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.       )



   Filed by the Registrant   



   Filed by a Party other than the Registrant   



Check the appropriate box:



   Preliminary Proxy Statement



   Confidential, for Use of the Commission Only

(as permitted by Rule 14a-6(e)(2))



   Definitive Proxy Statement



   Definitive Additional Materials



   Soliciting Material Pursuant to §240.14a-12







WD-40 COMPANY

(Name of Registrant as Specified In Its Charter)



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



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Date Filed:


 

WD-40 COMPANY

9715 Businesspark Avenue

San Diego, California 92131



NOTICE OF ANNUAL MEETING OF STOCKHOLDERS



To the Stockholders:



The 2020 Annual Meeting of Stockholders of WD-40 Company will be held via a live audio webcast at the following virtual location and for the following purposes:







 

When:

 

Tuesday, December 8, 2020, at 10:00 a.m. Pacific Standard Time



 

 

Place:

 

www.meetingcenter.io/283620136



 

 

Items of Business:

1.

To elect a Board of Directors for the ensuing year and until their successors are elected and qualified;



2.

To hold an advisory vote to approve executive compensation;



3.

To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2021; and



4.

To vote on a shareholder proposal as described in the accompanying Proxy Statement if properly presented at the meeting; and



5.

To consider and act upon such other business as may properly come before the meeting.



 

 

Who Can Vote:

 

Only the stockholders of record at the close of business on October 12, 2020 are entitled to vote at the meeting.



 

 

Attending the Virtual Annual Meeting

 

As a result of the public health impact of the COVID-19 pandemic and to prioritize the health and well-being of meeting participants, this year’s annual meeting will be conducted virtually via a live audio webcast, accessible at

www.meetingcenter.io/283620136.  

 

Please see "How_can_I_participate in the virtual annual meeting?" beginning on page 3 for information about how to attend and participate in the virtual annual meeting, vote, view the list of stockholders of record and submit questions pertinent to the meeting.

 



REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:



www.meetingcenter.io/283620136







 

 

VIA THE INTERNET

Visit the website listed on your proxy card

 

BY MAIL

Sign, date and return your proxy card in the enclosed envelope



BY TELEPHONE

Call the telephone number on your proxy card

 

 

VIA LIVE VIRTUAL MEETING

Attend the Virtual Annual Meeting at www.meetingcenter.io/283620136



 

 



 

By Order of the Board of Directors

Richard T. Clampitt

Corporate Secretary

San Diego, California

October 29, 2020






 

TABLE OF CONTENTS



 



 



 



 



Page

PROXY STATEMENT SUMMARY

GENERAL INFORMATION 

PRINCIPAL SECURITY HOLDERS

ITEM NO. 1: NOMINEES FOR ELECTION AS DIRECTORS AND SECURITY OWNERSHIP OF MANAGEMENT

   Director Independence 

   Security Ownership of Directors and Executive Officers 

   Nominees for Election as Directors 

   Board Leadership, Risk Oversight and Compensation-Related Risk 

13 

   Board of Directors Meetings, Committees and Annual Meeting Attendance 

13 

   Board of Directors Compensation 

14 

   Director Compensation Table – Fiscal Year 2020 

14 

   Equity Holding Requirement for Directors 

15 

   Stockholder Communications with Board of Directors 

16 

   Committees 

16 

INSIDER TRADING POLICY - PROHIBITED HEDGING TRANSACTIONS

18 

ENVIRONMENTAL SOCIAL GOVERNANCE REPORT

19 

ITEM NO. 2: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION 

20 

COMPENSATION DISCUSSION AND ANALYSIS

21 

   Executive Summary of Compensation Decisions and Results 

21 

   Governance of Executive Officer Compensation Program 

23 

   Executive Compensation Philosophy and Framework 

24 

   Executive Officer Compensation Decisions for Fiscal Year 2020 

25 

   Other Compensation Policies 

33 

   Accounting Considerations 

34 

COMPENSATION COMMITTEE REPORT 

35 

EXECUTIVE COMPENSATION 

36 

   Summary Compensation Table 

36 

   Grants of Plan-Based Awards - Fiscal Year 2020 

38 

   Outstanding Equity Awards at 2020 Fiscal Year End 

39 

   Option Exercises and Stock Vested - Fiscal Year 2020

39 

   Nonqualified Deferred Compensation – Fiscal Year 2020

40 

   Supplemental Death Benefit Plans and Supplemental Insurance Benefits 

40 

   Change of Control Severance Agreements 

40 

  CEO Pay Ratio

42 

AUDIT COMMITTEE REPORT

43 

ITEM NO.3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

44 

   Audit Fees 

44 

   Audit-Related Fees 

44 

   Tax Fees 

44 

   All Other Fees 

44 

ITEM NO. 4: SHAREHOLDER PROPOSAL TO ADOPT A POLICY TO INCLUDE NON-MANAGEMENT 

45 

          EMPLOYEES AS PROSPECTIVE DIRECTOR CANDIDATES

 

    Board of Directors' Statement in Opposition to Item No. 4 

46 

SHAREHOLDER PROPOSALS 

47 



 


 





PROXY STATEMENT SUMMARY



We provide below highlights of certain information in this Proxy Statement. As it is only a summary, please refer to the complete Proxy Statement and 2020 Annual Report before you vote.





2020 ANNUAL MEETING OF STOCKHOLDERS





 

 

Date and Time: 

December 8,  2020,  at 10:00 a.m. Pacific Standard Time

 

Record Date: 

October 12, 2020

 

Place:

www.meetingcenter.io/283620136

 

Meeting Webcast:

Available on the Company’s investor relations website at http:/investor.wd40company.com beginning at 10:00 a.m. Pacific Standard Time on December 8, 2020





CORPORATE GOVERNANCE 

Our Corporate Governance Policies Reflect Best Practices

 



 

 

 

Annual election of all directors with majority voting requirement

Executive sessions of independent directors held at each regularly scheduled board meeting



 

 

 

 

 

 

Governance guidelines for independent director leadership and best governance practices

 

Annual performance evaluations for board, committees and individual directors

 

 

 

Annual consideration of succession planning for the board, the CEO, and senior management

 

Company policy prohibits pledging and hedging of WD-40 Company stock by directors



 

 

 

All non-employee directors are independent

All equity grants received by directors must be held until board service is ended



 

 

 



 

 

 



VOTING MATTERS AND BOARD RECOMMENDATIONS

 



 

 

 

 

Management Proposals:

 

Board’s Recommendation

 

Page

Election of Directors (Item No. 1)

 

FOR all Director Nominees

 



 

 

 

 

Advisory Vote to Approve Executive Compensation
(Item No. 2)

 

FOR

 

20 



 

 

 

 

Ratification of Appointment of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year 2021 (Item No. 3)

 

FOR

 

44 



 

 

 

 

Shareholder Proposal:

 

Board’s Recommendation

 

Page



 

 

 

 

Proposal to Adopt a Policy to Include Non-Management Employees as Prospective Director Candidates (Item No. 4)

 

AGAINST

 

45 



1

 


 

 EXECUTIVE COMPENSATION PHILOSOPHY AND FRAMEWORK

Compensation Objectives

The Company’s executive compensation program is designed to achieve five primary objectives:

1.Attract, motivate, reward and retain high performing executives;

2.Align the interests and compensation of executives with the value created for stockholders;

3.Create a sense of motivation among executives to achieve both short- and long-term Company objectives;

4.Create a direct, meaningful link between business and team performance and individual accomplishment and rewards; and

5.Ensure our compensation programs are appropriately competitive in the relevant labor markets.



Our Executive Compensation Programs Incorporate Strong Governance Features

 



 

 

 



 

 

 

No Employment Agreements with Executive Officers

Executive Officers are Subject to Stock Ownership Guidelines



 

 

 

No Supplemental Executive Retirement Plans for Executive Officers

Executives are Prohibited from Hedging or Pledging Company Stock



 

 

 

Long-Term Incentive Awards are Subject to Double-Trigger Vesting upon Change of Control

No Backdating or Re-pricing of Equity Awards



 

 

 

Annual and Long-Term Incentive Programs Provide a Balanced Mix of Goals for Profitability and Total Stockholder Return Performance

Financial Goals for Performance Awards Never Reset



Say-on-Pay Voting

Since 2011, the Company’s Board of Directors has authorized annual advisory votes for the stockholders to consider and approve the compensation of the Company’s Named Executive Officers (“NEOs”) as disclosed in the Company’s Proxy Statement (“Say-On-Pay” votes).

In 2011, and again at the Company’s 2017 Annual Meeting of Stockholders, the Company’s stockholders were asked to express their preference as to the frequency of Say-on-Pay votes. In each instance, the Company’s stockholders expressed a preference to have Say-on-Pay votes every year.

The Say-on-Pay votes approving NEO compensation for 2011 through 2019 have been approved in each year by more than 95% of the votes cast.

Please see the Compensation Discussion and Analysis section of this Proxy Statement for a detailed description of our executive compensation.

 



2

 


 

GENERAL INFORMATION





 

Q:

Why am I receiving these proxy materials?

 

A:

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of WD-40 Company for use at its Annual Meeting of Stockholders to be held on Tuesday, December 8, 2020, and at any postponements or adjournments thereof. This Proxy Statement and enclosed form of proxy are first sent to stockholders on or about October 29, 2020.

 

At the meeting, the stockholders of WD-40 Company will consider and vote upon (i) the election of the Board of Directors for the ensuing year; (ii) an advisory vote to approve executive compensation; (iii) the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2021; and (iv) a shareholder proposal if properly presented at the meeting. Detailed information concerning these matters is set forth below. Management knows of no other business to come before the meeting.

 

Q:

When and where will the annual meeting be held?

A:

As a result of the public health impact of the COVID-19 pandemic and to prioritize the health and well-being of meeting participants, this year’s annual meeting will be a virtual meeting of stockholders conducted exclusively via a live audio webcast, accessible at www.meetingcenter.io/283620136. Although no physical in-person meeting will be held, we designed the format of this year’s virtual annual meeting to ensure that our stockholders of record who attend the virtual annual meeting will be afforded similar rights and opportunities to participate as they would at an in-person meeting.

 

The virtual annual meeting will begin promptly at10:00 a.m., Pacific Standard Time, on Tuesday, December 8, 2020. Online access to the audio webcast will open 15 minutes prior to the start of the annual meeting. Stockholders are encouraged to access the annual meeting prior to the start time and allow ample time to log into the audio webcast and test their computer systems.

 

Q:

How can I participate in the virtual annual meeting?

3

 


 

A:

Stockholders are encouraged to vote and submit proxies in advance of the meeting by internet, telephone or mail as early as possible to avoid COVID-19 related processing delays. Anyone may enter the meeting as a guest in listen-only mode, but only stockholders as of the record date and holders of valid proxies are entitled to vote or ask questions at the live meeting. To participate in the annual meeting, you will need to review the information included on your notice, on your proxy card or on the instructions that accompanied your proxy materials.

 

Stockholders of Record

If you are a registered stockholder (that is, if you hold your shares through our transfer agent, Computershare), you do not need to register to attend the virtual annual meeting. You can participate in the virtual annual meeting by accessing www.meetingcenter.io/283620136. Enter the control number provided by Computershare. The password for the meeting is WDFC2020. If you cannot locate your notice of internet availability or proxy card but would still like to attend the annual meeting, you can join as a guest by selecting “I am a Guest.” Guest attendees will not be allowed to vote or submit questions at the annual meeting.

 

Beneficial Owners

If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to participate in the virtual annual meeting.  If you would like to attend the meeting and do not want to ask questions or vote you do not have to complete the steps outlined below. You can join the meeting as a guest by selecting “I am a Guest.” Guest attendees will not be allowed to vote or submit questions at the annual meeting.  If you would like to vote or ask questions at the annual meeting you will need to register online in advance. To register to participate in the virtual annual meeting you must submit proof of your proxy power (legal proxy) reflecting your WD-40 Company (WDFC) holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 4:00 p.m., Central Time, on December 3, 2020, using one of the following methods:

 

Email: Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com.

 

Mail: Send a copy of the email or correspondence from your broker, or include your legal proxy, to WD-40 Company Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001

 

Upon receipt of your valid legal proxy, Computershare will provide you with a control number by email. Once provided, you can attend and participate in the virtual annual meeting by accessing www.meetingcenter.io/283620136. Enter the control number provided by Computershare.  The password for the meeting is WDFC2020.

 

Whether or not you plan to attend the meeting, we urge you to vote and submit your proxy using the methods described the Notice of Internet Availability of Proxy Materials we have sent to you, or by following the instructions at www.envisionreports.com/WDFC.

 

Our virtual meeting procedures are intended to authenticate stockholders’ identities, allow stockholders to give their voting instructions, confirm that stockholders’ instructions have been recorded properly, and comport with applicable legal requirements.

 

Q:

What constitutes a quorum in order to hold and transact business at the Annual Meeting?

 

A:

The close of business on October 12, 2020 is the record date for stockholders entitled to notice of and to vote at the Annual Meeting of Stockholders of WD-40 Company. On October 12, 2020, WD-40 Company had outstanding 13,664,786 shares of $.001 par value common stock. Stockholders of record entitled to vote at the meeting will have one vote for each share so held on the matters to be voted upon. If you are a beneficial owner whose shares are held of record by a broker, you must instruct the broker how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a “broker non-vote.” A majority of the outstanding shares will constitute a quorum at the meeting. Abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum. Broker non-votes are shares that are held of record by a bank or broker as to which the bank or broker has not received instructions from the beneficial owner as to how the shares are to be voted.

 

Q:

If I hold my shares through a broker, how do I vote?

 

4

 


 

A:

If you are a beneficial owner whose shares are held of record by a broker, you must instruct the broker how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. If you hold your shares through a broker, it is important that you cast your vote if you want it to count in the election of directors,  in the advisory vote to approve executive compensation, for ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2021, and on the shareholder proposal.  Your broker will only be permitted to exercise its discretionary authority to vote on your behalf as to the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’ independent registered public accounting firm for fiscal year 2021.  You may have received a notice from the Company entitled “Important Notice Regarding the Availability of Proxy Materials Stockholder Meeting to Be Held on December 8, 2020” with voting instructions or you may have received these proxy materials with separate voting instructions. Follow the instructions to vote or to request further voting instructions as set forth on the materials you have received. For more information on this topic, see the Securities and Exchange Commission (“SEC”) Spotlight on Proxy Matters – The Mechanics of Voting at https://www.sec.gov/spotlight/proxymatters/voting_mechanics.shtml.

  

Q:

How will my vote be cast if I provide instructions or return my proxy and can I revoke my proxy?

 

A:

If the enclosed form of proxy is properly executed and returned, the shares represented thereby will be voted in accordance with the instructions specified thereon. If no specified instruction is given with respect to a particular matter on your form of proxy, your shares will be voted by the proxy holder as set forth on the form of proxy. A proxy may be revoked by attendance at the meeting or by filing a proxy bearing a later date with the Secretary of the Company.

 

Q:

How are the proxies solicited and what is the cost?

 

A:

The cost of soliciting proxies will be borne by the Company. Solicitations other than by mail may be made by telephone or in person by employees of the Company for which the expense will be nominal.

 



5

 


 

PRINCIPAL SECURITY HOLDERS



The following table sets forth information concerning those persons known to the Company to be the beneficial owners of more than 5% of the common stock of the Company:







 

 

 

 



 

 

 

 

Name and Address of Beneficial Owner

 

Amount and
Nature of
Beneficial Ownership
October 12, 2020

 

Percent of Class



 

 

 

 

Blackrock, Inc.

 

2,056,348 

1

15.05% 

55 East 52nd Street

 

 

 

 

New York, NY 10055

 

 

 

 



 

 

 

 

Vanguard Group, Inc.

 

1,579,730 

2

11.56% 

P.O. Box 2600

 

 

 

 

Valley Forge, PA 19482

 

 

 

 



 

 

 

 

Neuberger Berman Group LLC

 

908,618 

3

6.65% 

1290 Avenue of the Americas

 

 

 

 

New York, NY 10104

 

 

 

 



 

 

 

 

APG Asset Management N.V.

 

769,447 

4

5.63% 

1082 MS

 

 

 

 

Amsterdam, P7 00000

 

 

 

 



 

 

 

 



1

As of June 30, 2020, BlackRock, Inc. (“BlackRock”) filed a report on Form 13F with the Securities and Exchange Commission to report beneficial ownership of a total of 2,056,348 shares managed by thirteen BlackRock investment management subsidiaries. BlackRock disclaims investment discretion with respect to all shares reported as beneficially owned by its investment management subsidiaries. BlackRock Fund Advisors holds sole investment discretion and sole voting authority with respect to 1,480,466 shares. BlackRock Institutional Trust Company, N.A. reported sole investment discretion and sole voting authority with respect to 408,352 shares and sole investment discretion and no voting authority with respect to 13,190 shares. Sole investment discretion and sole voting authority with respect to shares is reported for the following BlackRock subsidiaries: BlackRock Investment Management, LLC as to 69,440 shares; BlackRock Advisors LLC as to 35,765 shares; BlackRock Asset Management Ireland Limited as to 20,708 shares; and six other BlackRock subsidiaries as to a total of 8,411 shares. BlackRock Financial Management, Inc. reported sole investment discretion and sole voting authority with respect to 4,478 shares and sole investment discretion and no voting authority with respect to 4,709 shares. BlackRock Investment Management (UK) Limited reported sole investment discretion and sole voting authority with respect to 3,222 shares and sole investment discretion and no voting authority with respect to 7,607 shares. Beneficial ownership information for BlackRock, Inc. and its investment management subsidiaries as of October 12, 2020 is unavailable.

2

As of June 30, 2020, Vanguard Group Inc. (“Vanguard”) filed a report on Form 13F with the Securities and Exchange Commission to report beneficial ownership of 1,579,730 shares, including 27,198 shares held by Vanguard Fiduciary Trust Co., 12,471 shares held by Vanguard Global Advisors, LLC, and 5,689 shares held by Vanguard Investments Australia, Ltd. Vanguard reported sole investment discretion and no voting authority with respect to 1,531,355 shares and sole investment discretion and sole voting authority with respect to 3,017 shares. Vanguard Fiduciary Trust Co. reported shared investment discretion and shared voting authority with respect to all 27,198 shares and Vanguard Investments Australia, Ltd. reported shared investment and shared voting authority with respect to all 5,689 shares. Beneficial ownership information as of October 12, 2020 is unavailable.

3

As of June 30, 2020, Neuberger Berman Group LLC (“Neuberger”) filed a report on Form 13F with the Securities and Exchange Commission to report beneficial ownership of 908,618 shares. Neuberger reported shared investment discretion with respect to all shares, sole voting authority with respect to 900,953 shares and no voting authority with respect to 7,665 shares. Beneficial ownership information as of October 2, 2020 is unavailable

4

As of June 30, 2020, APG Asset Management N.V. (“APG”) filed a report on Form 13F reporting beneficial ownership of 769,447 shares. APG reported shared investment discretion with two additional reporting managers as to all such shares. Beneficial ownership information as of October 12, 2020 is unavailable.



6

 


 

ITEM NO. 1

NOMINEES FOR ELECTION AS DIRECTORS

AND SECURITY OWNERSHIP OF MANAGEMENT



At the Company’s Annual Meeting of Stockholders, the ten nominees named below under the heading, Nominees for Election as Directors, will be presented for election as directors until the next Annual Meeting of Stockholders and until their successors are elected or appointed. In the event any nominee is unable or declines to serve as a director at the time of the Annual Meeting, any proxy granted to vote for such nominee will be voted for a nominee designated by the present Board of Directors to fill such vacancy.



A nominee for election to the Board of Directors will be elected as a director if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Holders of common stock are not entitled to cumulate their votes in the election of directors. Withheld votes and broker non-votes are not counted as votes in favor of any nominee.



If an incumbent director nominee fails to receive more votes for his or her election as a director than votes against his or her election, the incumbent director will continue to serve as a director until his or her successor is elected or appointed.  However, pursuant to governance guidelines adopted by the Board of Directors, such director nominee will be expected to tender his or her resignation to the Corporate Governance Committee of the Board of Directors.  The Corporate Governance Committee will promptly consider such resignation and present a recommendation to the Board of Directors concerning the acceptance or rejection of such resignation for formal action to be taken within 90 days following the Annual Meeting of Stockholders.  



Article III, Section 3.2 of the Bylaws of the Company, most recently amended and restated on August 15, 2018, provides that the authorized number of directors of the Company shall not be less than seven nor more than twelve until changed by amendment of the Certificate of Incorporation or by a bylaw duly adopted by the stockholders. The exact number of directors is to be fixed from time to time by a resolution duly adopted by the Board of Directors or by the stockholders.



On June 15, 2020, the Board of Directors voted to increase the number of directors from ten to eleven and elected Graciela I. Monteagudo as a director. On June 15, 2020, the Board of Directors also voted to nominate Lara L. Lee as a director to be elected at the 2020 Annual Meeting of Stockholders.    Neal E. Schmale is retiring from the Board of Directors as of the date of the Annual Meeting in accordance with the Company’s Corporate Governance Guidelines. On October 12, 2020, Daniel E. Pittard provided notice of his intention not to stand for re-election at the Annual Meeting and the Board of Directors voted to reduce the number of directors from eleven to ten effective as of the date of the Annual Meeting.





DIRECTOR INDEPENDENCE 



The Board of Directors has determined that each director and nominee other than Garry O. Ridge is an independent director as defined in Rule 5605(a)(2) of the Marketplace Rules of The Nasdaq Stock Market LLC (the “Nasdaq Rules”).



Information concerning the independence of directors serving on committees of the Board of Directors is provided below as to each committee.

7

 


 

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

 

The following tables set forth certain information, including beneficial ownership of the Company’s common stock, for the current directors and director nominees, for the executive officers named in the Summary Compensation Table below, and for all directors, director nominees and executive officers as a group:



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

Amount and Nature of
Beneficial Ownership
October 12, 20201

Director/Nominee

 

Age

 

Principal Occupation

 

Director
Since

 

Number

 

Percent of
Class

Daniel T. Carter

 

64

 

Former CFO, BevMo! Inc.

 

2016

 

3,705 

2

*

Melissa Claassen

 

48

 

Vice President Finance, Emerging Markets,
adidas Group

 

2015

 

4,845 

3

*

Eric P. Etchart

 

64

 

Former Senior Vice President,
The Manitowoc Company

 

2016

 

4,136 

4

*

Lara L. Lee
(nominee director)

 

57

 

Former business unit president,
Lowe's Companies, Inc.

 

N/A

 

 -

 

*

Trevor I. Mihalik

 

54

 

Executive Vice President and CFO,
Sempra Energy

 

2019

 

938 

5

*

Graciela I. Monteagudo

 

54

 

Former President and CEO of Lala U.S., Inc.

 

2020

 

370 

6

*

David B. Pendarvis

 

61

 

Chief Administrative Officer, Global General Counsel and Corporate Secretary, ResMed Inc.

 

2017

 

2,304 

7

*

Daniel E. Pittard
(retiring director)

 

70

 

Former President and CEO,
Rubio's Restaurants, Inc.

 

2016

 

4,150 

8

*

Garry O. Ridge

 

64

 

CEO and Chairman of the Board, WD-40 Company

 

1997

 

101,202 

9

*

Gregory A. Sandfort

 

65

 

Lead Independent Director, WD-40 Company;
Former CEO, Tractor Supply Company

 

2011

 

16,926 

10

*

Anne G. Saunders

 

59

 

Former President, U.S., nakedwines.com

 

2019

 

764 

11

*

Neal E. Schmale
(retiring director)

 

74

 

Former President and COO, Sempra Energy

 

2001

 

27,973 

12

*

*Less than one (1) percent.

1

All shares owned directly unless otherwise indicated.

2

Mr. Carter has the right to receive 3,705 shares upon settlement of vested restricted stock units upon termination of his service as a director of the Company.

3

Ms. Claassen has the right to receive 4,845 shares upon settlement of vested restricted stock units upon termination of her service as a director of the Company.

4

MrEtchart has the right to receive 3,136 shares upon settlement of vested restricted stock units upon termination of his service as a director of the Company.

5

Mr. Mihalik has the right to receive 636 shares upon settlement of vested restricted stock units upon termination of his service as a director of the Company.

6

MsMonteagudo has the right to receive 370 shares upon settlement of vested restricted stock units upon termination of her service as a director of the Company.

7

Mr. Pendarvis has the right to receive 2,304 shares upon settlement of vested restricted stock units upon termination of his service as a director of the Company.

8

Mr. Pittard has the right to receive 2,325 shares upon settlement of vested restricted stock units upon termination of his service as a director of the Company.

9

Mr. Ridge has the right to receive 5,884 shares upon settlement of vested restricted stock units upon termination of employment, the right to receive 967 shares upon settlement of vested deferred performance units upon termination of employment, the right to receive 4,242 shares upon settlement of restricted stock units upon vesting within 60 days, and the right to receive 8,868 shares within 60 days upon settlement of vested market share units. Mr. Ridge also has voting and investment power over 1,285 shares held under the Company’s 401(k) plan.

10

Mr. Sandfort has the right to receive 11,572 shares upon settlement of vested restricted stock units upon termination of his service as a director of the Company.

11

MsSaunders has the right to receive 764 shares upon settlement of vested restricted stock units upon termination of her service as a director of the Company.

12

Mr. Schmale has the right to receive 17,206 shares upon settlement of vested restricted stock units upon termination of his service as a director of the Company.



8

 


 

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS (cont’d)





 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

Amount and Nature of
Beneficial Ownership
October 12, 2020 1

Executive Officer

 

Age

 

Principal Occupation

 

 

 

Number

 

Percent of
Class

Jay W. Rembolt

 

69

 

Vice President, Finance, Treasurer and CFO,
WD-40 Company

 

42,101 

2

*

Steven A. Brass

 

54

 

President and COO, WD-40 Company

 

6,541 

3

*

Richard T. Clampitt

 

65

 

Vice President, General Counsel and Corporate Secretary,
WD-40 Company

 

8,677 

4

*

Patricia Q. Olsem

 

54

 

Division President, Americas, WD-40 Company

 

 

 

2,985 

5

*

All Directors, Director Nominees and Executive Officers as a Group

 

254,937 

6

1.85%



 

 

 

 

 

 

 

 

 

 



*Less than one (1) percent.

1

All shares owned directly unless otherwise indicated.

2

Mr. Rembolt has the right to receive 310 shares upon settlement of vested deferred performance units upon termination of employment, the right to receive 816 shares upon settlement of restricted stock units upon vesting within 60 days, and the right to receive 1,596 shares within 60 days upon settlement of vested market share units. Mr. Rembolt also has voting and investment power over 6,539 shares held under the Company’s 401(k) plan.

3

Mr. Brass has the right to receive 108 shares upon settlement of vested deferred performance units upon termination of employment, the right to receive 1,082 shares upon settlement of restricted stock units upon vesting within 60 days, and the right to receive 1,728 shares within 60 days upon settlement of vested market share units.

4

Mr. Clampitt has the right to receive 179 shares upon settlement of vested deferred performance units upon termination of employment, the right to receive 582 shares upon settlement of restricted stock units upon vesting within 60 days, and the right to receive 1,330 shares within 60 days upon settlement of vested market share units.  

5

 Ms. Olsem has the right to receive 89 shares upon settlement of vested deferred performance units upon termination of employment, the right to receive 461 shares upon settlement of restricted stock units upon vesting within 60 days, and the right to receive 518 shares within 60 days upon settlement of vested market share units.

6

Total includes the rights of executive officers and directors to receive a total of 60,689 shares upon settlement of vested restricted stock units upon termination of employment or service as a director of the Company, the rights of executive officers to receive 2,371 shares upon settlement of vested deferred performance units upon termination of employment, the rights of executive officers to receive a total of 8,621 shares upon settlement of restricted stock units upon vesting within 60 days, the rights of executive officers to receive a total of 16,765 shares within 60 days upon settlement of vested market share units, and a total of 8,877 shares held by executive officers under the Company’s 401(k) plan.  

9

 


 

NOMINEES FOR ELECTION AS DIRECTORS 

 

DANIEL T. CARTER  Director



Daniel T. Carter was elected to the Board of Directors in 2016. Mr. Carter served as executive vice president and chief financial officer of BevMo! Inc. from 2009 until June 2016. Mr. Carter served as chief financial officer of Semtek, Inc. from 2008 to 2009; chief financial officer at Charlotte Russe Holding, Inc. from 1998 to 2007; and chief financial officer of Advanced Marketing Services from 1997 to 1998. From 1986 to 1997 he was employed by Price Club and its follow-on entities, serving as senior vice president for PriceCostco and chief financial officer for Price Enterprises. Mr. Carter began his career as an auditor with Ernst & Young, and he is a Certified Public Accountant (inactive). Mr. Carter received his Bachelor of Business Administration degree in accounting from the University of Oklahoma. Mr. Carter is recognized as a NACD Board Leadership Fellow and has earned Harvard’s Corporate Director Certificate.  Mr. Carter’s financial expertise, considerable knowledge of the retail industry and non-profit company board experience provide the Board with a breadth of relevant skills and experience.



Skills and Expertise:

·

Former CFO with extensive finance and accounting expertise 

·

In-depth knowledge of retail industry

·

Considerable non-profit board experience



Committees:

·

Audit (Chair)

·

Finance



MELISSA CLAASSEN –  Director


Melissa Claassen was elected to the Board of Directors in 2015. Ms. Claassen is vice president finance, emerging markets – adidas Group. She served as vice president, brand finance at adidas from 2018 to 2019 and as vice president, business unit finance at adidas from 2015 to 2018.  Ms. Claassen served as the chief financial officer of Taylor Made  adidas Golf from 2012 to 2015. From 1996 until 2012 Ms. Claassen held positions at various adidas subsidiaries including chief financial officer of adidas Group Hong Kong and Taiwan, controlling director at adidas Group China, head of marketing controlling, senior financial controller, finance manager, SAP team lead, management accountant, and financial accountant.  Ms. Claassen’s extensive knowledge and expertise in the areas of collaboration, finance, accounting, and international business enhance the Board’s management oversight capabilities.  



Skills and Expertise:

·

International business experience

·

Finance and accounting expertise 



Committees:

·

Finance (Chair)

·

Compensation



ERIC P. ETCHART  Director


Eric P. Etchart was elected to  the Board of Directors in 2016. Mr. Etchart served as senior vice president of The Manitowoc Company, Inc. from 2007 until his retirement in January 2016.  He served as senior vice president, business development, from 2015 to 2016 and as president and general manager of the Manitowoc Crane Group from 2007 to 2015 From 1983 to 2007, Mr. Etchart held various sales, marketing and management positions at subsidiaries and predecessor companies of The Manitowoc Company, Inc.  Mr. Etchart is a French national, having held management positions in China, Singapore, Italy, France and the United States.  Mr. Etchart is recognized as a NACD Board Leadership Fellow. He presently serves as a director of Graco Inc. and Alamo Group Inc.  Mr. Etchart’s breadth of international finance, marketing and management experience provides important perspective to the Board.  His demonstrated commitment to the highest standards of board leadership strengthens the Board’s commitment to good governance.  



Skills and Expertise:

·

Strong management background in sales, marketing and finance

·

International business experience

·

Board governance 



Committees:

·

Corporate Governance (Chair)

·

Finance

10

 


 

LARA L. LEE – Director Nominee



Lara L. Lee served as president of Orchard Supply Hardware, a subsidiary of Lowe’s Companies, Inc., from 2016 to 2018 and as senior vice president of Lowe’s from 2013 to 2018. From 2011 to 2013 she served as chief innovation and operating officer for Continuum, a global consultancy. She was also a partner at an innovation firm, Jump Associates, from 2007 to 2010.  Ms. Lee’s prior experience included fifteen years at Harley-Davidson Motor Company as vice president, business unit leader, and in various European and Asian strategy and business development roles, and three years as a financial analyst at Otis Elevator Company based in Singapore. She began her career with Ernst & Whinney (now Ernst & Young) in Washington, D.C. and Singapore. Ms. Lee’s diverse international and management experience, including expertise in strategic marketing and innovation, will provide the Board with valuable insights.



Skills and Expertise:

·

Strategic marketing expertise, including digital, e-commerce and channel marketing

·

Diverse experience in innovation across industries and international markets 

·

Extensive international business and brand development experience 



Committees:

·

To be determined upon election to the Board



TREVOR I. MIHALIK – Director



Trevor I. Mihalik was elected to the Board of Directors in 2019. Mr. Mihalik has served as executive vice president and chief financial officer of Sempra Energy since May 2018. Mr. Mihalik was senior vice president controller and chief accounting officer of Sempra Energy from 2014 until 2018 and controller and chief accounting officer from 2012 to 2014. Prior to Sempra Energy, Mr. Mihalik held roles as senior vice president – finance for Iberdrola Renewables and vice president and CFO for Chevron Natural Gas. Mr. Mihalik’s current experience as director of SDG&E and SoCalGas as well as past experience as chairman of the board of Luz del Sur and Chilquinta Energia and as a  director of Infraestructura Energética Nova S.A.B. de C.V., and his extensive senior management experience with Fortune 500 companies offers the Board valuable judgment and management perspective.



Skills and Expertise:

·

Seasoned finance executive with accounting and public company financial reporting expertise

·

Directorship experience for oversight of business management and strategic planning

·

Significant transactions experience



Committees:

·

Audit

·

Corporate Governance



GRACIELA I. MONTEAGUDO – Director



Graciela I. Monteagudo was elected to the Board of Directors on June 15, 2020.  Ms. Monteagudo served as president and CEO of Lala U.S., Inc. from 2017 to 2018. From 2015 to 2017 she served as president, Americas and global marketing for Mead Johnson Nutrition and from 2012 to 2015 she held various leadership roles at Mead Johnson. From 2008 through 2012, she held various leadership roles at Walmart Mexico, including senior vice president and business unit head for Sam’s Club stores in Mexico. Ms. Monteagudo has dual Mexican and American citizenship and has held senior management positions in both Latin America and the United States. Ms. Monteagudo is recognized as a NACD Board Leadership Fellow and she has been included in the Women Inc. Magazine Most Influential Corporate Directors list. Ms. Monteagudo presently serves as a director of ACCO Brands Corporation. Ms. Monteagudo’s significant leadership experience in Latin America, her extensive global/digital marketing, e-commerce and consumer goods expertise will provide our board with a valuable perspective. 



Skills and Expertise:

·

Domestic and international business experience, particularly in Latin America

·

Consumer products and retail marketing expertise

·

Strong global, digital and e-commerce marketing expertise 



Committees:

·

Audit

·

Corporate Governance 



11

 


 

DAVID B. PENDARVIS –  Director



David B. Pendarvis was elected to the Board of Directors in 2017. Mr. Pendarvis has served as chief administrative officer of ResMed Inc. since 2011.  From March through July 2017, he served as interim president, EMEA and Japan of ResMed Inc. He joined ResMed Inc. in 2002 as global general counsel and he has served as secretary since 2003 and he also served as vice president of organizational development from 2005 to 2011. From 2000 until 2002 Mr. Pendarvis was a partner at Gray Cary Ware & Friedenrich (presently, DLA Piper). From 1986 until 2000 he was an associate (1986-1992) and a partner (1993-2000) at Gibson, Dunn & Crutcher, and from 1984 until 1986 he served as a law clerk to United States District Court Judge, J. Lawrence Irving in the United States District Court, San Diego. Mr. Pendarvis served as a director of Sequenom, Inc. from 2009 until its acquisition by Laboratory Corporation of America Holdings in 2016.  His legal expertise and experience as general counsel with global responsibilities provides the Board of Directors with valuable perspective for risk oversight.



Skills and Expertise:

·

In depth experience in corporate governance,  compliance, intellectual property and world-wide legal affairs

·

Strong focus on investor relations and corporate communications

·

International executive management experience



Committees:

·

Compensation

·

Finance



GARRY O. RIDGE  CEO



Garry O. Ridge presently serves as CEO and Chair of the Board of Directors. He joined WD-40 Company in 1987 as managing director, WD-40 Company (Australia) Pty. Limited and he was responsible for Company operations throughout the Pacific and Asia. Mr. Ridge transferred to the corporate office in 1994 as director international operations and was elected vice president - international in 1995. He was elected to the position of executive vice president/chief operating officer in 1996. He was elected to the Board of Directors in 1997 and served as president and CEO from 1997 through June 2019. Prior to joining WD-40 Company Mr. Ridge was managing director of Mermax Pacific Pty. Ltd. and held a number of senior management positions with Hawker Pacific Pty. Ltd. (a Hawker Siddeley PLC Group Company) which was a licensee for WD-40® products until 1988. As the CEO of the Company, Mr. Ridge offers the Board an important Company-based perspective. In addition, his particular knowledge of the Company’s international markets and industry position provides the Board with valuable insight.



Skills and Expertise:

·

CEO of the Company

·

Leader with a passion for a strong culture, employee engagement and protecting and maximizing the return on the Company’s brand assets

·

Particular expertise in driving a global business



GREGORY A. SANDFORT –  Lead Independent Director



Gregory A. Sandfort was elected to the Board of Directors in 2011. He was designated as lead independent director on October 12, 2020. Mr. Sandfort served as chief executive officer of Tractor Supply Company from December 2012 until his retirement in February 2020.  He held the office of president of Tractor Supply Company from 2009 through 2015. Prior to 2013,  Mr. Sandfort served as president and chief operating officer in 2012 and as president and chief merchandising officer from 2009 to 2012. Mr. Sandfort served as executive vice president-chief merchandising officer of Tractor Supply Company from 2007 to 2009. Mr. Sandfort previously served as president and chief operating officer at Michael’s Stores, Inc. from 2006 to 2007, and as executive vice president-general merchandise manager at Michaels Stores, Inc. from 2004 to 2006. He is recognized as a NACD Board Leadership Fellow. Mr. Sandfort brings a retail industry perspective to the Board. The Board also values Mr. Sandfort’s extensive management experience in the retail industry.



Skills and Expertise:

·

Former CEO in a channel that distributes the Company’s products

·

Brings a retail industry perspective

·

Long-standing connection with consumers of the Company’s products



Committees:

·

Compensation (Chair)

·

Finance



12

 


 

aNNE g. sAUNDERS –  Director



Anne G. Saunders was elected to the Board of Directors in 2019. Ms. Saunders served as president, U.S. of nakedwines.com from 2016 through 2017. From 2014 through 2016, she was president, U.S. of FTD Companies, Inc., and from 2012 through 2014 she served as president of Redbox Automated Retail, LLC. From 1990 to 2012, Ms. Saunders held various senior executive level positions at Starbucks, Bank of America, Knowledge Universe (now known as KinderCare Education), eSociety and AT&T. Ms. Saunders is a director of Swiss Water Decaffeinated Coffee Inc. and Nautilus, Inc. Ms. Saunders’ functional expertise in brand management, leadership and marketing strategy, as well as her extensive public company board experience, provide valuable experience to the Board. 



Skills and Expertise:

·

Significant consumer and retail markets experience

·

Diverse digital and e-commerce marketing expertise

·

Product innovation and development experience  



Committees:

·

Audit

·

Corporate Governance



13

 


 

 

BOARD LEADERSHIP, RISK OVERSIGHT AND COMPENSATION-RELATED RISK 



Corporate Governance Guidelines adopted by the Board of Directors provide, under appropriate circumstances, for the designation of the CEO to serve as board chair and for the designation of a lead independent director to assure the most effective board governance when the CEO is also serving as board chair. On December 10, 2019, Mr. Ridge was designated as board chair and Mr. Schmale was designated to serve as lead independent director.  On October 12, 2020, in anticipation of Mr. Schmale’s retirement from the Board as of the 2020 Annual Meeting of Stockholders, the Board designated Mr. Sandfort to serve as lead independent director.



The Board believes that board oversight of and attention to the Company’s current strategic initiatives are best served at this time by having Mr. Ridge provide primary leadership at meetings of the Board, while assuring independent director oversight of management of the Board through the designation of a lead director.  The Board’s determination as to whether having the CEO serve as board chair is in the best interests of the Company is subject to annual review.  



The lead director has the following responsibilities and authority:



·

To preside at meetings of the Board when the CEO is not present;

·

To serve as leader of the independent directors and as a liaison between the CEO and the independent directors;

·

To coordinate feedback to the CEO regarding issues discussed in executive sessions;

·

To consult with the CEO and the Corporate Secretary regarding meeting materials and other information sent to the Board;

·

To review Board meeting agendas in consultation with the CEO;

·

To meet periodically with the Board committee chairs to discuss their respective work plans;

·

To approve meeting schedules to assure that there is sufficient time for Board consideration of all agenda items;

·

To call meetings of the independent directors.



Risk oversight is undertaken by the Board of Directors as a whole, but various Board Committees are charged with responsibility to review and report on business and management risks included within the purview of each Committee’s responsibilities. The Compensation Committee considers risks associated with the Company’s compensation policies and practices, with particular focus on the cash incentive compensation and equity awards offered to the Company’s executive officers. The Audit Committee considers risks associated with financial reporting and internal control, including ethics and compliance program risks.  The Audit Committee also reviews the appropriateness of the Company’s insurance programs. The Finance Committee considers risks associated with the Company’s financial management and investment activities, acquisition-related risks and Employee Retirement Income Security Act of 1974 plan oversight. The Board and the Committees receive periodic reports from management employees having responsibility for the management of particular areas of risk, including risks related to systems integrity and disaster recovery of primary information technology systems, and supply chain risks associated with disruptive events. The CEO is responsible for overall risk management and provides input to the Board of Directors with respect to the Company’s enterprise risk management program and is responsive to the Board in carrying out its risk oversight role.



With respect to compensation-related risk, the Company’s management has undertaken an annual assessment of the Company’s compensation policies and practices and strategic business initiatives to determine whether any of these policies or practices, as well as any compensation plan design features, including those applicable to the executive officers, are reasonably likely to have a material adverse effect on the Company. Based on this review, management has concluded that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. This conclusion is based primarily on the fact that the incentives underlying the Company’s compensation plan design features provide a balance between increased profitability and longer-term stockholder returns. Management has discussed these findings with the Compensation Committee.



BOARD OF DIRECTORS MEETINGS, COMMITTEES AND ANNUAL MEETING ATTENDANCE



The Board of Directors is charged by the stockholders with managing or directing the management of the business affairs and exercising the corporate power of the Company. The Board of Directors relies on the following standing committees to assist in carrying out the Board of Directors’ responsibilities: the Audit Committee, the Compensation Committee, the Corporate Governance Committee, and the Finance Committee. Each of the committees has a written charter approved by the Board of Directors and such charters can be found on WD-40 Company’s website at http://investor.wd40company.com within the “Corporate Governance” section. There were five meetings of the Board of Directors during the last fiscal year. Each director serving for the full fiscal year attended at least 75 percent of the aggregate of the total number of meetings of the Board and of all committees on which the director served. The Board of Directors holds an annual organizational meeting on the date of the Annual Meeting of Stockholders. All directors are expected to attend the Annual Meeting. At the last Annual Meeting of Stockholders, all of the prior year nominee directors were present. 

14

 


 



BOARD OF DIRECTORS COMPENSATION



Director compensation is set by the Board of Directors upon the recommendation of the Corporate Governance Committee. The Corporate Governance Committee conducts an annual review of non-employee director compensation, including consideration of a survey of director compensation for the same peer group of companies used by the Compensation Committee for the assessment of executive compensation. For fiscal year 2020, non-employee directors received compensation for services as directors pursuant to the Directors’ Compensation Policy and Election Plan (the “Director Compensation Policy”) adopted by the Board of Directors on October 7,  2019. Pursuant to the Director Compensation Policy, non-employee directors received a base annual fee of $54,000 for services provided from January 1, 2020 through the date of the Company’s 2020 Annual Meeting of Stockholders. The lead independent director received an additional annual fee of $22,000. Non-employee directors received additional cash compensation for service on various Board Committees. The Chair of the Audit Committee received $16,000 and each other member of the Audit Committee received $8,000. The Chair of the Compensation Committee received $10,000 and each other member of the Compensation Committee received $4,000. Each Chair of the Corporate Governance Committee and the Finance Committee received $8,000 and each other member of those committees received $4,000. All such annual fees were paid in March 2020, with the exception of fees paid to Ms. Monteagudo. As a newly elected director, as of June 15, 2020, Ms. Monteagudo received a base annual fee of $40,500 and the sum of $4,000 in fees for service on the Audit Committee and the sum of $2,000 in fees for service on the Corporate Governance Committee through the date of the Company’s 2020 Annual Meeting of Stockholders.



At the Company’s 2016 Annual Meeting of Stockholders, the Company’s stockholders approved the WD-40 Company 2016 Stock Incentive Plan (the “Stock Incentive Plan”) to authorize the issuance of stock-based compensation awards to employees as well as to directors and consultants. For services provided for the period from the date of the Company’s 2019 Annual Meeting of Stockholders to the next annual meeting, the Director Compensation Policy provided for the grant of restricted stock unit (“RSU”) awards having a grant date value of $70,000 to each non-employee director. Each RSU represents the right to receive one share of the Company’s common stock. On December 10,  2019, each non-employee director other than Ms. Monteagudo received a non-elective RSU award covering 359 shares of the Company’s common stock. On June 15, 2020, Ms. Monteagudo received an RSU award covering 370 shares of the Company’s common stock. Additional information regarding the RSU awards is provided in a footnote to the Director Compensation table below.



Each non-employee director was also permitted to elect to receive an RSU award in lieu of all or a portion of his or her base annual fee for service as a director as specified above. The number of shares of the Company’s common stock subject to each such RSU award granted to the non-employee directors equaled the elective portion of his or her base annual fee payable in RSUs divided by the fair market value of the Company’s common stock as of the date of grant.



RSU awards granted to non-employee directors pursuant to the Director Compensation Policy are subject to Award Agreements under the Stock Incentive Plan. All RSU awards granted to non-employee directors are fully vested and are settled in shares of the Company’s common stock upon termination of the director’s service as a director of the Company.



The Company also maintains a Director Contributions Fund from which each incumbent non-employee director has the right, at a specified time each fiscal year, to designate $6,000 in charitable contributions to be made by the Company to properly qualified (under Internal Revenue Code Section 501(c)(3)) charitable organizations.



15

 


 

DIRECTOR COMPENSATION TABLE -  FISCAL YEAR 2020

 

The following Director Compensation table provides information concerning director compensation earned by each non-employee director for services rendered in fiscal year 2020. Since the annual base fee and fees for service on Committees are payable for services provided to the Company from January 1st of the fiscal year until the next annual meeting of stockholders, such compensation is reported for purposes of the Director Compensation table on a weighted basis. For fiscal year 2020, one third of the reported compensation earned or paid in cash is based on the Director Compensation Policy in effect for calendar year 2019 and two thirds of the reported compensation earned or paid in cash is based on the Director Compensation Policy in effect for calendar year 2020. Amounts earned and reported in the Director Compensation table for Fees Earned or Paid in Cash for the fiscal year for each director are dependent upon the various committees on which each director served as a member or as chair during the fiscal year.



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

Name

 

Fees Earned or Paid in Cash
($)1

 

Stock Awards
($)2

 

All Other
Compensation
($)3

 

Total
($)

Daniel T. Carter

 

$               74,000

 

$               69,919

 

$                 6,000

 

$             149,919

Melissa Claassen

 

$               66,000

 

$               69,919

 

$                 6,000

 

$             141,919

Eric P. Etchart

 

$               66,000

 

$               69,919

 

$                 6,000

 

$             141,919

Trevor I. Mihalik

 

$               45,333

 

$               69,919

 

$                 6,000

 

$             121,252

Graciela I. Monteagudo

 

$               24,500

 

$               69,949

 

$                 6,000

 

$             100,449

David B. Pendarvis

 

$               62,000

 

$               69,919

 

$                 6,000

 

$             137,919

Daniel E. Pittard

 

$               66,000

 

$               69,919

 

$                 6,000

 

$             141,919

Gregory A. Sandfort

 

$               68,000

 

$               69,919

 

$                 6,000

 

$             143,919

Anne G. Saunders

 

$               66,000

 

$               69,919

 

$                 6,000

 

$             141,919

Neal E. Schmale

 

$               92,000

 

$               69,919

 

$                 6,000

 

$             167,919



 

 

 

 

 

 

 

 



1

For services rendered during fiscal year 2020, directors received RSU awards pursuant to elections made in 2018 (not applicable to Messrs.  Mihalik, Pittard and Schmale and Mses.  Monteagudo and Saunders)  and 2019 (not applicable to Messrs.  Carter, Pittard, Schmale and Mses.  Monteagudo and Saunders) under the Director Compensation Policy with respect to their services as directors in calendar years 2019 and 2020, respectively, in each case in lieu of all or part of their base annual fees for such calendar year (as described in the narrative preceding the Director Compensation table). The value of such elective RSU awards received by Ms. Claassen and Messrs. Etchart, Pendarvis and Sandfort for services rendered during fiscal year 2020 was $53,927. The value of elective RSU awards received by Messrs. Carter and Mihalik for services rendered during fiscal year 2020 were $17,961 and $35,966, respectively. Messrs.  Pittard and Schmale and Ms. Saunders elected to receive all of their base annual fees in cash. The number of shares underlying each director’s RSU award is rounded down to the nearest whole share.

2

Amounts included in the Stock Awards column represent the grant date fair value for non-elective RSU awards granted to all non-employee directors pursuant to the Director Compensation Policy. On December 10, 2019, each director other than Ms. Monteagudo received a non-elective RSU award covering 359 shares of the Company’s common stock. Each RSU award granted on December 10, 2019 has a grant date fair value equal to the closing price of the Company’s common stock on that date in the amount of $194.76 per share multiplied by the number of shares underlying the RSU award. On June 15, 2020 Ms. Monteagudo received a non-elective RSU award covering 370 shares of the Company’s common stock having a grant date fair value equal to the closing price of the Company’s common stock on that date in the amount of $189.05 per share multiplied by the number of shares underlying the RSU award.  The number of shares underlying each director’s RSU award is rounded down to the nearest whole share. Outstanding RSUs held by each director as of October 12, 2020 are reported above in footnotes to the table under the heading, Security Ownership of Directors and Executive Officers. The RSUs vest immediately upon grant but are settled in stock only upon termination of service as a director. The RSUs provide for the payment of dividend equivalent compensation in amounts equal to dividends declared and paid on the Company’s common stock.  

3

Amounts represent charitable contributions to be made by the Company in fiscal year 2021 as designated by non-employee directors pursuant to the Company’s Director Contribution Fund.

 

EQUITY HOLDING REQUIREMENT FOR DIRECTORS

 

All RSU awards to non-employee directors, including both non-elective grants and RSU awards granted pursuant to the annual elections of the directors to receive RSUs in lieu of all or part of their base annual fee, provide for immediate vesting but will not be settled in shares of the Company’s common stock until termination of each director’s service as a director. The number of shares to be issued to each non-employee director upon termination of service is disclosed in the footnotes to the table under the heading, Security Ownership of Directors and Executive Officers.

 

16

 


 

STOCKHOLDER COMMUNICATIONS WITH BOARD OF DIRECTORS

 

Stockholders may send communications to the Board of Directors by submitting a letter addressed to: WD-40 Company, Corporate Secretary, 9715 Businesspark Avenue, San Diego, CA 92131.  



The Board of Directors has instructed the Corporate Secretary to forward such communications to the Board Chair. The Board of Directors has also instructed the Corporate Secretary to review such correspondence and, at the Corporate Secretary’s discretion, to not forward correspondence which is deemed of a commercial or frivolous nature or inappropriate for consideration by the Board of Directors. The Corporate Secretary may also forward the stockholder communication within the Company to another department to facilitate an appropriate response.



COMMITTEES (membership as of October 12, 2020)

s

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

Director

 

Audit

 

Compensation

 

Corporate
Governance

 

Finance

Daniel T. Carter

 

Chair

 

 

 

 

 

Melissa Claassen

 

 

 

 

 

 

Eric P. Etchart

 

 

 

 

 

Chair

 

Graciela I. Monteagudo

 

 

 

 

 

 

Trevor I. Mihalik

 

 

 

 

 

Chair

David B. Pendarvis

 

 

 

 

 

 

Daniel E. Pittard

 

 

 

 

 

 

Gregory A. Sandfort

 

 

 

Chair

 

 

 

Anne G. Saunders

 

 

 

 

 

 

Neal E. Schmale

 

 

 

 

 

Number of Meetings Held in Fiscal Year 2020

 

5

 

3

 

5

 

5



 

 

 

 

 

 

 

 



CORPORATE GOVERNANCE COMMITTEE

Nomination Policies and Procedures 



The Corporate Governance Committee is comprised of Eric P. Etchart (Chair), Graciela I. Monteagudo, Trevor I. Mihalik and Daniel E. Pittard. The Corporate Governance Committee also functions as the Company’s nominating committee and is comprised exclusively of independent directors as defined in the Nasdaq Rules. The Corporate Governance Committee met five times during the last fiscal year.



The Corporate Governance Committee acts in conjunction with the Board of Directors to ensure that a regular evaluation is conducted of succession plans, performance, independence, and of the qualifications and integrity of the Board of Directors. The Corporate Governance Committee also reviews the applicable skills and characteristics required of nominees for election as directors. The objective is to balance the composition of the Board of Directors to achieve a combination of individuals of different backgrounds and experiences as describe more fully below. The Board of Directors has not established any specific diversity criteria for the selection of nominees other than the general composition criteria noted below. The Corporate Governance Committee also oversees an annual process of self-evaluation conducted by each committee of the Board and for the Board as a whole, which includes a board evaluation, individual self-evaluations and peer evaluations.

 

In determining whether to recommend a director for re-election, the Corporate Governance Committee considers the director’s past attendance at meetings, results of evaluations and the director’s participation in and anticipated future contributions to the Board of Directors. A director who will have reached the age of 72 prior to the date of the next annual meeting of stockholders will be expected to retire from the Board. However, the Board may re-nominate any director for up to three additional years if relevant circumstances warrant continued service.



The Corporate Governance Committee reviews new Board of Director nominees through a series of internal discussions, reviewing available information, and interviewing selected candidates. Generally, candidates for nomination to the Board of Directors have been identified and compiled in a database through director networking resources and professional organizations or suggested by individual directors or employees. The Company does not currently employ a search firm or third party in connection with seeking or evaluating candidates.



The Corporate Governance Committee considers director recruitment and succession planning for the Board at each quarterly meeting. This review entails consideration of various factors that the Committee believes to be relevant to assurance that the Board maintains a level of diversity and experience that is appropriate for its oversight and governance responsibilities.  In addition to age and the tenure of each director on the WD-40 Company Board, the committee considers the extent of each

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director’s experience in management and as directors on other public company boards, if applicable, including service on committees and as committee or board chairs.  In addition to a baseline expectation that directors and director candidates will share WD-40 Company values and have demonstrated an ability to promote and sustain a strong corporate culture, the Board endeavors to assure that the mix of skills among existing directors is appropriate for the evolving business of the Company. The following list of specific skills are presently included among the areas of expertise and experience that the Committee believes will best serve the Company.  The list is updated from time to time and each director’s skills in these areas are graded on a scale to assess the level of competence in each area that is available to the Board as a whole.



·

Financial Expertise

·

Legal Expertise

·

Organizational Development Expertise

·

Compensation Design Expertise

·

Consumer or Retail Market Expertise

·

Business-to-Business Sales and Marketing Expertise

·

Digital/Internet/E-Commerce Expertise

·

Experience in Americas Markets and Cultures (Canada and Latin America)

·

Experience in EMEA Markets and Cultures (Europe, India, Middle East and Africa)

·

Experience in Asia-Pacific Markets and Cultures (Australia, China and other countries in the Asia region)

·

IT or Cybersecurity Expertise

·

Logistics and Supply Chain Management Expertise

·

Manufacturing Expertise

·

Innovation Expertise

·

Mergers and Acquisitions Expertise



The Corporate Governance Committee will consider director candidates recommended by security holders under the same criteria as other candidates described above. Nominations may be submitted by letter addressed to: WD-40 Company Corporate Governance Committee, Corporate Secretary, 9715 Businesspark Avenue, San Diego, California 92131. Nominations by security holders must be submitted in accordance with the requirements of the Company’s Bylaws, including submission of such nominations within the time required for submission of shareholder proposals as set forth below under the heading, Shareholder Proposals.  



AUDIT COMMITTEE

Related Party Transactions Review and Oversight



The Audit Committee is comprised of Daniel T. Carter (Chair), Trevor I. Mihalik, Graciela I. Monteagudo, Daniel E. Pittard, Anne G. Saunders and Neal E. Schmale.  Five meetings of the Audit Committee were held during the last fiscal year to review quarterly financial reports, to consider the annual audit and other audit services, to review the audit with the independent registered public accounting firm after its completion and to fulfill other responsibilities provided for in the Audit Committee’s Charter. The Board of Directors has determined that Mr. Carter is an “audit committee financial expert” as defined by regulations adopted by the Securities and Exchange Commission. Mr. Carter and each of the other members of the Audit Committee are independent directors as defined in the Nasdaq Rules. Each member of the Audit Committee also satisfies the requirements for service on the Audit Committee as set forth in Rule 5605(c)(2) of the Nasdaq Rules.

 

The Audit Committee has responsibility for review and oversight of related party transactions for potential conflicts of interest. Related party transactions include any independent business dealings between the Company and related parties who consist of, or are related to, the Company’s executive officers, directors, director nominees and holders of more than 5% of the Company’s shares. Such transactions include business dealings with parties in which any related party has a material direct or indirect interest. The Audit Committee has adopted a written policy to provide for its review and oversight of related party transactions. Executive officers and directors are required to notify the Secretary of the Company of any proposed or existing related party transactions in which they have an interest. The Secretary and the Audit Committee also rely upon the Company’s disclosure controls and procedures adopted pursuant to Exchange Act rules for the purpose of assuring that matters requiring disclosure, including transactions that may involve a related party or may otherwise involve the potential for conflicts of interests, are brought to the attention of management and the Audit Committee on a timely basis. Certain related party transactions do not require Audit Committee review and approval. Such transactions are considered pre-approved. Pre-approved transactions include:



·

compensation arrangements approved by the Compensation Committee or the Board of Directors and expense reimbursements consistent with the Company’s expense reimbursement policy;

·

transactions in which the related party’s interest is derived solely from the fact that he or she serves as a director of another corporation that is a party to the transaction;

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·

transactions in which the related party’s interest is derived solely from his or her ownership (combined with the ownership interests of all other related parties) of not more than a 5% beneficial interest (but excluding any interest as a general partner of a partnership) in an entity that is a party to the transaction; and

·

transactions available to all employees of the Company generally.



If a related party transaction is proposed or if an existing transaction is identified, the Audit Committee has authority to disapprove, approve or ratify the transaction and to impose such restrictions or other limitations on the transaction as the Committee may consider necessary to best assure that the interests of the Company are protected and that the related party involved is not in a position to receive an improper benefit. In making such determination, the Audit Committee considers such factors as it deems appropriate, including without limitation (i) the benefits to the Company of the transaction; (ii) the commercial reasonableness of the terms of the transaction; (iii) the dollar value of the transaction and its materiality to the Company and to the related party; (iv) the nature and extent of the related party’s interest in the transaction; (v) if applicable, the impact of the transaction on a non-employee director’s independence; and (vi) the actual or apparent conflict of interest of the related party participating in the transaction.



During the fiscal year ended August 31, 2020, there were no transactions required to be reported pursuant to the requirements of Item 404(a) of Regulation S-K under the Exchange Act that did not require review and approval by the Audit Committee. 



FINANCE COMMITTEE



The Finance Committee is comprised of Trevor I. Mihalik (Chair), Daniel T. Carter, Melissa Claassen, Eric P. Etchart, David B. Pendarvis, Gregory A. Sandfort and Neal E. Schmale. Five meetings of the Finance Committee were held during the last fiscal year. The Finance Committee is appointed by the Board for the primary purpose of assisting the Board in overseeing financial matters of importance to the Company, including matters relating to acquisitions, investment policy, capital structure, and dividend policy. The Finance Committee also reviews the Company’s annual and long-term financial strategies and objectives.



COMPENSATION COMMITTEE

Compensation Committee Interlocks and Insider Participation

The Compensation Committee is comprised of Gregory A. Sandfort (Chair), Melissa Claassen, David B. Pendarvis, Anne G. Saunders and Neal E. Schmale, all of whom are independent directors as defined under the Nasdaq Rules. The Compensation Committee met three times during the last fiscal year. During the fiscal year ended August 31, 2020, there were no compensation committee interlock relationships with respect to members of the Board of Directors and the Compensation Committee as described in Item 407(e)(4)(iii) of Regulation S-K promulgated under the Exchange Act.





INSIDER TRADING POLICY - PROHIBITED HEDGING TRANSACTIONS



The Company maintains an insider trading policy, including transaction pre-approval requirements, applicable to its officers and directors required to report changes in beneficial ownership of the Company’s common stock under Section 16 of the Exchange Act as well as certain other employees who have significant management or financial reporting responsibilities and can be expected to have access to material non-public information concerning the Company. The Company’s insider trading policy also requires pre-approval of all trading plans adopted pursuant to Rule 10b5-1 promulgated under the Exchange Act. To avoid the potential for abuse, the Company’s policy with respect to such trading plans is that, once adopted, trading plans are not subject to change or cancellation. Any such change or cancellation of an approved trading plan by an executive officer, director or employee covered by the Company’s insider trading policy in violation of the policy will result in the Company’s refusal to approve future trading plan requests for that person.



The insider trading policy also includes a prohibition on certain hedging and transactions involving the potential for abuse. Pursuant to the insider trading policy, covered officers, directors and employees may not engage in the following transactions involving the Company’s publicly traded securities:



·

Short sale transactions

·

Transactions in publicly traded options or derivatives

·

Hedging transactions

·

Pledges or margin account borrowing



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ENVIRONMENTAL SOCIAL GOVERNANCE REPORT



WD-40 Company believes that taking an integrated approach to environmental, social and governance (“ESG”) issues creates long-term stockholder value.



The Company is committed to operating in a sustainable manner and being a responsible corporate citizen for the benefit of customers, end users, investors, tribe members, the environment and the communities in which we live and work.



While the Company has for decades followed its values – the first and most important one being, “We value doing the right thing” – the Company has not formally catalogued its activities across environmental and social factors.



In fiscal year 2018, the Company established a cross-regional, cross-functional ESG Project Team to formally address environmental and social topics in order to provide recommendations to management. In that year, the ESG Project team completed a comprehensive analysis documenting the Company’s many activities and guiding structures that fall under the umbrella of ESG topics. 



In fiscal year 2019, the ESG Project Team completed an ESG Materiality Assessment to identify best practices and to determine the range of importance for ESG topics as viewed by all of our stakeholders. To do so, the ESG Project Team engaged the guidance of Sustainability Partners, led by Drs. Mary and Brian Nattrass, well-known and respected experts in sustainability programs for businesses, non-profits and governments.



In fiscal year 2020, the ESG Project Team pursued the objectives of 1) completing a Life Cycle Assessment screening for the Company’s flagship product, WD-40 Multi-Use Product, to identify the largest contributors of the product’s impact on the environment, and 2) completing the first ESG report for the Company.



The Company’s inaugural ESG report has been published contemporaneously with the filing of this Proxy Statement and can be found at https://www.wd40company.com/our-company/corporate-responsibility/.

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ITEM NO. 2

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION



In accordance with the requirements of Section 14A of the Exchange Act, the Company’s stockholders are being asked to cast an advisory vote to approve the compensation of the Company’s Named Executive Officers (“NEOs”) identified in the Compensation Discussion and Analysis section of this Proxy Statement. This vote is commonly referred to as a “Say-on-Pay” vote.

 

At the Company’s 2017 Annual Meeting of Stockholders, the Company’s stockholders were asked, by a non-binding advisory vote, to express their preference as to the frequency of future Say-on-Pay votes and the Board of Directors recommended annual Say-on-Pay voting. The Company’s stockholders expressed a preference to have Say-on-Pay votes every year. 



The following resolution will be presented for approval by the Company’s stockholders at the 2020 Annual Meeting of Stockholders:

 

“RESOLVED, that the stockholders of WD-40 Company (the “Company”) hereby approve the compensation of the Company’s Named Executive Officers as disclosed in the Compensation Discussion and Analysis section of the Company’s proxy statement for the 2020 Annual Meeting of Stockholders and in the accompanying compensation tables and narrative disclosures.”



The advisory vote to approve executive compensation is a non-binding vote on the compensation of the Company’s NEOs. This Proxy Statement contains a description of the compensation provided to the NEOs as required by Item 402 of Regulation S-K promulgated under the Exchange Act.



Stockholders are encouraged to carefully consider the Compensation Discussion and Analysis, accompanying compensation tables and related narrative discussion in this Proxy Statement in considering this advisory vote. The Board of Directors believes that the compensation provided to the Company’s NEOs offers a competitive pay package with a proper balance of current and long-term incentives aligned with the interests of the Company’s stockholders.



This is an advisory vote and will not affect compensation previously paid or awarded to the NEOs. While a vote disapproving the NEOs’ executive compensation will not be binding on the Board of Directors or the Compensation Committee, the Compensation Committee will consider the results of the advisory vote in making future executive compensation decisions.

 

The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal at the Annual Meeting of Stockholders is required to approve this advisory vote on executive compensation.



THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” ADOPTION OF THE PROPOSED RESOLUTION FOR APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.

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COMPENSATION DISCUSSION AND ANALYSIS

WD-40 Company’s Compensation Discussion and Analysis addresses the executive compensation philosophy and the processes and decisions of the Compensation Committee of the Company’s Board of Directors (the “Committee”) with respect to the compensation of the Company’s Named Executive Officers (the “NEOs”). For fiscal year 2020, the Company’s NEOs were:



·

Garry O. Ridge, our Chief Executive Officer and Chairman of the Board (“CEO”);

·

Jay W. Rembolt, our Vice President, Finance, Treasurer and Chief Financial Officer (“CFO”);

·

Steven A. Brass, our President and Chief Operating Officer;

·

Richard T. Clampitt, our Vice President, General Counsel and Corporate Secretary; and

·

Patricia Q. Olsem, our Division President, Americas.



EXECUTIVE SUMMARY OF EXECUTIVE COMPENSATION DECISIONS AND RESULTS

 

The compensation structure for the NEOs is comprised of three elements: base salary, retention-related equity compensation and performance-related cash and equity compensation. Through the application of these elements, a significant portion of NEO realized compensation is directly tied to Company performance measured by increased earnings and total stockholder return (“TSR”).  Performance-based compensation tied to earnings is based on earnings before interest, income taxes, depreciation (in operating departments) and amortization (“EBITDA”), not earnings per share.

 

Retention-related equity compensation includes restricted stock unit (“RSU”) awards that vest over a period of three years after grant, subject to earlier vesting upon the effective date of retirement under certain conditions. Retention-related equity compensation features are also reflected in our performance-based market share unit (“MSU”) awards that may be earned over a market return-based vesting period of three years, subject to pro-rata vesting at the end of the applicable measurement period in the event of earlier retirement under certain conditions.

 

Performance-related compensation includes (i) an annual cash payment opportunity that is tied to current fiscal year financial results (“Incentive Compensation”); (ii) MSU awards that are tied to a measure of TSR; and (iii) deferred performance unit (“DPU”) awards that are tied to current fiscal year financial results that exceed levels required for maximum payment of that portion of the cash Incentive Compensation opportunity that is tied to global EBITDA.



For purposes of measuring performance based on the Company’s EBITDA, the Company uses EBITDA before deduction of the stock-based compensation expense for vested DPU awards, if any, and excluding other non-operating income and expense amounts (“Adjusted EBITDA”).



FISCAL YEAR 2020 SUPPLEMENTAL CASH COMPENSATION AWARD



For fiscal year 2020, due to the extreme variability of the impact of the COVID-19 pandemic on the Company’s local market and regional results, and to recognize the outstanding cross-regional and cross-functional efforts that allowed the Company to manage its business successfully through the year, compensation for all employees, including the NEOs, was supplemented by a separate cash compensation award. Additional cash compensation was paid to each employee to the extent that the regular Incentive Compensation amount determined as described below under the heading, Performance Incentive Program, did not provide a baseline level of compensation equal to 25% of the employee’s Incentive Compensation opportunity. The Company maintains transparent and well-defined compensation arrangements for all employees, including the NEOs. This unprecedented supplemental cash compensation award has been granted to recognize employee efforts in an extraordinary year in which the regular compensation arrangements resulted in differences in rewards that did not properly reflect the contributions all made to achieve the results of the company as a whole.    

 

The foregoing compensation structure elements are fully described later in this Compensation Discussion and Analysis.



In establishing the framework for overall NEO compensation and in assessing such compensation for each NEO in light of individual and overall Company performance, the Committee considers actual and target levels of compensation with reference to both short-term and long-term performance periods as well as labor market data and peer group executive compensation. The Committee seeks to align individual NEO performance incentives with both short-term and long-term Company objectives. The Committee assesses the effectiveness of the established framework for NEO compensation through a review of each of the principal elements of NEO compensation. The Committee considers measures of Company performance, specifically including regional and global measures based on the Company’s Adjusted EBITDA, and also relative Company performance as compared to an established peer group of companies and a comparable market index. Additionally, the Committee also considers the relative achievement of longer term strategic objectives as to which each NEO is accountable.  Information regarding NEO strategic objectives is provided in the Executive Officer Compensation Decisions section below under the heading, Base Salary: Process. The Committee believes that a review of NEO compensation and relative company performance over multi-year periods demonstrates the effectiveness of the Company’s established framework for NEO compensation.

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THREE YEAR PERFORMANCE-BASED COMPENSATION REVIEW



For fiscal year 2020, the Company’s overall financial performance resulted in highly variable achievement of performance measure goals for regional Adjusted EBITDA under the Company’s Incentive Compensation program (the “Performance Incentive Program”) as described below. Depending on local market impacts resulting from efforts to slow the spread of COVID‑19, most local market results for the Company were either quite strong or very poor. Due to this variability, a modest portion of the first level performance measure goal for the Americas region was achieved, a small portion of the first level performance goal for the EMEA region was achieved, and no portion of the first level performance goal for the Asia-Pacific region was achieved. As a result, a small portion of the first level goal for global Adjusted EBITDA was achieved and none of the second level goal for global Adjusted EBITDA was achieved. For fiscal year 2020, each of the NEOs identified for fiscal year 2020 other than Ms. Olsem earned Incentive Compensation equal to approximately 10% of their Incentive Compensation opportunity and Ms. Olsem earned Incentive Compensation equal to approximately 35% of her Incentive Compensation opportunity. Due to the extreme variability of the impacts of the COVID-19 pandemic on the Company’s financial results across local markets and the regions, the Company awarded additional cash compensation to all employees, including the NEOs, who did not receive at least 25% of their Incentive Compensation opportunity. As a result, each of the NEOs other than Ms. Olsem (who received more than 25% of her Incentive Compensation opportunity) received a supplemental cash compensation award for fiscal year 2020 in an amount equal to approximately 15% of their Incentive Compensation opportunity. Amounts received by each of the NEOs for fiscal year 2020 as earned Incentive Compensation and for the supplemental cash compensation awards are set forth below under the headings, Performance Incentive Program and Supplemental Cash Compensation Award for Fiscal Year 2020, respectively.



For fiscal year 2019, the Company’s overall financial performance resulted in partial achievement of performance measure goals for regional and global Adjusted EBITDA under the Company’s Performance Incentive Program. The maximum first level performance measure goals for the EMEA and Asia-Pacific regions were achieved, but only a modest portion of the first level performance goal for the Americas region was achieved. Due to the strong performance of the EMEA and Asia-Pacific segments and modest achievement of goals for the Americas segment, the maximum first level goal for global Adjusted EBITDA was achieved and approximately 35.6% of the second level for global Adjusted EBITDA was achieved. As a result, for fiscal year 2019, each of the NEOs other than Mr. Brass earned Incentive Compensation equal to 68% of their Incentive Compensation opportunity and Mr. Brass earned Incentive Compensation equal to 26% of his Incentive Compensation opportunity for fiscal year 2019.



For fiscal year 2018,  the Company’s overall financial performance resulted in partial achievement of performance measure goals for regional and global Adjusted EBITDA under the Company’s Performance Incentive Program.  The maximum first level performance measure goals for the Americas and Asia-Pacific regions were achieved, but no portion of the first level performance goal for the EMEA region was achieved. Due to the strong performance of the Americas and Asia-Pacific segments, the maximum first level goal for global Adjusted EBITDA was achieved and approximately 26.6%  of the second level goal for global Adjusted EBITDA was achieved. As a result, for fiscal year 2018 each of the NEOs identified for fiscal year 2018 disclosures earned Incentive Compensation equal to 63% of their Incentive Compensation opportunity for fiscal year 2018. 



For the three fiscal years ended August 31, 2020, the TSR for the Company’s shares exceeded, by an absolute percentage point difference, the return for the Russell 2000 Index (the “Index”) by 79.2%. As a result, MSUs awarded to the NEOs in October 2017 provided vested shares of the Company’s common stock to the NEOs at 200% of the target number of award shares. 



For the three fiscal years ended August 31, 2019, the TSR for the Company’s shares exceeded, by an absolute percentage point difference, the return for the Index by 22.4%. As a result, MSUs awarded to the NEOs in October 2016 provided vested shares of the Company’s common stock to the NEOs, other than Mr. Brass, at 200% of the target number of award shares. Mr. Brass earned 150% of the target number of award shares for the MSUs awarded to him in October 2016.



For the three fiscal years ended August 31, 2018, the TSR for the Company’s shares exceeded, by an absolute percentage point difference, the return for the Index by 48.45%. As a result, MSUs awarded in October 2015 to the NEOs identified for fiscal year 2018 disclosures provided vested shares of the Company’s common stock to those NEOs, other than Mr. Brass, at the maximum amount of 200% of the target number of award shares. Mr. Brass earned 150% of the target number of award shares for the MSUs awarded to him in October 2015. 



FISCAL YEAR 2020 COMPENSATION DECISIONS



Compensation decisions for fiscal year 2020 were made in October 2019 based on individual and Company performance during fiscal year 2019 and a market survey conducted by the Committee’s compensation consultant. The position relative to the market median of total compensation for each of the NEOs for fiscal year 2020 is based on peer group and survey data which is discussed below under the heading, Overall Reasonableness of Compensation.

 

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The following is a summary of the decisions made by the Committee for NEO compensation for fiscal year 2020:  



·

For fiscal year 2020, base salaries for the NEOs other than Mr. Brass and Ms. Olsem were increased by 2.0%. The base salary for Mr. Brass was increased by 11.0% in October 2019, and the base salary for Ms. Olsem was increased by 12.5% in October 2019. Base salaries for the NEOs were assessed in relation to labor market information. For fiscal year 2020, consideration was given to the appropriate relative mix of salary, annual Incentive Compensation and equity awards.

·

Annual Incentive Compensation is awarded to the NEOs under the Company’s Performance Incentive Compensation Plan as described below under the heading Performance Incentive Program. For purposes of the Performance Incentive Program, goals for regional and global Adjusted EBITDA were established at the beginning of the fiscal year. The Company’s performance as measured against these goals is described in detail below.

·

In October 2019, the NEOs received annual RSU awards providing for the issuance of a total of 7,910 shares of the Company’s common stock to be earned by continued employment by the Company over a vesting period of three years,  subject to earlier vesting upon the effective date of retirement under certain conditions. These awards serve a retention purpose together with an incentive to maximize long term stockholder value through share price appreciation.

·

In October 2019, the NEOs received MSU awards subject to performance vesting covering a target number of shares of the Company’s common stock equal to 7,910 shares. If the Company’s TSR over the three-year vesting period matches the median return for the Index, the target number of shares of the Company’s common stock would be issued to the NEOs.  The actual number of shares to be issued to the NEOs will be from 0% to 200% of the target number of shares depending upon the Company’s TSR as compared to the return for the Index. In October 2019, the NEOs received DPU awards that provided an opportunity to receive up to an aggregate maximum of 7,715 additional shares of the Company’s common stock upon termination of employment.  The DPU awards provided for vesting as of the end of fiscal year 2020 if the Company were to achieve a level of global Adjusted EBITDA for the fiscal year in excess of the maximum goal for global Adjusted EBITDA established for the Performance Incentive Program.  Since the Company’s global Adjusted EBITDA for fiscal year 2020 did not exceed the maximum goal for global EBITDA established for the Performance Incentive Program, the DPU awards for fiscal year 2020 did not vest and they have lapsed without value to the NEOs.

·

RSU, MSU and DPU award amounts for fiscal year 2020 varied among the NEOs based on labor market compensation practices specific to the region of employment, relative achievement of individual performance measures and goals established for each NEO, as well as Company performance for fiscal year 2019 in areas over which each NEO had direct influence.

·

The Company’s stockholders have provided advisory votes to approve executive compensation required by Section 14A of the Exchange Act (the “Say-on-Pay” votes) at the Company’s annual meeting of stockholders for fiscal years 2017, 2018 and 2019. In each instance, at least 95% of the votes cast in the Say-on-Pay votes approved the compensation of the NEOs as disclosed in the Compensation Discussion and Analysis section of the Company’s Proxy Statements for those fiscal years and in the accompanying compensation tables and narrative disclosures. The Committee has considered the results of these advisory Say-on-Pay votes in its decision-making for executive compensation of the NEOs and has concluded that no significant changes in executive compensation decisions and policies are warranted.



GOVERNANCE OF EXECUTIVE OFFICER COMPENSATION PROGRAM



The purpose of the Committee is to establish and administer the compensation arrangements for our CEO and the other executive officers of the Company, including the other NEOs, on behalf of the Board of Directors. The Committee is responsible for developing the Company’s overall executive compensation strategy, with support from management and the Committee’s independent compensation consulting firm. For fiscal year 2020 compensation decisions, the Committee’s compensation consulting firm was Board Advisory, LLC. In March 2020 the Committee selected a new compensation consulting firm, ClearBridge Compensation Group, LLC. The Committee also has responsibilities in connection with administration of the Company’s equity compensation plans.



The Committee operates pursuant to a Charter which outlines its responsibilities, including the Committee’s responsibilities with respect to performance reviews and approval of annual compensation arrangements for the Company’s executive officers. A copy of the Compensation Committee Charter can be found on WD-40 Company’s website at http://investor.wd40company.com

within the “Corporate Governance” section. 



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PROCESS FOR EVALUATING EXECUTIVE OFFICER PERFORMANCE AND COMPENSATION



In accordance with its Charter, the Committee works with the Company’s Human Resources function in carrying out its responsibilities. The Vice President of Global Organization Development is management’s liaison with the Committee. The Committee’s independent compensation consulting firm provides advice and information relating to executive compensation. For fiscal year 2020, the compensation consulting firm assisted the Committee in the evaluation of executive base salary, Incentive Compensation opportunities, equity incentive design and award levels, and the specific pay recommendation for our CEO.  The Committee’s compensation consulting firm reports directly to the Committee and provides no additional services for management.



EXECUTIVE COMPENSATION PHILOSOPHY AND FRAMEWORK

 

COMPENSATION OBJECTIVES



The Company’s executive compensation program is designed to achieve five primary objectives:



1.Attract, motivate, reward and retain high performing executives;

2.Align the interests and compensation of executives with the value created for stockholders;

3.Create a sense of motivation among executives to achieve both short- and long-term Company objectives;

4.Create a direct, meaningful link between business and team performance and individual accomplishment and rewards; and

5.Ensure our compensation programs are appropriately competitive in the relevant labor markets.



TARGET PAY POSITION/MIX OF PAY

 

The Company’s compensation program consists primarily of base salary, annual cash incentives, and long-term oriented equity awards. Each of these components is discussed in greater detail in the Executive Officer Compensation Decisions section below. The Committee has established a target for executive officer total compensation (defined as base salary, plus target Incentive Compensation, plus the value of RSU and MSU equity awards) at the median market level of compensation for each position (details on the use of peer group and survey data to establish the median market level are provided below). Actual pay may vary, based on Company and/or individual performance, length of time within the position, and anticipated contribution. The Committee does not adhere to specific guidelines regarding the percentage of total compensation that should be represented by each compensation component but monitors market competitiveness. A review of total compensation for each NEO relative to the target market percentile is provided in the Executive Officer Compensation Decisions section below under the heading, Overall Reasonableness of Compensation.    



The mix of pay for executive officers is intended to provide significant incentives to drive overall company performance and increased stockholder value. The mix of pay consists of Salary and All Other Compensation amounts as reported in the Summary Compensation Table below,  maximum possible values for Stock Awards (RSUs, MSUs and DPUs) as reported in the table in footnote 1 to the Summary Compensation Table,  and maximum possible Non-Equity Incentive Plan Compensation (Incentive Compensation) amounts as reported in the Grants of Plan-Based Awards table below.  The sum total of these maximum possible compensation amounts for each NEO is referred to as the NEO’s “Total Compensation Opportunity.” For purposes of the charts below, the Total Compensation Opportunity for the CEO, and for all other NEOs in the aggregate, has been divided among elements of compensation that are considered at risk (MSUs, tied to longer term relative stockholder return, and DPUs and Incentive Compensation, tied to current fiscal year financial performance), and those elements that are not performance-based and not considered at risk (Salary, All Other Compensation and RSUs). Approximately 72% of the CEO’s Total Compensation Opportunity for fiscal year 2020 was at risk while approximately 62%,  in the aggregate, of the Total Compensation Opportunity for fiscal year 2020 for all of the other NEOs was at risk.  As reported in more detail below, for fiscal year 2020,  each of the NEOs other than Ms. Olsem earned 25%  of their maximum Incentive Compensation amounts (inclusive of the supplemental cash compensation award described above under the heading, Three Year Performance-Based Compensation Review, and Ms. Olsem earned approximately 35% of her maximum Incentive Compensation amount,  and each NEO earned maximum MSU award values (for the MSU award granted in October 2017), and no portion of their DPU awards. 











 

 

 

 

 

 

 

 

 

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PICTURE 1



COMPENSATION BENCHMARKING 



For purposes of its fiscal year 2020 compensation decisions, the Committee examined the executive compensation practices of a peer group of seventeen companies to assess the competitiveness of the Company’s executive compensation. Peer group companies were selected from a list of U.S. headquartered companies having revenues and earnings reasonably comparable to the Company and doing business in the specialty chemical industry or within specific consumer products categories.  In addition to the peer group data, the Committee considered general industry company survey data provided by Korn Ferry Hay Group, a global management consulting firm. These data sources are applied by the Committee to establish the market median level of compensation for each executive officer position. The companies used in the peer group analysis for fiscal year 2020 compensation decisions were as follows:





 

 

 



 

 

 

American Vanguard Corporation

Innospec Inc.

Balchem Corporation

Landec Corporation

Cambrex Corporation

Prestige Healthcare, Inc

Chase Corporation

Quaker Chemical Corporation

Dorman Products

Rayonier Advanced Materials, Inc.

Flotek Industries Inc.

Sensient Technologies Corporation

Hawkins, Inc.

Stoneridge Inc.

Ingevity Corporation

USANA Health Sciences, Inc.

Innophos Holdings, Inc.

 

 





EXECUTIVE OFFICER COMPENSATION DECISIONS FOR FISCAL YEAR 2020

 

BASE SALARY: PROCESS

 

Base salaries for all executive officers, including the NEOs, are approved by the Committee effective for the beginning of each fiscal year. In setting base salaries, the Committee considers the salary range prepared by its compensation advisor based on each NEO’s job responsibilities and the market 50th percentile target pay position. Salary adjustments, if any, are based on factors such as individual performance, position, current pay relative to the market, future anticipated contribution and the Company-wide merit increase budget. Assessment of individual performance follows a rigorous evaluation process, including self-evaluation and the establishment of annual goals for each executive officer and an assessment of the achievement thereof.

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Individual performance elements considered in this process included individual and Company performance goals and achievements in such areas as growth, leadership, earnings and governance for Mr. Ridge; governance and risk, compliance, forecasting and financial reporting for Mr. Rembolt; growth, leadership, innovation, brand development, earnings and customer relations for Mr. Brass; brand protection, corporate governance, legal services and risk management, and compliance for Mr. Clampitt; and business unit performance, teamwork, execution and growth for Ms. Olsem.  



BASE SALARY: FISCAL YEAR 2020



In October 2019, the Committee reviewed the market competitiveness of executive officer base salaries relative to peer group market data presented by the Committee’s compensation advisor. Based on its review of the peer group market data and the general industry company survey data, the Committee approved a 2.0% increase in the CEO’s base salary for fiscal year 2020 and increases in base salary ranging from 2.0% to 12.5% for the other NEOs.



PERFORMANCE INCENTIVE PROGRAM

 

The Company uses its Performance Incentive Program to tie executive officer compensation to the Company’s financial performance. All Company employees participate in the same Performance Incentive Program as described below. The Performance Incentive Program is offered to the executive officers pursuant to the WD-40 Company Performance Incentive Compensation Plan most recently approved by the stockholders at the Company’s 2017 Annual Meeting of Stockholders.    

 

The Performance Incentive Program provides direct incentives to all Company employees, including executive officers, to affect regional financial performance and, for the Company as a whole, to promote sales at increasing levels of profitability. Specific performance measures tied to regional financial results are used in the Performance Incentive Program formulas as applied to each employee according to his or her particular area of responsibility.



For the NEOs, Incentive Compensation opportunity awards for fiscal year 2020 were based on pre-established goals for the following corporate performance measures: (i) the Company’s Adjusted EBITDA computed for each of the Company’s relevant financial reporting segments (“Regional EBITDA”); and (ii) Adjusted EBITDA computed on a consolidated basis (“Global EBITDA”). The calculations of attainment of these performance measures for the NEOs are substantially the same as the calculations for all other employees for whom such performance measures were applicable.



For purposes of computing the actual financial results to be measured against the goals established for the Regional EBITDA and Global EBITDA performance measures, the Company may exclude certain expenditures as approved by the Committee.  For fiscal year 2020, the Committee approved the exclusion of certain expenses in the amount of approximately $1,493,000 associated with the Company’s investment in IT infrastructure.     



The Company’s Incentive Compensation Program, as applied to all of its employees, is designed with the intent to fund the Incentive Compensation payout to all employees, including the NEOs, from increased earnings over the prior fiscal year.  If the Company does not realize an increase in Global EBITDA over the prior year, it is possible that Ms. Olsem will earn some Incentive Compensation because the performance measure for a portion of the Incentive Compensation opportunity payable to her is based on Regional EBITDA. 



Depending upon actual performance results, the Incentive Compensation opportunities for fiscal year 2020 range from 0% up to 200% of base salary for Mr. Ridge, from 0% up to 100% of base salary for Mr. Rembolt, from 0% up to 160% of base salary for Mr. Brass,  from 0% up to 90% of base salary for Mr. Clampitt, and from 0% up to 100% of base salary for Ms. Olsem.



The maximum Incentive Compensation potential for employees under the Performance Incentive Program is referred to herein as the employee’s “Annual Opportunity.” For each of the NEOs, the Performance Incentive Program for fiscal year 2020 provided two performance measure levels (“Levels A and C”) for determination of earned Incentive Compensation; each level represented 50% of the Annual Opportunity. The Performance Incentive Program is consistently applied for all employees of the Company except that there are three performance measure levels (“Levels A, B and C”) for all employees other than the NEOs and certain other executive officers and management employees. The maximum Incentive Compensation payout for Ms. Olsem required achievement of specified segment goals for Regional EBITDA (Level A) and Company performance that equaled the maximum goal amount for Global EBITDA as described below (Level C). For Messrs. Ridge, Rembolt,  Brass and Clampitt (each of whom has global rather than regional responsibilities), the maximum Incentive Compensation payouts required achievement of specified goals for Global EBITDA for each of Levels A and C. 



Only two of the three performance measure goals are applied for the NEOs and certain other executive officers and management employees for purposes of calculating earned Incentive Compensation in order to provide an increased incentive to those employees to achieve the maximum level of Global EBITDA results for the benefit of stockholders.  Level B performance measure goals for other employees are more directed to achievement of goals tied to areas over which they have more direct

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influence. For such other employees, Level A represented 50% of the Annual Opportunity, Level B represented 30% of the Annual Opportunity and Level C represented 20% of the Annual Opportunity.



Target and maximum payout amounts for each of the NEOs for the fiscal year 2020 Performance Incentive Program are disclosed below in the table under the heading, Grants of Plan-Based Awards - Fiscal Year 2020.



The following table sets forth the fiscal year 2020 Performance Incentive Program payout weightings and the minimum and maximum goals for the performance measures applicable to each of the NEOs.  The minimum and maximum Level A goals for Regional and Global EBITDA were based on earnings before deduction of any Incentive Compensation amounts.  The minimum and maximum Level C goals for Global EBITDA were based on earnings after deduction of an estimate of the maximum possible Incentive Compensation amounts for Levels A and B, but before deduction of Incentive Compensation amounts for Level C.



 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

Level

 

Performance Measure

 

Garry O. Ridge
Jay W. Rembolt
Steven A. Brass
Richard T. Clampitt

 

Patricia Q. Olsem

 

Minimum Goal
FY 2020
($ thousands)

 

Maximum Goal
FY 2020
($ thousands)

A

 

Regional  EBITDA (Americas)

 

N/A

 

50%

 

$            56,517

 

$            60,359

A

 

Global  EBITDA

 

50%

 

N/A

 

$            88,917

 

$          102,713

C

 

Global  EBITDA

 

50%

 

50%

 

$            93,363

 

$          100,954



The following table sets forth the actual fiscal year 2020 performance results and percentage achievement for each of the performance measures under the Performance Incentive Program formulas applicable to the NEOs. Actual earnings results for measurement against the Regional and Global EBITDA goals were adjusted to exclude (a) Incentive Compensation amounts consistent with the manner in which the minimum and maximum performance measure goals are determined as described with reference to the table above and (b) certain Company expenditures as approved by the Committee, as described above.



 

 

 

 

 

 



 

 

 

 

 

 

Level

 

Performance Measure

 

Actual
FY 2020
($ thousands)

 

% Achievement

A

 

Regional  EBITDA (Americas)

 

$                   59,200

 

69.8% 

A

 

Global  EBITDA

 

$                   91,793

 

20.8% 

C

 

Global  EBITDA

 

$                   86,519

 

0.0% 



 

 

 

 

 

 



Achievement of the maximum goals for Regional EBITDA and Global EBITDA is intended to be attainable through the concerted efforts of all management teams working in their own regions and areas of responsibility and for the Company as a whole.



Based on the Company’s fiscal year 2020 performance and the Committee’s certification of the relative attainment of each of the performance measures under the Performance Incentive Program, the payouts for our executive officers, including the NEOs, were calculated. On October 12,  2020, the Committee approved payment of the following Incentive Compensation amounts to the NEOs for fiscal year 2020 performance:



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

Executive Officer

 

Title

 

FY 2020
Annual
Opportunity
(As % of
Base Salary)

 

FY 2020
Incentive Compensation
Paid ($)

 

FY 2020
Actual Incentive Compensation
(As % of
Opportunity)

Garry O. Ridge

 

Chief Executive Officer and Chairman of the Board

 

200% 

 

$          140,647

 

10% 

Jay W. Rembolt

 

Vice President, Finance, Treasurer

 

100% 

 

$            34,037

 

10% 



 

and Chief Financial Officer

 

 

 

 

 

 

Steven A. Brass

 

President and Chief Operating Officer

 

160% 

 

$            74,161

 

10% 

Richard T. Clampitt

 

Vice President, General Counsel

 

90% 

 

$            26,874

 

10% 



 

and Corporate Secretary

 

 

 

 

 

 

Patricia Q. Olsem

 

Division President, Americas

 

100% 

 

$          104,419

 

35% 



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 





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As an example of the operation of the Performance Incentive Program, Ms. Olsem’s Incentive Compensation payout for fiscal year 2020 was computed as follows:



·

Incentive Compensation Annual Opportunity = 100%  X Eligible Earnings ($299,091)  =  $299,091.  

·

Level A (Regional EBITDA) =  50% of Annual Opportunity = $149,546.  

—  Level A Incentive Compensation = Level A Achievement (69.824%) X Level A Annual Opportunity = $104,419.  

·

Level C (Global EBITDA) = 50% of Annual Opportunity = $149,546.  

—  Level C Incentive Compensation = Level C Achievement (0%) X Level C Annual Opportunity = $0.  



Ms. Olsem’s aggregate Incentive Compensation payout was the sum of the payouts under Levels A and C of the Performance Incentive Program, or $104,419.





Supplemental cash compensation award for fiscal year 2020

 

As discussed above under the headings,  Fiscal Year 2020 Supplemental Cash Compensation Award and Three Year Performance-Based Compensation Review, the Company paid a supplemental cash award to all employees, including the NEOs, so that all employees received at least 25% of their Incentive Compensation opportunity.  Accordingly, the following supplemental cash compensation amounts were awarded to the NEOs for fiscal year 2020:







 

 



 

 

Executive Officer

 

Supplemental Cash Compensation Amount

Garry O. Ridge

 

$        196,718

Jay W. Rembolt

 

$          47,634

Steven A. Brass

 

$        103,727

Richard T. Clampitt

 

$          37,588

Patricia Q. Olsem

 

 -



 

 



Equity Compensation

 

Equity compensation is a critical component of the Company’s efforts to attract and retain executives and key employees, encourage employee ownership in the Company, link pay with performance and align the interests of executive officers with those of stockholders. To provide appropriately directed incentives to our executive officers, the Committee has provided awards of time-vesting restricted stock unit (“RSU”) awards as well as performance-vesting market share unit (“MSU”) awards and deferred performance unit (“DPU”) awards. Equity awards for fiscal year 2020 were granted to the NEOs pursuant to the Company’s 2016 Stock Incentive Plan (the “Stock Incentive Plan”) approved by the stockholders at the 2016 Annual Meeting of Stockholders.



The Company’s MSU awards are tied to a measure of total stockholder return (“TSR”) that is determined by reference to a change in the value of the Company’s common stock with reinvestment of dividends. In October 2019, the Committee granted primary equity allocations of RSU and MSU awards for fiscal year 2020. The authorized awards were divided equally between the two types of awards for each NEO. MSU awards provide for vesting after a three-year performance vesting period based on a comparison of the Company’s TSR against the Russell 2000 Index (the “Index”) as described in more detail below. In addition to the RSU and MSU awards, the NEOs also received DPU awards in October 2019. As compared to the retention and long-term performance-based attributes of the RSU and MSU awards, the DPU awards provide a near-term incentive reward for achieving Global EBITDA results for the fiscal year in excess of the amount of Global EBITDA required for maximum payout of Incentive Compensation under Level C of the Performance Incentive Program as described above.  DPU awards provide for vesting at the end of the fiscal year for which they are granted. All RSU, MSU and DPU awards are subject to terms and conditions set forth in an applicable award agreement (the “Award Agreement”).



The principal attributes and benefits of the RSU, MSU and DPU awards for executive officers are as follows:



·

RSU awards provide for vesting in relatively equal portions over a period of three years from the grant date, subject to earlier vesting upon the effective date of retirement under certain conditions.

·

MSU awards provide for performance-based vesting tied to the Company’s TSR over a performance measurement period of three fiscal years beginning with the fiscal year in which the awards are granted and ending on August 31st of the third year.

·

DPU awards provide for performance-based vesting tied to the Company’s Global EBITDA achievement for the fiscal year in which the awards are granted in excess of the maximum goal for Global EBITDA under Level C of the Company’s Performance Incentive Program.

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·

RSU and MSU awards provide for the issuance of shares of the Company’s common stock upon vesting.

·

Vested DPU awards provide for the issuance of shares of the Company’s common stock only upon termination of employment.  Until issuance of the shares for vested DPU awards, the holders of the vested DPU awards are entitled to receive dividend equivalent payments with respect to their vested DPU awards, payable in cash as and when dividends are declared upon shares of the Company’s common stock.

·

A mix of RSU, MSU and DPU awards is appropriate as compared to RSU awards alone or other equity awards, such as stock options, for the following reasons: i) MSU awards granted annually provide a more direct performance-based incentive aligned directly with longer term stockholder interests; ii) RSU awards have a greater perceived value to recipients than stock options; iii) DPU awards offer a reward for exceeding the highest goal for near-term financial results for the Company; iv) RSU, MSU and DPU awards have a  less dilutive impact on a share count basis than stock options; and v) the issuance of shares of the Company’s common stock upon vesting of RSUs and MSUs, and the deferred issuance of shares following vesting of DPU awards encourages long-term stock ownership, promotes retention objectives and facilitates the achievement of the Company’s stock ownership guidelines (as described below in the Other Compensation Policies section, under the heading, Executive Officer Stock Ownership Guidelines).



The Board recognizes the potentially dilutive impact of equity awards. The Company’s equity award practices are designed to balance the impact of dilution and the Company’s need to remain competitive by recruiting, retaining and providing incentives for high-performing employees.  



Restricted Stock Unit Awards

 

RSU awards provide for the issuance of shares of the Company’s common stock to the award recipient upon vesting provided that the recipient remains employed with the Company through each vesting date except as noted below with respect to vesting upon retirement. Shares of the Company’s common stock equal to the portion of the RSU award that has vested are issued promptly upon the vesting date. RSU awards provide for vesting over a period of three years from the grant date. 34% of the RSU award will vest on the first vesting date and 33% of the RSU award will vest on each of the second and third vesting dates. The vesting date each year is the third business day following the Company’s public release of its annual earnings for the preceding fiscal year, but not later than November 15 of the vesting year.



RSU Award Agreements provide that, for RSU award recipients who retire from the Company after reaching age 65, or for RSU award recipients who retire from the Company after reaching age 55 and have been employed by the Company for at least 10 years, all RSUs will be vested upon the effective date of retirement and shares will be issued within 30 days after the effective date of retirement, except for executive officers whose RSU shares will be issued 6 months after the effective date of retirement.  



Payment of required withholding taxes due with respect to the vesting of the RSU awards, if any, will be covered through withholding of shares by the Company. The Company will issue a net number of shares to the recipient for a vested RSU award after withholding shares having a value as of the vesting date, or as of the date of issuance in the case of the issuance of RSU shares following retirement, equal to the required tax withholding obligation.



Market Share Unit Awards

 

MSU awards provide for performance-based vesting over a performance measurement period of three fiscal years commencing with the fiscal year in which the MSU awards are granted (the “Measurement Period”). Except as noted below with respect to vesting upon retirement, the recipient must remain employed with the Company for vesting purposes until the date on which the Committee certifies achievement of the requisite performance provided for in the MSU Award Agreement. A number of shares of the Company’s common stock equal to an “Applicable Percentage” of the “Target Number” of shares covered by the MSU awards to the NEOs will be issued as of the “Settlement Date.” The Applicable Percentage is determined by reference to the performance vesting provisions of the MSU Award Agreements as described below. The Settlement Date for an MSU award is the third business day following the Company’s public release of its annual earnings for the third fiscal year of the Measurement Period.



MSU Award Agreements provide for monthly pro-rata vesting of MSUs as of the end of the Measurement Period in the event of the earlier termination of the award recipient’s employment due to death, disability, or retirement after reaching age 65, or retirement after reaching age 55 with at least 10 years of employment with the Company. For purposes of calculating the number of MSUs vested and the corresponding number of shares to be issued as of the Settlement Date, the Target Number of shares covered by the MSU awards will be adjusted according to the pro-rata portion of the Measurement Period that has elapsed as of the effective date of termination of employment. The Committee may also exercise its discretion to provide for monthly pro-rata vesting of MSUs awarded to a recipient who resigns or is terminated by the Company for reasons other than good cause.



Payment of required withholding taxes due with respect to the settlement of an MSU award, if any, will be covered through withholding of shares by the Company. The Company will issue a net number of shares to the recipient for a vested MSU award after withholding shares having a value as of the Settlement Date equal to the required tax withholding obligation.

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The performance vesting provisions of MSU awards are based on relative TSR for the Company over the Measurement Period as compared to the total return (“Return”) for the Index as reported for total return (with dividends reinvested), as published by Russell Investments. For purposes of computing the relative TSR for the Company as compared to the Return for the Index, dividends paid with respect to the Shares will be treated as having been reinvested as of the ex-dividend date for each declared dividend.



The Applicable Percentage of the Target Number of shares will be determined for each of the NEOs based on the absolute percentage point difference between the TSR for the Company as compared to the Return for the Index (the “Relative TSR”) as set forth in the table below: 





 

 



 

 

Relative TSR

 

 

(absolute percentage point difference)

 

Applicable Percentage

> 20%

 

200%*

   20%

 

200%*

   15%

 

175%*

   10%

 

150%

   5%

 

125%

Equal

 

100%

   -5%

 

  75%

  -10%

 

  50%

>-10%

 

    0%

 

 

 

*  The MSU award granted to Ms. Olsem in fiscal year 2019 provides for a maximum Applicable Percentage of the Target Number of shares of 150% if the Relative TSR is 10% or greater. Otherwise, the Applicable Percentage for the MSU awards granted to Ms. Olsem will be calculated in the same manner as for the other NEOs.



The Applicable Percentage will be determined on a straight-line sliding scale from the minimum 50% Applicable Percentage achievement level to the maximum 200% Applicable Percentage achievement level (150% for Ms. Olsem for the MSU award granted in fiscal year 2019). For purposes of determining the TSR for the Company and the Return for the Index, the beginning and ending values for each measure will be determined on an average basis over a period of all market trading days within the ninety (90) calendar days prior to the beginning of the fiscal year for the beginning of the Measurement Period and over a period of all market trading days within the ninety (90) calendar days prior to the end of the third fiscal year of the Measurement Period. For purposes of determining relative achievement, actual results are to be rounded to the nearest tenth of one percent and rounded up from the midpoint. The number of MSU Shares to be issued on the Settlement Date is to be rounded to the nearest whole share and rounded upward from the midpoint. 



In the event of a Change in Control (as defined in the Stock Incentive Plan), the Measurement Period will end as of the effective date of the Change in Control and the ending values for calculating the TSR for the Company and the Return for the Index will be determined based on the closing price of the Company’s common stock and the value of the Index, respectively, immediately prior to the effective date of the Change in Control. The Applicable Percentage will be applied to a proportionate amount of the Target Number of MSUs based on the portion of the Measurement Period elapsed as of the effective date of the Change in Control. The recipient NEO will receive RSUs for the portion of the Target Number of MSUs to which the Applicable Percentage is not applied. Those RSUs will time vest, subject to rights under the NEO’s Change of Control Severance Agreement, as of the Settlement Date.



Deferred Performance Unit Awards

 

DPU awards provide for performance-based vesting over a performance measurement period of the fiscal year in which the DPU awards are granted (the “Measurement Year”). The DPU awards provide for vesting of a number of DPUs equal to an “Applicable Percentage” of the “Maximum Number” of DPUs awarded to the NEOs following conclusion of the Measurement Year (“Vested DPUs”). Except as noted below with respect to vesting upon retirement, the recipient must remain employed with the Company for vesting purposes until August 31 of the Measurement Year. Except as noted below as to non-residents of the United States, the Vested DPUs must be held until termination of employment. Following termination of employment, each Vested DPU will be settled by issuance of one share of the Company’s common stock (a “DPU Share”). The Maximum Number of DPUs refers to the maximum number of DPU Shares that may be issued with respect to a DPU award upon full achievement of the applicable performance goal as described below. The Applicable Percentage is determined by reference to the performance vesting provisions of the DPU Award Agreement as described below. For NEOs who are not residents of the United States, the Compensation Committee has discretion to either defer settlement of each Vested DPU by issuance of a DPU Share following termination of employment or settle each Vested DPU in cash by immediate payment of an amount equal to the closing price of

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one share of the Company’s common stock as of the date of the Compensation Committee’s certification of achievement of the performance measure applied in determination of the Applicable Percentage.



Each Vested DPU that is not settled in cash will include the right to receive a dividend equivalent payment in an amount equal to the dividends declared with respect to the Company’s common stock for each Vested DPU. Such dividend equivalent payments are to be paid in cash as ordinary compensation income as and when common stock dividends are paid by the Company, provided, however, that the Company may elect to accumulate such dividend equivalent payments for later payment not less often than annually.



DPU Award Agreements provide for monthly pro-rata vesting of DPUs as of the end of the Measurement Year in the event of the earlier termination of the award recipient’s employment due to death, disability, or retirement after reaching age 65, or retirement after reaching age 55 with at least 10 years of employment with the Company. For purposes of calculating the number of Vested DPUs earned, the Maximum Number of shares covered by the DPU awards will be adjusted according to the pro-rata portion of the Measurement Year that has elapsed as of the effective date of termination of employment.



Vested DPUs not otherwise settled in cash will be settled by issuance of the DPU Shares as of 6 months following termination of employment (the “Settlement Date”). Payment of required withholding taxes due with respect to the settlement of a Vested DPU award, if any, will be covered through withholding of shares by the Company. The Company will issue a net number of shares to the recipient for a Vested DPU award after withholding shares having a value as of the Settlement Date equal to the required tax withholding obligation.



The performance vesting provisions of the DPUs are based on relative achievement within an established performance measure range of the Company’s EBITDA (before deduction of the stock-based compensation expense for the Vested DPUs and excluding other non-operating income and expense amounts (“Adjusted Global EBITDA”) for the Measurement Year.



For fiscal year 2020, the performance vesting provisions for the DPUs were established as set forth in the table below:





 

 



 

 

Adjusted Global EBITDA1

 

Applicable Percentage

 > $101,109,000

 

100%

  $101,109,000

 

100%

    $96,284,000

 

5%

 <   $96,284,000

 

0%

    $96,030,000*

 

0%

      *      Implied zero percentage achievement level.

 

 



 

 

1

The calculation of Adjusted Global EBITDA for purposes of the performance vesting provisions of the DPUs accounts for full payment of all Incentive Compensation earned for the fiscal year. 



The Applicable Percentage will be determined on a straight-line sliding scale from the implied zero percentage achievement level to the maximum 100% Applicable Percentage achievement level, but the Applicable Percentage shall not be less than 5%. For purposes of determining the Applicable Percentage, the calculated percentage is to be rounded to the nearest tenth of one percent and rounded upward from the midpoint. The number of Vested DPUs is to be rounded to the nearest whole unit and rounded upward from the midpoint.







EQUITY AWARDS FISCAL YEAR 2020



For fiscal year 2020, equity awards to our executive officers were granted to satisfy goals for executive officer retention, to provide incentives for current and future performance, and to meet objectives for overall levels of compensation and pay mix. RSU, MSU and DPU awards were granted to the NEOs by the Committee in October 2019. All of the equity awards are set forth below in the table under the heading, Grants of Plan-Based Awards - Fiscal Year 2020. In establishing award levels for the NEOs for fiscal year 2020, the Committee placed emphasis on long-term retention goals and desired incentives for current and future contributions. The RSU and MSU awards to our CEO were, consistent with past practice, larger than the awards to the other NEOs in recognition of his higher level of responsibility for overall Company performance and based upon market data that supports a higher level of equity compensation for our CEO. The specific RSU award amounts and Target Number of shares covered by MSU awards were determined for each NEO based on an assessment of the NEO’s achievement of individual performance goals as well as Company performance for fiscal year 2019 in areas over which the NEO had particular influence. The DPU award amounts were established by reference to each NEO’s Incentive Compensation opportunity amount based on fiscal year 2019 base salary amounts and fiscal year 2020 maximum percentage opportunity for Incentive Compensation – the share equivalent value of the DPUs awarded to each NEO as of the date of grant equals 50% of the NEO’s maximum Incentive Compensation opportunity amount.  

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Market Share Unit Award Vesting for Three Fiscal Year Performance Achievement



On October 12,  2020, the Committee certified achievement of the performance measure applicable to MSU awards granted to the NEOs in October 2017. The Committee certified the Company’s relative TSR as compared to the Return for the Index for the performance Measurement Period ended August 31, 2020 for purposes of calculating the vested number of shares of the Company’s common stock for those MSU awards.  The relative TSR as compared to the Return for the Index (as an absolute percentage point difference) over the three fiscal year Measurement Period ending August 31, 2020 was 79.2%. As a result, based on the table above in the description of the MSU awards, the Applicable Percentage of the Target Number of shares underlying the MSU awards granted in October 2017 was 200%  for each of the NEOs other than Ms. Olsem, and 150% for Ms. Olsem.



The following table sets forth the Target Number and vested number of shares underlying the MSU awards granted to each NEO in October 2017:





 

 

 

 



 

 

 

 

Executive Officer

 

Target Number

 

Vested Shares

Garry O. Ridge

 

4,434 

 

8,868 

Jay W. Rembolt

 

798 

 

1,596 

Steven A. Brass

 

864 

 

1,728 

Richard T. Clampitt

 

665 

 

1,330 

Patricia Q. Olsem

 

345 

 

518 



 

 

 

 

Deferred Performance Unit Award Vesting for Fiscal Year 2020 Performance Achievement 



DPU awards granted to the NEOs for fiscal year 2020 lapsed without value to the NEOs. Vesting of the DPUs would have required a level of Adjusted Global EBITDA equal to or greater than $96,284,000  (the minimum Adjusted Global EBITDA goal for DPU vesting as set forth in the table on the preceding page). Since the actual Adjusted Global EBITDA for fiscal year 2019 was less than $96,284,000,  the DPUs did not vest and they have lapsed.



BENEFITS AND PERQUISITES



As is the case with most Company employees, the NEOs are provided with standard health and welfare benefits, and the opportunity to participate in the WD-40 Company Profit Sharing/401(k) Plan (the “Plan”). The Plan serves to provide our executive officers, including the eligible NEOs, with tax-advantaged retirement savings as an additional component of overall compensation. Employees have the right to invest the Company’s contributions to the Plan in shares of the Company’s common stock as an alternative to other investment choices available under the Plan. 



The Company maintains individual Supplemental Death Benefit Plan agreements for both Mr. Ridge and Mr. Rembolt. The Company’s Supplemental Death Benefit Plan agreement obligations are funded by life insurance policies owned by the Company.



The Company also provides leased vehicles or a vehicle allowance to its executive officers. The costs associated with the perquisites and other personal benefits provided to the NEOs are included in the Summary Compensation Table below and they are separately identified for fiscal year 2020 in the footnote disclosure of such perquisites and other personal benefits included with the Summary Compensation Table.



The Committee considers the cost of the foregoing health and welfare benefits and perquisites in connection with its approval of the total compensation for each of our NEOs. All such costs are considered appropriate in support of the Committee’s objective of attracting and retaining high quality executive officers because they are common forms of compensation for senior executives and are expected by such executives when they consider competing compensation packages.  



POST-EMPLOYMENT OBLIGATIONS



The Company has change of control severance agreements with each of the NEOs. The specific terms of the agreements are described in detail below under the heading, Change of Control Severance Agreements. In establishing the terms and conditions for the change of control severance agreements consideration was given to possible inclusion of severance compensation to be paid to the executive officers in the event of their termination of employment without cause (or for good reason) without regard to the existence of a change of control of the Company. No such provisions were included and severance compensation is payable only following a termination of employment without “cause” or for “good reason” within two years following a “change of control” of the Company (as the quoted terms are defined in the severance agreements).



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The Committee believes that the change of control severance agreements help ensure the best interests of stockholders by fostering continuous employment of key management personnel. As is the case in many public companies, the possibility of an unsolicited change of control exists. The uncertainty among management that can arise from a possible change of control can result in the untimely departure or distraction of key executive officers. Reasonable change of control severance agreements reinforce continued attention and dedication of executive officers to their assigned duties and support the Committee’s objective of retaining high quality executives.

 

OVERALL REASONABLENESS OF COMPENSATION

 

The Committee believes that the Company is achieving its compensation objectives and rewards executive officers for driving operational success and stockholder value creation. Based on reviews of tally sheets and a “pay-for-performance” analysis by the Committee, and in light of the Company’s compensation objectives, the Committee and the Board of Directors believe that the pay mix and target pay position relative to market for each of the NEOs are reasonable and appropriate. The “pay-for-performance” analysis includes a review of the individual components of executive officer compensation that are tied to Company performance, as measured by identified financial performance metrics as well as the price of the Company’s common stock. In particular, the Committee reviews executive officer Incentive Compensation to determine whether it appropriately rewards achievement of specific financial performance goals and does not otherwise provide rewards in the absence of reasonable measures of individual and Company success. Similarly, with respect to equity awards, the Committee considers the effectiveness of such awards in providing a reasonable incentive to the executive officers to increase profits (as measured by Regional and Global EBITDA) and total stockholder return without inappropriately rewarding the executive officers if performance targets are not achieved over the long term.



The following table sets forth the total compensation for each of our NEOs (based on cash compensation received as base salary and earned Incentive Compensation, plus the value of equity awards (other than the DPUs) at their date of grant per share values) for fiscal year 2020, together with the relative position to market mid-point with 100% equaling market median for each NEO:





 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

Executive Officer

 

Base Salary

 

Other
Earned Compensation1

 

Value of
Stock Awards2

 

Total
Compensation

 

Present Value of Total Compensation Received as a Percentage of Market Median

 

Garry O. Ridge

 

$        675,240

 

$          337,365

 

$     1,599,630

 

$     2,612,235

 

83% 

 

Jay W. Rembolt

 

$        327,011

 

$            81,671

 

$        299,814

 

$        708,496

 

89% 

 

Steven A. Brass

 

$        446,422

 

$          177,888

 

$        649,908

 

$     1,274,218

 

84% 

 

Richard T. Clampitt

 

$        286,716

 

$            64,462

 

$        229,795

 

$        580,973

 

76% 

 

Patricia Q. Olsem

 

$        300,375

 

$          104,419

 

$        259,963

 

$        664,757

 

80%