Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 1, 2021, the Compensation Committee of the Board of Directors (the “Compensation Committee”) of Compass Minerals International, Inc. (the “Company”) approved supplemental peer alignment awards to certain executive officers under the Company’s 2020 Incentive Award Plan following a review of the Company’s equity award methodology compared to peer group practice. Historically, the grant size (i.e., number of units granted) of performance stock units (“PSUs”) linked to the Company’s relative total shareholder return (“rTSR”) was determined by dividing the target grant value by a Monte Carlo valuation on the date of grant.
A review of competitive peer group practice, as prepared by the Compensation Committee’s independent compensation consultant, indicated that the vast majority of peers determine grant size by dividing the target grant value by the closing stock price on the date of grant. The Compensation Committee evaluated this alternative approach and determined that it better aligns the Company’s equity grant practices with its compensation philosophy. In addition, the Compensation Committee also considered that the alternative approach (a) eliminates the disconnect created by the Monte Carlo methodology between the target grant value and perceived grant value based on the number of PSUs awarded, and (b) is consistent with how the Company sizes its outstanding EBITDA growth PSU and restricted stock unit grants (“RSUs”). Based on these considerations, the Compensation Committee determined to adopt the closing stock price on the date of grant as the basis for sizing PSU and RSU grants.
Supplemental peer alignment awards were granted to Kevin S. Crutchfield (President and Chief Executive Officer), Mary L. Frontczak (Chief Legal and Administrative Officer and Corporate Secretary), George J. Schuller (Chief Operations Officer) and James D. Standen (Chief Commercial Officer) on December 1, 2021 consistent with the newly adopted approach, as further described in the below chart. For clarity, the supplemental peer alignment awards are incremental to and will not have any effect on the original rTSR PSUs granted.
The following chart shows the target grant value of outstanding rTSR PSUs, as approved by the Compensation Committee, at the time of the original awards, the number of target rTSR PSUs actually granted using a Monte Carlo valuation methodology, the number of target rTSR PSUs that would have been awarded had the grant date closing stock price methodology been used at the time of grant and the number of supplemental peer alignment awards that were granted on December 1, 2021, which reflects the difference in the number of PSUs determined by the Monte Carlo and grant date closing stock price methodologies. No supplemental peer alignment awards were made for outstanding EBITDA growth PSUs or RSUs, for which the number of units granted were already based on the closing stock price on the date of grant.
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Name
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Target Grant Value of rTSR PSUs(1)
($)
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rTSR PSUs Granted Using Monte Carlo Methodology (Actual)(2)
(#)
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rTSR PSUs Granted Using Grant Date Closing Stock Price Methodology
(Hypothetical)(3)
(#)
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Supplemental Market Alignment Awards Granted (Actual)(4)
(#)
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October 15, 2021 Grants
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December 1, 2021 Grants(5)
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Kevin S. Crutchfield
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1,564,955
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10,520
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21,009
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10,489
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Mary L. Frontczak
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388,859
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2,614
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5,221
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2,607
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George J. Schuller, Jr.
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542,974
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3,650
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7,290
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3,640
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James D. Standen
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405,073
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2,723
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5,438
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2,715
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January 13, 2020 Grants
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December 1, 2021 Grants(6)
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Kevin S. Crutchfield
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2,047,473
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24,854
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34,756
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9,902
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Mary L. Frontczak
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324,001
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3,933
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5,500
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1,567
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George J. Schuller, Jr.
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712,505
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8,649
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12,095
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3,446
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James D. Standen
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507,626
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6,162
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8,617
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2,455
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May 7, 2019 (K. Crutchfield) and April 1, 2019 (J. Standen) Grants
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December 1, 2021 Grants(7)
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Kevin S. Crutchfield
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1,618,838
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27,839
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30,118
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2,279
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James D. Standen
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281,995
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4,601
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5,127
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526
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(1)As approved by the Compensation Committee prior to the grant of rTSR PSUs awarded on October 15, 2021, January 13, 2020, May 7, 2019 and April 1, 2019.
(2)Reflects the following value for each rTSR PSU on the grant date using the Monte Carlo methodology: $148.76 for the October 15, 2021 rTSR PSUs, $82.38 for the January 13, 2020 rTSR PSUs, $58.15 for the May 7, 2019 rTSR PSUs and $61.29 for the April 1, 2019 rTSR PSUs.
(3)Calculated by dividing the target grant value of rTSR PSUs by the grant date closing stock price, which are as follows: $74.49 for the October 15, 2021 rTSR PSUs, $58.91 for the January 13, 2020 rTSR PSUs, $53.75 for the May 7, 2019 rTSR PSUs and $55.01 for the April 1, 2019 rTSR PSUs.
(4)Reflects rTSR PSUs that are subject to the achievement of performance conditions based on rTSR over the three-year performance period of the corresponding original rTSR PSU award. The amount reported represents the target number of PSUs that may be earned. The actual number of shares that may be earned may range between 0% and 300% of the target award level (with respect to the awards that correspond to the rTSR PSUs awarded on October 15, 2021) and between 0% and 200% of the target award level (with respect to the awards that correspond to the rTSR PSUs awarded on January 13, 2020, May 7, 2019 and April 1, 2019).
(5)Reflects rTSR PSUs vesting on October 15, 2024, based on Company performance.
(6)Reflects rTSR PSUs vesting on January 13, 2023, based on Company performance.
(7)Reflects rTSR PSUs vesting on April 1, 2022, based on Company performance.