director
also receives an annual grant of restricted stock units on May 1 of each calendar year having a value of $90,000 on the date of
grant. These annual grants will vest at the annual meeting of stockholders held in the year following the date of grant or, if
sooner, upon a change in control of the Company. In addition, the restricted stock units will vest on a pro rata basis if the director
dies before the annual meeting at which the units would have otherwise vested.
PAYMENT OF VESTED RESTRICTED STOCK UNITS
A director is permitted to
specify, prior to the year in which the restricted stock units are credited, the date upon which he or she wishes to receive payment
in Common Stock of any vested restricted stock units. In the absence of an election, payment will be made upon the earlier of a
director’s cessation of service on the Board or a change in control of Livent. The directors’ ability to sell any distributed
shares remains subject to the restrictions of the Company’s Director Stock Ownership Policy, which policy is described below.
OTHER COMPENSATION
Non-employee directors also
receive dividend equivalent rights on all restricted stock units awarded as part of their annual retainers and on any vested restricted
stock units awarded as an annual grant. Such dividend equivalent rights are credited in the form of additional restricted stock
units equal in value to the cash dividends paid to stockholders.The dividend equivalent rights awarded as part of an annual retainer
are generally subject to forfeiture on a pro rata basis if a director does not serve on the Board for the full year in respect
of which the retainer grant is made, except the forfeiture condition is waived in those circumstances described in the “Retainer
and Fees” section above. No other remuneration is paid to non-employee directors for services as a director of the Company.
Non-employee directors do not participate in the Company’s nonqualified deferred compensation plan or employee benefit plans.
DIRECTOR STOCK OWNERSHIP POLICY
The Company has established
guidelines setting expectations for the ownership of Company stock by non-employee directors. The Director Stock Ownership Policy
requires that within five years of being elected to the Board, each non-employee director hold a minimum of five times the
value of the annual cash retainer (the “ownership requirement”), currently $375,000, in Company stock. For this purpose,
undistributed shares underlying restricted stock units (both vested and non-vested) are considered “held” by a director.
A director has five years from the date of his or her election to the Board to achieve compliance with the ownership requirement.
However, even during the initial five-year phase-in period, directors are not permitted to sell shares of Common Stock, other than
to satisfy tax liabilities triggered by Company equity grants, unless they will be in compliance with the ownership requirement
(calculated on the then current annual cash retainer) immediately following any sale of Common Stock. Compliance with the ownership
requirement is measured at the time of any proposed sale or disposition of shares of Common Stock by a director, and after the
initial five-year phase-in period, on December 31 of each year.
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 20
DIRECTOR COMPENSATION TABLE 2020
The table below shows the total compensation paid
to each non-employee director who served on the Board during 2020.
|
|
Fees Earned or
|
|
|
|
All Other
|
|
|
|
|
Paid in Cash
|
|
Stock Awards(1)
|
|
Compensation
|
|
Total
|
Name(a)
|
|
($)(b)
|
|
($)(c)
|
|
($)(d)
|
|
($)(e)
|
Pierre F. Brondeau
|
|
97,505
|
(2)
|
90,003
|
|
0
|
|
187,508
|
G. Peter D’Aloia
|
|
92,505
|
(2)
|
90,003
|
|
0
|
|
182,508
|
Michael F. Barry
|
|
95,000
|
|
90,003
|
|
0
|
|
185,003
|
Pablo Marcet
|
|
68,750
|
|
90,003
|
|
0
|
|
158,753
|
Steven
T. Merkt
|
|
88,333
|
|
90,003
|
|
0
|
|
178,337
|
Christina Lampe-Önnerud
|
|
73,333
|
|
90,003
|
|
0
|
|
163,337
|
Robert C. Pallash
|
|
85,005
|
|
90,003
|
|
0
|
|
175,008
|
Andrea E. Utecht
|
|
76,667
|
|
90,003
|
|
0
|
|
166,670
|
(1)
|
The amounts in Column (c)
reflect the grant date fair value of directors’ stock awards for 2020 computed in accordance with FASB ASC Topic 718.
See Note 11 to the consolidated and combined financial statements contained in Livent’s Annual Report on Form 10-K for
the year ended December 31, 2020 for the assumptions used in the valuations that appear in this column. The column includes,
for all of the directors, a grant of 15,680 RSUs, with a grant date fair value of $90,003. The number of RSUs outstanding
and unvested at fiscal year-end for each director was: 19,976 for each of Messrs. Brondeau and D’Aloia and 15,680 for
the other directors.
|
(2)
|
Messrs. Brondeau & D’Aloia elected to receive
RSUs in lieu of $75,000 of annual retainer cash fees in respect of service on the Board between May 1, 2020 and April
30, 2021. This resulted in the grant of 13,067 RSUs. In this table we have included only the portion of cash fees that were
foregone in 2020. The portion of cash fees foregone in the first four months of 2021 will be reflected in our 2022 annual
proxy statement. Should either Messrs. Brondeau & D’Aloia resign from the Board prior to April 30, 2021, he
will forfeit a pro rata share of the RSU grant.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 21
CORPORATE GOVERNANCE
BOARD LEADERSHIP STRUCTURE
The positions of Chairman
of the Board and Chief Executive Officer of the Company are separate. Mr. Brondeau serves as Chairman of the Board and Mr. Graves
serves as our Chief Executive Officer and President. Our Corporate Governance principles provide that the Board should consider
the issue of separation of the Chairman and Chief Executive Officer positions under the circumstances prevailing from time to time.
When the positions are not separate, a Lead Director shall be appointed. The responsibilities of the Lead Director under this structure
would include: serving as the liaison between the Chairman and the non-employee directors, reviewing, advising on or approving
information sent to the Board, approving meeting agendas and schedules, calling meetings of the non-employee directors, serving
as a member of the Executive Committee, and presiding at all meetings at which the Chairman is not present, including executive
sessions of the non-employee directors.
BOARD’S ROLE IN OVERSEEING THE
RISK MANAGEMENT PROCESS
As part of the Company’s
risk management process, the Board regularly discusses with management the Company’s major risk exposures, their potential
financial impact on the Company, and the steps the Company takes to manage them. The Board also reviews the designation of the
management person or entity responsible for managing such risks, and evaluates the steps being taken to mitigate the risks. The
Board’s monitoring role is carried out by either the full Board or a Committee that reports to the Board, depending on the
risk in question. The Board has determined that a separate Risk Committee is not warranted at this time.
COMMUNICATING WITH THE BOARD
Stockholders and any interested
parties may communicate with the Board of Directors, the Chairman of the Compensation and Organization Committee, or any other
individual member of the Board as follows: Communications must be in writing, sent care of the Corporate Secretary, Livent Corporation,
FMC Tower at Cira Centre South, 2929 Walnut Street, Philadelphia, PA 19104. All communications will be delivered as addressed.
DIRECTOR NOMINATION PROCESS
The Nominating and Corporate
Governance Committee is responsible for seeking, screening and recommending to the Board, candidates for Board membership. An executive
search firm may also be utilized to identify qualified candidates for consideration. The Nominating and Corporate Governance Committee
evaluates candidates based on the qualifications for director described in its Charter and summarized in the section above entitled
“Director Qualifications.” The Nominating and Corporate Governance Committee then presents qualified candidates to
the full Board of Directors for consideration and selection. The Nominating and Corporate Governance Committee will consider nominees
for election to the Board that are recommended by stockholders, applying the same criteria for candidates as discussed above, provided
it is timely made and that the other information specified in the By-Laws, accompanies the stockholder’s recommendation.
Any stockholder is entitled to directly nominate one or more candidates for election to the Board of Directors in accordance with
the Company’s By-Laws. Notice of a stockholder’s intent to nominate one or more candidates for election as directors
at the 2022 Annual Meeting must be delivered to the Company at the address set forth below, not later than January 31, 2022. All
nominations, together with the additional information required by the Company’s By-Laws, must be sent to the Corporate Secretary,
Livent Corporation, FMC Tower at Cira Centre South, 2929 Walnut Street, Philadelphia, PA 19104. A copy of the Company’s By-Laws
may be obtained by writing to the Corporate Secretary at the same address. The Board reserves the right not to include such nominees
in the proxy statement.
ANNUAL PERFORMANCE REVIEW
The Nominating and Corporate
Governance Committee annually surveys all Directors for evaluation of Board and Committee performance overall and in specific areas
of responsibility in accordance with the Company’s Statement of Governance Principles, Policies and Procedures.
The Board and Committees
perform annual self-evaluations of their performance. A lengthy questionnaire is sent to each director covering several topics,
including Board structure and composition (and what additional skills, if any, may be needed), preparation of members and whether
they stay
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 22
abreast of issues, understanding
of Company strategy, whether expectations and concerns are adequately communicated to the CEO, CEO succession planning procedures,
performance of committees, and length and content of Board meetings. Each Committee member also completes a shorter questionnaire
assessing the performance of his or her Committee.
After obtaining written responses
to the questionnaires, the Corporate Secretary conducts a telephone interview with each director to elicit elaboration of views
expressed and any other issues the director wishes to discuss. A written report summarizing the responses from the questionnaires
and the telephone interviews is presented to the Nominating and Corporate Governance Committee to determine whether any action
is required, with a copy of the report also going to the full Board. Individual responses remain anonymous to ensure complete candor.
Any concern or issue with
regard to an individual director’s performance would be reviewed with the Chairman of the Nominating and Corporate Governance
Committee for discussion with the director and any further action. The Board is committed to ensuring that its members maintain
the necessary skills, qualifications, experience and diversity, and the Board will continue to consider and implement changes to
the composition of the Board in light of its annual performance evaluations.
RETIREMENT/RESIGNATION POLICY FOR DIRECTORS
Our Statement of Governance
Principles, Policies and Procedures provides that a range in director age is desirable to allow staggered retirement and replacement
of desired skills on a planned basis with appropriate continuity.
In accordance with Livent’s
director resignation policy, Incumbent director nominees are required to tender a contingent resignation which would become effective
if (i) the nominee does not receive the required number of votes for his or her reelection and (ii) the Board accepts such resignation.
Non-employee directors are expected to submit their resignation from the Board upon termination of active service as an employee
or a significant change in responsibilities, unless requested by the Board to continue as a Board member for an agreed period.
Employee directors, specifically
including the Company’s Chief Executive Officer, are expected to retire from the Board simultaneous with retirement from
the Company unless requested by the Board to continue as a Board member for an agreed upon period.
ATTENDANCE AT ANNUAL MEETINGS
The Company’s policy is that all directors
are expected to attend the annual meeting of stockholders. All incumbent directors attended the 2020 Annual Meeting via live webcast.
CORPORATE GOVERNANCE DOCUMENTS
The Company’s website
is located at www.livent.com. The following corporate governance documents are posted on the Investor Relations page of the website
under Corporate Governance Guidelines:
■
|
Audit Committee Charter
|
■
|
Compensation and Organization Committee Charter
|
■
|
Livent Statement of Governance Principles, Policies and Procedures (This document includes both the Nominating and Corporate Governance Committee Charter and the Company’s Corporate Governance Principles)
|
■
|
Sustainability Committee Charter
|
CODE OF ETHICS AND BUSINESS CONDUCT POLICY
The Company has a Code of Ethics and Business Conduct policy that applies to all directors, officers (including its Chief
Executive Officer, Chief Financial Officer and Controller), employees, and suppliers and contractors in their work on behalf
of the Company. It is posted on the Investor Relations page of the Company’s website at www.livent.com.
The Company intends to post any amendments to,
or waivers from, the Policy required to be disclosed by either SEC or NYSE regulations on the Corporate Governance Guidelines section
of the Investor Relations page of the Company’s website.
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 23
COMPENSATION AND ORGANIZATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During the last fiscal year,
Messrs. D’Aloia, Barry and Marcet served as members of the Compensation Committee. Each of Messrs. D’Aloia, Barry and
Marcet have been determined by the Board to be independent on the basis described in the above section entitled “Committees
and Independence of Directors”. None of the members listed above has been an officer or employee of the Company, and no executive
officer of the Company has served as a member of a compensation committee (or if no committee performs that function, the board
of directors) of any other entity that has an executive officer serving as a member of our Board of Directors.
HUMAN CAPITAL MANAGEMENT
The Board strongly believes
that much of the future success of Livent depends on the caliber of its talent and the full engagement and inclusion of its employees
in the workplace. Additionally, the Compensation and Organization Committee oversees a broad range of human capital management
topics, including skills, diversity and inclusion, talent attraction and retention, employee engagement and pay equity.
For more information about
Livent’s Human Capital Management (“HCM”) practices, please see the section captioned “Human Capital Management”
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
SUSTAINABILITY
Livent continues its sustainability
journey, building upon its heritage as a lithium pioneer and leader for nearly 80 years. Last year, the Company released its first
Sustainability Report. The Sustainability Report includes a comprehensive review of the Company’s strategy and performance
in key Environmental, Social and Governance (“ESG”) areas. The Company understands the importance to its various stakeholders
of establishing an ESG strategy unique to Livent.
For more information about
Livent’s sustainability program and updates on the Company’s progress against its sustainability goals, please visit www.livent.com/sustainability.
Nothing on the Company’s website, including its Sustainability Report or sections thereof, shall be deemed incorporated by
reference into this Proxy Statement.
RELATED PARTY TRANSACTIONS POLICY
The Board of Directors Statement
of Policy with respect to Related Party Transactions sets forth the Company’s position and procedures with respect to review,
approval or ratification of related party transactions, including the types of transactions addressed by the Policy.
Under the Policy, “Related
Parties” are defined to include executive officers and directors of the Company and their immediate family members, a stockholder
owning in excess of 5% of the Company (or its controlled affiliates), and entities in which any of the foregoing have a substantial
ownership interest or control.
With respect to any transaction
where a related party receives a benefit equal to or in excess of a de minimis amount of $5,000 (when aggregated with all similar
transactions) the Policy requires that the transaction be pre-approved (or, if equal to or less than $120,000, ratified) by the
Audit Committee and disclosed where required by SEC rules. During the period that the Company was a “controlled company”
within the meaning of NYSE corporate governance standards, all Related Party Transactions between the Company and FMC were subject
to review and approval or ratification by those members of the Audit Committee who are both independent and not FMC-affiliated
directors. The Policy also provides that any related party (other than FMC, a director who serves as an officer or director of
FMC or an otherwise unaffiliated 5% shareholder) who is presented with a “corporate opportunity” within the Company’s
line of business, must first offer that opportunity to the Company.
The Policy provides a different
standard for the review and approval of an ordinary course of business transaction between the Company and an entity of which a
potential director nominee of the Company is an executive officer or significant stockholder of the entity (provided the director
does not otherwise have a material interest in the transaction) that involve payments in any year to or from the Company in excess
of either: (i) 1% of the Company’s consolidated revenues for the most recently completed fiscal year or (ii) the greater
of $1 million or 1% of the other entity’s consolidated revenues for the most recently completed fiscal year. If the transaction
does not exceed the above-mentioned thresholds (and the director does not have a material interest in the transaction), the transaction
will be reviewed by the Nominating and Corporate Governance
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 24
Committee as part of its
review of director independence. If the director does have a material interest in the transaction, regardless of whether the above-mentioned
thresholds are exceeded, the transaction must be approved or ratified by the Audit Committee in accordance with the preceding paragraph.
In the event of an ordinary
course of business transaction that exceeds the above-mentioned thresholds associated with prospective directors, review and approval
by the Audit Committee must occur prior to the director’s election, provided that the foregoing does not apply to FMC-affiliated
directors who were members of the Board upon consummation of our initial public offering of 20 million shares of Livent common
stock to the public on October 15, 2018 (the “IPO”). After approval or ratification, in each case the director will
provide updated information at least annually on the aggregate payments involved in the transaction. This information will be reviewed
by the Nominating and Corporate Governance Committee in connection with its review of directors’ independence. If the aggregate
amounts involved in the transaction exceed the thresholds noted above, the Audit Committee shall be required again to review and
ratify the transaction.
The Related Party Transactions
Policy does not apply to transactions available to all employees generally and transactions involving solely matters of executive
compensation.
AGREEMENTS WITH FMC
We became a public company
upon completion of the IPO. On March 1, 2019, we became an independent company as a result of FMC’s distribution to FMC stockholders
of all 123 million shares of Livent common stock that FMC owned as a pro rata dividend on shares of FMC common stock outstanding
at the close of business on February 25, 2019 (the “Distribution”).
In connection with the IPO,
we entered into certain agreements with FMC to provide a framework for the Company’s relationship with FMC following the
IPO. Some of the agreements are summarized below, while all of the material agreements are filed as exhibits to the Company’s
Annual Report on Form 10-K for the year ended December 31, 2020. These summaries are qualified in their entirety by reference to
the full text of such agreements.
TRANSITION SERVICES AGREEMENT
We entered into (and subsequently
amended) a transition services agreement to provide each other, on a transitional basis, certain administrative, human resources,
treasury and support services and other assistance, each in a manner and scope generally consistent with the services provided
by the parties to each other before our separation from FMC. Pursuant to the transition services agreement, FMC provided certain
support services to us. Services were provided on a cost-plus basis.The transition services agreement expired on October 31,
2019. However, during the fiscal year ended December 31, 2020, we paid approximately $5.0 million to FMC in settlement of amounts
owed under that agreement.
TAX MATTERS AGREEMENT
We entered into a tax matters
agreement that governs the parties’ respective rights, responsibilities and obligations with respect to taxes, including
taxes arising in the ordinary course of business, and taxes, if any, incurred as a result of any failure of the Distribution (or
certain related transactions) to qualify as tax-free for U.S. federal income tax purposes. The tax matters agreement also sets
forth the respective obligations of the parties with respect to the filing of tax returns, the administration of tax contests and
assistance and cooperation on tax matters. Under the tax matters agreement, FMC generally will be responsible for all of our income
taxes that are reported on combined tax returns with FMC or any of its affiliates for tax periods ending on or before December
31, 2017. For the year ended December 31, 2020, we are not expecting any U.S. federal and state tax liabilities. In addition, at
December 31, 2020 we had recorded a $0.4 million indemnification liability to FMC for assets where the offsetting uncertain tax
position is with FMC and a $1.3 million indemnification asset from FMC regarding uncertain tax positions that are related to our
legacy business before the IPO and for which we are indemnified by FMC. We will generally be responsible for all other income taxes,
that would be applicable to us if we filed the relevant returns on a standalone basis, and all non-income taxes attributable to
our business.
EMPLOYEE MATTERS AGREEMENT
We entered into an employee
matters agreement with FMC immediately prior to the completion of the IPO that governs the relationship between us and FMC with
respect to employment, compensation and benefits matters. Upon the closing of the IPO, except as otherwise expressly provided in
the employee matters agreement, we generally assumed responsibility for all employment, compensation and benefits-related liabilities
relating to our employees (whether active or inactive) and former employees who were last actively employed primarily in FMC’s
Lithium Business, whom we collectively refer to as “Lithium Employees,” regardless of whether such liabilities arise
before, on or after the closing of the IPO.
Except as otherwise provided
in the employee matters agreement, effective as of January 1, 2019 (or, in the case of Lithium Employees located outside of the
United States, the date of the closing of the IPO), which we refer to as the “Benefits Commencement Date,” Lithium
Employees are eligible to participate in compensation and benefit plans established by us or one of our subsidiaries, and such
plans will generally recognize all service for FMC and its affiliates prior to the applicable Benefits Commencement Date for purposes
of eligibility, vesting and benefit accruals. However, such service will not be recognized to the extent that such recognition
would result in a duplication of benefits. The employee matters agreement was amended and restated on February 4, 2019.
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 25
TRADEMARK LICENSE AGREEMENT
We entered into a Trademark
License Agreement pursuant to which FMC granted to us a non-exclusive, worldwide, royalty free license to use the “FMC”
word mark and related logos (which we refer to as the “Licensed Trademarks”) for a period ending two years after the
date of the Distribution solely in connection with any product or service of the Lithium Business as conducted as of the date of
our separation from FMC. The Trademark License Agreement was amended on May 11, 2020 to extend the term of the agreement, and our
permitted use of the Licensed Trademarks, to March 1, 2022.
SUBLEASE AGREEMENTS
We entered into a Sublease
Agreement with FMC, pursuant to which we subleased office space from FMC at our Philadelphia, Pennsylvania location. Under this
sublease agreement, we paid FMC rent of approximately $2.1 million during the fiscal year ended December 31, 2020.
We entered into a Sublease
Agreement with FMC, pursuant to which FMC subleased office space from us at our Ewing, New Jersey location. This sublease agreement
expired in 2020. FMC paid us rent of approximately $208,000 during the fiscal year ended December 31, 2020.
We entered into a Sublease
Agreement with FMC, pursuant to which we subleased office space from FMC at our Shanghai, China location. Under this sublease agreement,
we paid FMC rent of approximately $235,000 during the fiscal year ended December 31, 2020. This Sublease Agreement was terminated
in 2020.
We entered into a Sublease
Agreement with FMC, pursuant to which we subleased office space from FMC at our Tokyo, Japan location. Under this sublease agreement,
we paid FMC rent of approximately $34,000 during the fiscal year ended December 31, 2020. This Sublease Agreement was
terminated on June 30, 2020.
STOCKHOLDER
PROPOSALS FOR THE 2022 ANNUAL MEETING
Stockholders may make proposals
to be considered at the 2022 Annual Meeting. In order to make a proposal for consideration at the 2022 Annual Meeting, a stockholder
must deliver notice to the Company at the address set forth below, containing certain information specified in the By-Laws, not
less than 60 or more than 90 days before the date of the meeting. However, if the Company provides public disclosure of the date
of the 2022 Annual Meeting less than 70 days in advance of the meeting date, then the deadline for the stockholder’s notice
and other required information is 10 days after the date of the Company’s notice or public disclosure of the date of the
2022 Annual Meeting.
In addition to being able
to present proposals for consideration at the 2022 Annual Meeting, stockholders may also be able to have their proposals included
in the Company’s proxy statement and form of proxy for the 2022 Annual Meeting. In order to have a stockholder proposal included
in the proxy statement and form of proxy, the proposal must be delivered to the Company at the address set forth below not later
than November 19, 2021, and the stockholder must otherwise comply with applicable SEC requirements. If the stockholder complies
with these requirements for inclusion of a proposal in the Company’s proxy statement and form of proxy, the stockholder need
not comply with the notice requirements described in the preceding paragraph.
A copy of the Company’s
By-Laws may be obtained by writing to the Corporate Secretary, and all notices referred to above must be sent to the Corporate
Secretary, Livent Corporation, FMC Tower at Cira Centre South, 2929 Walnut Street, Philadelphia, PA 19104.
LIVENT CORPORATION | 2021 PROXY STATEMENT 26
V.
|
SECURITY
OWNERSHIP OF LIVENT CORPORATION
|
MANAGEMENT OWNERSHIP
The following
table shows, as of the record date, March 1, 2021, the number of shares of Common Stock beneficially owned by each current director
or nominee for director, the executive officers named in the Summary Compensation Table, and all current directors, nominees for
director and executive officers as a group. Each director or nominee and each executive officer named in the Summary Compensation
Table (“NEOs”) beneficially owns less than one percent of the Common Stock.
Name
|
|
Beneficial
Ownership
on March 1, 2021
Livent Common
Stock
|
|
Percent of Class
|
Paul W. Graves(1)
|
|
707,259
|
|
*
|
Gilberto Antoniazzi(1)
|
|
70,133
|
|
*
|
Sara Ponessa(1)
|
|
3,233
|
|
*
|
Pierre Brondeau(2)
|
|
386,878
|
|
*
|
Michael F. Barry(2)
|
|
53,114
|
|
*
|
G. Peter D’Aloia(2)
|
|
141,678
|
|
*
|
Christina Lampe-Önnerud(2)
|
|
18,071
|
|
*
|
Pablo Marcet(2)
|
|
25,071
|
|
*
|
Steven T. Merkt(2)
|
|
27,614
|
|
*
|
Robert C. Pallash(2)
|
|
65,741
|
|
*
|
Andrea E. Utecht(2)
|
|
131,947
|
|
*
|
All current directors and executive officers as a group—11 persons(1)(2)
|
|
1,630,739
|
|
*
|
*
|
Less than one percent of class
|
(1)
|
For the NEOs, shares “beneficially owned” include:
(i) shares owned or controlled by the individual; (ii) shares held in the Livent Nonqualified Savings Plan, the Livent Qualified
Savings Plan and the FMC Corporation Savings and Investment Plan for the account of the individual (97,815 for Mr. Graves,
and 4,895 for Mr. Antoniazzi); and (iii) shares subject to options that are presently exercisable or will be exercisable within
60 days of March 1, 2021 (466,390 for Mr. Graves, 55,381 for Mr. Antoniazzi, and 521,771 for all current executive officers
as a group).
|
(2)
|
For the non-employee Directors,
shares “beneficially owned” include: (i) shares owned or controlled by the individual;
(ii) shares held in the FMC Corporation Savings and Investment Plan for the account of
the individual (1,950 for Mr. Brondeau); and (iii) restricted stock units that are vested
as of March 1, 2021 or that will vest within 60 days thereafter (27,114 for each of Messrs.
Barry and Merkt, 38,388 for Mr. Brondeau, 16,846 for Ms. Utecht, 47,243 for Mr. D’Aloia,
18,071 for each of Ms. Lampe-Önnerud and Mr. Marcet, 34,176 for Mr. Pallash, and 227,023
for all directors as a group). Directors have no power to vote or dispose of shares represented
by restricted stock units until the shares are distributed and, until such distribution, directors
have only an unsecured claim against the Company.
|
LIVENT CORPORATION | 2021 PROXY STATEMENT 27
OTHER SECURITY OWNERSHIP
Based on available information,
the persons listed in the table below beneficially owned more than five percent of the Company’s outstanding shares of Common
Stock as of the dates set forth in the footnotes to the table:
Name and Address of Beneficial Owner
|
|
Amount and Nature
of Beneficial
Ownership
|
|
|
Percent of Class
|
BlackRock, Inc.
|
|
|
|
|
|
|
|
|
55 East 52nd Street
|
|
|
|
|
|
|
|
|
New York, NY 10055
|
|
|
24,091,663
|
(1)
|
|
|
16.5
|
%
|
The Vanguard Group, Inc.
|
|
|
|
|
|
|
|
|
100 Vanguard Boulevard
|
|
|
|
|
|
|
|
|
Malvern, PA 19355
|
|
|
15,291,997
|
(2)
|
|
|
10.5
|
%
|
FMR LLC
|
|
|
|
|
|
|
|
|
245 Summer Street
|
|
|
|
|
|
|
|
|
Boston, MA 02210
|
|
|
14,143,450
|
(3)
|
|
|
9.6
|
%
|
(1)
|
According to Amendment No. 2 to the Schedule 13G filed with the SEC on
January 25, 2021, BlackRock, Inc. had sole voting power as to 23,459,214 of such shares and sole dispositive power as to all
of the shares.
|
(2)
|
According to Amendment No. 2 to the Schedule 13G filed with
the SEC on February 8, 2021, The Vanguard Group, Inc. had sole voting power as to no such shares, shared voting power as to 147,715
shares, sole dispositive power as to 15,032,203 shares and shared dispositive power as to 259,794 shares.
|
(3)
|
According to Amendment No. 1 to the Schedule 13G filed with
the SEC on February 11, 2021, FMR LLC had sole voting power as to 2,871,525 of such shares and sole dispositive power as to all
of the shares.
|
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange
Act requires our directors and executive officers and any beneficial owner of more than 10% of any class of our equity securities
to file with the SEC initial reports of beneficial ownership and reports of changes in ownership of securities. These reports are
made on documents referred to as Forms 3, 4, and 5. Our directors and executive officers must also provide us with copies of these
reports. We have reviewed the copies of these reports that we have received and written representations that no Form 5 was required
from the individuals required to file these reports. Based on this review, we believe that during 2020 each of our directors and
executive officers timely complied with applicable reporting requirements for transactions in our equity securities except for
one late report on Form 4 relating to shares withheld on January 10, 2020 to pay taxes upon the vesting of previously timely disclosed
awards for Paul W. Graves.
LIVENT CORPORATION | 2021 PROXY STATEMENT 28
VI.
|
EXECUTIVE COMPENSATION
|
COMPENSATION DISCUSSION AND ANALYSIS
This compensation discussion
and analysis (“CD&A”) describes the philosophy, objectives, process, components and additional aspects of our 2020
executive compensation program. This CD&A is intended to be read in conjunction with the tables that immediately follow this
section, which provide further historical compensation information for the following named executive officers (“NEOs”),
who were the sole executive officers of the Company in 2020:
Paul W. Graves
|
|
President and Chief Executive Officer
|
Gilberto Antoniazzi
|
|
Vice President, Chief Financial Officer and Treasurer
|
Sara Ponessa
|
|
Vice President, General Counsel and Secretary
|
COMPANY BACKGROUND
In October 2018, Livent successfully
began its separation from FMC, our former parent company, with an IPO. On March 1, 2019, we completed our separation from FMC with
FMC’s Distribution. When the Compensation Committee designed our initial executive compensation program in 2018, it contemplated
the impending IPO and Distribution. In 2019 and 2020, the Compensation Committee did not make changes to the original compensation
program developed in 2018. The objectives of the Compensation Committee in designing our executive compensation program are to
have a simple yet competitive program that supports Livent’s business strategy, reflects Livent’s pay for performance
approach, and aligns with the long-term interests of our stockholders.
SAY ON PAY AND SAY ON FREQUENCY
As of December 31, 2019,
we ceased to be an emerging growth company under the Jumpstart Our Business Startups Act of 2012. We are therefore now required
to hold our first non-binding advisory stockholder vote on our executive compensation program (known as “Say on Pay”)
during our 2021 Annual Meeting of Stockholders. We held our first non-binding advisory stockholder vote on the frequency of the
“Say on Pay” vote at the 2020 Annual Meeting. At that meeting, the vast majority of our stockholders voted to support
conducting our non-binding Say on Pay vote on an annual basis. In line with that advisory vote, our Board of Directors has determined
that Livent will conduct a Say on Pay vote annually.
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Executive Summary
|
Section I
|
Compensation Philosophy and Objectives
|
Section II
|
Compensation Determination Process
|
Section III
|
Components of Our Compensation Program
|
Section IV
|
Additional Compensation Policies and Practices
|
Section V
|
LIVENT CORPORATION | 2021 PROXY STATEMENT 29
OVERVIEW
The primary objectives of our executive compensation
program are to:
■
|
Link pay to performance over both the short and long terms;
|
■
|
Align executive officers’ interests with those of Livent and our shareholders over
the long term, generally through the use of equity as a significant component;
|
■
|
Provide market compensation to attract, motivate and retain executive talent; and
|
■
|
Achieve all objectives in ways that incorporate due consideration of risk.
|
In light of these objectives, our compensation
plans are designed to reward our executive officers for generating performance that achieves Company and individual goals, and
for increasing shareholder returns. When we do not achieve Company and individual goals, our executive officers’ compensation
reflects that performance.
2020 SELECT BUSINESS RESULTS
2020 was a challenging year
for Livent and the lithium industry as a whole. The difficult business environment was exacerbated by the COVID-19 pandemic, which
disrupted supply chains and customer order patterns, added to operational complexity and delayed the strong rebound
in demand that was expected in 2020. As a result, global market conditions for many of the lithium products that Livent supplies
were not favorable. Livent’s performance was negatively impacted by lower than forecasted realized pricing, lower than anticipated
lithium hydroxide sales volumes due to delayed customer orders, and the incremental cost of consuming third-party lithium carbonate
versus Livent-produced carbonate from Argentina.
Key financial and operating results in 2020 include
the following:
Revenue
■
|
Revenue of $288.2 million in 2020, a decrease of $100.2 million from 2019, primarily
due to lower average prices and lower sales volumes, in part due to COVID-19 reducing customer demand.
|
Gross Margin
■
|
Gross margin of $36.8 million in 2020, a decrease of $78.1 million from 2019, primarily
due to lower average prices, lower sales volumes, increased costs due to the financial impact of increased third party lithium
carbonate usage, and incremental COVID-19 costs to implement safety protocols.
|
Net (loss)/Income
■
|
Net loss of $18.9 million for 2020, compared to net income of $50.2 million in 2019, a decrease
of $69.1 million from 2019, was primarily due to lower average prices and lower sales volumes, driven by a decrease in customer
demand related to COVID-19, increased costs due to the financial impact of increased third party lithium carbonate usage,
and incremental COVID-19 costs to implement safety protocols.
|
Adjusted EBITDA
■
|
Adjusted EBITDA of $22.3 million, a decrease of $77.5 million compared to the 2019 amount
of $99.8 million, primarily due to lower average prices, lower sales volumes and increased costs due to the financial impact
of increased third party lithium carbonate usage. Adjusted EBITDA is used as a Company performance metric in our annual cash
incentive plan.
|
EBITDA is defined as net income/loss, plus interest
expense, net, income tax expense/(benefit), and depreciation and amortization.
Adjusted EBITDA is defined as EBITDA adjusted for certain Argentina remeasurement losses/(gains), restructuring and other
charges/(income), separation-related costs, COVID-19 related costs, loss on debt extinguishment, and other losses/(gains).
For a reconciliation of Adjusted EBITDA to the
nearest GAAP measure, see the section captioned “Results of Operations — Years Ended December 31, 2020 and 2019”
in our Annual Report on Form 10-K for the year ended December 31, 2020.
COVID-19 EFFECT ON BUSINESS;
RESPONSES TO THE PANDEMIC
In December 2019, an outbreak of a novel strain
of coronavirus originated in Wuhan, China (“COVID-19”) and was declared a pandemic by the World Health Organization
in March 2020. COVID-19 has since spread worldwide, posing public health risks across the globe and has negatively impacted the
global economy, disrupted global supply chains and workforce participation and created significant volatility and disruption of
financial markets. The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on
future developments, including the duration and severity of the pandemic and related restrictions, all of which are uncertain and
cannot be predicted.
In 2020, the COVID-19 pandemic negatively impacted
the Company’s business, operations and financial performance. Government measures and restrictions globally had a negative
impact on demand for certain of the Company’s products and a negative impact on the operating cost and the efficient operation
of the Company’s facilities, supply chains and logistics. We saw a slowdown in demand for certain of our products and global
inventories were elevated, which had a downward pressure on prices for certain of our products.
The Company’s working capital was impacted
by the effects of COVID-19 during 2020. Certain of our customers canceled, postponed or delayed orders. We had an increased use
of cash
LIVENT CORPORATION | 2021 PROXY STATEMENT 30
resulting from
logistical supply disruptions, such as increased warehousing costs, higher sea shipping costs, and the use of air freight
rather than cargo ships to meet more uncertain customer delivery deadlines. The Company also used cash to purchase additional
personal protective equipment for its employees, such as masks and gloves, and for increased cleaning and disinfectant costs,
wipes and hand sanitizer, additional medical personnel at our facilities, and increased personnel transportation costs due to
social distancing guidelines.
The Company has
responded to the COVID-19 pandemic in a number of ways. We assembled a Global Pandemic Response Team whose global members are
taken from different functional areas, including Operations, Finance, Commercial, Legal, Human Resources, Communications &
Public Affairs, Information Technology, Procurement and Health & Safety. The Global Pandemic Response Team meets on a
regular basis, and provides reports to the Executive Leadership team. The Company has also assembled COVID-19 Response
Teams at several of its regional locations, who have the responsibility to keep informed of local matters such as government
policies and regulations. These Response Teams are helping to shape the Company’s policies in response to the COVID-19
pandemic.
The Company is also working diligently to protect
the health and well-being of its employees, customers and other key stakeholders. As an essential business under the rules of the
governments in the countries where we operate, our plant personnel continue to remain on the job at their respective facilities.
We have instituted numerous safety procedures to protect the health of these plant personnel. This includes temperature checks
before an employee enters any one of our facilities, screening questions, the use of masks and gloves where appropriate, and social
distancing measures. We are no longer permitting visitors to any of our facilities and all third-party contractors must undergo
a vigorous screening process. All workers who can work from home have been requested to do so, and business travel has been substantially
reduced. Communications relating to all of these policies and COVID-19 preventative measures are regularly distributed to our employees.
For more information on the business impact of
COVID-19 on the Company, see the section captioned “Item 7., Management’s Discussion and Analysis of Financial Condition
and Results of Operations, COVID-19 Impacts,” in our Annual Report on Form 10-K for the year ended December 31, 2020.
NOTABLE ASPECTS OF OUR 2020 EXECUTIVE COMPENSATION
PROGRAM
BASE SALARIES
The Committee set the NEOs’ initial base
salary rates in connection with our IPO in 2018, and these base salary rates were not increased in 2019 or 2020.
ANNUAL CASH INCENTIVE PLAN
Our annual cash incentive plan is comprised of
Company and individual performance metrics.
For the Company component (70% of the annual incentive
opportunity), in addition to the previous metric of Adjusted EBITDA (35%), in 2020, we added Adjusted Free Cash Flow (35%) as a
metric.
Adjusted Free Cash Flow is defined as Adjusted
cash from operations less cash required by investing activities less Adjusted EBITDA.
Adjusted cash from operations is defined as cash
provided by operating activities, adjusted for restructuring and other charges, separation-related spending, COVID-19 related costs,
and other losses/gains.
The Compensation Committee continued
to use the Adjusted EBITDA measure in order to focus executive officers on the critical strategic priority of achieving and improving
operating profitability, and added Adjusted Free Cash Flow to focus management on improving cash management. The Compensation Committee set the target for both measures
at levels it believed to be challenging and rigorous.
In developing our 2020 annual operating budget
and the corresponding incentive plan performance metric targets, which were aligned with our 2020 guidance and outlook as communicated
to investors in February 2020, the Compensation Committee made certain key assumptions, including a decline in Adjusted EBITDA,
based on:
■
|
Growth in total volumes sold, on a lithium carbonate equivalent (“LCE”) basis,
of approximately 30%;
|
■
|
Depressed market pricing for lithium hydroxide that was expected to continue through 2020,
with the anticipated average realized price expected to be low-to-mid-teens percent lower than average realized pricing in
2019; and
|
■
|
Higher costs from using up to 5,000 tons of third-party lithium carbonate to sell such higher
volumes of battery-grade lithium hydroxide compared to 2019.
|
For 2020,
Adjusted EBITDA decreased to $22.3 million because of difficult market conditions for both Livent and the lithium industry as
a whole, as global supply chains were disrupted as a result of COVID-19. Results were affected by costs from higher
third-party carbonate usage and increased spending due to the disruption caused by the COVID-19 pandemic. Adjusted
Free Cash Flow increased to $(138.3 million) due to improved collection of accounts receivable, better inventory management, and prudent capital spending decisions. Based on these financial results, the
Compensation Committee determined that Adjusted EBITDA was achieved at 0% and Adjusted Free Cash Flow was achieved at 200%, yielding a 100% overall achievement level for Company Measures.
For the individual component, which represented
30% of the total opportunity, the targets, achievement, and payouts of the NEOs employed at the end of the 2020 fiscal year varied,
but were generally earned between 110% and 120% of target.
LIVENT CORPORATION | 2021 PROXY STATEMENT 31
LONG-TERM INCENTIVES
There were no long-term incentive grants to the
NEOs in 2020. In connection with our IPO in 2018, our CEO and the other NEOs received RSUs and stock options, which were intended
to represent two years’ worth of annual equity grants.
Long-term incentive equity awards are prospective
in nature and intended to tie a substantial portion of an executive’s pay to creating long-term stockholder value. The Compensation
Committee intends to structure the long-term incentive opportunity to motivate executive officers to achieve multiyear strategic
goals and deliver sustained long-term value to stockholders, and to reward them for doing so.
POSITIONING FOR 2021 PROGRAM
As the Company has
continued to evolve and mature following its IPO in 2018, the Compensation Committee has correspondingly sought to evolve the
executive compensation program as appropriate for a company of Livent’s stage of development and size. In the second
half of 2020, the Compensation Committee, with the assistance of its independent compensation consultant, developed a peer
group of comparable companies to use as a reference point in determining executive officer compensation in connection with
decisions for 2021.
II.
|
COMPENSATION PHILOSOPHY
|
COMPENSATION PHILOSOPHY
Pay-for-performance: Our
program is designed to motivate our executive officers to achieve goals by closely linking their performance and the Company’s
performance to the compensation they receive. As such, we intend for a significant portion of the total compensation of our executive
officers to be based on measures that support our Company goals, as well as on the executive officer’s individual performance.
To tighten this link, we define clear and measurable quantitative and qualitative objectives that, in combination, are designed
to improve our results and returns to shareholders.
Alignment of executive
officers’ interests with those of the Company and its shareholders: A significant portion of our executive officers’
overall compensation is in the form of equity-based compensation. We use equity as the form for long-term incentive opportunities
in order to motivate and reward executive officers to (i) achieve multiyear strategic goals and (ii) deliver sustained long-term
value to shareholders. Using equity for the long-term incentives creates strong alignment between the interests of executive officers
and the interests of our shareholders because it provides executive officers with a common interest with shareholders in stock
price performance and it fosters an ownership culture among executive officers by making them shareholders with a personal stake
in the value they are being motivated to create.
As described above, we sized
our initial IPO grants to cover two years of equity-based compensation for our NEOs. We did not make additional annual equity grants
to our NEOs in 2019 or 2020.
Provide market competitive
pay to attract and retain talent: In our industry, we must compete in the market for executive talent. We seek executive officers
and managers to manage our business and carry out our strategy who have diverse experience, expertise, capabilities and backgrounds.
In recruiting our executive officers and determining competitive pay levels, we reference the market median amounts and compensation
structures of executive officers as shown in general industry surveys. Executive officers’ total compensation may deviate
from the level referenced in the surveys in order to attract or retain certain individuals or reflect their respective characteristics
or performance.
Risk management: While
we have designed our executive compensation program to create incentives for executive officers to deliver high performance, we
also simultaneously seek to minimize risk by striving to reduce undue pressure on, or incentives for, executive officers to take
excessive risks to achieve goals and receive rewards. We seek to include mechanisms intended to mitigate such risk, including (i)
placing maximum limits on short- and long-term incentive payouts; (ii) measuring performance using key performance indicators that
by design have lower potential to promote excessive risk-taking; (iii) utilizing a mix of equity vehicles with longer term vesting;
and (iv) requiring clawback of compensation payments under certain plans or in certain circumstances. The Compensation Committee
has determined, based in part on an assessment of the Company’s executive compensation programs by its consultant, that its
compensation policies and programs do not give rise to inappropriate risk taking or risks that are reasonably likely to have a
material adverse effect on the Company.
LIVENT CORPORATION | 2021 PROXY STATEMENT 32
COMPENSATION PROGRAM GOVERNANCE
We assess the effectiveness of our executive compensation
program from time to time and review risk mitigation and governance matters, which include maintaining the following best practices:
III.
|
COMPENSATION DETERMINATION PROCESS
|
ROLE OF THE COMMITTEE
The Compensation Committee establishes our compensation
philosophy and objectives, determines the structure, components and other elements of executive compensation, and reviews and approves
the compensation of the NEOs or recommends it for approval by the Board of Directors.
The Compensation Committee structures the executive
compensation program to accomplish our articulated compensation objectives in light of the compensation philosophy described above.
In accordance with its
charter, the Compensation Committee establishes total compensation for the CEO (generally at its February meeting). The
Compensation Committee reviews and evaluates the performance of the CEO and develops base salary and incentive compensation. Our CEO does not play any role with
respect to any matter affecting his own compensation and is not present when the Compensation Committee discusses and
formulates the compensation recommendation.
With the input of the CEO, the Compensation Committee
also establishes the compensation for all the other executive officers. As part of this process, the CEO evaluates the performance
of the other executive officers annually and makes recommendations to the Compensation Committee each February regarding the compensation
of each executive officer. The CEO’s input is particularly important in connection with base salary adjustments and the determination
of each executive officer’s individual goals under the annual incentive plan. The Compensation Committee gives significant
weight to the CEO’s recommendations in light of his greater familiarity with the day-to-day performance of his direct reports
and the importance of incentive compensation in driving the execution of managerial initiatives developed and led by the CEO. Nevertheless,
the Compensation Committee or the Board makes the ultimate determination regarding the compensation for the executive officers.
LIVENT CORPORATION | 2021 PROXY STATEMENT 33
ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT
The Compensation Committee recognizes the importance
of obtaining objective, independent expertise and advice in carrying out its responsibilities, and has the power to retain an independent
compensation consultant to assist it in the performance of its duties and responsibilities.
The Compensation Committee has retained Aon plc
(“Aon”) as its independent compensation consultant. Aon reports directly to the Compensation Committee, and the Committee
has the sole authority to retain, terminate and obtain the advice of Aon at the Company’s expense. The Committee selected
Aon as its consultant because of the firm’s expertise and experience.
The Compensation Committee has worked with Aon
to assess our executive compensation objectives and components; review considerations, market practices, and trends related to
short-term annual incentive plans and long-term equity and other incentive plans; collect comparative compensation levels for each
of our executive officer positions, as needed; and review our equity compensation strategy.
While the Compensation Committee takes into consideration
the review and recommendations of Aon when making decisions about our executive compensation program, ultimately, the Committee
makes its own independent decisions about compensation matters.
The Compensation Committee has assessed the independence
of Aon pursuant to SEC and NYSE rules. In doing so, the Compensation Committee considered each of the factors set forth by the
SEC and the NYSE with respect to a compensation consultant’s independence. The Compensation Committee also considered the
nature and amount of work performed for the Compensation Committee and the fees paid for those services in relation to the firm’s
total revenues. On the basis of its consideration of the foregoing and other relevant factors, the Compensation Committee concluded
that there were no conflicts of interest, and that Aon is independent.
EXECUTIVE COMPENSATION COMPETITIVE MARKET INFORMATION
In making determinations about executive compensation,
the Compensation Committee believes that obtaining relevant market data is important, because it serves as a reference point for
making decisions and provides very helpful context. Because pay was established in late 2018 in preparation for the IPO and no
adjustments to pay were contemplated for the NEOs in 2019 or 2020, a formal market review was not completed in advance of decisions
about 2020. As the Company has continued to progress from its IPO in October 2018 and separation from FMC in 2019, with the assistance
of its independent compensation consultant, it has developed a peer group of comparable companies to use as a reference point in
determining executive officer compensation.
IV.
|
COMPENSATION PROGRAM COMPONENTS
|
2020 COMPONENTS IN GENERAL
The Compensation Committee selected the components
of compensation set forth in the chart below to achieve our executive compensation program objectives.The Compensation Committee
regularly reviews all components of the program to verify that each executive officer’s total compensation is consistent
with our compensation philosophy and objectives and that the component is serving a purpose in supporting the execution of our
strategy. Taking into consideration the grants of equity in 2018 to the CEO and other NEOs in connection with our IPO, the majority
of each executive officer’s compensation is variable and at-risk.
As described above, there were no long-term incentive
grants to the NEOs in 2019 or 2020. In connection with our IPO in 2018, our CEO and other NEOs received RSUs and stock options,
which were intended to represent two years’ worth of annual equity grants, vesting in 2021 and 2022.
As the Company has continued to evolve and mature
following its IPO in 2018, the Committee has correspondingly sought to evolve the executive compensation program as appropriate
for a company of Livent’s stage of development and size. In the second half of 2020, the Compensation Committee, with the
assistance of its independent compensation consultant, developed a peer group of comparable companies to use as a reference point
in determining executive officer compensation.
Long-term incentive equity awards are prospective
in nature and intended to tie a substantial portion of an executive’s pay to creating long-term stockholder value. The Committee
intends to structure the long-term incentive opportunity to motivate executive officers to achieve multiyear strategic goals and
deliver sustained long-term value to stockholders, and to reward them for doing so.
LIVENT CORPORATION | 2021 PROXY STATEMENT 34
Element
|
|
Description
|
|
Additional Detail
|
Base Salary
|
|
Fixed cash compensation.
Determined based on each executive officer’s
role, individual skills, experience, performance and external market value.
|
|
Base salaries are intended to provide stable compensation to executive officers, allow us
to attract and retain skilled executive talent and maintain a stable leadership team.
|
Short-Term Incentives: Annual Cash Incentive Opportunities
|
|
Variable cash compensation based on the
level of achievement of pre-determined annual corporate and individual goals.
70% of the award is based on corporate
objectives and 30% is based on individual measures.
For the corporate objectives, cash incentives
are capped at a maximum of 200% of each NEO’s target opportunity.
Performance against the corporate objectives
must exceed a threshold level of performance in order to earn any credit toward a payout with respect to that goal.
|
|
Annual cash incentive opportunities are designed to ensure that executive officers are motivated
to achieve our annual goals; payout levels are generally determined based on actual
financial results and non-financial objectives specific to each NEO.
|
Long-Term Incentives: Annual Equity-Based Compensation
|
|
Variable equity-based compensation
Stock Options: Right to purchase shares at a price equal to the
stock price on the grant date.
RSUs: Restricted stock units that
are time-based.
In 2018, upon our IPO, we granted to
the NEOs equity awards comprised of non-qualified stock options and RSUs, each representing fifty percent of the total
award. The 2018 equity awards were intended to represent two years’ worth of annual equity awards. The NEOs did
not receive an additional equity award in 2019 or 2020.
|
|
The 2018 equity awards vest in two equal installments on the third and fourth
anniversaries of the date of grant, subject to the NEO’s continued employment.
|
BASE SALARY
Base salaries provide fixed compensation to executive
officers and help to attract and retain the executive talent needed to lead the business and maintain a stable leadership team.
Base salaries are individually determined according to each executive officer’s areas of responsibility, role and experience,
and vary among executive officers based on a variety of considerations, including skills, experience, achievements and the competitive
market for the position.
In 2020, the Compensation Committee did not make
any changes to the base salaries of the NEOs from the levels set upon the IPO.
NEO
|
|
2020
Base
Salary
|
|
Paul W. Graves
|
|
$
|
800,000
|
|
Gilberto Antoniazzi
|
|
$
|
375,000
|
|
Sara
Ponessa
|
|
$
|
350,000
|
|
ADJUSTMENTS TO BASE SALARY
From time to time, the Compensation Committee
will consider base salary adjustments for executive officers. The main considerations for a salary adjustment are similar to those
used in initially determining base salaries but may also include a change of role or responsibilities, recognition for achievements,
regulatory or contractual requirements, budgetary constraints or market trends.
ANNUAL INCENTIVE PLAN
The annual cash incentive plan for executive officers
is a cash-based plan that rewards NEOs for the achievement of key short-term objectives. The structure of the annual cash plan
incentivizes NEOs to achieve annual financial and operational results that the Committee views as critical to the execution of
our business strategy.
For the NEOs, the amount of the payout, if any,
under the annual incentive plan is based on achievement against two categories of performance measures: Company Measure and Individual
Measures.
LIVENT CORPORATION | 2021 PROXY STATEMENT 35
TARGET OPPORTUNITIES
The Compensation Committee determines a target
cash incentive opportunity for each NEO under the annual cash incentive plan by taking the individual’s base salary and multiplying
it by the individual’s target incentive percentage. Among other factors, the target incentive percentages are determined
with reference to general industry surveys. The target incentive percentages for each NEO remain unchanged since 2018.
|
|
2020 Threshold
Level
Opportunity
|
|
2020 Target Level
Opportunity
(as % of
Applicable Base
Salary)
|
|
2020 Maximum
Level
Opportunity
(as % of Applicable
Base Salary)
|
Paul W. Graves
|
|
0%
|
|
100%
|
|
200%
|
Gilberto Antoniazzi
|
|
0%
|
|
60%
|
|
120%
|
Sara Ponessa
|
|
0%
|
|
60%
|
|
120%
|
COMPANY MEASURES
The amount of the payout, if any, under the Company
Measures component of the Annual Incentive Plan is based on our achievement against two financial metrics, Adjusted EBITDA and
Adjusted Free Cash Flow. The Company Measures represent 70% of the annual cash incentive opportunity, underscoring the emphasis
on Company performance.
The Compensation Committee continued
to use Adjusted EBITDA (35%) in order to focus executive officers on the critical strategic priority of achieving and improving
operating profitability, and added Adjusted Free Cash Flow (35%) in 2020 to focus management on improving cash management.
Both of these metrics also give a clear line of
sight into how achieving operating goals drives performance and generates rewards. The Compensation Committee believes that these
non-GAAP measures are useful as an incentive compensation performance metrics because they exclude various items that do not relate
to or are not indicative of operating performance.
EBITDA is defined as net income plus interest
expense, net, income tax expense/(benefit), and depreciation, and amortization. Adjusted EBITDA is defined as EBITDA adjusted for certain Argentina remeasurement losses/(gains), restructuring and other
charges/(income), and separation-related costs, COVID-19 related costs, loss on debt extinguishment, and other losses/(gains).
Adjusted Free Cash Flow is defined as Adjusted
cash from operations less cash required by investing activities less Adjusted EBITDA.
Adjusted cash from operations is defined as cash
provided by operating activities, adjusted for restructuring and other charges, separation-related spending, COVID-19 related costs,
and other losses/gains.
The Non-GAAP measures Adjusted EBITDA and Adjusted
Free Cash Flow should not be considered as a substitute for net income or cash flows from continuing operations or other measures
of profitability or liquidity determined in accordance with GAAP. For the reconciliation of Adjusted EBITDA to the most directly
comparable financial measure calculated and presented in accordance with GAAP, reference is made to the section captioned “Results
of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
TARGET, THRESHOLD AND MAXIMUM
PERFORMANCE LEVELS
The Compensation Committee set the targets for
Adjusted EBITDA and Adjusted Free Cash Flow at levels that it considered rigorous and challenging and that took into account the
relevant risks and opportunities of the Company’s business. In particular, the Compensation Committee reviewed our 2020 annual
operating budget that resulted from our detailed budgeting process and evaluated various factors that might affect whether the
budget targets could be achieved, including the risks to achieving certain preliminary objectives that were necessary prerequisites
to achieving the budget targets.
In developing our 2020 annual operating
budget and the corresponding incentive plan performance metric targets, which were themselves based on the business plan and were
aligned with our 2020 guidance and outlook as communicated to investors in February 2020, the Compensation Committee made certain
key assumptions, including a decline in Adjusted EBITDA compared to 2019, as communicated to investors in February 2020:
■
|
Growth in total volumes sold, on a lithium carbonate equivalent (“LCE”) basis,
of approximately 30%;
|
■
|
Depressed market pricing for lithium hydroxide that was expected to continue through 2020,
with the anticipated average realized price expected to be low-to-mid-teens percent lower than average realized pricing in 2019;
and
|
■
|
Higher costs from using up to 5,000 tons of third-party lithium carbonate to sell such higher
volumes of battery-grade lithium hydroxide compared to 2019;
|
As the Company stated to shareholders in February 2020, lithium pricing was severely impacted by oversupply conditions outpacing demand growth. The new supply was largely due to increased output in Australia combined with an increase in
LIVENT CORPORATION | 2021 PROXY STATEMENT 36
conversion capacity in China. Additionally, in
connection with our projection to grow total LCEs sold by roughly 30%, such projected volumes were higher than our own then-annual
production capacity, necessitating that we source additional lithium carbonate from third parties, at higher cost.
Considering these factors,
the Compensation Committee set the 2020 target for Adjusted EBITDA at $68 million, and the 2020 target for Adjusted Free Cash Flow
at $(214) million.
The Compensation Committee also set the threshold
and maximum performance levels for Adjusted EBITDA and Adjusted Free Cash Flow. For 2020, the Compensation Committee set threshold
at what it believed to be a high level of performance equating to approximately 82% of the target for Adjusted EBITDA and approximately
86% of the target for Adjusted Free Cash Flow. The Compensation Committee set the maximum level of performance equating to approximately
132% of target for Adjusted EBITDA and approximately 120% of target for the Adjusted Free Cash Flow, levels that required an exceptionally
strong performance and represented a significant challenge.
PAYOUT LEVELS
Payout levels represent the amount to be paid
to NEOs based on the level of actual performance relative to the goals. In order to motivate performance and underscore the importance
of achieving, or closely approaching, the performance goals at this critical time in our development, the Compensation Committee
set the payout at 0% for achievement below the threshold level of performance. For performance on either metric between the threshold
level and the target level, the payout increases in a straight-line manner from 0% for threshold performance to 100% of the target
opportunity for achieving target performance. For performance on either metric between the target level and the maximum level,
the payout ranges from 100% of the target opportunity to 200% of the target opportunity, also with the payout increasing in a straight-line
manner. Achievement above the maximum level on either metric is capped at the maximum payout of 200% of target.
2020 ACHIEVEMENTS FOR COMPANY MEASURES
For 2020,
we did not exceed the threshold level of performance for the Adjusted EBITDA metric due to significant changes in demand and pricing
in the lithium industry caused in part by the COVID-19 pandemic. However, the maximum level of performance for Adjusted
Free Cash Flow was exceeded due to improved collection of accounts receivable, better inventory management, and prudent capital
spending decisions. The table below sets forth the 2020 performance goals for the Company Measures and the Company’s achievement
against these goals in 2020.
|
|
Company Measure
|
|
Actual
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Result
|
|
|
%
|
|
Performance Metric
|
|
($ in millions)
|
|
|
($ in millions)
|
|
|
($ in millions)
|
|
|
($ in millions)
|
|
|
Achievement
|
|
Adjusted EBITDA
|
|
$
|
56
|
|
|
$
|
68
|
|
|
$
|
90
|
|
|
$
|
22
|
|
|
0%
|
|
Adjusted Free Cash Flow
|
|
$
|
(244
|
)
|
|
$
|
(214
|
)
|
|
$
|
(179
|
)
|
|
$
|
(138
|
)
|
|
200%
|
|
Payout Percentage (as a % of target payout)
|
|
|
0%
|
|
|
|
100%
|
|
|
|
200%
|
|
|
|
|
|
|
100%
|
|
INDIVIDUAL MEASURES
The Compensation Committee also established Individual
Measures under the annual incentive plan, which represent 30% of the annual incentive target opportunity. The Individual Measures
for each of Mr. Graves, Mr. Antoniazzi and Ms. Ponessa were set in 2020 and were designed to align with the Company’s
strategic and operating initiatives. NEOs are eligible to receive anywhere between 0% - 200% of target for this portion of the
award, based on performance against individual goals. The NEOs’ 2020 Individual Measures are set forth below:
■
|
Mr. Graves: Continue to rebuild investor confidence in near- and long-term results; Continuous improvement in safety; Lead commercial organization to achieve financial targets and develop better demand capabilities; Oversee expansion projects and capital deployment strategy; Continue to develop talent and leadership globally; Finalize long-range strategic plan.
|
■
|
Mr. Antoniazzi: Cash-Flow Discipline – bolster awareness and drive stricter controls. Implement new funding structure; Advance on ESG narrative to investors; Prioritize effort and resource allocation to simplify – further tailor Livent’s processes to our size of business; “Systemic View” Attitude – engage and contribute with all functions; IT Focus – mature and improve outsourced service model, focus service requirements while selectively pursuing system process developments; IR Focus – maintain efforts to better tailor sell-side coverage and broaden investor base; Safety Mindset.
|
■
|
Ms. Ponessa: Efficiently manage legal support for the expansions; Oversee development and execution of strategy for the IPO class action securities litigation; Effectively manage legal resources to support the evaluation and successful execution of strategic initiatives.
|
LIVENT CORPORATION | 2021 PROXY STATEMENT 37
2020 ACHIEVEMENTS FOR INDIVIDUAL
MEASURES
For the Individual Measures
component, the Committee determined that Mr. Graves earned 110%, Mr. Antoniazzi earned 120% and Ms. Ponessa earned 110% of their
individual target despite challenging market conditions, based on the performance assessments described below.
■
|
Mr.
Graves: Led the company through significant challenges caused by the global COVID-19 pandemic, including changes in demand
and pricing in the lithium industry, which required adjusting and managing supply and distribution networks, and careful customer management. He successfully navigated the temporary shutdown and reopening of
our operations in Argentina. He
continued the Company’s focus on R&D to better position the Company as a leader in technology innovation once
the pandemic and its effects subside. He shaped the company’s long-term strategy as it relates to Environmental,
Social and Corporate Governance goals by elevating our sustainability agenda within the Company as well as engaging with
multiple interested parties (employees, communities, local governments, investors, customers). The Company’s efforts were rewarded with the receipt of a Gold Sustainability Rating from Ecovadis,
which placed the Company within the top 3% of all companies that were evaluated in its industry group. Mr. Graves led the
process of investing in Nemaska, including identifying and approaching The Pallinghurst Group as a preferred partner,
leading Livent’s part in the negotiations to acquire the business previously conducted by Nemaska Lithium Inc.
(“New Nemaska”), and building on existing relationships with the relevant parts of the Québec
government and investment fund (Investissement Québec).
|
■
|
Mr.
Antoniazzi: Managed the impact resulting from the COVID-19 pandemic which required swift actions for preserving the
Company’s financial health, while adjusting employee working dynamics across the globe. Assumed the role of Treasurer
in addition to his role as CFO. Oversaw the SEC reporting process for Quarterly and Annual Reports. Led a restructuring
of the Company’s funding capacity, while managing debt covenant requirements. Evaluated and managed financial
liquidity needs through the pandemic, including amendments to the Company’s credit facility agreement and the
offering of Convertible Green Notes. Managed operating costs closely while leading a focus on employee safety and
wellbeing that was driven by the drastic change in working dynamics. He brought more focus and discipline to company-wide
resource allocation and margin management to position the Company for future growth and value
creation. Led the development and successful execution of Livent’s investment in New Nemaska, advancing the
company’s strategy for alternate sources of lithium.
|
■
|
Ms. Ponessa: Led the company’s legal strategy through significant challenges caused by the global COVID-19 pandemic and the myriad of commercial, human capital and financial related legal developments. Oversaw legal support that mitigated legal risk and costs associated with expansion suspension and COVID-19 impacts. Coordinated legal support to government affairs team to successfully secure duty-free entry of the new hydroxide factory into the US. Executed enhancements to the Company’s global compliance program and developed processes to keep the Board informed of legal matters and corporate governance developments. Successfully executed IPO securities litigation strategy, resulting in the Federal court granting Livent’s motion to dismiss, and a settlement stipulation being reached with the state court plaintiffs. Directed global multidisciplinary legal team through the development and successful execution of Livent’s investment in New Nemaska and settlement of its supply agreement dispute with a subsidiary of Nemaska Lithium, Inc.
|
LIVENT CORPORATION | 2021 PROXY STATEMENT 38
PAYOUT DETERMINATION
As described
above, the Compensation Committee verifies achievement relative to the targets for the Company Measures and the Individual
Measures to determine the respective performance levels. The Compensation Committee then adds the amounts for the two
portions together to determine the total 2020 annual incentive plan payout for each NEO. The Compensation Committee then
presents the determination of the annual incentive plan payout amounts to the Board for its review.
The total payout under our Annual Incentive Plan
for each NEO for 2020 is reflected in the table below.
NEO
|
|
Target
Incentive
|
|
Company
Measures:
70% of
Target
Incentive
|
|
Company
Measures
Rating
|
|
Company
Measures
Incentive
Payout
Amount
|
|
Individual
Measures:
30% of
Target
|
|
Individual
Measures
Rating
|
|
Individual
Measures:
Incentive
Payout
Amount
|
|
Total 2020
Incentive
Payout
Amount
|
|
Paul W. Graves
|
|
$
|
800,000
|
|
$
|
560,000
|
|
|
1.0
|
|
$
|
560,000
|
|
$
|
240,000
|
|
|
1.1
|
|
$
|
264,000
|
|
$
|
824,000
|
|
Gilberto Antoniazzi
|
|
$
|
225,000
|
|
$
|
157,500
|
|
|
1.0
|
|
$
|
157,500
|
|
$
|
67,500
|
|
|
1.2
|
|
$
|
81,000
|
|
$
|
238,500
|
|
Sara Ponessa
|
|
$
|
210,000
|
|
$
|
147,000
|
|
|
1.0
|
|
$
|
147,000
|
|
$
|
63,000
|
|
|
1.1
|
|
$
|
69,300
|
|
$
|
216,300
|
|
LONG-TERM INCENTIVES
The third component of the executive compensation
program is long-term equity incentives. The Compensation Committee has designed the long-term incentive opportunity to motivate
and reward executive officers to achieve multi-year strategic goals and to deliver sustained long-term value to shareholders. The
long-term incentives create a strong link between payouts and performance, and a strong alignment between the interests of executive
officers and the interests of our shareholders. Long-term equity incentives also promote retention, because generally executive
officers will only receive value if they remain employed by us over the required term, and they foster an ownership culture among
our executive officers by making executive officers shareholders with a personal stake in the value they are intended to create.
MIX OF STOCK OPTIONS AND RSUs
The Compensation Committee structured the mix
of IPO Awards and the relative weight assigned to each type of award to motivate stock price appreciation over the long term through
stock options, which deliver value only if the stock price increases, and to ensure some amount of value delivery through the RSUs,
which are complementary because they have upside potential but deliver some value even if the stock price does not go up, while
also reinforcing an ownership culture and commitment to us.
The mix of long-term incentives granted to the
NEOs in connection with our IPO is shown below:
Equity Vehicle
|
|
2018 IPO
Allocation
|
|
Vesting
Period
|
|
How Value is
Delivered
|
|
Rationale for Use
|
Stock Options
|
|
50%
|
|
■ 4
years: 50% after Year 3, 50% after Year 4
■ Exercise
price: closing price on grant date
■ 10-year
term
|
|
■ Share price appreciation
|
|
■ Prioritizes
increasing shareholder value
■ Promotes
long-term focus
|
RSUs
|
|
50%
|
|
■ 4 years: 50% after Year 3, 50%
after Year 4
|
|
■ Value of stock
|
|
■ Aligns with shareholders
■ Promotes retention
■ Provides
value
|
2018 IPO LONG-TERM INCENTIVES
In 2018, the CEO
and other NEOs received IPO Awards comprised of 50% non-qualified stock options and 50% RSUs (the “IPO Awards”).
The target grant date values of the IPO Awards were, $2.8 million for Mr. Graves, $0.9 million for Mr. Antoniazzi, and
$0.6 million for Ms. Ponessa. The IPO Awards were intended to represent two years’ worth of annual equity awards, each
vesting in two equal installments on the third and fourth anniversaries of the date of grant in 2021 and 2022. These IPO
Awards were designed to quickly promote direct and significant alignment of the interests of these executive officers with
those of the Company’s stockholders. During the vesting period for the RSUs, if cash dividends are paid to
Livent’s stockholders, the NEOs will receive a special cash payment equal to the amount they would have received had
they been the record holders of the shares underlying the RSUs when the dividend was declared and paid. The Compensation
Committee believed that these grants were reasonably sized relative to market standards.
LIVENT CORPORATION | 2021 PROXY STATEMENT 39
NO 2019 OR 2020 LONG-TERM INCENTIVES
Consistent with the approach described above,
the Committee did not grant any new long-term incentives to the NEOs in 2019 or 2020.
PROSPECTIVE 2021 LONG-TERM INCENTIVES
As the Company has continued to evolve and mature
following its IPO in 2018, the Committee has correspondingly sought to evolve the executive compensation program as appropriate
for a company of Livent’s stage of development and size. In the second half of 2020, the Committee, with the assistance of
its independent compensation consultant, developed a peer group of comparable companies which it will use as a reference point
in determining 2021 executive officer compensation.
Long-term incentive equity awards are prospective
in nature and intended to tie a substantial portion of an executive’s pay to creating long-term stockholder value. The Committee
intends to structure the long-term incentive opportunity to motivate executive officers to achieve multiyear strategic goals and
deliver sustained long-term value to stockholders, and to reward them for doing so.
CONVERTED FMC AWARDS
Prior to our IPO, each of the NEOs historically
received equity grants from FMC. As a result of the Distribution, on March 1, 2019, outstanding equity awards denominated in FMC
stock were converted into awards denominated in Livent equity. As-converted, these awards are reflected, to the extent applicable,
in the Outstanding Equity Awards at Fiscal Year-End Table 2020 and Option Exercises and Stock Vested Table 2020 that follow.
POST-EMPLOYMENT COMPENSATION
QUALIFIED AND NON-QUALIFIED DEFINED CONTRIBUTION
PLANS
We offer a tax-qualified 401(k) defined contribution
plan (the “Qualified Savings Plan”) covering substantially all of our U.S. employees, including our NEOs. Eligible
employees may make voluntary pre-tax and post-tax contributions to the Qualified Savings Plan, and are eligible for matching company
contributions. The Qualified Savings Plan also permits discretionary company contributions. All contributions to the Qualified
Savings Plan are subject to certain limitations under the Internal Revenue Code.
We also offer a non-qualified deferred compensation
plan (the “Nonqualified Savings Plan”) that is available to certain highly compensated individuals, including our NEOs.
The Nonqualified Savings Plan generally is designed to mirror the Qualified Savings Plan, but without application of the Internal
Revenue Code limits. Livent’s matching contribution under both plans is currently 80% of the amount deferred up to a maximum
of 5% of eligible earnings (i.e., base salary and annual incentive paid in a calendar year). However, the matching contribution
under both plans may not exceed 4% of an NEO’s total eligible earnings. Livent’s non-elective employer contributions
under both plans (the “core contribution”) is 5% of an employee’s eligible earnings. However, Mr. Antoniazzi
was eligible for an enhanced core contribution of 15% of his eligible earnings based on his prior participation in a FMC predecessor
plan. An employee must be employed as of the last day of the plan year (i.e., December 31st) to receive the core contribution.
PENSION BENEFITS
Livent does not maintain a qualified or non-qualified
defined benefit pension plan. However, prior to our separation from FMC, Mr. Antoniazzi earned pension benefits as a participant
in the FMC Retirement Salaried and Nonunion Hourly Employees’ Retirement Plan and the FMC Salaried Employees’ Equivalent
Plan (collectively, the “FMC Pension Plans”). Mr. Antoniazzi ceased earning any additional benefits under the FMC Pension
Plans effective December 31, 2018. To compensate for the pension benefits that otherwise would have been earned under the FMC Pension
Plans, Mr. Antoniazzi will be eligible for special “short-fall” contributions under Livent’s Nonqualified Savings
Plan. Subject to continuing employment, Mr. Antoniazzi will receive an annual contribution of $68,000 to his Nonqualified Savings
Plan account beginning in 2022 and continuing through 2029.
SEVERANCE ARRANGEMENTS
We maintain Executive Severance Guidelines (the
“Severance Guidelines”), which provide for the payment of severance pay and benefits in the event of an executive’s
termination of employment by us without cause (other than in connection with a change in control of the Company or as a result
of death, disability or normal retirement). No NEO has a contractual entitlement to any severance pay or benefits under the Severance
Guidelines, and the Compensation Committee has the discretion to enhance or reduce the severance pay or benefits under the Severance
Guidelines in any specific case. As a condition to receiving any severance pay or benefits under the Severance Guidelines, the
NEO must execute a release of claims in favor of the Company, as well as a non-solicitation, non-competition and confidentiality
agreement.
See “Potential Payments upon a Termination
or Change in Control,” which describes the payments to which the participating NEOs may be entitled under the Severance Guidelines.
CHANGE IN CONTROL ARRANGEMENTS
The Compensation Committee believes that the long-term
interests of stockholders are best served by providing reasonable income protection for NEOs to address potential change in control
situations in which they may otherwise be distracted by their potential loss of employment in the event of a successful transaction.
Livent has entered into an executive severance agreement with each NEO that provides certain financial benefits in the event of
a change in control. These are “double trigger” arrangements –i.e., severance benefits under these arrangements
are only triggered by a qualifying event that also results in the executive’s termination of employment under certain specified
circumstances within 24 months following the event.
LIVENT CORPORATION | 2021 PROXY STATEMENT 40
In addition, under the terms of the IPO Awards,
if a change in control occurs and those awards are not assumed or continued by the successor or surviving corporation, the unvested
portion of any outstanding IPO Awards will then vest and become exercisable as applicable. There is no parallel automatic vesting
provision that is applicable to the FMC equity awards that were converted into Livent equity awards.
See “Potential Payments upon a Termination
or Change in Control”, below for further information.
HEALTH AND WELFARE BENEFITS
We offer broad-based medical, dental, vision,
life, and disability plans to all of our employees.
PERQUISITES AND OTHER PERSONAL BENEFITS
We do not generally provide our executive officers,
including the NEOs, with perquisites or other personal benefits, except for financial planning for our CEO, CFO and GC, parking for our CEO and CFO, and, in the case of the CEO, a club membership. These items are provided because we believe
that they support our executive officers, serve a necessary business purpose, and the related amounts of compensation are not material
to the overall executive compensation program. The costs of these items are reported in the Summary Compensation Table.
We do not provide tax reimbursements or any other
tax payments with respect to perquisites, including excise tax “gross-ups,” to any of our executive officers.
V. ADDITIONAL COMPENSATION POLICIES AND PRACTICES
CLAWBACK POLICY
Livent maintains a clawback policy designed to
reverse, to the extent possible, any economic benefit resulting from incentive compensation paid to executive officers based on
erroneously prepared financial statements. If Livent is required to prepare an accounting restatement because of material non-compliance
with any financial reporting requirement, all incentive compensation paid or credited to each current or former executive officer
for the restated period (up to three years) will be recalculated based on restated results. To the extent the recalculated incentive
compensation is less than the incentive compensation actually paid or credited to such executive officer for that period, the excess
amount must be forfeited or returned to Livent.
In addition to forfeiting amounts earned but unpaid
and repaying cash amounts previously received, executive officers may be required to return shares of Livent stock previously issued
to them if the shares provided an economic benefit based on erroneous financial data and to repay any dividends or distributions
paid on the shares since their issuance. If the executive officers have already sold or transferred issued shares, they will be
required to repay to Livent the fair market value of the shares at the time of their sale or transfer, plus the dividends or distributions
paid on the shares prior to their sale or transfer.
Alternatively, Livent is authorized to offset
the forfeitable amount from compensation owed currently or in the future to such executive officers.
EXECUTIVE STOCK OWNERSHIP GUIDELINES
We believe that Livent
and our stockholders are best served when executive officers manage the business with a long-term perspective. As such, we implemented
executive stock ownership guidelines in February 2021, as we believe stock ownership is an important tool to strengthen the alignment
of interests among our executive officers and our stockholders, to reinforce executive officers’ commitment to us and to
demonstrate our commitment to sound corporate governance. The guidelines require that within five years of being appointed to
a covered position, the executive officer hold a minimum of five or two times (as detailed below) the value of their annual base
salary in Company stock.
|
Multiple of
|
Position
|
Base Salary
|
Chief Executive Officer
|
5x
|
Chief Financial Officer General Counsel
|
2x
|
For this purpose, time-based restricted stock
units (whether or not vested), Company stock held in the Livent Nonqualified Savings Plan, Company stock held in the FMC Corporation
Savings and Investment Plan, and Company stock owned directly or beneficially owned by the executive or the executive’s immediate
family members, will count. After the initial five-year phase-in period, compliance with the ownership requirement will be measured
on December 31 of each year.
ANTI-HEDGING AND ANTI-PLEDGING POLICY
Livent’s insider trading policy prohibits
employees (including officers) and directors from engaging in any hedging transactions (including transactions involving options,
puts, calls, prepaid variable forward contracts, equity swaps, collars and exchange funds or other derivatives) that are designed
to hedge or speculate on any change in the market value of Livent’s equity securities. It also explicitly prohibits employees
(including officers) and directors from effecting short sales of Livent’s equity securities, which are inherently speculative
in nature and contrary to the best interests of the Company and its stockholders. Livent’s insider trading policy also prohibits
employees (including officers) and directors from pledging Livent’s securities in any circumstance, including by purchasing
Company securities on margin or holding Livent’s securities in a margin account.
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 41
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Generally, a public company
cannot deduct compensation in excess of $1 million paid in any year to a Company’s chief executive officer, chief financial
officer and the three other most highly compensated officers. Deductibility of pay is among the many factors considered by the
Committee in designing our pay programs.
COMPENSATION AND ORGANIZATION
COMMITTEE REPORT
This Compensation and Organization
Committee Report shall not be deemed to be incorporated by reference into any filing made by the Company under the Securities Act
of 1933 or the Exchange Act, notwithstanding any general statement contained in any such filing incorporating this Proxy Statement
by reference, except to the extent the Company incorporates such Report by specific reference.
The Compensation Committee
has reviewed and discussed the Compensation Discussion and Analysis with the management of the Company. Based on this review and
these discussions, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the
Company’s Annual Report on Form 10-K and the Company’s Proxy Statement.
The preceding report has
been furnished by the following members of the Compensation Committee:
G. Peter D’Aloia, Chairman
Michael F. Barry
Pablo
Marcet
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 42
EXECUTIVE COMPENSATION TABLES
SUMMARY COMPENSATION TABLE 2020
The following table sets forth information required
under SEC rules concerning the compensation paid to our NEOs by Livent in respect of our fiscal years ended December 31, 2020 and
December 31, 2019, and by FMC and Livent in respect of our fiscal year ended December 31, 2018.
Name and
Principal Position
(a)
|
|
|
Year
(b)
|
|
Salary
($)
(c)
|
|
Bonus
($)
(d)
|
|
Stock
Awards
($)
(e)
|
|
Option
Awards
($)
(f)
|
|
Non-Equity
Incentive Plan
Compensation(1)
($)
(g)
|
|
All Other
Compensation(2)
($)
(i)
|
|
Total
($)
(j)
|
Paul W. Graves
|
|
|
2020
|
|
800,000
|
|
–
|
|
–
|
|
–
|
|
824,000
|
|
120,802
|
|
1,744,802
|
President and Chief Executive Officer
|
|
|
2019
|
|
800,000
|
|
–
|
|
–
|
|
–
|
|
360,000
|
|
169,170
|
|
1,329,170
|
|
|
|
2018
|
|
723,856
|
|
–
|
|
2,132,872
|
|
1,707,965
|
|
841,064
|
|
203,191
|
|
5,608,948
|
Gilberto Antoniazzi
|
|
|
2020
|
|
375,000
|
|
–
|
|
–
|
|
–
|
|
238,500
|
|
99,627
|
|
713,127
|
Vice President and Chief Financial Officer
|
|
|
2019
|
|
375,000
|
|
–
|
|
–
|
|
–
|
|
108,000
|
|
118,972
|
|
601,972
|
|
|
|
2018
|
|
285,417
|
|
–
|
|
500,061
|
|
488,169
|
|
199,321
|
|
17,152
|
|
1,490,120
|
Sara Ponessa
|
|
|
2020
|
|
350,000
|
|
–
|
|
–
|
|
–
|
|
216,300
|
|
41,005
|
|
607,305
|
Vice President, General Counsel and Secretary
|
|
|
2019
|
|
350,000
|
|
–
|
|
–
|
|
–
|
|
94,500
|
|
46,046
|
|
490,546
|
(1)
|
The
amounts listed in this column represent the Annual Incentive earned by the NEOs for 2020, as described in the section entitled
“Annual Incentive Plan” in the CD&A.
|
(2)
|
The
amounts reported in this column for 2020 for our NEOs reflect the following:
|
|
a
|
For
Mr. Graves, includes: (i) employer matching contribution to the Qualified Savings Plan ($11,400); (ii) employer matching
contribution to the Nonqualified Savings Plan ($39,040); (iii) employer non-elective contributions to the Qualified
Savings Plan ($14,250); and (iv) employer non-elective contributions to the Nonqualified Savings Plan ($43,972). The
amount in this column also includes the aggregate incremental cost of the following benefits provided to Mr. Graves
during 2020: a club membership, financial planning, and reserved parking.
|
|
b
|
For
Mr. Antoniazzi, includes: (i) employer matching contribution to the Qualified Savings Plan ($7,797); (ii) employer matching
contribution to the Nonqualified Savings Plan ($11,273); (iii) employer non-elective contributions to the Qualified Savings
Plan ($35,271); and (iv) employer non-elective contributions to the Nonqualified Savings Plan ($37,179). The amount in this
column also includes the aggregate incremental cost of the following benefits provided to Mr. Antoniazzi during 2020: financial
planning and regular parking.
|
|
c
|
For
Ms. Ponessa, includes: (i) employer matching contribution to the Qualified Savings Plan ($10,258); (ii) employer matching
contribution to the Nonqualified Savings Plan ($7,522); and (iii) employer non-elective contributions to the Qualified Savings
Plan ($14,250); and (iv) employer non-elective contributions to the Nonqualified Savings Plan ($7,975). The amount in this
column also includes the aggregate incremental cost of the following benefits provided to Ms. Ponessa during 2020: financial
planning.
|
The NEOs commenced their
service as executive officers of Livent in May of 2018. Prior to that time, each NEO was employed by FMC. In connection with the
IPO, the executives’ annual base salaries were set at $800,000 for Mr. Graves, $375,000 for Mr. Antoniazzi, and $350,000
for Ms. Ponessa. In addition, the NEOs’ target bonus amounts under Livent’s annual incentive plan, were set at 100%
of base salary for Mr. Graves and 60% of base salary for each of Mr. Antoniazzi and Ms. Ponessa. Target long-term incentive
equity values were also set at $1,400,000 for Mr. Graves, $450,000 for Mr. Antoniazzi, and $280,000 for Ms. Ponessa. Upon
the IPO, the NEOs each received non-qualified stock options and RSUs upon the IPO, which were intended to represent two years’
worth of annual equity awards and therefore were valued at two times the NEOs’ annual target awards. The NEOs did not receive
any increase to base salary for 2019 or 2020, nor did they receive an additional annual equity award in 2019 or 2020. In addition,
Messrs. Graves and Antoniazzi each executed an agreement as of the IPO, which binds them to certain restrictive covenants during
and following their employment with Livent, including an 18 month post-termination non-compete and non-solicit of employees and
customers.
The Summary Compensation
Table lists compensation for the Chief Executive Officer, Chief Financial Officer, and Livent’s other most highly compensated
executive officer who served as of the end of the fiscal year. Livent had no other executive officers during 2020. The material
terms of the pay elements included in the Summary Compensation Table are described above in the CD&A.
LIVENT CORPORATION | 2021 PROXY STATEMENT 43
GRANTS OF PLAN-BASED AWARDS TABLE
2020
The Grants of Plan- Based Awards Table below discloses
information related to our annual incentive program. As previously noted, our NEOs did not receive any new equity awards in 2020.
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards(1)
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
Number of Shares of
Stock or Units
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Grant
Date
(b)
|
|
Threshold
($)
(c)
|
|
Target
($)
(d)
|
|
Maximum
($)
(e)
|
|
Threshold
(#)
(f)
|
|
Target
(#)
(g)
|
|
Maximum
(#)
(h)
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
(i)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
(j)
|
|
Exercise
or Base
Price of
Option
Awards
($/sh)
(k)
|
|
Grant
Date
Fair
Value of
Stock and
Option
Awards
($)
(l)
|
Paul W.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Graves
|
|
–
|
|
0
|
|
800,000
|
|
1,600,000
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
Gilberto Antoniazzi
|
|
–
|
|
0
|
|
225,000
|
|
450,000
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
Sara Ponessa
|
|
–
|
|
0
|
|
210,000
|
|
420,000
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
|
–
|
(1)
|
The
actual amount of the Annual Incentive paid to each NEO with respect to 2020 is stated in Column (g) of the Summary
Compensation Table. The threshold, target and maximum performance signify performance that will yield a rating of 0, 1.0
and 2.0, respectively. In order for any payout to be earned, performance must exceed the threshold level for at least
one metric. The percentage of salary awarded for performance falling between the threshold and target achievement
levels and the target and maximum achievement levels is determined using straight-line
interpolation.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 44
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END TABLE 2020
The table below reflects outstanding equity awards held
by our NEOs as of December 31, 2020. In connection with our IPO, previously granted FMC equity awards were converted into outstanding
equity awards denominated in Livent stock. Therefore, the table below includes awards previously granted by FMC to the NEOs, now
denominated in Livent stock, and the IPO Awards granted by us to the NEOs in 2018.
|
|
Option
Awards
|
|
|
|
|
|
Stock
Awards
|
|
|
|
|
Name
(a)
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
(b)
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
(c)
|
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
|
|
Option
Exercise
Price
($)
(e)
|
|
Option
Expiration
Date
(f)
|
|
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)
(g)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
(h)
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have Not
Vested
(#)
(i)
|
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value
of Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)
(j)
|
Paul W. Graves
|
|
85,171
|
|
|
_
|
|
|
_
|
|
8.56
|
|
2/18/2023
|
|
|
24,767
|
(1)
|
|
466,610
|
|
_
|
|
_
|
|
|
71,303
|
|
|
_
|
|
|
_
|
|
10.49
|
|
2/17/2024
|
|
|
82,353
|
(2)
|
|
1,551,531
|
|
_
|
|
_
|
|
|
97,273
|
|
|
_
|
|
|
_
|
|
9.12
|
|
2/27/2025
|
|
|
|
|
|
|
|
_
|
|
_
|
|
|
129,301
|
|
|
|
|
|
_
|
|
8.29
|
|
2/27/2027
|
|
|
|
|
|
|
|
_
|
|
_
|
|
|
_
|
|
|
83,342
|
(3)
|
|
_
|
|
12.26
|
|
2/15/2028
|
|
|
|
|
|
|
|
_
|
|
_
|
|
|
_
|
|
|
266,667
|
(4)
|
|
_
|
|
17.00
|
|
10/10/2028
|
|
|
|
|
|
|
|
_
|
|
_
|
Gilberto
Antoniazzi
|
|
7,372
|
|
|
_
|
|
|
_
|
|
8.56
|
|
2/18/2023
|
|
|
3,067
|
(1)
|
|
57,782
|
|
_
|
|
_
|
|
|
8,603
|
|
|
_
|
|
|
_
|
|
10.49
|
|
2/17/2024
|
|
|
26,471
|
(2)
|
|
498,714
|
|
_
|
|
_
|
|
|
11,740
|
|
|
_
|
|
|
_
|
|
9.12
|
|
2/27/2025
|
|
|
3,665
|
(5)
|
|
69,049
|
|
_
|
|
_
|
|
|
17,338
|
|
|
|
|
|
_
|
|
8.29
|
|
2/27/2027
|
|
|
|
|
|
|
|
_
|
|
_
|
|
|
_
|
|
|
10,328
|
(3)
|
|
_
|
|
12.26
|
|
2/15/2028
|
|
|
|
|
|
|
|
_
|
|
_
|
|
|
_
|
|
|
85,715
|
(4)
|
|
_
|
|
17.00
|
|
10/10/2028
|
|
|
|
|
|
|
|
_
|
|
_
|
Sara Ponessa
|
|
_
|
|
|
53,334
|
(4)
|
|
_
|
|
17.00
|
|
10/10/2028
|
|
|
1,877
|
(1)
|
|
35,363
|
|
_
|
|
_
|
|
|
_
|
|
|
|
|
|
_
|
|
|
|
|
|
|
16,471
|
(2)
|
|
310,314
|
|
_
|
|
_
|
(1)
|
These RSUs vested on February 15,
2021.
|
(2)
|
These RSUs, which we granted upon the IPO,
will vest in two equal installments on October 10, 2021 and October 10, 2022.
|
(3)
|
These stock options vested and became exercisable
on February 15, 2021.
|
(4)
|
These stock options, which we granted upon
the IPO, will vest and become exercisable in two equal installments on October 10, 2021 and October 10, 2022.
|
(5)
|
These RSUs vested on January 16, 2021.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 45
OPTION EXERCISES
AND STOCK VESTED TABLE 2020
The data in the “Option Exercises and Stock Vested”
table is compiled based on each transaction date.
|
|
Option Awards
|
|
Stock Awards
|
Name
(a)
|
|
Number of Shares
Acquired On Exercise
(#)
(b)
|
|
Value Realized
On Exercise
($)
(c)
|
|
Number of Shares
Acquired On Vesting
(#)
(d)
|
|
Value Realized
On Vesting
($)
(e)
|
Paul W. Graves
|
|
–
|
|
–
|
|
68,477
|
|
970,327
|
Gilberto Antoniazzi
|
|
–
|
|
–
|
|
4,708
|
|
45,809
|
Sara Ponessa
|
|
–
|
|
–
|
|
2,935
|
|
28,558
|
NONQUALIFIED
DEFERRED COMPENSATION TABLE 2020
Name
(a)
|
Executive
Contributions
in Last FY(1)
($)
(b)
|
Registrant
Contributions
in Last FY(2)
($)
(c)
|
Aggregate
Earnings
in Last FY
($)
(d)
|
Aggregate
Withdrawals/
Distributions
($)
(e)
|
Aggregate
Balance at
Last FYE(3)
($)
(f)
|
Paul
W. Graves
|
61,333
|
83,012
|
1,179,978
|
–
|
3,001,481
|
Gilberto
Antoniazzi
|
24,150
|
48,452
|
38,289
|
–
|
214,169
|
Sara
Ponessa
|
44,450
|
15,497
|
26,549
|
–
|
134,446
|
(1)
|
The
amounts listed in this column are reported as compensation in the amounts included in Column (c), Salary, of the 2020
Summary Compensation Table.
|
(2)
|
The
amounts listed in this column are reported as compensation in the amounts included in Column (i), All Other Compensation,
of the 2020 Summary Compensation Table. In addition to the employer matching contribution, of $39,040, Mr. Graves
received nonqualified non-elective contributions of 5% of compensation on his eligible earnings amount which was $43,972.
In addition to the employer matching contribution of $11,273, Mr. Antoniazzi received a nonqualified non-elective
employer contribution of 15% of compensation on his eligible earnings amount, which was $37,179. Ms. Ponessa received an
employer matching contribution of $7,522, Ms. Ponessa received nonqualified non-elective contributions of 5% of
compensation on her eligible earnings amount which was $7,975.
|
(3)
|
Amounts listed in this column for Mr. Graves
include an aggregate of $877,626, which was reported in previous years in our Summary Compensation Table or, during Mr. Graves’
prior tenure as a named executive officer at FMC, in FMC’s Summary Compensation Table. The amounts listed for Mr. Antoniazzi
and Ms. Ponessa include an aggregate of $100,837 and $34,846, respectively, which were reported in our Summary Compensation
Table in previous years.
|
The Nonqualified Savings Plan is a deferred compensation
plan that provides for employee contributions as well as company matching, non-elective and discretionary contributions. The Nonqualified
Savings Plan works in tandem with the Qualified Savings Plan. Please see the Post-Employment Compensation section above for a
description of such Plans.
Employee and employer contributions to the Nonqualified
Savings Plan are deemed invested by the employee in his or her choice of more than 20 investment alternatives. All investments,
except for the FMC Stock Fund and Livent Stock Fund, are mutual funds, and all investments may be exchanged by the employee at
any time. Earnings on investments are market earnings. There are no programs or provisions for guaranteed rates of return. Distributions
under the Nonqualified Savings Plan must occur or commence at the earlier of separation of service plus six months or at a designated
time elected by the employee at the time of deferral. Distributions may
be in a lump sum or installments as determined by the employee’s distribution election.
The Nonqualified Savings Plan is subject to certain disclosure
and procedural requirements of ERISA, but as a “top hat” plan is not subject to the eligibility, vesting, accrual,
funding and fiduciary responsibility requirements of ERISA.The Nonqualified Savings Plan represents an unfunded liability and
all amounts listed in the table above are unsecured and therefore not guaranteed to be fully paid in the event of Livent’s
insolvency or bankruptcy.
Mr. Graves and Ms. Ponessa’s balances in our Nonqualified
Savings Plan include amounts the NEOs transferred into the plan from a legacy FMC nonqualified plan.
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 46
PAY RATIO DISCLOSURE
We disclose here
the Livent CEO to median employee pay ratio as calculated in accordance with Item 402(u) of Regulation S-K. We examined the
total cash compensation for all employees, excluding our CEO and certain non-U.S. based employees as described below, who
were employed by Livent on November 1, 2020 in order to identify a median employee. We included all employees,
whether employed on a full-time, part-time, or temporary basis. We annualized the compensation for any non-temporary employee
who was not employed by Livent for the full year in 2020. For non-U.S. employees, we converted their total cash compensation
to US Dollars based on a published average annual exchange rate as of November 1, 2020. We excluded less than 5% of
our non-U.S. based employees as follows: Singapore (14), Japan (3), India (10), Netherlands (1), and Switzerland (1). After
excluding our CEO and these non-U.S. based employees, we had 303 U.S.-based employees and 490 non-U.S. based employees,
and irrespective of these exclusions we had 491 U.S.-based employees and 519 non-U.S. based employees as of
November 1, 2020.
This methodology resulted in the identification of four
U.S.-based employees that had the same estimated compensation. To select from among these four employees, we calculated the annual
total compensation of each in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, averaged these four compensation
values, and selected the employee whose annual total compensation was closest to the average.
We calculated
annual total compensation for our median employee using the same methodology we use for our named executive officers as set forth
in the 2020 Summary Compensation Table in this proxy statement. Using this methodology, we have estimated that the median of the
annual total compensation of our employees, excluding our CEO and a limited number of non-U.S. based employees as described above,
was $67,262, and the annual total compensation of our CEO was $1,744,802. Therefore, our 2020 CEO to median employee pay
ratio is 26:1.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Although the Company does not maintain individual employment
agreements with any NEO that provide guaranteed payments in the event of a termination of employment, upon such a termination,
or upon a change in control of Livent, the Company maintains certain arrangements, guidelines, plans and programs pursuant to
which our NEOs could be eligible to receive certain cash severance, equity vesting and other benefits.
The amounts that the NEOs could receive are set forth below
for the following types of termination of employment:
■
|
Termination without cause
not in connection with a change in control;
|
■
|
Termination
without cause or by executive for good reason following a change in control;
|
■
|
Death
or disability;
|
■
|
Retirement;
and
|
■
|
Termination
for cause.
|
In accordance with SEC rules,
we have used certain assumptions in determining the amounts shown. We have assumed that the termination of employment or change
in control occurred on December 31, 2020. On that date, the closing price on the NYSE of a Livent share was $18.84. Since many
factors (e.g., the time of year when the event occurs, our stock price and the executive’s age) could affect the nature
and amount of benefits a NEO could potentially receive, any amounts paid or distributed upon a future termination may be different
from those shown in the tables below. Under these SEC rules, the potential payments upon termination or change in control do not
include certain distributions to the NEO or benefits to which the NEO is already entitled, including the value of equity awards
that have already vested and distributions from qualified retirement plans.
TERMINATION WITHOUT CAUSE (NOT INVOLVING
A CHANGE IN CONTROL)
CASH AND OTHER AMOUNTS
The Company maintains Executive Severance Guidelines (the
“Severance Guidelines”), which provide non-mandatory guidance for the payment of severance pay and benefits in the
event of an executive’s termination of employment by the Company without cause (other than in connection with a change in
control of the Company or as a result of death, disability or normal retirement). No NEO has a contractual entitlement to any
severance pay or benefits under the Severance Guidelines, and the Compensation Committee has the discretion to enhance or reduce
the severance pay or benefits under the Severance Guidelines in any specific case. As a condition to receiving any severance pay
or benefits under the Severance Guidelines, the NEO must execute a release of claims in favor of the Company, as well as a non-solicitation,
non-competition and confidentiality agreement. The Severance Guidelines provide for delivery to the NEO of the following:
■
|
An
amount equal to 12 months of the NEO’s base salary, payable in a lump sum;
|
■
|
An amount equal to 12
months of the NEO’s target annual incentive award, payable in a lump sum;
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 47
■
|
A pro-rated annual incentive award
(at target) for the year of termination;
|
■
|
Transition benefits (e.g., outplacement assistance
up to $20,000, and financial/tax planning for the last calendar year of employment); and
|
■
|
Continuation of health benefits for the one-year
period following the date of termination.
|
EQUITY AWARDS
In the event of a termination of an NEO’s employment
by Livent without cause, the NEO’s outstanding equity incentive awards will be treated as follows, contingent on the NEO’s
execution of a release of claims and, in the case of benefits provided under the Guidelines, execution of a non-compete, non-disclosure
and non-solicitation agreement:
■
|
Options
|
|
Under the Guidelines:
|
|
■
|
Vested stock options will remain exercisable
for twelve months; and
|
|
■
|
Outstanding and unvested stock options that would
have vested within one calendar year following the termination date become exercisable on their regularly scheduled vesting
dates, and will remain exercisable for one year thereafter.
|
■
|
Restricted Stock Units
|
|
Under the terms of the IPO Awards:
|
|
■
|
The portion of IPO RSUs that would
have vested on the first vesting date (October 10, 2021) will vest on a pro rata basis, with the pro ration calculated based
on the number of days the NEO was employed between the grant date and the first vesting date; and
|
|
■
|
The portion of IPO RSUs that would have vested
on the second vesting date (October 10, 2022) will vest pro rata.
|
|
Under the terms of predecessor FMC awards and/or the Guidelines:
|
|
■
|
All other outstanding and unvested
RSUs will vest on a pro rata basis based on the number of days the NEO was employed during the vesting period.
|
TERMINATION WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON
FOLLOWING A CHANGE IN CONTROL
CASH AND OTHER AMOUNTS
Each of the NEOs
entered into an Executive Severance Agreement with the Company, effective as of the IPO, which generally provides that, in
the event such individual’s employment is terminated by the Company without “cause” or by such individual
for “good reason” in each case, within the 24-month period following a “change in control” of the
Company, then such individual would be entitled, contingent on the executive’s execution of a release of claims in
favor of the Company and its affiliates, to the payments and benefits detailed below.
■
|
An
amount equal to three times (in the case of Messrs. Graves and Antoniazzi) and two times (in the case of Ms. Ponessa) the
base salary, payable in a lump sum;
|
■
|
An amount equal to three times (in the case of
Messrs. Graves and Antoniazzi) and two times (in the case of Ms. Ponessa) the target annual incentive award,
payable in a lump sum;
|
■
|
A pro-rated annual incentive award for the year
of termination;
|
■
|
Reimbursement
for outplacement services for a two-year period following the termination date, with the total reimbursements capped at 15% of
base salary as of the termination date; and
|
■
|
Continuation of medical and welfare benefits (including
life and accidental death and dismemberment and disability insurance coverage) for such individual (and covered spouse and
dependents), at the same premium cost and coverage level as in effect as of the change in control date, for three years (in
the case of Messrs. Graves and Antoniazzi) and two years (in the case of Ms. Ponessa) following the date of termination (or,
if earlier, the date on which substantially similar benefits at a comparable cost are available from a subsequent employer)
or, if such benefits continuation is not permissible under the applicable plan or would result in adverse tax consequences,
cash benefits in lieu thereof under the upated Executive Severance Agreements.
|
The Executive Severance Agreements provide that if the amounts
to be received in connection with a change in control would trigger the excise tax on parachute payments, either the payments
will be lowered so as not to trigger the excise tax, or they will be paid in full subject to the tax, whichever produces the better
net after-tax position.
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 48
EQUITY AWARDS
To the extent that upon a change in control, the successor
or the surviving entity (or its parent) fails to continue or assume the IPO Awards, then under the terms of those awards:
■
|
All outstanding and unvested stock
options granted pursuant to an IPO Award will vest and become exercisable on the change in control; and
|
■
|
All outstanding and unvested RSUs granted pursuant
to an IPO Award will vest on the change in control.
|
There is no parallel automatic vesting provision that is
applicable to FMC equity awards that were converted into Livent equity awards.These awards will vest only in the event of a termination
without cause or a resignation with good reason within two years following a change in control of Livent, contingent on the NEO’s
execution of a release of claims in favor of the Company and its affiliates, as follows:
■
|
All outstanding and unvested stock
options will vest and become exercisable on the termination date, and will remain exercisable for up to three months following
the termination date;
|
■
|
All outstanding and unvested RSUs will vest on
the termination date.
|
Generally, the following definitions apply to our equity
grants, with some variation for awards that were converted from FMC equity awards:
A “Change in Control” is generally
the acquisition of 20% or more of our common stock; a substantial change in the composition of our Board such that the current
Board no longer constitutes a majority; a merger, sale of substantially all of the assets or acquisition, unless the beneficial
owners prior to the transaction own more than 60% of the resulting corporation.
“Cause” generally means a willful and continued
failure to substantially perform the executive’s material employment duties, willful and deliberate conduct which is materially
injurious to the Company, or having been convicted to a felony on or prior to the Change in Control.
“Good Reason” generally means the assignment
of duties materially inconsistent with the executive’s duties and status as an employee or reduction in the nature of the
duties, the Company’s requiring the executive to be based at a location which is at least 50 miles further from the office
where the executive is located at the time of the Change in Control, or a reduction in base salary, each of which the Company
has failed to cure after receiving notice from the Named Executive Officer.
DEATH OR DISABILITY
In the event of a termination of an NEO’s employment
due to death or disability, the NEO would not be entitled to severance pay or benefits, and outstanding equity incentive awards
will be treated as follows:
■
|
All outstanding and unvested stock
options will fully vest and become exercisable, and will remain exercisable for up to five years following the date of termination;
and
|
■
|
All outstanding and unvested RSUs will fully vest.
|
RETIREMENT
Predecessor FMC awards and our IPO awards contain accelerated
vesting provisions for a grantee who becomes retirement eligible. However, none of the NEOs are currently retirement eligible,
nor will they become retirement eligible during the vesting period applicable to their outstanding awards.
CAUSE
In the event of a termination of an NEO’s employment
for cause, all outstanding and unvested equity awards will be cancelled, and all vested stock option awards will expire immediately.
PAUL GRAVES
Executive
Benefits and Payments
Upon Termination(1) or
Change in Control
|
|
Change in Control
Termination
($)
|
|
|
Termination
Without Cause*
($)
|
|
|
Death or
Disability
($)
|
|
Cash Severance
|
|
|
4,800,000
|
(2)
|
|
|
1,600,000
|
(3)
|
|
|
N/A
|
|
Annual Incentive
|
|
|
824,000
|
(4)
|
|
|
800,000
|
(5)
|
|
|
0
|
|
Stock Options
|
|
|
1,039,058
|
(6)
|
|
|
793,723
|
(7)
|
|
|
1,039,058
|
(6)
|
Restricted Stock Units
|
|
|
2,018,141
|
(8)
|
|
|
1,454,184
|
(9)
|
|
|
2,018,141
|
(8)
|
Welfare Benefits
|
|
|
62,817
|
(10)
|
|
|
19,780
|
(11)
|
|
|
0
|
|
Transition Benefits
|
|
|
120,000
|
(12)
|
|
|
20,000
|
(13)
|
|
|
0
|
|
Best Net After-Tax Forfeiture
|
|
|
0
|
(14)
|
|
|
N/A
|
|
|
|
N/A
|
|
TOTAL
|
|
|
8,864,016
|
|
|
|
4,687,687
|
|
|
|
3,057,198
|
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 49
GILBERTO ANTONIAZZI
Executive
Benefits and Payments
Upon Termination(1) or
Change in Control
|
|
Change in Control
Termination
($)
|
|
|
Termination
Without Cause*
($)
|
|
|
Death or
Disability
($)
|
|
Cash Severance
|
|
|
1,800,000
|
(2)
|
|
|
600,000
|
(3)
|
|
|
N/A
|
|
Annual Incentive
|
|
|
238,500
|
(4)
|
|
|
225,000
|
(5)
|
|
|
0
|
|
Stock Options
|
|
|
225,674
|
(6)
|
|
|
146,815
|
(7)
|
|
|
225,674
|
(6)
|
Restricted Stock Units
|
|
|
625,545
|
(8)
|
|
|
447,167
|
(9)
|
|
|
625,545
|
(8)
|
Welfare Benefits
|
|
|
61,985
|
(10)
|
|
|
19,780
|
(11)
|
|
|
0
|
|
Transition Benefits
|
|
|
56,250
|
(12)
|
|
|
20,000
|
(13)
|
|
|
0
|
|
Best Net After-Tax Forfeiture
|
|
|
0
|
(13)
|
|
|
N/A
|
|
|
|
N/A
|
|
TOTAL
|
|
|
3,007,953
|
|
|
|
1,458,762
|
|
|
|
851,218
|
|
SARA PONESSA
Executive
Benefits and Payments
Upon Termination(1) or
Change in Control
|
|
Change in Control
Termination
($)
|
|
|
Termination
Without Cause*
($)
|
|
|
Death or
Disability
($)
|
|
Cash Severance
|
|
|
1,120,000
|
(2)
|
|
|
560,000
|
(3)
|
|
|
N/A
|
|
Annual Incentive
|
|
|
216,300
|
(4)
|
|
|
210,000
|
(5)
|
|
|
0
|
|
Stock Options
|
|
|
98,135
|
(6)
|
|
|
49,067
|
(7)
|
|
|
98,135
|
(6)
|
Restricted Stock Units
|
|
|
345,676
|
(8)
|
|
|
235,349
|
(9)
|
|
|
345,676
|
(8)
|
Welfare Benefits
|
|
|
41,212
|
(10)
|
|
|
19,780
|
(11)
|
|
|
0
|
|
Transition Benefits
|
|
|
52,500
|
(12)
|
|
|
20,000
|
(13)
|
|
|
0
|
|
Best Net After-Tax Forfeiture
|
|
|
(297,798
|
)(14)
|
|
|
N/A
|
|
|
|
N/A
|
|
TOTAL
|
|
|
1,576,025
|
|
|
|
1,094,196
|
|
|
|
443,811
|
|
* Amounts shown generally reflect the amounts specified in the Severance Guidelines, which are not contractually guaranteed.
|
(1)
|
On December 31, 2020, Messrs. Graves
and Antoniazzi and Ms. Ponessa were not eligible to retire.
|
(2)
|
The amount shown is equal to three times (two
times for Ms. Ponessa) the sum of base salary plus target annual incentive, calculated by using the highest annualized base
salary and target annual incentive available to the NEO during his/her career with the Company.
|
(3)
|
The amount shown is equal to the sum of 12
months of base salary plus target annual incentive.
|
(4)
|
The amount shown is the pro rata amount of
any annual incentive award payable in the year of separation. This is the same annual incentive amount reported in the Summary
Compensation Table, because the table assumes termination would have occurred on the last day of the fiscal year.
|
(5)
|
The amount shown is the prorated target bonus
for the year of termination based on the Severance Guidelines.
|
(6)
|
All unvested stock options will vest, except
that IPO stock options will also vest upon the change in control even if the NEO was not terminated if the surviving entity
fails to continue or assume the award. The amount shown is the value of all unvested stock options based on the difference
between the exercise price and the stock price of $18.84 at December 31, 2020. Please note, however, that the ultimate value
of the foregoing options will depend on the stock price on the date of exercise.
|
(7)
|
The Executive Severance Guidelines provide
that all options that would have vested within one year following termination will become exercisable on their regularly scheduled
dates. As noted above, the Executive Severance Guidelines are not binding on the Company and are intended to serve merely
as guidelines, with the Compensation Committee retaining the ultimate discretion to modify them for any specific termination.
The amount shown is the value of all unvested stock options based on the difference between the exercise price and the stock
price of $18.84 at December 31, 2020. Please note, however, that the ultimate value of the foregoing options will depend on
the stock price on the date of exercise.
|
(8)
|
All unvested restricted stock units will vest,
except that IPO RSUs will also vest upon the change in control even if the NEO was not terminated if the surviving entity
fails to continue or assume the award. The amount shown is the market value of all unvested restricted stock units based on
the stock price of $18.84 on December 31, 2020.
|
(9)
|
Unvested restricted stock units will vest pro
rata, with such pro ration calculated as described on page 48.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 50
(10)
|
Welfare benefits of health care
and dental, life insurance and disability insurance continue for three years (two years for Ms. Ponessa). The amounts shown
are the estimated cost to the Company for such benefits during the period.
|
(11)
|
Welfare benefits of health care and dental
insurance continue for one year. The amounts shown are the estimated cost to the Company for such benefits during the period.
|
(12)
|
The executives are entitled to outplacement
services, which are capped at 15% of the NEO’s base salary. The actual amounts paid in respect of such services will
be determined based upon the outplacement services obtained, if any, by an NEO upon termination. However, the amounts reflected
in the table represent the maximum amounts that could be paid by the Company in respect of these services.
|
(13)
|
The
executives are entitled to outplacement services up to $20,000, plus financial and tax planning services for the last
calendar year of employment. Executives generally receive an allowance for financial planning and tax benefits, which are
not shown in the table because they would have already been used by an executive terminated on December 31,
2020.
|
(14)
|
The NEO severance agreements provide that if
the amounts to be received upon a change in control would trigger the excise tax on parachute payments, either the payments
will be lowered so as not to trigger the excise tax, or they will be paid in full subject to the tax, whichever produces the
better net after-tax position. The benefits of Ms. Ponessa exceeded the triggering amount, and forfeiture of benefits resulted
in a better after-tax situation than the receipt of full benefits with payment of the excise tax. Therefore, we have shown
amounts that she would have forfeited upon a theoretical termination of employment on December 31, 2020 in the table. The
amount shown does not take into account any possible reductions related to “reasonable compensation” for services
before and/or after the change in control date.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 51
NOTICE AND ACCESS
As permitted by the
SEC, we are furnishing to stockholders our Notice of the Annual Meeting, this Proxy Statement and our Annual Report primarily
over the internet. On or about March 19, 2021, we will mail to each of our stockholders (other than those who previously
requested electronic delivery or previously elected to receive delivery of a paper copy of the proxy materials) a Notice of
Internet Availability of Proxy Materials (the “Notice of Internet Availability”) containing instructions on how
to access and review the proxy materials via the internet and how to submit a proxy electronically using the internet. The
Notice of Internet Availability also contains instructions on how to receive, free of charge, paper copies of the proxy
materials. If you received the Notice of Internet Availability, you will not receive a paper copy of the proxy materials
unless you request one.
We believe the delivery
options that we have chosen will allow us to provide our stockholders with the proxy materials they need, while minimizing the
cost of the delivery of the materials and the environmental impact of printing and mailing paper copies.
HOUSEHOLDING
We have adopted a procedure
approved by the SEC called “householding”. Under this procedure, we are permitted to deliver a single copy of the Notice
of Internet Availability and, if a stockholder requested printed versions by mail, our proxy materials, including this proxy statement
and our annual report, to stockholders sharing the same address who did not otherwise notify us of their desire to receive multiple
copies of our proxy materials. Householding allows us to reduce our printing and postage costs and limits the volume of duplicative
information received at your household. A separate proxy card will continue to be mailed for each registered stockholder account
who requests a paper copy of the proxy materials.
We will promptly deliver,
upon oral or written request, a separate copy of the Notice of Internet Availability and, if a stockholder requested printed versions
by mail, the proxy materials to any stockholder residing at an address to which only one copy was mailed. If you wish to receive
an additional copy of the Notice of Internet Availability or our proxy materials, or if you received multiple copies and wish
to request householding in the future, you may make such request by writing to our Corporate Secretary at Livent Corporation,
FMC Tower at Cira Centre South, 2929 Walnut Street, Philadelphia, PA 19104.
If you are a street name
holder and wish to revoke your consent to householding and receive separate copies of our proxy materials for the annual meeting
of stockholders this year or future years, you may call Broadridge Investor Communications Services toll-free at (866) 540-7095
or write to them c/o Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
AUDIT COMMITTEE REPORT
The Audit Committee Report
that follows shall not be deemed to be incorporated by reference into any filing made by the Company under the Securities Act of
1933 or the Exchange Act, notwithstanding any general statement contained in any such filing incorporating this proxy statement
by reference, except to the extent the Company incorporates such Report by specific reference.
During the past year, the
Audit Committee met seven times, including six telephonic meetings, to discuss quarterly results and other matters. In carrying
out its duties, the Committee has:
■
|
Reviewed and discussed the audited consolidated
and combined financial statements for the fiscal year ended December 31, 2020 with management and KPMG, the company’s
independent registered public accounting firm;
|
■
|
Discussed with KPMG the matters required
to be discussed pursuant to Public Company Accounting Oversight Board Auditing Standard No. 1301, “Communications
with Audit Committees”;
|
■
|
Discussed various matters with KPMG related
to the Company’s consolidated and combined financial statements, including all critical accounting policies and
practices used, all alternative treatments for material items that have been discussed with Company management, and all other
material written communications between KPMG and management; and
|
■
|
Received the written disclosures and the letter from KPMG as
required by the Public Company Accounting Oversight Board, and has confirmed with KPMG its independence.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 52
In reliance upon the review
and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements
be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
The preceding report has
been furnished by the following members of the Audit Committee:
Michael F. Barry, Chairman
G. Peter D’Aloia
Christina Lampe-Önnerud
Steven T. Merkt
EXPENSES RELATING
TO THIS PROXY SOLICITATION
The Company will pay all
expenses relating to this proxy solicitation. Company officers, directors and employees may solicit proxies by personal interview,
mail, telephone, and electronic communications by directors, officers, and other Livent employees without extra compensation for
that activity. Solicitation of proxies by mail may be supplemented by telephone, email, facsimile transmission, electronic transmission
or personal solicitation by certain of our directors, officers or other employees. The Company also expects to reimburse banks,
brokers and other persons for reasonable out-of-pocket expenses in forwarding proxy material to beneficial owners of Company stock
and obtaining the proxies of those owners.
SARA PONESSA
Vice President,
General Counsel and
Secretary
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 53
APPENDIX A-1
|
PROPOSED AMENDMENT TO AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION - BOARD DECLASSIFICATION
|
If Proposal 4 is approved
by stockholders at the 2021 Annual Meeting, the following amendments to Article 5 of the Certificate of Incorporation will be approved.1
5. The following additional
provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation and its directors
and stockholders:
* * * * *
(b)
|
The
number of directors which shall constitute the whole Board of Directors shall be fixed by, and may be amended from time to
time by, resolution adopted by affirmative vote of a majority of the whole Board of Directors except that such number shall
not be less than three (3) nor more than fifteen (15), the exact number to be determined by resolution adopted by affirmative
vote of a majority of the whole Board of Directors. The Board of Directors shall be divided into three classes: Class
I, Class II and Class III. Membership in such classes shall be as nearly equal in number as possible. The term of office of
the initial Class I directors shall expire at the annual election of directors by the stockholders of the Corporation in 2019,
the term of office of the initial Class II directors shall expire at the annual election of directors by the stockholders
of the Corporation in 2020, and the term of office of the initial Class III directors shall expire at the annual election
of directors by the stockholders of the Corporation in 2021, subject, however, to prior death, resignation, retirement, disqualification
or removal from office. At each annual election of directors by the stockholders of the Corporation beginning in 2019, the
directors chosen to succeed those whose terms then expire shall be identified as being of the same class as the directors
they succeed and shall be elected for a term expiring at the third succeeding annual election of directors by the stockholders
of the Corporation, or thereafter when their respective successors in each case are elected by the stockholders and qualified.
If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the
number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a
vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term
of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director.
|
|
|
|
Any
vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of
the Board of Directors then in office, and any other vacancy occurring in the Board of Directors may be filled by a majority
of the directors then in office, although less than quorum, or by a sole remaining director. Any director elected to fill
a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor.
|
|
|
|
Notwithstanding
the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation shall
have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders,
the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms
of this Certificate of Incorporation applicable thereto and such directors so elected shall not be divided into classes pursuant
to this Section (b) of Article 5 unless expressly provided by such terms.
|
|
|
|
Subject
to the rights of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation
to elect directors under specified circumstances, a director may only be removed from office for cause.
|
1
|
The
stricken through language represents existing language to be deleted, and language in brackets represents new language to
be added. Multiple asterisks signify that text has been omitted, with no changes to the omitted text.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 54
APPENDIX A-2
|
PROPOSED
AMENDMENT TO AMENDED AND RESTATED BY-LAWS - BOARD DECLASSIFICATION
|
If Proposal 4 is approved
by stockholders at the 2021 Annual Meeting, the following amendments to Article 4 of the By-Laws will be approved.²
4. Directors
SECTION
1. Election, Number and Term of Office.
(a)
|
Manner
of Election. Except as provided in Section 7 of this Article, each Director shall be elected by the vote of the majority
of the votes cast with respect to the Director at any meeting of the stockholders called for the purpose of the election of
Directors at which a quorum is present, provided that if as of a date that is fourteen (14) days in advance of the date the
Corporation files its definitive proxy statement (regardless of whether or not thereafter revised or supplemented) with the
Securities and Exchange Commission the number of nominees exceeds the number of Directors to be elected, the Directors shall
be elected by the vote of a plurality of the shares represented in person or by proxy at any such meeting and entitled to
vote in the election of Directors generally. For purposes of this paragraph, a majority of the votes cast means that the number
of shares voted “for” a Director must exceed the number of votes “withheld” with respect to that Director.
|
|
|
(b)
|
Number of Directors;Term of Office.The number of Directors of the Corporation
which shall constitute the whole Board shall be fixed by resolution adopted by affirmative vote of a majority of the
whole Board except that such number shall not be less than three (3) nor more than fifteen (15) the exact number
to be seven (7) until [unless] otherwise determined by resolution adopted by affirmative vote of a majority of
the whole Board. As set forth in Article 5 of the Certificate of Incorporation [Prior to the
Corporation’s 2022 annual meeting of stockholders], the Board of Directors shall be divided into three classes:
Class I, Class II and Class III. Membership in such classes shall be as nearly equal in number as possible. The term of
office of the Class I directors shall expire at the annual election of directors by the stockholders of the Corporation
in 2019[2022], the term of office of the Class II directors shall expire at the annual election of directors by the
stockholders of the Corporation in 2020[2023], and the term of office of the Class III directors shall expire at the annual
election of directors by the stockholders of the Corporation in 2021[2024], subject, however, to prior death, resignation,
retirement, disqualification or removal from office. At each annual election of directors by the stockholders of the
Corporation beginning in 2019[until and including the 2021 annual meeting of stockholders], the
directors chosen to succeed those whose terms then expire shall be identified as being of the same class as the directors
they succeed and shall be elected for a term expiring at the third succeeding annual election of directors by the
stockholders of the Corporation, or thereafter when their respective successors in each case are elected by the
stockholders and qualified. [Until immediately prior to the Corporation’s 2024 annual meeting of stockholders,
if]If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible, and any additional director of any class
elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with
the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any
incumbent director.
|
|
|
|
[At
the Corporation’s 2022 annual meeting of stockholders and thereafter, each director who is up for election shall be
elected to serve for a term of one (1) year and shall hold office until the annual meeting at which his or her term expires
and until his or her successor shall be elected and qualified, or his or her death, resignation, retirement, disqualification
or removal from office; provided, that any director elected or appointed prior to the Corporation’s 2022 annual meeting
of stockholders shall complete the term to which such director has been elected or appointed. Commencing at the Corporation’s
2024 annual meeting of stockholders and thereafter, the directors shall not be divided into separate classes. Prior to the
Corporation’s 2024 annual meeting of stockholders, the Board shall be deemed to be classified for purposes of Section
141 of the DGCL.]
|
* * * * *
2
|
The
stricken through language represents existing language to be deleted, and language in brackets represents new language to
be added. Multiple asterisks signify that text has been omitted, with no changes to the omitted text.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 55
SECTION 3. Removal of Directors.
Subject to the rights of any class or series of stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances[Until immediately prior to the Corporation’s 2024 annual
meeting of stockholders], directors may only be removed for cause. [Commencing at the Corporation’s 2024 annual meeting of
stockholders and thereafter, any director may be removed from office at any time with or without cause by the affirmative vote
of the holders of a majority of the then-outstanding Voting Stock, voting as a single class.]
* * * * *
SECTION 7. Vacancies on Board.
Vacancies on the Board of Directors may be filled by a majority of the Directors then in office, although less than a quorum,
or by a sole remaining Director. [Until the completion of the 2023 annual meeting of stockholders (a)
any]Any Director elected to fill a vacancy resulting from an increase in the number of Directors shall hold
office for a term that shall coincide with the remaining term of the class of Directors to which he [or she] is elected.[,
and (b) any]A Director elected to fill a vacancy not resulting from an increase in the number of Directors
shall have the same remaining term as that of his [or her] predecessor. [Following the completion of the 2023 annual meeting
of stockholders, any Director elected to fill a vacancy resulting from an increase in the number of Directors shall hold
office until the next election of directors, and until his or her successor has been selected and qualified or until his or
her earlier death, resignation or removal.] The Board of Directors shall not fill a Director vacancy or newly created
Directorship with any candidate who has not agreed to tender, promptly following his or her appointment to the Board of
Directors, the same form of resignation as is described under Section 4 of this Article 4 (Conditions for Nomination).
* * * * *
[SECTION 13. Rights of Preferred Stockholders.
Notwithstanding anything to the contrary in this Article 4, whenever the holders of any one or more classes or series of Preferred
Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of vacancies, removal and other features of such directorships
shall be governed by the terms of the Certificate of Incorporation applicable thereto.]
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 56
APPENDIX B
|
PROPOSED AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION -
ELIMINATION OF SUPERMAJORITY VOTING
|
If Proposal
5 is approved by stockholders at the 2021 Annual Meeting, the following amendments to Articles 8 and 9 of the Certificate
of Incorporation will be approved.3
8. Certain Business Combinations
SECTION 1. Vote Required for Certain
Business Combinations.
(a)
|
Higher
Vote for Certain Business Combinations. Following the Trigger Date, in addition to any affirmative vote required by law
or this Certificate of Incorporation, and except as otherwise expressly provided in Section 2 of this Article 8:
|
|
(i)
|
any merger or consolidation of the Corporation or any Subsidiary (as hereinafter
defined) with (a) any Interested Stockholder (as hereinafter defined) or (b) any other corporation (whether or not itself
an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined)
of an Interested Stockholder; or
|
|
(ii)
|
any merger, sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one
transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder
of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value of $20,000,000 or more; or
|
|
(iii)
|
the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series
of transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate
Fair Market Value of $20,000,000 or more; or
|
|
(iv)
|
the adoption of any plan or proposal for the liquidation or dissolution of the Corporation
proposed by or on behalf of an Interested Stockholder or any Affiliate of any Interested Stockholder; or
|
|
(v)
|
any reclassification of securities (including any reverse stock split), or recapitalization
of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly,
of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation
or any Subsidiary which is directly or indirectly owned by any Interested Stockholder or any Affiliate of any Interested Stockholder;
|
|
|
shall require the affirmative vote
of the holders of at least 80% a majority of the then-outstanding Voting Stock, voting together
as a single class (it being understood that for purposes of this Article 8, each share of the Voting Stock shall have
the number of votes granted to it pursuant to Article 4 of this Certificate of Incorporation). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law
or in any agreement with any national securities exchange or otherwise.
* * * * *
|
SECTION 2. When Higher Vote is
Not Required[RESERVED].
The provisions of Section 1 of this
Article 8 shall not be applicable to any particular Business Combination involving an Interested Stockholder, and such Business
Combination shall require only such affirmative vote as is required by law and any other provision of this Certificate of Incorporation,
if the Business Combination shall have been approved by a majority of the Disinterested Directors (as hereinafter defined).
* * * * *
3
|
The
stricken through language represents existing language to be deleted, and language in brackets represents new language to
be added. Multiple asterisks signify that text has been omitted, with no changes to the omitted text.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 57
9. Amendment.
(a)
|
Notwithstanding
anything contained in this Certificate of Incorporation to the contrary, paragraphs (b) and (i) of Article 5 hereof,
this Article 9 (Amendment), Articles 6 (Section 203 of the Delaware Act), 7 (Certain Corporate Opportunities), 8 (Certain
Business Combinations) and 10 (Exclusive Forum) hereof, and paragraph (b) of Section 1 of Article 3 (Special Meetings),
[and] Section 5 of Article 3 (Business Brought Before a Meeting) and Sections 1 (Election, Number and Term of Office)
and 2 (Nomination of Directors) of Article 4 (Directors) of the By-Laws shall not be altered, amended or repealed
and no provision inconsistent therewith shall be adopted without the affirmative vote of the holders of at least 80%[a
majority] of the then-outstanding Voting Stock, voting together as a single class. Notwithstanding anything contained
in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the then-outstanding
Voting Stock, voting together as a single class, shall be required to alter, amend, adopt any provision inconsistent with
or repeal this paragraph (a) of Article 9.
|
LIVENT
CORPORATION | 2021 PROXY
STATEMENT 58
PRELIMINARY
COPY SUBJECT TO COMPLETION DATED MARCH 5, 2021
PRELIMINARY
COPY SUBJECT TO COMPLETION DATED MARCH 5, 2021
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