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Compensation Discussion
and Analysis
Tax Policies
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Carpenter also provides retiree life insurance benefits for some employees, including NEOs, who are
eligible to receive an immediate retirement benefit from the GRP upon termination of employment. The face amount of the retiree life insurance benefit is equal to $5,000.
Benefits for NEOs under the above plans are discussed in detail in the Executive Compensation section of this Proxy Statement.
Savings Plans and Deferred Compensation Plan
Our
Savings Plans are
tax-qualified
profit sharing plans. Carpenter had a savings plan available to Carpenter employees and certain affiliates who were hired prior to January 1, 2012
(Pre-2012
Savings Plan), a savings plan available to Carpenter employees and certain affiliates who were hired on and after January 1, 2012 (2012 Savings Plan), a savings plan for employees of Amega West
Services LLC (a wholly-owned subsidiary), and a savings plan for collectively bargained employees of Latrobe Steel Company (a wholly-owned subsidiary).
Effective
January 1, 2017, the
Pre-2012
Savings Plan and the 2012 Savings Plan were merged into the Savings Plan, which credits the account of every eligible participant annually with an employer contribution of 3%
of base salary and an employer matching contribution of up to 6% (subject to IRS limits on the maximum compensation that may be taken into account for this purpose). Eligible participants may contribute up to an additional 100% of base salary to
their individual accounts (subject to the same IRS limit on maximum compensation that can be taken into account for such purposes).
Participant contributions could
not exceed $18,000 in calendar year 2017 and $18,500 in calendar year 2018. If the participant was or became age 50 or older during calendar year 2017, the limit was $24,000. The limit in 2018 was $24,500 if the participant was or became age 50 that
year. The Savings Plan allows for immediate participation by all eligible employees and immediate vesting of all contributions.
As further described in the
Tax-Qualified
Defined Contribution Pension Plans section of this proxy, if the companys contribution to a Savings Plan for any executive is limited under the Code, the executive will receive any
lost contributions under the companys deferred compensation plan discussed immediately below.
Carpenter sponsors a
non-qualified,
deferred compensation plan for executives, including NEOs, to supplement these
tax-qualified
savings plans. If the companys contribution to a
savings plan for any executive is limited under the Code, the executive will receive any lost contributions under this deferred compensation plan. Executives, including NEOs, may annually defer up to 35% of their base pay and up to 100% of their
cash incentive payout. Executives are fully vested in all amounts deferred under this plan, including any company contributions. These sums are deliverable to the executive either on a date selected by the participant or upon the occurrence of a
specified event.
Health Benefits and Disability Insurance
Carpenter
currently provides its executive officers with the same health and disability insurance plans offered to all employees. In addition, Carpenter encourages each executive officer to have a periodic physical examination, and reimburses executives for
certain additional
out-of-pocket
health costs associated with those exams that are not covered by insurance. This reimbursement is tax deductible to the company.
Severance and Employment Arrangements
Carpenter maintains an executive
severance plan to address certain terminations in the absence of a change in control. In addition, the company also maintains a change in control severance plan, which provides certain payments and benefits in the event of a change in control. These
plans are discussed in more detail in the Potential Payments Upon Termination of Employment section of this proxy.
Tax
Policies
To the extent the aggregate compensation subject to Section 162(m) of the Internal Revenue Code paid to any NEO (other than our principal financial
officer, prior to the amendment discussed below) exceeds $1 million, it is not deductible by Carpenter for federal income tax purposes unless it meets the definition of performance-based under Code Section 162(m). Cash
incentives and RSU grants are performance-based only if they are earned or vested based on achieving objective goals under stockholder approved plans. Cash incentives granted under the Executive Bonus
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CARPENTER TECHNOLOGY
2018 PROXY STATEMENT
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59
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