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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
SCHEDULE
14A
Proxy Statement
Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than
the Registrant o
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Check the appropriate
box:
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o Preliminary Proxy
Statement
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o Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material under §240.14a-12
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Horizon
Global Corporation
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(Name of Registrant as
Specified in its Charter)
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(Name of Person(s) Filing
Proxy Statement, if Other Than the Registrant)
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Payment of Filing Fee (Check
the appropriate box):
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No fee required.
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Fee computed on table below
per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of
securities to which transaction applies:
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Aggregate number of securities
to which transaction applies:
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(3)
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Per unit price or other
underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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Proposed maximum aggregate
value of transaction:
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Total fee paid:
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Fee paid previously with
preliminary materials.
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Check box if any part of the
fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously
Paid:
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(2)
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Form, Schedule or Registration
Statement No.:
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Filing Party:
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Date Filed:
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NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS
To be held June 19, 2020
To the
Stockholders of Horizon Global Corporation:
Due to the
emerging public health impact of the coronavirus pandemic
(“COVID-19”) and to support the health and well-being of our
stockholders, employees and their families, the 2020 Annual Meeting
of Stockholders (the “Annual Meeting”) of Horizon Global
Corporation (the “Company,” “Horizon,” “Horizon Global,” “us,”
“our” or “we”) will be a completely “virtual meeting” and held on
Friday, June 19, 2020 at 2:00 p.m., Eastern Time. You
will be able to participate in the Annual Meeting and vote and
submit appropriate questions during the Annual Meeting live via
webcast by visiting www.virtualshareholdermeeting.com/HZN2020 using
your sixteen-digit control number found on your proxy card or your
voting instruction form. However, we encourage you to vote prior to
the Annual Meeting. The Annual Meeting will be held for the purpose
of considering and voting upon:
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1.
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The election of
eight directors to serve until the Annual Meeting of Stockholders
in 2021;
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2.
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The approval of
the Horizon Global Corporation 2020 Equity and Incentive
Compensation Plan;
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3.
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The ratification
of the appointment of Deloitte & Touche LLP (“Deloitte”) as the
Company’s independent registered public accounting firm for the
fiscal year ending December 31, 2020; and
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4.
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The transaction
of such other business as may properly come before the
meeting.
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The Board of
Directors has fixed the close of business on May 7, 2020 as
the record date (“Record Date”) for determining the stockholders
that are entitled to notice of, and to vote at, the Annual Meeting
or any adjournment or postponement of the Annual
Meeting.
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By Order of the Board of
Directors
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/s/ Jay Goldbaum
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Jay Goldbaum
General Counsel, Chief
Compliance Officer,
and Corporate
Secretary
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Plymouth,
Michigan
This notice of
the Annual Meeting, proxy statement and form of proxy are being
distributed and made available on or about May 18,
2020.
Even if you
intend to participate in the live webcast of the Annual Meeting via
the internet, please sign and date the enclosed proxy card or
voting instruction card and return it in the accompanying envelope,
or vote via telephone or Internet (as indicated on your proxy card
or voting instruction card), to ensure the presence of a quorum.
Any proxy may be revoked in the manner described in the
accompanying proxy statement at any time before it has been voted
at the Annual Meeting.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE
ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD VIA LIVE WEBCAST ON JUNE 19,
2020
The Proxy
Statement and 2019 Annual Report of Horizon Global Corporation are
available at:
https://investors.horizonglobal.com/2020proxystatement
and
https://investors.horizonglobal.com/2019annualreport
PROXY STATEMENT FOR 2020 ANNUAL MEETING OF
STOCKHOLDERS
This proxy
statement contains information regarding the Annual Meeting of the
Company to be held on Friday, June 19, 2020 live via webcast. Any
stockholder can listen to and participate in the meeting live via
the Internet at www.virtualshareholdermeeting.com/HZN2020. The
webcast will start at 2:00 p.m. Eastern Time. You will require the
sixteen-digit control number that is included on your Notice or
your proxy card (if you received a printed copy of the proxy
materials) to vote and submit questions while participating in the
meeting online. If you do not have your sixteen-digit control
number, you will only be able to listen to the Annual Meeting. The
Company’s Board of Directors (the “Board”) is soliciting proxies
for use at such meeting and at any adjournment or postponement of
such meeting. The Company first mailed this proxy statement to its
stockholders on or about May 18, 2020. The Company will bear
the cost of soliciting proxies.
Proxy Summary
This summary
highlights information contained elsewhere in this Proxy Statement,
Annual Report, SEC filings or in our corporate governance documents
on our website at www.horizonglobal.com. We encourage you to read
this Proxy Statement in its entirety before voting.
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STOCKHOLDER ACTION
Proposal for Your Vote
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Board Voting
Recommendation
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Proposal 1: Election
of eight directors to serve until the Annual Meeting of
Stockholders in 2021.
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FOR each
nominee
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Proposal 2: Approval
of the Horizon Global Corporation 2020 Equity and Incentive
Compensation Plan.
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FOR
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Proposal 3:
Ratification of the appointment of Deloitte & Touche LLP as the
Company’s independent registered public accounting firm for the
fiscal year ending December 31, 2020.
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FOR
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Additional Details on Virtual Meeting Participation
Our goal for the
Annual Meeting is to enable the broadest number of stockholders to
participate in the meeting while respecting state and federal
mandated regulations and guidelines related to COVID-19. There will
be a support line for technical and other assistance, and we will
endeavor to address as many appropriate stockholder questions as
time allows. Additional information on how you can participate in
the virtual Annual Meeting to the fullest extent is set forth in
the “Frequently
Asked Questions” section of this Proxy
Statement.
PROPOSAL 1 — ELECTION OF DIRECTORS
Stockholders will
vote to elect eight directors to hold office for a one-year term
expiring at the 2021 Annual Meeting of Stockholders. David A.
Roberts, one of our current directors, has elected not to stand for
reelection at the Annual Meeting. The Board is deeply appreciative
for the strong leadership and valuable contributions provided by
Mr. Roberts during his term. As a result, the size of the Board is
decreasing from nine to eight directors effective as of the Annual
Meeting The Board has recommended each of Terrence G. Gohl, John C.
Kennedy, Frederick A. “Fritz” Henderson, Ryan L. Langdon, Brett N.
Milgrim, Debra S. Oler, Mark D. Weber and Harry J. Wilson, for
election as directors, to serve until the 2021 Annual Meeting of
Stockholders. If any of them should become unavailable, the Board
may designate a substitute nominee. In that case, the proxy holders
named as proxies in the accompanying proxy card will vote for the
Board’s substitute nominee.
THE COMPANY’S BOARD RECOMMENDS A VOTE
“FOR”
EACH OF TERRENCE G. GOHL, JOHN C. KENNEDY, FREDERICK A. “FRITZ”
HENDERSON, RYAN L. LANGDON, BRETT N. MILGRIM, DEBRA S. OLER, MARK
D. WEBER AND HARRY J. WILSON, WHO STANDS FOR REELECTION TO SERVE
UNTIL THE 2021 ANNUAL MEETING OF STOCKHOLDERS.
Vote Required for Approval
The eight
nominees who receive the most votes cast at the Annual Meeting will
be elected as directors, provided a quorum of at least a majority
of the issued and outstanding shares of the Company’s Common Stock
that are entitled to vote is represented either in person or by
proxy at the meeting. If you abstain from voting on this matter,
your abstention will have no effect on the vote. If you hold your
shares through a broker and you do not instruct the broker on how
to vote on this “non-routine” proposal, your broker does not have
authority to vote your shares (referred to as a “broker non-vote”).
Abstentions and broker non-votes will
each be counted
as present for purposes of determining the presence of a quorum but
will not have any other effect on the outcome of the election of
directors.
The Board
currently consists of nine members each serving one-year terms.
This section provides additional information regarding the
directors of the Company.
Directors
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Name
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Age
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Title
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Terrence G. Gohl
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58
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President, Chief Executive
Officer and Director
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John C.
Kennedy
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62
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Chair of the
Board
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Frederick A. “Fritz”
Henderson
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61
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Director
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Ryan L. Langdon
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47
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Director
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Brett N. Milgrim
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51
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Director
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Debra S. Oler
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65
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Director
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David A. Roberts
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72
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Director
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Mark D. Weber
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62
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Director
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Harry J. Wilson
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48
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Director
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Director Background and Qualifications
The following
sets forth the business experience during at least the past five
years of each director nominee.
In addition, the
following includes a brief discussion of the specific experience,
qualifications, attributes and skills that led to the conclusion
that the directors should serve on the Board at this time. The
Corporate Governance and Nominating Committee of the Board (the
“Governance Committee”) considers the experience, mix of skills and
other qualities of the existing Board to ensure appropriate Board
composition. The Governance Committee believes that directors must
have demonstrated excellence in their chosen field, high ethical
standards and integrity, and sound business judgment. In addition,
it seeks to ensure the Board includes members with diverse
backgrounds, skills and experience, including appropriate financial
and other expertise relevant to the Company’s
business.
The Board
believes that the directors have an appropriate balance of
knowledge, experience, attributes, skills and expertise as a whole
to ensure the Board appropriately fulfills its oversight
responsibilities and acts in the best interests of stockholders.
The Board believes that each director satisfies its criteria for
demonstrating excellence in his or her chosen field, high ethical
standards and integrity, and sound business judgment. In addition,
the Board has eight independent directors in accordance with the
applicable rules of the New York Stock Exchange (“NYSE”), and such
directors are also independent of the influence of any particular
stockholder or stockholder groups whose interests may diverge from
the interests of the stockholders as a whole. Further, each
director brings a strong background and set of skills to the Board,
giving the Board, as a whole, competence and experience in a wide
variety of areas.
Terrence G. Gohl
Director since
2019
Age
58
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Mr. Gohl was appointed to our
Board and has served as President and Chief Executive Officer since
September 2019. Prior to joining the Company, Mr. Gohl served as
Chief Operating Officer of International Automotive Components
(“IAC”) Group, a supplier of automotive components and systems,
from February 2017 to June 2018. From March 2009 to January 2017,
Mr. Gohl served as President and Chief Executive Officer of Key
Plastics L.L.C. (“Key Plastics”), a global manufacturer and
supplier of injection molded plastic components to automotive
OEMs. Prior
to joining Key Plastics, from 2004 to March 2009, Mr. Gohl served
in various executive management and corporate officer roles with
Visteon Corporation, a global automotive leader in cockpit
electronics.
From 1995 to
2005, Mr. Gohl held executive positions with Tower Automotive, an
automotive manufacturer, and Lear Corporation, a global leading
supplier of automotive seating and e-systems. Mr. Gohl brings
extensive automotive industry leadership to the Horizon Board, with
deep expertise in manufacturing, operations and turnaround
situations.
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John C. Kennedy
Chair of the Board since
2019
Age 62
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Mr. Kennedy was
appointed to our Board in April 2019, and has served as Chair of
the Board since his appointment. Mr. Kennedy is currently president
and chief executive officer of Autocam Medical, a privately held
contract manufacturer of precision-machined implants and
instruments for surgical applications, which he founded in 2005.
Mr. Kennedy previously served as the president and chief executive
officer of Autocam Corporation, which he founded in 1988 and later
sold in 2014. Mr. Kennedy is currently a board member of Lacks
Enterprises, Inc., a Michigan-based privately held company
providing complex, highly decorated components and systems for the
exterior automotive trim market, since 2004; the Van Andel
Institute, a Michigan-based nonprofit biomedical research and
science education organization, since 2003; Shape Corporation, a
full-service, tier-one automotive and industrial component supplier
since 2014; and Business Leaders for Michigan, a nonprofit
organization for business leaders that is focused on strategy,
policy and business initiatives to drive Michigan’s economic
growth. Outside of the business world, Mr. Kennedy dedicates a
significant amount of time to improving education. Previously, Mr.
Kennedy served on Grand Valley State University’s Board of
Trustees, as chair from 2016 to 2018 and trustee from 2011 to 2018.
Mr. Kennedy is also a founding board member of Grand Rapids
University Preparatory Academy, a public education school located
in Grand Rapids, Michigan, since 2008. Mr. Kennedy has served on
multiple education commissions for the State of Michigan. Currently
he is a commissioner on the Governor’s PreK-12 Literacy Commission
and he previously served on the State of Michigan’s Third Grade
Reading Commission. Mr. Kennedy brings to Horizon Global extensive
board and company leadership, business development expertise, and
operational and manufacturing experience in the automotive and
industrial business segments.
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Frederick A. “Fritz” Henderson
Director since
2019
Age 61
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Mr. Henderson was
appointed to our Board in April 2019 and was named Chair of the
Audit Committee at the time of his appointment. Mr. Henderson is
currently chair of the board of Adient, PLC, an automotive parts
manufacturer focused on automotive seating and interiors, since
October 2018, and a director since October 2016. Mr. Henderson also
currently serves as chair of the board of Arconic Corporation, a
manufacturer of advanced aluminum sheet, plate, extruded and
architectural products that primarily advance the ground
transportation, aerospace, industrial, packaging, and commercial
building markets, since April 1, 2020. Mr. Henderson served as
interim chief executive officer of Adient from June 2018 to
September 2018. From 2010 until his retirement in December 2017,
Mr. Henderson served as chair and chief executive officer of
SunCoke Energy, Inc., a producer of coke, a principal raw material
in the blast furnace steelmaking process. Mr. Henderson held the
same positions at SunCoke Energy Partners GP LLC, the general
partner of SunCoke Energy Partners L.P., the publicly traded master
limited partnership of which SunCoke Energy, Inc. is a sponsor,
from 2013 to 2017. Mr. Henderson served as senior vice president of
Sunoco, Inc., a transportation fuel provider with interests in
logistics from September 2010, until SunCoke’s initial public
offering in 2011. From 1984 to 2009, Mr. Henderson served in
various executive management roles at General Motors, LLC, a global
automotive company, including president and chief executive officer
from April 2009 to December 2009, president and chief operating
officer from March 2008 to March 2009, and vice chair and chief
financial officer from January 2006 until February 2008.Since 2013,
Mr. Henderson has served as a director, and as chair of the
audit committee, of Marriott International, Inc., a multinational
diversified hospitality company that manages and franchises a broad
portfolio of hotels and related lodging facilities. From 2011 to
2014, Mr. Henderson served as a director and chair of the
audit committee of Compuware Corporation, an IT software company.
Mr. Henderson also is a trustee of the Alfred P. Sloan
Foundation, a not-for-profit grantmaking institution that supports
research and education in science, technology, engineering,
mathematics and economics, since 2008. Mr. Henderson brings
extensive corporate senior leadership and board leadership
experience to the Horizon Board, as well as operational experience
and broad financial expertise related to financial reporting,
accounting and compliance for public companies.
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Ryan L. Langdon
Director since
2019
Age 47
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Mr. Langdon was
appointed to our Board in April 2019. Mr. Langdon is currently
senior managing director and co-founder of Newport Global Advisors,
an alternative investment firm specializing in turnaround and
special situation investments, since 2005. Prior to the formation
of Newport Global Advisors, Mr. Langdon served in the High Yield
Group of AIG Global Investment Group, a business that provides
investment advice and markets its asset management products and
services, from 2002 to 2005, ultimately reaching the level of
managing director responsible for its distressed credit portfolio.
Mr. Langdon currently serves on the board of various privately held
businesses spanning multiple sectors, including automotive supply,
building products, industrial and consumer gases and cylinders, and
internet retail. Mr. Langdon has previously served on a variety of
privately held company boards relating to firm investments. Mr.
Langdon brings extensive financial management, business leadership
and financial turnaround expertise.
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Brett N. Milgrim
Director since
2019
Age 51
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Mr. Milgrim was
appointed to our Board in April 2019. Mr. Milgrim is currently
co-chair of the board of directors of Loar Group, Inc., a privately
held aerospace components manufacturer, since 2017. Mr. Milgrim
also serves as a director of Builders FirstSource, Inc., a
manufacturer of building materials and components for homebuilders
and contractors, since 1999, and PGT Innovations, Inc., a
manufacturer and supplier of residential impact-resistant windows
and doors, since his appointment in 2003. From 1997 until his
retirement in 2011, Mr. Milgrim served as managing director of
JLL Partners, Inc., a private equity firm focused on leveraged
buyout transactions and leveraged recapitalizations of mid-market
companies. Mr. Milgrim was previously an associate at Donaldson,
Lufkin & Jenrette Securities Corporation, a New York-based firm
providing investment banking and security brokerage services. Mr.
Milgrim brings extensive management and board experience in the
industrial manufacturing industry as well as financial and business
analytical experience.
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Debra S. Oler
Director since
2020
Age 65
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Ms. Oler was appointed to our
Board in March 2020. Ms. Oler served as senior vice
president/president, North American sales and service for W.W.
Grainger, Inc. (“Grainger”), a leading global supplier of
maintenance, repair and operating supplies for businesses and
institutions, from September 2014 through her retirement on
December 31, 2019. Ms. Oler previously held roles of increasing
responsibility with Grainger, including vice president sales from
2004 to 2009, and vice president/general manager from 2009 to
September 2014. Prior to joining Grainger, Ms. Oler gained
extensive sales and leadership experience with Alliant FoodService,
Inc., a broadline foodservice distributor, distributing dairy
products, seafood and Italian product lines, from 1996 to 2002, and
with Kraft Foods, a multinational confectionery, food and beverage
manufacturing and processing conglomerate, from 1986 to 1996. Ms.
Oler currently serves on the board of directors of Pool
Corporation, a position she has held since October 30, 2018. Ms.
Oler brings deep sales experience to the Horizon
Board.
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Mark D. Weber
Director since
2019
Age 62
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Mr. Weber was appointed to
our Board in April 2019, and was appointed Chair of Horizon
Global’s Governance Committee on November 13, 2019. Mr. Weber is
currently senior vice president and chief operating officer of
Federal Signal Corporation (“Federal Signal”), a global
manufacturer of environmental cleaning equipment, emergency
signaling systems and industrial warning equipment, since his
appointment in January 2018. Mr. Weber previously served as
president and chief executive officer of Supreme Industries, Inc.
(“Supreme”), a leading manufacturer of final mile dry freight and
refrigerated work trucks from May 2013 to September 2017, when
Supreme was sold to Wabash National Corporation. From 1996 to 2013,
Mr. Weber held various leadership positions with Federal Signal
including vice president, Sweeper Products, and president,
Environmental Solutions Group. Prior to 1996, Mr. Weber served as
director, Advanced Midrange Manufacturing for Cummins, a U.S.-based
global company in the design, manufacture and distribution of
engines, filtration and power generation products. Mr. Weber brings
extensive senior management experience leading companies in the
industrial and manufacturing sectors, business turnaround
leadership as well as deep operational expertise to the Horizon
Board.
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Harry J. Wilson
Director since
2019
Age 48
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Mr. Wilson was
appointed to our Board in April 2019. Mr. Wilson is currently the
founder and chief executive officer of MAEVA Group, LLC, a
turnaround and restructuring firm, which he founded in January
2011. Previously, Mr. Wilson served as a senior advisor on the
President’s Automotive Task Force from March 2009 to August 2009,
and as a partner at Silver Point Capital, a credit-oriented
investment fund, where he joined as a senior analyst in May 2003
and served until August 2008. From 1999 to 2003, Mr. Wilson worked
in the private equity group at The Blackstone Group, a private
equity firm. Mr. Wilson also held positions with Clayton, Dubilier
& Rice, a private equity firm, from 1995 to 1997, and Goldman
Sachs & Co. from 1993 to 1995. Mr. Wilson currently serves on a
number of nonprofit boards and has served as co-chair of MAEVA
Social Capital, Inc., a venture philanthropy organization focused
on early childhood development, since 2017. Mr. Wilson previously
served as a director of Sotheby’s, one of the world’s leading
auction houses, from May 2014 until October 2019, and as a director
of Visteon, an automotive supplier focused on automotive
electronics, from January 2011 through the expiration of his term
on June 3, 2020. From 2012 through 2013, Mr. Wilson previously
served on the board of Yahoo! Inc., one of the world’s leading
Internet media companies, and, from 2011 through 2014, Mr. Wilson
served on the board of YRC Worldwide, Inc., a leading provider of
transportation and global logistics services, as well as a number
of private company boards earlier in his career. Mr. Wilson brings
a great deal of turnaround and automotive industry experience to
the Horizon Board, as well as broad management, board, and
financial and analytical expertise.
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Board Leadership Structure and Management
On March 15,
2019, we entered into a Second Lien Term Facility Credit Agreement
(the “Second Lien Term Facility Agreement”) with Cortland Capital
Markets Services LLC, as administrative agent and collateral agent,
Corre Partners Management, L.L.C. (“Corre”), as representative of
the lenders, and the lenders party thereto (the “Second Lien
Lenders”). The Second Lien Lenders include Corre Opportunities
Qualified Master Fund, LP (“Corre Master Fund”), Corre Horizon
Fund, LP and Corre Opportunities II Master Fund, LP (collectively,
the Corre Lenders”). In connection therewith, on April 3, 2019, the
size of the Board increased from seven to nine directors, and in
April 2019, Messrs. Henderson, Kennedy, Langdon, Milgrim, Weber and
Wilson were appointed to fill the newly created directorships and
vacancies created from the director resignations of Richard L.
DeVore, Scott G. Kunselman, Richard D. Siebert and Maximiliane C.
Straub on April 2, 2019. Mr. Kennedy was appointed Chair of the
Board on April 3, 2019. The Chair oversees the planning of the
annual Board calendar and, in consultation with the other
directors, will schedule and set the agenda for meetings of the
Board and lead the discussions at such meetings. In addition, the
Chair provides guidance and oversight to other members of
management, helps with the formulation and implementation of our
strategic plans and acts as the Board’s liaison to the rest of
management. In this capacity, the Chair is actively engaged in
significant matters affecting us. The Chair also leads our annual
meetings of stockholders and performs such other functions and
responsibilities as requested by the Board from time to
time.
As part of its
oversight function, the Board monitors how management operates the
Company, in part via its committee structure. When granting
authority to management, approving strategies and receiving
management reports, the Board considers, among other things, the
risks and vulnerabilities the Company faces. The Audit Committee of
the Board (the “Audit Committee”) considers risk issues associated
with the Company’s overall financial reporting, disclosure process
and legal compliance, as well as reviews policies on risk control
assessment and accounting risk exposure. In addition to its
regularly scheduled meetings, the Audit Committee meets with the
corporate audit team, and the independent registered public
accounting firm in executive sessions at least quarterly, and with
the General Counsel and Chief Compliance Officer as determined from
time to time by the Audit Committee. Each of the Compensation
Committee of the Board (the “Compensation Committee”) and the
Governance Committee considers risk issues associated with the
substantive matters addressed by each such committee.
During 2019, the
Board held fourteen (14) meetings, the Audit Committee held seven
(7) meetings, the Compensation Committee held five (5) meetings,
and the Governance Committee held two (2) meetings.
The following
table sets forth the current committee member information for the
three standing committees of the Board:
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THE BOARD AND COMMITTEES - MEMBERSHIPS & MEETINGS
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BOARD
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AUDIT
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COMPENSATION
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GOVERNANCE
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Terrence G.
Gohl(1)
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Director
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John C.
Kennedy(2)
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Chair
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ü
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ü
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Frederick A.
“Fritz” Henderson(3)
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Director
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Chair
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Ryan L.
Langdon(3)
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Director
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ü
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Brett N.
Milgrim(3)
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Director
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ü
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Debra S.
Oler(4)
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Director
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ü
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ü
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David A.
Roberts(5)
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Director
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Chair
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Mark D.
Weber(6)
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Director
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ü
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Chair
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Harry J.
Wilson(3)
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Director
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ü
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ü
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______________________________________
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(1)
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Appointment effective
September 23, 2019.
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(2)
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Appointed to the Board and
Governance Committee April 3, 2019. Member of the Audit Committee
since March 3, 2020.
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(3)
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Appointed to the Board April
3, 2019 and Committee appointments effective April 16,
2019.
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(4)
|
Appointments effective March
3, 2020.
|
|
|
|
(5)
|
Chair of the Compensation
Committee from April 16, 2019 through the expiration of his term on
June 19, 2020.
|
|
|
|
(6)
|
Appointed to the Board April
3, 2019 and Committee appointments effective April 16, 2019. Chair
of the Governance Committee since November 13, 2019.
|
The Company’s
Board has determined, after considering all of the relevant facts
and circumstances, that Ms. Oler and Messrs. Henderson,
Kennedy, Langdon, Milgrim, Roberts, Weber and Wilson are (and
Messrs. DeVore, Kunselman and Siebert and Mses. Denise Ilitch and
Straub, who served as directors during 2019, were) “independent”
from management in accordance with the NYSE listing standards and
the Company’s Corporate Governance Guidelines (the “Governance
Guidelines”). To be considered independent, the Board must
determine that a director does not have any direct or indirect
material relationships with the Company and must meet the criteria
for independence set forth in the Company’s Governance
Guidelines.
During 2019, all
of the then-current directors attended at least 75%, in the
aggregate, of the meetings of the Board and all committees of the
Board on which they served. All directors are expected to attend
all meetings, as well as the Annual Meeting. In addition to
attending Board and committee meetings, directors fulfill their
responsibilities by consulting with the President and Chief
Executive Officer and other members of management on matters that
affect the Company.
Independent
directors hold regularly scheduled executive sessions in which they
meet without the presence of management. These executive sessions,
as chaired by the Board Chair, generally occur around regularly
scheduled meetings of the Board. For more information regarding the
Board and other corporate governance procedures, see
“Corporate
Governance.” For information on how you
can communicate with the Company’s non-management directors, see
“Communicating
with the Board.”
Audit Committee. The Audit Committee is
responsible for providing independent, objective oversight and
review of our auditing, accounting and financial reporting
processes, including reviewing the audit results and monitoring the
effectiveness of our internal audit function. In addition, the
Audit Committee is responsible for (1) selecting our
independent registered public accounting firm, (2) approving
the overall scope of the audit, (3) assisting the Board in
monitoring the integrity of our financial statements, our
independent registered public accounting firm’s qualifications and
independence, the performance of our independent registered public
accounting firm, and our internal audit function and compliance
with relevant legal and regulatory requirements, (4) annually
reviewing our independent registered public accounting firm’s
report describing the auditing firm’s internal quality control
procedures and any material issues raised by the most recent
internal quality control review, or peer review, of the auditing
firm, (5) discussing the annual audited financial and
quarterly statements with management and the independent registered
public accounting firm, (6) discussing earnings press releases
and any financial information or earnings guidance provided to
analysts and rating agencies, (7) discussing policies with
respect to risk assessment and risk management, (8) meeting
separately and periodically, with management, internal auditors and
the independent registered public accounting firm,
(9) reviewing with the independent auditor any audit problems
or difficulties and management’s response, (10) setting clear
hiring policies for employees or former employees of the
independent registered public accounting firm, (11) handling
such other matters that are specifically delegated to the Audit
Committee by applicable law or regulation or by the Board from time
to time, and (12) reporting regularly to the full Board. The
Audit Committee’s charter reflects such responsibilities and is
available on the Company’s website at
https://investors.horizonglobal.com/investors-corporate-governance.
Each of the
directors on the Audit Committee is financially literate. The Board
has determined that Mr. Henderson qualifies as an “audit committee
financial expert” within the meaning of Securities and Exchange
Commission (“SEC”) regulations and that each member on the Audit
Committee has the accounting and related financial management
expertise required by the NYSE listing standards and that each is
“independent” from management in accordance with NYSE listing
standards and the Company’s Governance Guidelines.
Compensation Committee. In general, the Compensation
Committee is generally responsible for monitoring and administering
our compensation and employee benefit plans and reviewing, among
other things, base salary levels, incentive awards and bonus
incentive awards for the Chief Executive Officer and other
executive officers, and such other matters that are specifically
delegated to the Compensation Committee by applicable law or
regulation, or by the Board from time to time. All of the members
of our Compensation Committee are expected to be independent under
the rules of NYSE and Rule 10C-1 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). The Compensation Committee’s
duties include, among other things, (1) reviewing and
approving our overall executive and director compensation
philosophy and the executive and director compensation programs to
support our overall business strategy and objectives,
(2) overseeing the management continuity and succession
planning process (except as otherwise within the scope of the
Governance Committee) with respect to our officers, and
(3) preparing any report on executive compensation required by
the applicable rules and regulations of the SEC and other
regulatory bodies. For more information, including the role of
executive officers and compensation consultants in determining or
recommending the amount or form of executive and director
compensation, see “Executive
Compensation.”
The Compensation
Committee’s charter reflects such responsibilities and is available
on the Company’s website, www.horizonglobal.com,
in the Corporate Governance subsection of the Investor Relations
section. Under the charter, the Compensation Committee may delegate
any of its responsibilities, subject to applicable law, to
subcommittees or other committees appointed by the Board. Under the
Company’s effective equity plan, the Compensation Committee may
delegate its authority thereunder, subject to applicable law, to
subcommittees, may delegate administrative duties and powers to
Compensation Committee members, Company officers or Company agents
or advisors, and may delegate on a limited basis the ability to
grant plan awards to certain employees to one or more officers of
the Company. The Board has determined that each of the members of
the Compensation Committee is “independent” from management in
accordance with NYSE listing standards (including those standards
particular to Compensation Committee membership) and the Company’s
Governance Guidelines.
Corporate Governance and Nominating Committee. The Governance Committee is
responsible for identifying and nominating individuals qualified to
serve as board members and recommending directors for each board
committee. The Board has determined that all of the members of the
Governance Committee are independent under the rules of NYSE.
Generally, the Governance Committee will re-nominate incumbent
directors who continue to satisfy its criteria for membership on
the Board, who it believes will continue to make important
contributions to the Board and who consent to continue their
service on the Board.
In recommending
candidates to the Board, the Governance Committee reviews the
experience, mix of skills and other qualities of a nominee to
assure appropriate Board composition after taking into account the
current Board members and the specific needs of the Company and the
Board. The Board looks for individuals who have demonstrated
excellence in their chosen field, high ethical standards and
integrity, and sound business judgment. The Governance Committee
does not have a formal policy with respect to diversity; however,
the Board and the Governance Committee believe that it is essential
that the Board members represent diverse viewpoints. As required by
the NYSE, SEC or such other applicable regulatory requirements, a
majority of the Board will be comprised of independent
directors.
The Governance
Committee does not solicit director nominations, but will consider
recommendations by stockholders with respect to elections to be
held at an Annual Meeting, so long as such recommendations are sent
on a timely basis to the Corporate Secretary of the Company and are
in accordance with the Company’s bylaws. The Governance Committee
will evaluate nominees recommended by stockholders against the same
criteria as other director nominees. See “How and
when may I submit a stockholder proposal or director nomination for
the 2021 Annual Meeting of Stockholders?” for more
information.
Ms. Oler was
identified as a potential director by the Governance Committee
through a third-party search firm.
The Governance
Committee’s charter reflects such responsibilities and is available
on the Company’s website at
https://investors.horizonglobal.com/investors-corporate-governance.
Compensation Committee Interlocks and Insider Participation.
During the
majority of 2019, our Compensation Committee consisted of Messrs.
Roberts, Kennedy, Weber and Wilson. Mr. Roberts was appointed Chair
of the Compensation Committee on April 16, 2019 and will continue
to serve in that role until the expiration of his term at the
Annual Meeting. Messrs. Kennedy, Weber and Wilson were appointed as
members of the Compensation Committee on April 16, 2019. Messrs.
Kunselman, DeVore, and Siebert, and Mses. Ilitch and Straub served
as members of the Compensation Committee until April 2, 2019, with
Mr. Kunselman serving as Chair of the Compensation Committee until
April 2, 2019. None of the individuals serving on our Compensation
Committee during 2019 is or has ever been an officer or employee of
the Company or any of our subsidiaries. None of our executive
officers currently serves or has served as a member of the board of
directors, compensation committee or other board committee
performing equivalent functions of another entity that has one or
more executive officers serving as one of our directors or on our
Compensation Committee. Given Mr. Kennedy’s interest in the Second
Lien Term Facility, he did not participate in the approval of
equity awards granted in 2019 to our officers and directors for
purposes of Rule 16b-3 of the Exchange Act.
Retirement Age; Term Limits. The Governance Guidelines
provide that a director is expected to submit his or her
resignation from the Board at the first annual meeting of
stockholders following the director’s 75th
birthday. The
Board may accept or reject such resignation in its discretion after
consultation with the Governance Committee. The Board has not
established term limits for the directors. The Governance
Guidelines are available on the Company’s website at
https://investors.horizonglobal.com/investors-corporate-governance.
Assessment of Board and Committee Performance. The Board evaluates its
performance annually. In addition, each Board committee performs an
annual self-assessment to determine its effectiveness. The results
of the Board and committee self-assessments are discussed with the
Board and each Committee, respectively.
DIRECTOR COMPENSATION
The Compensation
Committee is responsible for reviewing director compensation and
making recommendations to the Board with respect to that
compensation, as appropriate. The 2019 director compensation
program is described below.
Annual Cash Retainer and Meeting Fees. Prior to April 16, 2019, each
independent director’s compensation package included an annual cash
retainer of $80,000 (the “Annual Cash Retainer”). The chair of the
Board and the chairs of each of the Audit, Compensation and
Governance Committees were paid an additional annual cash retainer
in the amounts of $50,000, $15,000, $10,000 and $5,000,
respectively (each, an “Annual Chair Retainer”). The Annual Cash
Retainer and Annual Chair Retainer described above were prorated to
reflect any partial year of service. Additionally, prior to April
16, 2019, each director was paid $1,000 per Board or committee
meeting attended (the “Per Meeting Fees”).
Effective April
16, 2019, the Board eliminated the Annual Cash Retainer and the Per
Meeting Fees. The chair of the Board and the chairs of each of the
Audit, Compensation and Governance Committees continued to be paid,
quarterly in arrears, an Annual Chair Retainer in the amounts of
$50,000, $15,000, $10,000 and $5,000, respectively, in cash.
Effective March 30, 2020, each Annual Chair Retainer was
temporarily reduced by 20% during such period as executive officer
salaries are reduced by the same percentage. Directors who are also
employees of the Company are not paid any additional cash
compensation for serving as directors.
Equity Compensation. Prior to April 16, 2019, each
independent director’s compensation package included an annual
grant of restricted stock units with a grant date fair market value
of $80,000, with each grant generally subject to such director’s
continued service on the Board, and a vesting period of one
year.
Effective April
16, 2019, simultaneously with the elimination of the Annual Cash
Retainer and the Per Meeting Fees, the Board approved an increase
to each director’s annual grant of restricted stock units. Each
independent director received an annual grant of restricted stock
units with a grant date fair market value of $160,000, with each
grant generally subject to such director’s continued service on the
Board, and a vesting period of one year. In addition, on September
10, 2019, Mr. Kennedy, the Chair of the Board, received an
additional grant of restricted stock units in recognition of his
extraordinary efforts as the Chair of the Board,
including in
connection with the sale of the Company’s Asia Pacific (“APAC”)
operating segment. These additional restricted stock units have a
grant date fair market value of $125,000, and are generally subject
to Mr. Kennedy’s continued service on the Board, and a vesting
period of one year. Directors who are also employees of the Company
do not receive any additional equity compensation for serving as
directors.
Effective May 13,
2020, the Board modified the non-employee director compensation
program by (1) reinstating the $80,000 Annual Cash Retainer
(temporarily reduced by 20% during such period as executive officer
salaries are reduced by the same percentage), and (2) decreasing
the target annual restricted stock unit grant value to
$80,000. These changes were made in recognition of the share
limitations under the proposed Horizon Global Corporation 2020
Equity and Incentive Compensation Plan, as well as the ongoing
uncertainty surrounding the COVID-19 pandemic and the related
salary reductions experienced by our executive officers and
employees in our Americas region (as further described below under
“Executive
Compensation”).
Director Stock Ownership. Under the stock ownership
guidelines in effect prior to April 16, 2019 (the “Prior Ownership
Guidelines”), independent directors were required to own, within
five years after initial election to the Board as an independent
director, shares of Common Stock having a value equal to or greater
than three times their Annual Cash Retainer (excluding Annual Chair
Retainers). Unrestricted stock, time-based restricted stock,
time-based restricted stock units and vested in-the-money options
are (or would be) counted toward fulfillment of this ownership
requirement. New independent directors had five years from the time
they were elected to the Board to meet the Prior Ownership
Guidelines.
Effective April
16, 2019, the Board approved amendments to the stock ownership
guidelines for our independent directors (the “Amended Ownership
Guidelines”). Subject to terms contained in the Amended Ownership
Guidelines, independent directors are required to hold shares of
Common Stock having a value greater than or equal to $250,000
within five years after election to the Board as an independent
director. If an independent director does not meet the Amended
Ownership Guidelines, the Compensation Committee may consider such
fact when determining the grant of future equity awards to such
director.
All independent directors are
within the five-year window to meet the Amended Ownership
Guidelines.
Indemnification. The Company has entered into
indemnification agreements with each of its directors. These
agreements require the Company to indemnify such individuals for
certain liabilities to which they may become subject as a result of
their affiliation with the Company.
Other. The
Company reimburses all directors for reasonable travel expenses
incurred when attending Board and committee meetings. The Company
does not provide any perquisites to directors. In 2018, the Board
approved a Non-Employee Director Deferred Compensation Plan,
pursuant to which independent directors may defer cash or equity
compensation (the “Deferred Compensation Plan”). No independent
directors participated in the Deferred Compensation Plan during
2019.
2019 Director Compensation Table
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|
|
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|
|
|
|
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|
|
Name(1)
|
|
Fees
Earned
or Paid in
Cash
($)
|
|
Stock
Awards
($) (2)
|
|
Total
($)
|
|
Richard L.
DeVore(4)
|
|
$
|
31,750
|
|
|
$
|
—
|
|
|
$
|
31,750
|
|
|
Frederick A.
Henderson
|
|
$
|
11,250
|
|
|
$
|
160,000
|
|
|
$
|
171,250
|
|
|
Denise
Ilitch(4)
|
|
$
|
42,750
|
|
|
$
|
160,000
|
|
|
$
|
202,750
|
|
|
John C. Kennedy
|
|
$
|
37,500
|
|
|
$
|
285,002
|
|
|
$
|
322,502
|
|
|
Scott G.
Kunselman(4)
|
|
$
|
32,500
|
|
|
$
|
—
|
|
|
$
|
32,500
|
|
|
Ryan L.
Langdon(5)
|
|
$
|
—
|
|
|
$
|
160,000
|
|
|
$
|
160,000
|
|
|
Brett N. Milgrim
|
|
$
|
—
|
|
|
$
|
160,000
|
|
|
$
|
160,000
|
|
|
David A.
Roberts(3)
|
|
$
|
29,000
|
|
|
$
|
160,000
|
|
|
$
|
189,000
|
|
|
Richard D.
Siebert(4)
|
|
$
|
31,250
|
|
|
$
|
—
|
|
|
$
|
31,250
|
|
|
Maximiliane C.
Straub(4)
|
|
$
|
29,000
|
|
|
$
|
—
|
|
|
$
|
29,000
|
|
|
Mark D. Weber
|
|
$
|
1,250
|
|
|
$
|
160,000
|
|
|
$
|
161,250
|
|
|
Harry J. Wilson
|
|
$
|
—
|
|
|
$
|
160,000
|
|
|
$
|
160,000
|
|
_______________________________________
|
|
|
(1)
|
Messrs. Henderson,
Kennedy, Langdon, Milgrim, Weber, and Wilson were appointed April
3, 2019, and Messrs. DeVore, Kunselman and Siebert and Ms. Straub
resigned April 2, 2019.
|
|
|
|
(2)
|
The amounts in
this column reflect the grant date fair value computed in
accordance with Financial Accounting Standards Board Accounting
Standards Codification Topic 718 (“FASB ASC Topic 718”) of the
restricted stock unit awards made to our non-employee directors
during 2019. Messrs. Henderson, Kennedy, Langdon, Milgrim, Roberts,
Weber, and Wilson and Ms. Ilitch each received 44,199 restricted
stock units effective on May 15, 2019. Mr. Kennedy received an
additional 27,840 restricted stock units effective September 10,
2019. These awards were granted under the Company’s Amended and
Restated 2015 Equity and Incentive Compensation Plan (the “Amended
2015 Plan”).
|
|
|
|
(3)
|
Mr. Roberts will
not stand for reelection at the Annual Meeting.
|
|
|
|
(4)
|
Messrs. DeVore,
Kunselman and Siebert and Ms. Straub resigned April 2, 2019, and
each had the vesting of their outstanding 14,035 restricted stock
units accelerated to such date. Ms. Ilitch resigned from the Board
effective July 22, 2019, resulting in the cancellation of 44,199
unvested restricted stock units.
|
|
|
|
(5)
|
Mr. Langdon
assigned his restricted stock units to Newport Global Advisors
LP.
|
As of December
31, 2019, there were 44,199 restricted stock units outstanding for
each of Messrs. Henderson, Langdon, Milgrim, Roberts, Weber and
Wilson, and 72,039 restricted stock units outstanding for Mr.
Kennedy. There were no outstanding restricted stock units for any
of the remaining non-employee directors.
Corporate Governance
The Board has
adopted Governance Guidelines. These guidelines address, among
other things, director responsibilities, qualifications (including
independence), compensation and access to management and advisors.
The Governance Committee is responsible for overseeing and
reviewing these guidelines and recommending any changes to the
Board.
The Spirit and The Letter. Effective as of July 1, 2015,
the Board adopted the Company’s code of conduct, titled “The Spirit
and The Letter,” which applies to all directors and employees,
including the Company’s principal executive officer, principal
financial officer, and other persons performing similar executive
management functions. The Spirit and The Letter is posted on the
Company’s website at
https://investors.horizonglobal.com/investors-corporate-governance.
All amendments to The Spirit and The Letter, if any, will be also
posted on the Company’s website, along with all waivers, if any, of
The Spirit and The Letter involving senior officers.
A copy of the
Company’s committee charters, Governance Guidelines and The Spirit
and The Letter will be sent to any stockholder, without charge,
upon written request sent to the Company’s executive offices:
Horizon Global Corporation, Attention: General Counsel, Chief
Compliance Officer and Corporate Secretary, 47912 Halyard Drive,
Suite 100, Plymouth, Michigan 48170.
Communicating with the Board
Any stockholder
or interested party who desires to communicate with the Board or
any specific director, including the Chair, non-management
directors or committee members, may write to: Horizon Global
Corporation, Attention: Board of Directors, 47912 Halyard Drive,
Suite 100, Plymouth, Michigan 48170.
Depending on the
subject matter of the communication, management will:
|
|
|
▪
|
forward the
communication to the director or directors to whom it is addressed
(matters addressed to the Chair of the Audit Committee will be
forwarded unopened directly to the Board Chair);
|
|
|
|
▪
|
attempt to handle
the inquiry directly where the communication does not appear to
require direct attention by the Board or an individual member,
e.g., the communication is a request for information about the
Company or is a stock-related matter; or
|
|
|
|
▪
|
not forward the
communication if it is primarily commercial in nature or if it
relates to an improper or irrelevant topic.
|
To submit
concerns regarding accounting matters, stockholders, employees and
other interested persons may also call the Company’s applicable
toll free, hotline number (for US callers: (844) 472-2428)
published at https://investors.horizonglobal.com/compliance.
Concerns may be expressed on a confidential and anonymous
basis.
Communications
made through the hotline are reviewed by the Audit Committee at
each regularly scheduled meeting; other communications will be made
available to directors at any time upon their request.
PROPOSAL 2 — APPROVAL OF THE HORIZON GLOBAL CORPORATION 2020 EQUITY
AND INCENTIVE COMPENSATION PLAN
THE COMPANY’S BOARD RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR”
THE APPROVAL OF THE HORIZON GLOBAL CORPORATION 2020 EQUITY AND
INCENTIVE COMPENSATION PLAN.
Overview
We are asking
stockholders to approve the Horizon Global Corporation 2020 Equity
and Incentive Compensation Plan (the “2020 Plan”). Our Board of
Directors is recommending that the Company’s stockholders vote in
favor of the 2020 Plan, which will succeed the Horizon Global
Corporation 2015 Equity and Incentive Compensation Plan (including
as amended or amended and restated, the “Predecessor Plan”). The
Predecessor Plan has shares remaining available for new awards as
of the date of this proxy statement, but if the 2020 Plan is
approved by our stockholders, no further grants will be made under
the Predecessor Plan. However, outstanding awards under the
Predecessor Plan will generally continue in effect in accordance
with their terms.
The 2020 Plan
will continue to afford the Compensation Committee the ability to
design compensatory awards that are responsive to the Company’s
needs and includes authorization for a variety of awards designed
to advance the interests and long-term success of the Company by
encouraging stock ownership among officers and other employees of
the Company and its subsidiaries, certain consultants or other
service providers to the Company and its subsidiaries, and
non-employee directors of the Company.
Stockholder
approval of the 2020 Plan would constitute approval of 3,800,752
shares of common stock, par value $0.01 per share, of the Company
(“Common Stock”), plus shares of Common Stock remaining available
under the Predecessor Plan as of the effective date of the 2020
Plan, as described below, with such amount subject to adjustment,
including under the 2020 Plan share counting rules. If the 2020
Plan is approved by stockholders, it will be effective as of the
day of the Annual Meeting. If the 2020 Plan is not approved by our
stockholders, no awards will be made under the 2020 Plan, and the
Predecessor Plan will remain in effect.
The actual text
of the 2020 Plan is attached to this proxy statement as Appendix A.
The following description of the 2020 Plan is only a summary of its
principal terms and provisions and is qualified by reference to the
actual text as set forth in Appendix A.
Why We Believe You Should Vote for Proposal 2
The 2020 Plan
authorizes the Compensation Committee to provide cash awards and
equity-based compensation in the form of stock options, stock
appreciation rights (“SARs”), restricted shares, restricted stock
units (“RSUs”), performance shares, performance units, dividend
equivalents, and certain other awards, including those denominated
or payable in, or otherwise based on, Common Stock, for the purpose
of providing our non-employee directors, officers and other
employees of the Company and its subsidiaries, and certain
consultants and other service providers of the Company and its
subsidiaries, incentives and rewards for service and/or
performance. Some of the key features of the 2020 Plan that reflect
our commitment to effective management of equity and incentive
compensation are set forth below in this subsection.
Company Strategy
Approval of the
2020 Plan is critical to the implementation of our multi-year
business strategy, as the Company’s continued ability to grant
equity-based incentives:
|
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•
|
helps motivate
exceptional employee behavior that can drive achievement of new
strategic priorities and increased stockholder return that are
critical to the success of our multi-year strategy;
|
|
|
|
•
|
aligns employee
and stockholder interests in the creation of stockholder
value;
|
|
|
|
•
|
drives employees
to achieve long-term financial and operational goals;
|
|
|
|
•
|
promotes a focus
on long-term value creation, because our equity compensation awards
are subject to vesting and/or performance criteria;
and
|
|
|
|
•
|
fosters a
pay-for-performance culture that is an important element of our
overall compensation philosophy.
|
The 2020 Plan is
intended to replenish our equity reserves following significant
refreshment of the Company’s leadership team. Stockholder interests
in the future of the Company could be seriously jeopardized if the
Company were unable to use equity grants as of part of its employee
and director compensation programs. If the 2020 Plan is not
approved, we may be compelled to increase significantly the cash
component of our employee and director compensation, which approach
may not necessarily align employee and director compensation
interests with the investment interests of our stockholders.
Replacing equity awards with cash also would increase cash
compensation expense and use cash that could be better
utilized.
Horizon Global Leadership
As noted in the
Executive Compensation section, Horizon Global continued to
experience leadership transition in 2019. With the new appointment
of five key leadership positions, Horizon Global emphasizes
variable and performance-based incentive compensation for our
senior executives, which is consistent with competitive market
practices in our industry and essential in the Company’s ability to
attract, retain and motivate executive talent needed to lead us
through this period of business transformation. Because we utilize
responsible share counting principles in administering our equity
compensation program, we count the maximum possible payout of
performance-based awards against our share reserves until the
awards are earned (even though the ultimate payout may be less, or
even zero). As a result, our available share pool is significantly
impacted by the number of shares reserved for performance-based
awards.
In a time of
global crisis and significant market uncertainty, in order to have
an appropriate supply of shares available for future equity awards
to attract, retain, and motivate the team responsible for achieving
our new strategic business priority, the Board recommends that our
stockholders approve the 2020 Plan.
Share Usage Information
On May 8, 2018,
the date our stockholders approved the most recent amendment and
restatement of the Predecessor Plan, the closing price of the
Common Stock on the NYSE was $5.69 per share. However, on the
grant valuation dates for our 2019 and 2020 regular annual equity
awards under the Predecessor Plan, the closing price of the Common
Stock on the NYSE was substantially lower: $3.00 per share on
March 4, 2019 and $3.22 per share on March 3, 2020. As a
result, in order to provide the level of value under our long-term
incentive program that we believed was necessary to retain key
employees, the number of shares subject to our 2019 and 2020 equity
awards was significantly higher than we had anticipated at the time
the most recent amendment and restatement of the Predecessor Plan
was approved.
As of May 1,
2020, only 274,248 shares of Common Stock remained available for
issuance under the Predecessor Plan.
The following
includes aggregated information regarding our view of the overhang
and dilution associated with the Predecessor Plan and the potential
dilution associated with the 2020 Plan. This information is as of
May 1, 2020. As of that date, there were approximately 25,472,634
shares of Common Stock outstanding:
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•
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Outstanding
full-value awards (time-based RSUs and performance-based RSUs based
on maximum performance): 3,372,603 shares (approximately 13.2% of
our outstanding shares of Common Stock, reflecting the simple
dilution of the holders of Common Stock);
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•
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Outstanding stock
options: 18,961 shares (less than 0.1% of our outstanding shares of
Common Stock, reflecting the simple dilution of the holders of
Common Stock) (outstanding stock options have a weighted average
exercise price of $10.43 and a weighted average remaining term of
5.7 years);
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•
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In summary, total
shares of Common Stock subject to outstanding awards, as described
above (full-value awards and stock options): 3,391,564 shares
(approximately 13.3% of our outstanding shares of Common Stock,
reflecting the simple dilution of the holders of Common
Stock);
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•
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Total shares of
Common Stock available for future awards under the Predecessor
Plan: 274,248 shares (approximately 1.1% of our outstanding shares
of of Common Stock, reflecting the simple dilution of the holders
Common Stock) (however, as noted above, no further grants will be
made under the Predecessor Plan upon the effective date of the 2020
Plan, so we view the remaining shares under the Predecessor Plan as
“rolling into” the new 2020 Plan based on the design of the new
2020 Plan);
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•
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The total number
of shares of Common Stock subject to outstanding awards (3,391,564
shares), plus the total number of shares of Common Stock available
for future awards under the Predecessor Plan (274,248 shares),
represents a current overhang percentage of approximately 14.4% (in
other words, the potential dilution of the holders of Common Stock
represented by the Predecessor Plan);
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•
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Proposed
additional shares of Common Stock available for awards under the
2020 Plan: 3,800,752 shares (approximately 15.0% of our outstanding
shares of Common Stock - this percentage reflects the simple
dilution of the holders of Common Stock that would occur if the
2020 Plan is approved); and
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•
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The total shares
of Common Stock subject to outstanding awards as of May 1, 2020
(3,391,564 shares), plus the proposed shares of Common Stock
available for future awards under the 2020 Plan (the 274,248 shares
of Common Stock that remain available under the Predecessor Plan,
plus 3,800,752 additional shares), represent an approximate total
overhang of 7,466,564 shares (approximately 22.7%) under the 2020
Plan (this percentage reflects the total fully diluted
overhang).
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Based on the
closing price on the NYSE for our Common Stock on May 1, 2020 of
$1.85 per share, the aggregate market value as of May 1, 2020 of
the additional 3,800,752 shares of Common Stock requested under the
2020 Plan was $7,031,391.
The following
table sets forth information regarding stock-settled, time-vested
equity awards granted, and performance-based equity awards earned,
over each of the last three fiscal years:
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2019
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2018
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2017
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3-Year
Average
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Stock Options/Stock
Appreciation Rights (SARs) Granted
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0
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0
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0
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Stock-Settled Time-Vested
Restricted Shares/Units Granted
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1,092,939
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332,960
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112,558
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Stock-Settled
Performance-Based Shares/Units Earned*
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0
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0
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0
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Weighted-Average Basic Common
Shares Outstanding
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25,297,576
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25,053,013
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24,781,349
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Share Usage
Rate
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4.3%
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1.3%
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0.5%
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2.0%
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*With respect to
performance-based shares/units in the table above, we calculate the
share usage rate based on the applicable number of shares earned
each year. For reference, the performance-based shares/units
granted during the foregoing 3-year period were as follows: 857,357
shares in 2019, 145,003 shares in 2018 and 72,865 shares in
2017.
Our burn rates in
2019 and 2018 were each higher than our burn rate in 2017 due, in
large part, to the changes in our leadership structure and
management team in connection with our business
transformation.
In determining
the number of shares to request for approval under the 2020 Plan,
our management team worked with the Compensation Committee and
Frederic W. Cook & Co., Inc. to evaluate a number of factors,
including our recent share usage and criteria expected to be
utilized by institutional proxy advisory firms in evaluating our
proposal for the 2020 Plan.
If the 2020 Plan
is approved, we intend to utilize the shares authorized under the
2020 Plan to continue our practice of incentivizing key individuals
through equity grants. We currently anticipate that the shares
requested in connection with the approval of the 2020 Plan will
last through 2021, based on our historic grant rates and the
approximate current share price, but could last for a different
period of time if actual practice does not match recent rates or
our share price changes materially. As noted below, our
Compensation Committee retains full discretion under the 2020 Plan
to determine the number and amount of awards to be granted under
the 2020 Plan, subject to the terms of the 2020 Plan, and future
benefits that may be received by participants under the 2020 Plan
are not determinable at this time.
We believe that
we have demonstrated a commitment to sound equity compensation
practices in recent years. We recognize that equity compensation
awards dilute stockholders’ equity, so we have carefully managed
our equity incentive compensation. Our equity compensation
practices are intended to be competitive and consistent with market
practices, and we believe our historical share usage has been
responsible and mindful of stockholder interests, as described
above.
In evaluating
this proposal, stockholders should consider all of the information
in this proposal.
2020 Plan Highlights
Below are certain
highlights of the 2020 Plan. These features of the 2020 Plan are
designed to reinforce alignment between equity compensation
arrangements awarded pursuant to the 2020 Plan and stockholders’
interests, consistent with sound corporate governance
practices:
Reasonable 2020 Plan Limits. Generally, awards under the
2020 Plan are limited to 3,800,752 shares of Common Stock, plus the
total number of shares of Common Stock remaining available for
awards under the Predecessor Plan as of the effective date of the
2020 Plan, plus the shares of Common Stock that are subject to
awards granted under the 2020 Plan or the Predecessor Plan that are
added (or added back, as applicable) to the aggregate number of
shares of Common Stock available under the 2020 Plan pursuant to
the share counting rules of the 2020 Plan. This design means that
we are essentially “rolling into” the new 2020 Plan the shares that
we have remaining under the Predecessor Plan. These shares may be
shares of original issuance or treasury shares, or a combination of
the two.
Non-Employee Director Compensation Limit. The 2020 Plan provides that
in no event will any non-employee director in any one calendar year
be granted compensation for such service having an aggregate
maximum value (measured at the date of grant, as applicable, and
calculating the value of any awards based on the grant date fair
value for financial reporting purposes) in excess of $500,000. The
independent members of the Board may make exceptions to this limit
up to an additional $200,000 for a non-
executive chair
of the Board, provided that the non-employee director receiving
such additional compensation may not participate in the decision to
award such compensation.
Other Limits. The 2020 Plan also provides
that, subject as applicable to adjustment and the applicable Common
Stock counting provisions as described in the 2020 Plan, the
aggregate number of shares of Common Stock actually issued or
transferred upon the exercise of Incentive Stock Options (as
defined below) will not exceed 3,800,752 shares of Common
Stock.
Share Recycling Provisions. Subject to certain
exceptions described in the 2020 Plan, if any award granted under
the 2020 Plan (in whole or in part) is cancelled or forfeited,
expires, is settled for cash, or is unearned, the shares of Common
Stock subject to such award will, to the extent of such
cancellation, forfeiture, expiration, cash settlement, or unearned
amount, again be available under the 2020 Plan. Additionally, if
after the effective date of the 2020 Plan, any shares of Common
Stock subject to an award granted under the Predecessor Plan are
forfeited, or an award granted under the Predecessor Plan (in whole
or in part) is cancelled or forfeited, expires, is settled in cash,
or is unearned, the shares of Common Stock subject to such award
will, to the extent of such cancellation, forfeiture, expiration,
cash settlement, or unearned amount, be available for awards under
the 2020 Plan. Notwithstanding anything else in the 2020 Plan, the
following share recycling rules apply under the 2020
Plan:
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Shares of Common
Stock withheld by us, tendered or otherwise used in payment of the
exercise price of a stock option granted under the 2020 Plan or the
Predecessor Plan will not be added (or added back, as applicable)
to the aggregate number of shares of Common Stock available under
the 2020 Plan;
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•
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Shares of Common
Stock withheld by us, tendered or otherwise used to satisfy tax
withholding with respect to awards (other than as described in the
next bullet) will not be added (or added back, as applicable) to
the aggregate number of shares of Common Stock available under the
2020 Plan;
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•
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Shares of Common
Stock withheld by us, tendered or otherwise used to satisfy tax
withholding with respect to awards other than stock options or SARs
granted under the 2020 Plan or the Predecessor Plan will be added
back to the aggregate number of shares of Common Stock available
under the 2020 Plan (provided that such recycling of Common Stock
for tax withholding purposes will be limited to 10 years from the
date of stockholder approval of the 2020 Plan if such recycling
involves Common Stock that has actually been issued by the
Company);
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•
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Shares of Common
Stock subject to a share-settled SAR that are not actually issued
in connection with the settlement of such SAR on exercise will not
be added (or added back, as applicable) to the aggregate number of
shares of Common Stock available under the 2020 Plan;
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•
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Shares of Common
Stock reacquired by the Company on the open market or otherwise
using cash proceeds from the exercise of stock options will not be
added (or added back, as applicable) to the aggregate number of
shares of Common Stock available under the 2020 Plan;
and
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•
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If a participant
elects to give up the right to receive compensation in exchange for
shares of Common Stock based on fair market value, such shares of
Common Stock will not count against the aggregate number of shares
available under the 2020 Plan.
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Minimum Vesting Requirement. Awards granted under the
2020 Plan (other than cash-based awards) will vest no earlier than
the first anniversary of the applicable grant date, except that the
following awards will not be subject to such minimum vesting
requirement: (1) awards granted in connection with certain awards
that are assumed, converted or substituted in connection with a
corporate acquisition or merger transaction as described in the
2020 Plan; (2) shares of Common Stock delivered in lieu of fully
vested cash obligations; (3) awards to non-employee directors that
vest on the earlier of the one-year anniversary of the applicable
grant date and the next annual meeting of stockholders which is at
least 50 weeks after the immediately preceding year’s annual
meeting of stockholders; and (4) any additional awards the
Compensation Committee may grant, up to a maximum of five percent
(5%) of the available share reserve authorized for issuance under
the 2020 Plan (subject to adjustment as described in the 2020
Plan). This minimum vesting requirement does not preclude the
Committee, in its sole discretion, from providing for continued
vesting or accelerated vesting for any award under the 2020 Plan
upon certain events, including in connection with or following a
participant’s death, disability, or termination of service or a
change in control, or exercising its discretionary vesting
authority (as described in the 2020 Plan) at any time following the
grant of an award.
No Repricing Without Stockholder Approval. Outside of certain
corporate transactions or adjustment events described in the 2020
Plan or in connection with a “change in control,” the exercise or
base price of stock options and SARs cannot be reduced, nor can
“underwater” stock options or SARs be cancelled in exchange for
cash or replaced with other awards with a lower exercise or base
price, without stockholder approval under the 2020
Plan.
Change in Control Definition. The 2020 Plan includes a
non-liberal definition of “change in control,” which is described
below.
Exercise or Base Price Limitation. The 2020 Plan also provides
that, except with respect to certain converted, assumed or
substituted awards as described in the 2020 Plan, no stock options
or SARs will be granted with an exercise or base price less than
the fair market value of a share of Common Stock on the date of
grant.
Dividends and Dividend Equivalents. The 2020 Plan provides that
dividends and dividend equivalents on 2020 Plan awards will be
deferred until, and paid contingent upon, the vesting or earning of
such awards. The 2020 Plan does not allow for dividends or dividend
equivalents on stock options or SARs.
Clawback Provisions. The 2020 Plan provides that
awards under the 2020 Plan may be made subject to a clawback policy
of the Company or otherwise provide for recoupment by the Company
in the event that a grantee engages in detrimental activity, as
provided in the documents governing the awards or the applicable
clawback policy.
Summary of Other Material Terms of the 2020 Plan
Administration. The 2020 Plan will
generally be administered by the Compensation Committee (or its
successor), or any other committee of the Board of Directors
designated by the Board of Directors to administer the 2020 Plan.
References to the “Committee” in this proposal refer to the
Compensation Committee or such other committee designated by the
Board of Directors, as applicable. The Board may also grant awards
under the 2020 Plan to non-employee directors and administer the
2020 Plan with respect to those awards.
The Committee may
from time to time delegate all or any part of its authority under
the 2020 Plan to a subcommittee. Any interpretation, construction
and determination by the Committee of any provision of the 2020
Plan, or of any agreement, notification or document evidencing the
grant of awards under the 2020 Plan, will be final and conclusive.
To the extent permitted by applicable law, the Committee may
delegate to one or more of its members or to one or more officers,
or to one or more agents or advisors of the Company, such
administrative duties or powers as it deems advisable. In addition,
the Committee may by resolution, subject to certain restrictions
set forth in the 2020 Plan, authorize one or more officers of the
Company to (1) designate employees to be recipients of awards under
the 2020 Plan, and (2) determine the size of such awards. However,
the Committee may not delegate such responsibilities to officers
for awards granted to non-employee directors or certain employees
who are subject to the reporting requirements of Section 16 of the
Exchange Act of 1934. The Committee is authorized to take
appropriate action under the 2020 Plan subject to the express
limitations contained in the 2020 Plan.
Eligibility. Any person who is selected
by the Committee to receive benefits under the 2020 Plan and who is
at that time an officer or other employee of the Company or any of
its subsidiaries (including a person who has agreed to commence
serving in such capacity within 90 days of the date of grant) is
eligible to participate in the 2020 Plan. In addition, certain
persons (including consultants) who provide services to the Company
or any of its subsidiaries that are equivalent to those typically
provided by an employee (provided that such persons satisfy the
Form S-8 definition of “employee”), and non-employee directors of
the Company, may also be selected by the Committee to participate
in the 2020 Plan. As of May 1, 2020, the Company had approximately
3,600 employees, and eight non-employee directors. Although the
2020 Plan permits grants to consultants, the Company does not
currently have any consultants that it expects to be eligible to
participate in the 2020 Plan. The basis for participation in the
2020 Plan by eligible persons is the selection of such persons by
the Committee (or its authorized delegate) in its
discretion.
Shares Available for Awards under the 2020 Plan. Subject to adjustment as
described in the 2020 Plan and the 2020 Plan share counting rules,
the number of shares of Common Stock available under the 2020 Plan
for awards of:
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•
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performance
shares or performance units;
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•
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other share-based
awards under the 2020 Plan; or
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•
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dividend
equivalents paid with respect to awards under the 2020
Plan;
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will not exceed,
in the aggregate, 3,800,752 shares of Common Stock, plus the total
number of shares of Common Stock remaining available for awards
under the Predecessor Plan as of the effective date of the 2020
Plan, plus the shares of Common Stock that are subject to awards
granted under the 2020 Plan or the Predecessor Plan that are added
(or added back, as applicable) to the aggregate number of shares of
Common Stock available under the 2020 Plan pursuant to the share
counting rules of the 2020 Plan. This design means that we are
essentially “rolling into” the new 2020 Plan the shares that we
have remaining under the Predecessor Plan.
Share Counting. Generally, the aggregate
number of shares of Common Stock available under the 2020 Plan will
be reduced by one share of Common Stock for every one share of
Common Stock subject to an award granted under the 2020 Plan.
Additionally, if after the effective date of the 2020 Plan, any
shares of Common Stock subject to an award granted under the 2020
Plan or the Predecessor Plan are forfeited, or an award granted
under the 2020 Plan or the Predecessor Plan (in whole or in part)
is cancelled or forfeited, expires, is settled for cash, or is
unearned, the shares of Common Stock subject to such award will, to
the extent of such cancellation, forfeiture, expiration, cash
settlement, or unearned amount, be available for awards under the
2020 Plan.
Types of Awards Under the 2020 Plan. Pursuant to the 2020 Plan,
the Company may grant cash awards and stock options (including
stock options intended to be “incentive stock options” as defined
in Section 422 of the Code (“Incentive Stock Options”)),
SARs,
restricted
shares, RSUs, performance shares, performance units, and certain
other awards based on or related to our Common Stock.
Generally, each
grant of an award under the 2020 Plan will be evidenced by an award
agreement, certificate, resolution or other type or form of writing
or other evidence approved by the Committee (an “Evidence of
Award”), which will contain such terms and provisions as the
Committee may determine, consistent with the 2020 Plan. A brief
description of the types of awards which may be granted under the
2020 Plan is set forth below.
Stock Options. A stock option is a right
to purchase shares of Common Stock upon exercise of the stock
option. Stock options granted to an employee under the 2020 Plan
may consist of either an Incentive Stock Option, a non-qualified
stock option that is not intended to be an “incentive stock option”
under Section 422 of the Code, or a combination of both. Incentive
Stock Options may only be granted to employees of the Company or
certain of our related corporations. Except with respect to awards
issued in substitution for, in conversion of, or in connection with
an assumption of stock options held by awardees of an entity
engaging in a corporate acquisition or merger with us or any of our
subsidiaries, Incentive Stock Options and non-qualified stock
options must have an exercise price per share that is not less than
the fair market value of a share of Common Stock on the date of
grant. The term of a stock option may not extend more than 10 years
from the date of grant. The Committee may provide in an Evidence of
Award for the automatic exercise of a stock option.
Each grant of a
stock option will specify the applicable terms of the stock option,
including the number of shares of Common Stock subject to the stock
option and the required period or periods of the participant’s
continuous service, if any, before any stock option or portion of a
stock option will become exercisable. Stock options may provide for
continued vesting or the earlier vesting of such stock options,
including in the event of the retirement, death, disability or
termination of employment or service of a participant or in the
event of a change in control.
Any grant of
stock options may specify management objectives regarding the
vesting of the stock options. Each grant will specify whether the
consideration to be paid in satisfaction of the exercise price will
be payable: (1) in cash, by check acceptable to the Company, or by
wire transfer of immediately available funds; (2) by the actual or
constructive transfer to the Company of shares of Common Stock
owned by the participant with a value at the time of exercise that
is equal to the total exercise price; (3) subject to any conditions
or limitations established by the Committee, by a net exercise
arrangement pursuant to which the Company will withhold shares of
Common Stock otherwise issuable upon exercise of a stock option;
(4) by a combination of the foregoing methods; or (5) by such other
methods as may be approved by the Committee. To the extent
permitted by law, any grant may provide for deferred payment of the
exercise price from the proceeds of a sale through a bank or broker
of some or all of the shares to which the exercise relates. Stock
options granted under the 2020 Plan may not provide for dividends
or dividend equivalents.
SARs. The
Committee may, from time to time and upon such terms and conditions
as it may determine, authorize the granting of SARs. A SAR is a
right to receive from us an amount equal to 100%, or such lesser
percentage as the Committee may determine, of the spread between
the base price and the value of our Common Stock on the date of
exercise.
Each grant of
SARs will specify the period or periods of continuous service, if
any, by the participant with the Company or any subsidiary that is
necessary before the SARs or installments of such SARs will become
exercisable. SARs may provide for continued vesting or the earlier
vesting of such SARs, including in the event of the retirement,
death, disability or termination of employment or service of a
participant or in the event of a change in control. Any grant of
SARs may specify management objectives regarding the vesting of
such SARs. A SAR may be paid in cash, Common Stock or any
combination of the two.
Except with
respect to awards issued in substitution for, in conversion of, or
in connection with an assumption of SARs held by awardees of an
entity engaging in a corporate acquisition or merger with us or any
of our subsidiaries, the base price of a SAR may not be less than
the fair market value of a share of Common Stock on the date of
grant. The term of a SAR may not extend more than 10 years from the
date of grant. The Committee may provide in an Evidence of Award
for the automatic exercise of a SAR. SARs granted under the 2020
Plan may not provide for dividends or dividend
equivalents.
Restricted Shares. Restricted shares
constitute an immediate transfer of the ownership of Common Stock
to the participant in consideration of the performance of services,
entitling such participant to dividend, voting and other ownership
rights, subject to the substantial risk of forfeiture and
restrictions on transfer determined by the Committee for a period
of time determined by the Committee or until certain management
objectives specified by the Committee are achieved. Each such grant
or sale of restricted shares may be made without additional
consideration or in consideration of a payment by the participant
that is less than the fair market value per share of Common Stock
on the date of grant.
Restricted shares
may provide for continued vesting or the earlier vesting of such
restricted shares, including in the event of the retirement, death,
disability or termination of employment or service of a participant
or in the event of a change in control.
Any grant of
restricted shares may specify management objectives regarding the
vesting of the restricted shares. Any grant of restricted shares
may require that any and all dividends or distributions paid on
restricted shares that remains subject to a substantial risk of
forfeiture be automatically deferred and/or reinvested in
additional restricted shares, which will be subject to the
same
restrictions as
the underlying restricted shares. Any such dividends or other
distributions on restricted shares will be deferred until, and paid
contingent upon, the vesting of such restricted
shares.
RSUs. RSUs
awarded under the 2020 Plan constitute an agreement by the Company
to deliver Common Stock, cash, or a combination of the two, to the
participant in the future in consideration of the performance of
services, but subject to the fulfillment of such conditions (which
may include achievement regarding management objectives) during the
restriction period as the Committee may specify. Each grant or sale
of RSUs may be made without additional consideration or in
consideration of a payment by the participant that is less than the
fair market value of our Common Stock on the date of
grant.
RSUs may provide
for continued vesting or the earlier lapse or other modification of
the restriction period, including in the event of the retirement,
death, disability or termination or employment of service of a
participant or in the event of a change in control.
During the
restriction period applicable to RSUs, the participant will have no
right to transfer any rights under the award and will have no
rights of ownership in the Common Stock deliverable upon payment of
the RSUs and no right to vote them. Rights to dividend equivalents
may be extended to and made part of any RSU award at the discretion
of and on the terms determined by the Committee, on a deferred and
contingent basis, either in cash or in additional shares of Common
Stock, but dividend equivalents or other distributions on Common
Stock underlying the RSUs will be deferred until and paid
contingent upon vesting of such RSUs. Each grant or sale of RSUs
will specify the time and manner of payment of the RSUs that have
been earned. An RSU may be paid in cash, Common Stock or any
combination of the two.
Performance Shares, Performance Units and Cash Incentive
Awards.
Performance shares, performance units and cash incentive awards may
also be granted to participants under the 2020 Plan. A performance
share is a bookkeeping entry that records the equivalent of one
share of Common Stock, and a performance unit is a bookkeeping
entry that records a unit equivalent to $1.00 or such other value
as determined by the Committee. Each grant will specify the number
or amount of performance shares or performance units, or the amount
payable with respect to a cash incentive award being awarded, which
number or amount may be subject to adjustment to reflect changes in
compensation or other factors.
Each grant of a
cash incentive award, performance shares or performance units will
specify management objectives regarding the earning of the
award.
The performance
period with respect to each cash incentive award or grant of
performance shares or performance units will be a period of time
determined by the Committee and within which the management
objectives relating to such award are to be achieved, which may be
subject to continued vesting or earlier lapse or other
modification, including in the event of the retirement, death,
disability or termination of employment or service of a participant
or in the event of a change in control. Each grant will specify the
time and manner of payment of performance shares, performance units
or a cash incentive award that has been earned.
Any grant of
performance shares or performance units may provide for the payment
of dividend equivalents in cash or in additional shares of Common
Stock, subject to deferral and payment on a contingent basis based
on the participant’s earning and vesting of the performance shares
or performance units, as applicable, with respect to which such
dividend equivalents are paid.
Other Awards. Subject to applicable law
and applicable share limits under the 2020 Plan, the Committee may
grant to any participant Common Stock or such other awards (“Other
Awards”) that may be denominated or payable in, valued in whole or
in part by reference to, or otherwise based on, or related to,
Common Stock or factors that may influence the value of such Common
Stock, including, without limitation, convertible or exchangeable
debt securities, other rights convertible or exchangeable into
Common Stock, purchase rights for Common Stock, awards with value
and payment contingent upon performance of the Company or specified
subsidiaries, affiliates or other business units or any other
factors designated by the Committee, and awards valued by reference
to the book value of the Common Stock or the value of securities
of, or the performance of the specified subsidiaries, affiliates or
other business units of the Company. The terms and conditions of
any such awards will be determined by the Committee. Shares of
Common Stock delivered under such an award in the nature of a
purchase right granted under the 2020 Plan will be purchased for
such consideration, paid for at such time, by such methods, and in
such forms, including, without limitation, Common Stock, other
awards, notes or other property, as the Committee
determines.
In addition, the
Committee may grant cash awards, as an element of or supplement to
any other awards granted under the 2020 Plan. The Committee may
also authorize the grant of Common Stock as a bonus, or may
authorize the grant of Other Awards in lieu of obligations of the
Company or a subsidiary to pay cash or deliver other property under
the 2020 Plan or under other plans or compensatory arrangements,
subject to terms determined by the Committee in a manner that
complies with Section 409A of the Code.
The Committee may
provide for the payment of dividends or dividend equivalents on
Other Awards on a deferred and contingent basis, either in cash or
in additional shares of Common Stock, based upon the earning and
vesting of such awards. Other Awards may provide for the earning or
vesting of, or earlier elimination of restrictions applicable to,
such award, including in the event of the retirement, death,
disability or termination of employment or service of a participant
or in the event of a change in control.
Change in Control. The 2020 Plan includes a
definition of “change in control.” In general, except as may be
otherwise prescribed by the Committee in any Evidence of Award, a
change of control will be deemed to have occurred if: (1) a person,
entity or group becomes the beneficial owner of 35% or more of our
then-outstanding Common Stock or the combined voting power of our
then-outstanding securities entitled to vote generally in the
election of directors, subject to certain exceptions; (2)
individuals who, as of the effective date of the 2020 Plan,
constituted the Board cease for any reason to constitute at least a
majority of the Board, unless their replacements are approved as
described in the 2020 Plan (subject to certain exceptions); (3)
there is a consummation of a reorganization, merger, statutory
share exchange, consolidation or other similar transaction
involving the Company or its subsidiaries, a sale of substantially
all of the assets of the Company, or the acquisition of assets or
securities of another entity by the Company or any of its
subsidiaries, resulting in a substantial change in the Company’s
ownership or leadership, as further described in the 2020 Plan; or
(4) the Company’s stockholders approve its complete liquidation or
dissolution.
Management Objectives. The 2020 Plan generally
provides that any of the awards set forth above may be granted
subject to the achievement of specified management objectives.
Management objectives are defined as the measurable performance
objective or objectives established pursuant to the 2020 Plan for
participants who have received grants of performance shares,
performance units or cash incentive awards or, when so determined
by the Committee, stock options, SARs, restricted shares, RSUs,
dividend equivalents or Other Awards. The management objectives
applicable to an award under the 2020 Plan (if any) will be
determined by the Committee, and may be based on one or more, or a
combination, of the following metrics or such other metrics as may
be determined by the Committee (including relative or growth
achievement regarding such metrics):
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•
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Profits (e.g.,
gross profit, EBITDA, operating income, EBIT, EBT, net income, net
sales, cost of sales, earnings per share, residual or economic
earnings, inventory turnover, operating profit, economic profit -
these profitability metrics could be measured before certain
specified special items and/or subject to GAAP
definition);
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•
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Cash Flow (e.g.,
free cash flow, free cash flow with or without specific capital
expenditure target or range, including or excluding divestments
and/or acquisitions, net cash provided by operating activities, net
increase (or decrease) in cash and cash equivalents, total cash
flow, cash flow in excess of cost of capital or residual cash flow
or cash flow return on investment);
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•
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Returns (e.g.,
profits or cash flow returns on: assets, invested capital, net
capital employed, and equity);
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•
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Working Capital
(e.g., working capital divided by sales, days’ sales outstanding,
days’ sales inventory, and days’ sales in payables);
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•
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Profit Margins
(e.g., profits divided by revenues, gross margins and material
margins divided by revenues, and material margin divided by weight
or volume);
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•
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Liquidity
Measures (e.g., debt-to-capital, debt-to-EBITDA, total debt
ratio);
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•
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Sales Growth,
Gross Margin Growth, Cost Initiative and Stock Price Metrics (e.g.,
revenues, revenue growth, revenue growth outside the United States,
gross margin and gross margin growth, material margin and material
margin growth, stock price appreciation, market capitalization,
total return to shareholders, sales and administrative costs
divided by sales, and sales and administrative costs divided by
profits); and
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•
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Strategic
Initiative Key Deliverable Metrics consisting of one or more of the
following: product development, strategic partnering, research and
development, vitality index, market penetration, market share,
geographic business expansion goals, cost targets, selling, general
and administrative expenses, customer satisfaction, employee
satisfaction, management of employment practices and employee
benefits, supervision of litigation and information technology,
productivity, economic value added (or another measure of
profitability that considers the cost of capital employed), product
quality, sales of new products, and goals relating to acquisitions
or divestitures of subsidiaries, affiliates and joint
ventures.
|
Additionally, if
the Committee determines that a change in the business, operations,
corporate structure or capital structure of the Company, or the
manner in which it conducts its business, or other events or
circumstances render the management objectives unsuitable, the
Committee may in its discretion modify such management objectives
or the goals or actual levels of achievement, in whole or in part,
as the Committee deems appropriate and equitable.
Transferability of Awards. Except as otherwise
provided by the Committee, and subject to the terms of the 2020
Plan with respect to Section 409A of the Code, no stock option,
SAR, restricted share, RSU, performance share, performance unit,
cash incentive award, Other Award or dividend equivalents paid with
respect to awards made under the 2020 Plan will be transferrable by
a participant except by will or the laws of descent and
distribution. In no event will any such award granted under the
2020 Plan be transferred for value. Except as otherwise determined
by the Committee, stock options and SARs will be exercisable during
the participant’s lifetime only by him or her or, in the event of
the participant’s legal incapacity to do so, by his or her guardian
or legal representative acting on behalf of the participant in a
fiduciary capacity under state law or court
supervision.
The Committee may
specify on the grant date that all or part of the shares of Common
Stock that are subject to awards under the 2020 Plan will be
subject to further restrictions on transfer, including minimum
holding periods.
Adjustments; Corporate Transactions. The Committee will make or
provide for such adjustments in: (1) the number of and kind of
shares of Common Stock covered by outstanding stock options, SARs,
restricted shares, RSUs, performance shares and performance units
granted under the 2020 Plan; (2) if applicable, the number of and
kind of shares of Common Stock covered by Other Awards granted
pursuant to the 2020 Plan; (3) the exercise price or base price
provided in outstanding stock options and
SARs,
respectively; (4) cash incentive awards; and (5) other award terms,
as the Committee in its sole discretion, exercised in good faith,
determines to be equitably required in order to prevent dilution or
enlargement of the rights of participants that otherwise would
result from (a) any extraordinary cash dividend, stock dividend,
stock split, combination of shares, recapitalization or other
change in the capital structure of the Company; (b) any merger,
consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation or other
distribution of assets, issuance of rights or warrants to purchase
securities; or (c) any other corporate transaction or event having
an effect similar to any of the foregoing.
In the event of
any such transaction or event, or in the event of a change in
control of the Company, the Committee may provide in substitution
for any or all outstanding awards under the 2020 Plan such
alternative consideration (including cash), if any, as it may in
good faith determine to be equitable under the circumstances and
will require in connection therewith the surrender of all awards so
replaced in a manner that complies with Section 409A of the Code.
In addition, for each stock option or SAR with an exercise price or
base price, respectively, greater than the consideration offered in
connection with any such transaction or event or change in control
of the Company, the Committee may in its discretion elect to cancel
such stock option or SAR without any payment to the person holding
such stock option or SAR. The Committee will make or provide for
such adjustments to the number of shares of Common Stock available
under the 2020 Plan and the share limits of the 2020 Plan as the
Committee in its sole discretion may in good faith determine to be
appropriate to reflect such transaction or event. However, any
adjustment to the limit on the number of shares of Common Stock
that may be issued upon exercise of Incentive Stock Options will be
made only if and to the extent such adjustment would not cause any
stock option intended to qualify as an Incentive Stock Option to
fail to so qualify.
Prohibition on Repricing. Except in connection with
certain corporate transactions or changes in the capital structure
of the Company or in connection with a change in control, the terms
of outstanding awards may not be amended to (1) reduce the exercise
price or base price of outstanding stock options or SARs,
respectively, or (2) cancel outstanding “underwater” stock options
or SARs in exchange for cash, other awards or stock options or SARs
with an exercise price or base price, as applicable, that is less
than the exercise price or base price of the original stock options
or SARs, as applicable, without stockholder approval. The 2020 Plan
specifically provides that this provision is intended to prohibit
the repricing of “underwater” stock options and SARs and that it
may not be amended without approval by our
stockholders.
Detrimental Activity and Recapture. Any Evidence of Award may
reference a clawback policy of the Company or provide for the
cancellation or forfeiture of an award or forfeiture and repayment
to us of any gain related to an award, or other provisions intended
to have a similar effect, upon such terms and conditions as may be
determined by the Committee from time to time, if any participant,
either during employment or other service with us or a subsidiary
or within a specified period after such employment or service,
engages in any detrimental activity, as described in the applicable
Evidence of Award or such clawback policy. In addition, any
Evidence of Award or such clawback policy may provide for
cancellation or forfeiture of an award or the forfeiture and
repayment of any Common Stock issued under and/or any other benefit
related to an award, or other provisions intended to have a similar
effect, including upon such terms and conditions as may be required
by the Committee or under Section 10D of the Exchange Act and any
applicable rules and regulations promulgated by the Securities and
Exchange Commission or any national securities exchange or national
securities association on which the Common Stock may be
traded.
Grants to Non-U.S. Based Participants. In order to facilitate the
making of any grant or combination of grants under the 2020 Plan,
the Committee may provide for such special terms for awards to
participants who are foreign nationals, who are employed by the
Company or any of its subsidiaries outside of the United States of
America or who provide services to the Company under an agreement
with a foreign nation or agency, as the Committee may consider
necessary or appropriate to accommodate differences in local law,
tax policy or custom. The Committee may approve such supplements
to, or amendments, restatements or alternative versions of, the
2020 Plan (including sub-plans) (to be considered part of the 2020
Plan) as it may consider necessary or appropriate for such
purposes, provided that no such special terms, supplements,
amendments or restatements will include any provisions that are
inconsistent with the terms of the 2020 Plan as then in effect
unless the 2020 Plan could have been amended to eliminate such
inconsistency without further approval by our
stockholders.
Withholding. To the extent the Company
is required to withhold federal, state, local or foreign taxes or
other amounts in connection with any payment made or benefit
realized by a participant or other person under the 2020 Plan, and
the amounts available to us for such withholding are insufficient,
it will be a condition to the receipt of such payment or the
realization of such benefit that the participant or such other
person make arrangements satisfactory to the Company for payment of
the balance of such taxes or other amounts required to be withheld,
which arrangements, in the discretion of the Committee, may include
relinquishment of a portion of such benefit. If a participant’s
benefit is to be received in the form of Common Stock, and such
participant fails to make arrangements for the payment of taxes or
other amounts, then, unless otherwise determined by the Committee,
we will withhold shares of Common Stock having a value equal to the
amount required to be withheld. When a participant is required to
pay the Company an amount required to be withheld under applicable
income, employment, tax or other laws, the participant may elect,
unless otherwise determined by the Committee, to satisfy the
obligation, in whole or in part, by having withheld, from the
shares required to be delivered to the participant, shares of
Common Stock having a value equal to the amount required to be
withheld or by delivering to us other shares of Common Stock held
by such participant. The shares of Common Stock used for tax or
other
withholding will
be valued at an amount equal to the fair market value of such
shares of Common Stock on the date the benefit is to be included in
the participant’s income. In no event will the fair market value of
the shares of Common Stock to be withheld and delivered pursuant to
the 2020 Plan exceed the minimum amount required to be withheld,
unless an additional amount can be withheld and not result in
adverse accounting consequences, and such additional withholding
amount is authorized by the Committee. Participants will also make
such arrangements as the Company may require for the payment of any
withholding tax or other obligation that may arise in connection
with the disposition of Common Stock acquired upon the exercise of
stock options.
No Right to Continued Employment. The 2020 Plan does not
confer upon any participant any right with respect to continuance
of employment or service with the Company or any of its
subsidiaries.
Effective Date of the 2020 Plan. The 2020 Plan will become
effective on the date it is approved by the Company’s stockholders.
No grants will be made under the Predecessor Plan on or after the
date on which our stockholders approve the 2020 Plan, provided that
outstanding awards granted under the Predecessor Plan will continue
unaffected following such date.
Amendment and Termination of the 2020 Plan. The Board of Directors
generally may amend the 2020 Plan from time to time in whole or in
part. However, if any amendment, for purposes of applicable stock
exchange rules (and except as permitted under the adjustment
provisions of the 2020 Plan) (1) would materially increase the
benefits accruing to participants under the 2020 Plan, (2) would
materially increase the number of securities which may be issued
under the 2020 Plan, (3) would materially modify the requirements
for participation in the 2020 Plan, or (4) must otherwise be
approved by our stockholders in order to comply with applicable law
or the rules of the NYSE, or, if the shares of Common Stock are not
traded on the NYSE, the principal national securities exchange upon
which the shares of Common Stock are traded or quoted, all as
determined by the Board, then such amendment will be subject to
stockholder approval and will not be effective unless and until
such approval has been obtained.
Further, subject
to the 2020 Plan’s prohibition on repricing, the Committee
generally may amend the terms of any award prospectively or
retroactively. Except in the case of certain adjustments permitted
under the 2020 Plan, no such amendment may be made that would
materially impair the rights of any participant without his or her
consent. If permitted by Section 409A of the Code and subject to
certain other limitations set forth in the 2020 Plan, and including
in the case of termination of employment or service, or in the case
of unforeseeable emergency or other circumstances or in the event
of a change in control, the Committee may provide for continued
vesting or accelerate the vesting of certain awards granted under
the 2020 Plan or waive any other limitation or requirement under
any such award.
The Board may, in
its discretion, terminate the 2020 Plan at any time. Termination of
the 2020 Plan will not affect the rights of participants or their
successors under any awards outstanding and not exercised in full
on the date of termination. No grant will be made under the 2020
Plan on or after the tenth anniversary of the effective date of the
2020 Plan, but all grants made prior to such date will continue in
effect thereafter subject to their terms and the terms of the 2020
Plan.
Allowances for Conversion Awards and Assumed
Plans.
Shares of Common Stock issued or transferred under awards granted
under the 2020 Plan in substitution for or conversion of, or in
connection with an assumption of, stock options, SARs, restricted
shares, RSUs, or other share or share-based awards held by awardees
of an entity engaging in a corporate acquisition or merger
transaction with us or any of our subsidiaries will not count
against (or be added to) the aggregate share limit or other 2020
Plan limits described above. Additionally, shares available under
certain plans that we or our subsidiaries may assume in connection
with corporate transactions from another entity may be available
for certain awards under the 2020 Plan, under circumstances further
described in the 2020 Plan, but will not count against the
aggregate share limit or other 2020 Plan limits described
above.
New Plan Benefits
The Committee has
determined to grant annual RSU awards for 2020 to the Company’s
non-employee directors under the 2020 Plan immediately after the
Annual Meeting, provided that our stockholders approve the adoption
of the 2020 Plan. The following table provides information about
these grants, which are in general expected to vest on the earlier
of the one-year anniversary of the applicable grant date and the
next annual meeting of stockholders:
Horizon Global Corporation 2020 Equity and Incentive Compensation
Plan
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Name and
Position
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Dollar
Value
|
|
Number of
Units
|
|
($)
|
|
(#)
|
|
Terrence Gohl, President and
Chief Executive Officer
|
|
—
|
|
—
|
|
Carl Bizon, former President
and Chief Executive Officer
|
|
—
|
|
—
|
|
Jay Goldbaum, General Counsel,
Chief Compliance Officer and Corporate Secretary
|
|
—
|
|
—
|
|
Matthew Meyer, Chief
Accounting Officer
|
|
—
|
|
—
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|
Jamie Pierson, former Chief
Financial Officer
|
|
—
|
|
—
|
|
Barry Steele, former Chief
Financial Officer
|
|
—
|
|
—
|
|
Executive Group
(1)
|
|
—
|
|
—
|
|
Non-Executive Director
Group (2)
|
|
$640,000
|
|
345,946
|
|
Non-Executive Officer Employee
Group (3)
|
|
—
|
|
—
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(1)
Consists of all
current executive officers as a group.
(2)
Consists of all
current directors who are not executive officers.
(3)
Consists of all
employees, including all current officers who are not executive
officers, as a group.
The amount in the
“Number of Units” column in the table above represents the
aggregate number of RSUs that would be expected to be granted to
the indicated group in the event that the 2020 Plan is approved by
stockholders, based solely on the closing price of one share as of
May 1, 2020.
Other than with
respect to the awards set forth in the table above, it is not
possible to determine the specific amounts and types of awards that
may be awarded in the future under the 2020 Plan because the grant
and actual settlement of awards under the 2020 Plan are subject to
the discretion of the plan administrator.
U.S. Federal Income Tax Consequences
The following is
a brief summary of certain of the Federal income tax consequences
of certain transactions under the 2020 Plan based on Federal income
tax laws in effect. This summary, which is presented for the
information of stockholders considering how to vote on this
proposal and not for 2020 Plan participants, is not intended to be
complete and does not describe Federal taxes other than income
taxes (such as Medicare and Social Security taxes), or state, local
or foreign tax consequences.
Tax Consequences to Participants
Restricted Shares. The recipient of restricted
shares generally will be subject to tax at ordinary income rates on
the fair market value of the restricted shares (reduced by any
amount paid by the recipient for such restricted shares) at such
time as the restricted shares are no longer subject to forfeiture
or restrictions on transfer for purposes of Section 83 of the Code
(“Restrictions”). However, a recipient who so elects under Section
83(b) of the Code within 30 days of the date of transfer of the
shares will have taxable ordinary income on the date of transfer of
the shares equal to the excess of the fair market value of such
shares (determined without regard to the Restrictions) over the
purchase price, if any, of such restricted shares. If a Section
83(b) election has not been made, any dividends received with
respect to restricted shares that are subject to the Restrictions
generally will be treated as compensation that is taxable as
ordinary income to the recipient.
Performance Shares, Performance Units and Cash Incentive
Awards. No
income generally will be recognized upon the grant of performance
shares, performance units or cash incentive awards. Upon payment in
respect of the earn-out of performance shares, performance units or
cash incentive awards, the recipient generally will be required to
include as taxable ordinary income in the year of receipt an amount
equal to the amount of cash received and the fair market value of
any unrestricted shares of Common Stock received.
Nonqualified Stock Options. In general:
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•
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no income will be
recognized by an optionee at the time a non-qualified stock option
is granted;
|
|
|
|
•
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at the time of
exercise of a non-qualified stock option, ordinary income will be
recognized by the optionee in an amount equal to the difference
between the option price paid for the shares and the fair market
value of the shares, if unrestricted, on the date of exercise;
and
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at the time of
sale of shares acquired pursuant to the exercise of a non-qualified
stock option, appreciation (or depreciation) in value of the shares
after the date of exercise will be treated as either short-term or
long-term capital gain (or loss) depending on how long the shares
have been held.
Incentive Stock Options. No income generally will be
recognized by an optionee upon the grant or exercise of an
“incentive stock option” as defined in Section 422 of the Code. If
shares of Common Stock are issued to the optionee pursuant to the
exercise of an incentive stock option, and if no disqualifying
disposition of such shares is made by such optionee within two
years after the date of grant or within one year after the transfer
of such shares to the optionee, then upon sale of such shares, any
amount realized in excess of the option price will be taxed to the
optionee as a long-term capital gain and any loss sustained will be
a long-term capital loss.
If shares of
Common Stock acquired upon the exercise of an incentive stock
option are disposed of prior to the expiration of either holding
period described above, the optionee generally will recognize
ordinary income in the year of disposition in an amount equal to
the excess (if any) of the fair market value of such shares at the
time of exercise (or, if less, the amount realized on the
disposition of such shares if a sale or exchange) over the exercise
price paid for such shares. Any further gain (or loss) realized by
the participant generally will be taxed as short-term or long-term
capital gain (or loss) depending on the holding
period.
SARs. No
income will be recognized by a participant in connection with the
grant of a SAR. When the SAR is exercised, the participant normally
will be required to include as taxable ordinary income in the year
of exercise an amount equal to the amount of cash received and the
fair market value of any unrestricted shares of Common Stock
received on the exercise.
RSUs. No
income generally will be recognized upon the award of RSUs. The
recipient of an RSU award generally will be subject to tax at
ordinary income rates on the fair market value of unrestricted
shares of Common Stock on the date that such shares are transferred
to the participant under the award (reduced by any amount paid by
the participant for such RSUs), and the capital gains/loss holding
period for such shares will also commence on such
date.
Tax Consequences to the Company and its Subsidiaries
To the extent
that a participant recognizes ordinary income in the circumstances
described above, the Company or the subsidiary for which the
participant performs services will be entitled to a corresponding
deduction provided that, among other things, the income meets the
test of reasonableness, is an ordinary and necessary business
expense, is not an “excess parachute payment” within the meaning of
Section 280G of the Code and is not disallowed by the $1 million
limitation on certain executive compensation under Section 162(m)
of the Code.
Code Section 162(m)
Section 162(m) of
the Code generally disallows a deduction for certain compensation
paid to certain executive officers (and, beginning in 2018, certain
former executive officers) to the extent that compensation to a
covered employee exceeds $1 million for such year. Compensation
qualifying for a performance-based exception as “qualified
performance-based compensation” under Section 162(m) of the Code
has historically not been subject to the deduction limit if the
compensation satisfies the requirements of Section 162(m) of the
Code. This exception has now been repealed, effective for taxable
years beginning after December 31, 2017, unless certain transition
relief for certain compensation arrangements in place as of
November 2, 2017 is available. The Company does not anticipate that
it will be able to make any grants under the 2020 Plan that will be
intended to qualify for the performance-based exception. To be
clear, stockholders are not being asked to approve the 2020 Plan
(or any of its provisions) for purposes of Section 162(m) of the
Code or the performance-based exception.
Registration with the SEC
We intend to file
a Registration Statement on Form S-8 relating to the issuance of
Common Stock under the 2020 Plan with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, as
soon as practicable after approval of the 2020 Plan by our
stockholders.
PROPOSAL 3 — RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE COMPANY’S BOARD RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR”
THE RATIFICATION OF THE APPOINTMENT OF DELOITTE AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2020.
The Audit
Committee has appointed Deloitte as the independent registered
public accounting firm to audit the Company’s consolidated
financial statements for the fiscal year ending December 31, 2020.
Deloitte was engaged as our independent registered public
accounting firm for the fiscal year ended December 31, 2019.
Representatives of Deloitte are expected to attend the Annual
Meeting, where they will be available to respond to appropriate
questions and, if they desire, make a statement.
The appointment
of Deloitte as the independent registered public accounting firm
for the Company is being presented to the stockholders for
ratification. The ratification of the appointment of the
independent registered public accounting firm requires the
affirmative vote of the holders of a majority of the total shares
of Common Stock present in person or represented by proxy and
entitled to vote on the matter, provided that a quorum of at least
a majority of the outstanding shares are present or represented at
the meeting. If you abstain from voting on this matter, your
abstention will have the same effect as a vote against the matter.
If you hold your shares through a broker and you do not instruct
the broker on how to vote on this “routine” proposal, your broker
will nevertheless have authority to vote your shares on this
“routine” proposal in your broker’s discretion. Proxies submitted
pursuant to this solicitation will be voted “FOR” the ratification
of the appointment of Deloitte as the Company’s independent
registered public accounting firm for the fiscal year ending
December 31, 2020, unless specified otherwise.
Fees Paid to Independent Auditor
The following
table presents fees billed by Deloitte for professional audit
services rendered related to the audits of the Company’s annual
financial statements for the years ended December 31, 2019 and
2018.
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2019
|
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2018
|
|
Audit Fees
|
|
$
|
2,025,000
|
|
|
$
|
1,535,000
|
|
|
Audit-related
Fees
|
|
36,000
|
|
|
6,000
|
|
|
Tax Fees
|
|
—
|
|
|
—
|
|
|
All Other Fees
|
|
5,000
|
|
|
5,000
|
|
|
Total
|
|
$
|
2,066,000
|
|
|
$
|
1,546,000
|
|
Audit and Audit-Related Fees
Audit fees
include fees for the audit of the annual consolidated financial
statements, reviews of quarterly consolidated financial statements,
statutory audits and consents. Audit-related fees for 2019 related
primarily to agreed upon procedures and financial statement
translation services performed for certain international legal
entities. Audit-related fees for 2018 related primarily to
procedures performed in connection with a New Zealand research and
development review.
Other Fees
Other fees for
2019 and 2018 relate to a subscription for technical
content.
We have been
advised by Deloitte that neither the firm nor any member of the
firm has any financial interest, direct or indirect, in any
capacity in the Company or its subsidiaries.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit
Services of Independent Registered Public Accounting
Firm
The Audit
Committee is responsible for appointing, setting compensation and
overseeing the work of the independent registered public accounting
firm. The Audit Committee’s pre-approval is required for all audit
and non-audit services provided by the independent registered
public accounting firm.
On an ongoing
basis, management communicates specific projects and categories of
service for which it wishes to engage the independent registered
public accounting firm. The Audit Committee reviews these requests
and advises management if the committee approves the engagement of
the independent registered public accounting firm. No services are
undertaken which are not pre-approved. On a periodic basis,
management reports to the Audit Committee regarding the actual
spending for such projects
and services
compared to the approved amounts. All of the services provided by
Deloitte, our independent auditor in 2019, including services
related to audit, audit-related fees, tax fees and all other fees
described above, were approved by the Audit Committee.
Vote Required for Approval
The affirmative
vote of a majority of the shares of Common Stock present or
represented by proxy at the Annual Meeting and entitled to vote on
the matter will be necessary to ratify the Audit Committee’s
appointment of Deloitte as the Company’s independent registered
public accounting firm for the fiscal year ending December 31,
2020, provided that a quorum is present. Abstentions will have the
same effect as a vote against the matter. Although stockholder
ratification of the appointment is not required by law and is not
binding on the Company, the Audit Committee will take the
appointment under advisement if such appointment is not so
ratified.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS
The Audit
Committee represents and assists the Board in fulfilling its
responsibilities for general oversight of the integrity of the
Company’s financial statements, the Company’s compliance with legal
and regulatory requirements, the independent registered public
accounting firm’s qualifications and independence, the performance
of the Company’s internal audit function and independent registered
public accounting firm, and risk assessment and risk management.
The Audit Committee engages the Company’s independent registered
public accounting firm (which reports directly to the Audit
Committee). The Audit Committee has the authority to obtain advice
and assistance from outside legal, accounting or other advisors as
the Audit Committee deems necessary to carry out its duties and
receives appropriate funding as determined by the Audit Committee
from the Company for such advice and assistance.
The Company’s
management is primarily responsible for the Company’s internal
control and financial reporting process. The Company’s independent
registered public accounting firm, Deloitte, is responsible for
performing an independent audit of the Company’s consolidated
financial statements and issuing opinions on the conformity of
reporting those audited financial statements with United States
generally accepted accounting principles. The Audit Committee
monitors the Company’s financial reporting process and reports to
the Board on its findings.
In this context,
the Audit Committee hereby reports as follows:
|
|
|
1.
|
The Audit
Committee has reviewed and discussed the audited financial
statements for the fiscal year ended December 31, 2019 with
the Company’s management;
|
|
|
|
2.
|
The Audit
Committee has discussed with Deloitte the matters required to be
discussed by the applicable requirements of the Public Company
Accounting Oversight Board (the “PCAOB”) and the Securities and
Exchange Commission (the “SEC”);
|
|
|
|
3.
|
The Audit
Committee has received the written disclosures and the letter from
Deloitte required by applicable requirements of the PCAOB regarding
Deloitte’s communications with the Audit Committee concerning
independence, and has discussed with Deloitte the independence of
that firm; and
|
|
|
|
4.
|
Based on the
review and discussions referred to in paragraphs 1 through 3
above, the Audit Committee recommended to the Board, and the Board
has approved, that the audited financial statements be included in
the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2019, for filing with the SEC.
|
The undersigned
members of the Audit Committee, submitted this Report to the Board
of Directors.
|
|
|
|
|
|
|
The Audit Committee
Frederick “Fritz” A.
Henderson (Chair)
John C. Kennedy
Ryan L. Langdon
Brett N. Milgrim
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following
table sets forth information with respect to the beneficial
ownership of the Common Stock as of the Record Date
by:
|
|
|
▪
|
each person known
by us to beneficially own more than 5% of the Common
Stock;
|
|
|
|
▪
|
each of the
Company’s directors and director nominees;
|
|
|
|
▪
|
each of the named
executive officers (“NEOs”); and
|
|
|
|
▪
|
all of the
Company’s directors and executive officers as a group.
|
The percentages
of Common Stock beneficially owned are reported on the basis of
regulations of the SEC governing the determination of beneficial
ownership of securities. Under the rules of the SEC, a person is
deemed to be a beneficial owner of a security if that person has or
shares, (1) voting power, which includes the power to vote or
to direct the voting of the security, (2) investment power,
which includes the power to dispose of or to direct the disposition
of the security, or (3) rights to acquire Common Stock that
are currently exercisable or convertible, or will become
exercisable or convertible within 60 days of the Record Date.
Except as indicated in the footnotes to this table, each beneficial
owner named in the following table has sole voting and sole
investment power with respect to all shares beneficially owned. As
of the Record Date, the Company had 25,472,634 shares
outstanding.
|
|
|
|
|
|
|
|
|
|
|
Shares
Beneficially
Owned
|
|
Name and
Beneficial Owner
|
|
Number
|
|
Percentage
|
|
T. Rowe
Price Associates, Inc.(1)
100 E. Pratt Street,
Baltimore, MD 21202
|
|
4,697,027
|
|
|
18.44
|
%
|
|
Corre
Partners Management, LLC(2)
12 East 49th Street, 40th
Floor, New York, NY 10017
|
|
2,519,454
|
|
|
9.89
|
%
|
|
Atlas
Capital Resources II LP(3)
100 Northfield Street,
Greenwich, CT 06830
|
|
2,473,904
|
|
|
9.71
|
%
|
|
Royce &
Associates, LP(4)
745 Fifth Avenue, New York,
NY 10151
|
|
1,806,153
|
|
|
7.09
|
%
|
|
Carl S.
Bizon(5)
|
|
81,477
|
|
|
—
|
%
|
|
Jay
Goldbaum(6)
|
|
67,106
|
|
|
—
|
%
|
|
Terrence G. Gohl
|
|
7,000
|
|
|
—
|
%
|
|
Frederick A. “Fritz”
Henderson
|
|
98,899
|
|
|
—
|
%
|
|
John C.
Kennedy(7)
|
|
932,756
|
|
|
3.62
|
%
|
|
Ryan L.
Langdon(8)
|
|
879,048
|
|
|
3.34
|
%
|
|
Matthew J. Meyer
|
|
7,333
|
|
|
—
|
%
|
|
Brett N. Milgrim
|
|
44,199
|
|
|
—
|
%
|
|
Debra S. Oler
|
|
—
|
|
|
—
|
%
|
|
Jamie G.
Pierson(9)
|
|
—
|
|
|
—
|
%
|
|
Matthew T.
Pollick
|
|
5,000
|
|
|
—
|
%
|
|
Dennis E.
Richardville
|
|
—
|
|
|
—
|
%
|
|
David A. Roberts
|
|
61,074
|
|
|
—
|
%
|
|
James F. Sistek
|
|
—
|
|
|
—
|
%
|
|
Barry G.
Steele(10)
|
|
—
|
|
|
—
|
%
|
|
Mark D. Weber
|
|
44,199
|
|
|
—
|
%
|
|
Harry J. Wilson
|
|
1,279,511
|
|
|
5.01
|
%
|
|
All
executive officers and directors as a group (14 persons)
(11)
|
|
3,426,125
|
|
|
12.73
|
%
|
_______________________________________
|
|
|
(1)
|
Information
contained in the columns above and this footnote is based on a
report on Schedule 13G/A filed with the SEC on February 14, 2020
jointly by T. Rowe Price Associates, Inc. (“T. Rowe Price”), and T.
Rowe Price Small-Cap Value Fund, Inc. (“T. Rowe Fund”). As of
December 31, 2019, T. Rowe Price had sole voting power with respect
to 1,047,117 shares of Common Stock, and sole dispositive power
with respect to 4,697,027 shares of Common Stock; and T. Rowe Fund
had sole voting power with respect to 3,579,190 shares of Common
Stock.
|
|
|
|
(2)
|
Information
contained in the columns above and this footnote is based on a
report on Schedule 13D/A filed with the SEC on March 22, 2019
jointly by (i) Corre Opportunities by Qualified Master Fund, LP
(the “Fund”); (ii) Corre Partners Advisors, LLC (the “General
Partner”), which serves as the general partner of the Fund; (iii)
Corre Partners Management, LLC (the “Investment Adviser”), which
has been delegated investment authority over the assets of the Fund
by the General Partner; (iv) Mr. John Barrett, who serves as a
managing member of the General Partner and the Investment Adviser;
and (v) Mr. Eric Soderlund, who serves as a managing member of the
General Partner and the Investment Adviser (each, a “Corre
Reporting Person” and collectively, the “Corre Reporting Persons”).
As of March 22, 2019, (i) the Fund may be deemed to be the
beneficial owner of 1,802,958 Shares, consisting of 1,788,801
shares of Common Stock and 14,157 shares of Common Stock issuable
upon conversion of certain notes and warrants of the Company held
by the Fund, and (ii) each of the General Partner, the Investment
Adviser, Mr. Barrett and Mr. Soderlund may be deemed to be the
beneficial owner of 2,519,454 shares of Common Stock, consisting of
2,505,297 shares of Common Stock and 14,157 shares of Common Stock
issuable upon conversion of certain notes and warrants of the
Company held by the Corre Reporting Persons. The Fund had shared
voting power with respect to 1,802,958 shares of Common Stock; and
shared dispositive power with respect to 1,802,958 shares of Common
Stock. The General Partner, the Investment Adviser, Mr. Barrett and
Mr. Soderlund had shared voting power with respect to 2,519,454
shares of Common Stock; and shared dispositive power with respect
to 2,519,454 shares of Common Stock. The amount does not include
shares of Common Stock underlying convertible senior notes and
Warrants held by the Corre Reporting Persons, which subject to
limitations on the right to convert and exercise, respectively, to
the extent that after giving effect to such issuance after
conversion or exercise, the Corre Reporting Persons (together with
the Corre Reporting Persons’ affiliates), would, when aggregated
with all other shares of Common Stock beneficially owned by such
Corre Reporting Persons at such time, beneficially own shares of
Common Stock in excess of 9.99% of the number of shares of Common
Stock outstanding (measured after giving effect to the issuance of
shares of Common Stock issuable upon conversion of the convertible
senior notes or exercise of the Warrants, as
applicable).
|
|
|
|
(3)
|
Information
contained in the columns above and this footnote is based on a
report on Schedule 13D/A filed with the SEC on December 20, 2019
jointly by (i) Atlas Capital Resources II LP (“Atlas Capital”);
(ii) Lapetus Capital II LLC (“Lapetus Capital”); (iii) Atlas
Capital GP II LP (“Atlas GP II”); (iv) Atlas Capital Resources GP
II LLC (“Atlas Capital LLC”); (v) Mr. Andrew M. Bursky; and (vi)
Mr. Timothy J. Fazio (each, a “Atlas Reporting Person” and
collectively, the “Atlas Reporting Persons”). As of December 18,
2019, the Atlas Reporting Persons, specifically Atlas Capital,
Lapetus Capital, Atlas GP II, Atlas Capital LLC, Mr. Bursky and Mr.
Fazio had shared voting power with respect to 2,473,904 shares of
Common Stock; and shared dispositive power with respect to
2,473,904 shares of Common Stock.
|
|
|
|
(4)
|
Information
contained in the columns above and this footnote is based on a
report on Schedule 13G filed by Royce Associates, LP (“Royce”) with
the SEC on January 21, 2020. As of December 31, 2019, Royce had
sole voting power and sole dispositive power with respect to
1,806,153 shares of Common Stock.
|
|
|
|
(5)
|
The number set
forth in the table is based on the total reported as of Mr. Bizon’s
termination date on September 20, 2019, and includes 43,902 RSUs
which vested April 7, 2020.
|
|
|
|
(6)
|
The number set
forth in the table includes 9,283 exercisable options.
|
|
|
|
(7)
|
The number set
forth in the table includes warrants to purchase 278,283 shares of
Common Stock.
|
|
|
|
(8)
|
The number set
forth in the table includes warrants to purchase 834,849 shares of
Common Stock owned by Newport Global Advisers LP.
|
|
|
|
(9)
|
Pursuant to the
terms of the Plan, Mr. Pierson’s RSUs were forfeited upon his
resignation date on December 12, 2019.
|
|
|
|
(10)
|
Pursuant to the
terms of the Plan, Mr. Steele’s RSUs were forfeited upon his
resignation date on February 8, 2019.
|
|
|
|
(11)
|
With the exception
of Messrs. Kennedy, Langdon and Wilson, each director and NEO
beneficially owns less than one percent of the outstanding shares
of the Common Stock. Messrs. Bizon, Pierson and Steele are not
included in this group.
|
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
category
|
|
Number of
securities to be issued upon exercise of outstanding options,
warrants and rights
(a)
|
|
Weighted-average
exercise price of outstanding options, warrants and
rights
(b) (1)
|
|
Number of
securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
(2)
|
|
Equity compensation plans
approved by security holders
|
|
1,431,047
|
|
|
$
|
10.52
|
|
|
2,277,872
|
|
|
Equity compensation plans not
approved by security holders
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
TOTAL:
|
|
1,431,047
|
|
|
$
|
10.52
|
|
|
2,277,872
|
|
____________________________________
|
|
|
(1)
|
The
weighted-average exercise price relates to outstanding stock
options only. The Company’s restricted stock unit awards have no
exercise price.
|
|
|
|
(2)
|
As of December 31,
2019, includes 2,277,872 shares available for future
issuance under the Amended 2015 Plan, all of which may be issued
for awards other than stock options, restricted stock units or
stock appreciation rights.
|
Executive Officers
Officers of the
Company serve at the pleasure of the Board.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Title
|
|
Terrence G. Gohl
|
|
58
|
|
President, Chief Executive
Officer and Director
|
|
Dennis E.
Richardville
|
|
65
|
|
Chief Financial
Officer
|
|
Matthew T.
Pollick
|
|
48
|
|
Chief Operating
Officer
|
|
James F. Sistek
|
|
56
|
|
Chief Administrative
Officer
|
|
Jay Goldbaum
|
|
38
|
|
General Counsel, Chief
Compliance Officer and Corporate Secretary
|
|
Matthew J. Meyer
|
|
38
|
|
Chief Accounting
Officer
|
Terrence G. Gohl. Business experience provided
under “Proposal 1
— Election of Directors.”
Dennis E. Richardville. Mr. Richardville was
appointed Chief Financial Officer on March 16, 2020. Prior to this
appointment, Mr. Richardville served as Vice President and
Corporate Treasurer of the Company since January 2020. Prior to
joining the Company, Mr. Richardville served as chief financial
officer of Dura Automotive Systems, LLC, a global Tier One
automotive supplier specializing in the design, engineering and
manufacturing of advanced mobility system solutions, from August
2019 to September 2019. Mr. Richardville served as executive vice
president and chief financial officer of IAC, a leading global
supplier of automotive components and systems, including interior
and exterior trim, from April 2012 to December 2019. From 2007 to
2012, Mr. Richardville served as vice president and global
corporate controller for IAC. Prior to joining IAC, Mr.
Richardville held various finance positions with Lear Corporation,
Wesley Industries, Inc., MSX International, Inc. and Hayes Lemmerz
International Inc. from 1999 to 2007.
Matthew T. Pollick. Mr. Pollick has served as our
Chief Operating Officer since November 11, 2019. Before joining
Horizon, Mr. Pollick served as Executive Vice President of
Industrial Management for Gestamp North America, a company
dedicated to the design, development and manufacture of metal
automotive components, from September 2016 to November 2019. From
April 2014 to September 2016, Mr. Pollick was a general manager of
Bowling Green Metalforming, a subsidiary of Magna International, a
leading global automotive mobility technology and automotive parts
supplier (“Magna”). Prior to joining Magna, from April 2002 to
April 2014, Mr. Pollick held roles of increasing responsibility at
Tower International, a leading manufacturer of engineered
automotive structural metal components and assemblies, ultimately
serving as its Director of Operations.
James F. Sistek. Mr. Sistek has served as our
Chief Administrative Officer since December 9, 2019. Prior to
joining Horizon, Mr. Sistek served as senior vice president
business operations for Superior Industries International, Inc.
(“Superior”), a Tier 1 automotive supplier of aluminum wheels, from
August 2014 to January 2019. During his tenure at Superior, Mr.
Sistek was directly responsible for product development and launch,
supply chain and logistics, quality, information technology and
served as the executive lead on a corporate-wide overhaul of the
operating model. From January 2013 to August 2014, Mr. Sistek
served as president and founder of Infologic, Inc. (“Infologic”), a
consulting services company specializing in the optimization of
business operations, where he streamlined business processes,
supported program development and launch programs, and provided
complete technology assessments for Tier 1 suppliers and IT service
providers. Prior to forming Infologic, from October 2005 to January
2013, Mr. Sistek held various leadership positions at Visteon
Corporation, a global automotive electronics supplier, ultimately
serving as vice president shared services and chief information
officer from 2009 to 2013.
Jay Goldbaum. Mr. Goldbaum has served as
our General Counsel, Chief Compliance Officer and Corporate
Secretary since November 13, 2017. Mr. Goldbaum served as Legal
Director, Chief Compliance Officer and Corporate Secretary since
June 30, 2015 in connection with the spin-off from TriMas
Corporation (“TriMas”). From January 14, 2015 through June 29,
2015, Mr. Goldbaum served as Vice President, Corporate Secretary
and a director of Horizon. Mr. Goldbaum was previously associate
general counsel-commercial law for TriMas beginning in January
2014. Mr. Goldbaum joined TriMas in January 2012 and held the
position of legal counsel. Before joining TriMas, Mr. Goldbaum was
an associate in the corporate and litigation practice groups at the
law firm of Jaffe, Raitt, Heuer & Weiss, P.C. from September
2007 to August 2011.
Matthew J. Meyer. Mr. Meyer was appointed Chief
Accounting Officer on December 12, 2019. Mr. Meyer also held the
role of principal financial officer from March 3, 2020 until March
16, 2020. Mr. Meyer was previously Corporate Controller for Horizon
Global since November 2018. Prior to joining the Company, Mr.
Meyer, served in a variety of management positions for Joyson
Safety Systems, a global leader in mobility safety providing
safety-critical components, systems and technology to automotive
and non-automotive markets, from December 2015 to November 2018,
and ultimately served as corporate controller. From January 2015 to
December 2015, Meyer served as director, accounting and reporting
for Federal-Mogul Holdings Corporation, a developer,
manufacturer and
supplier of products for automotive, commercial, aerospace, marine,
rail and off-road vehicles; and industrial, agricultural and
power-generation applications (“Federal-Mogul”). Prior to his
position with Federal-Mogul, from September 2011 to January 2015,
Mr. Meyer served in a variety of management positions of increasing
responsibility, ultimately serving as compliance director for Kelly
Services Inc., a global leader in providing workforce solutions,
including outsourcing and consulting services. Meyer also served in
a variety of positions leading up to an audit manager position with
KPMG, LLP, a global network of professional firms providing audit,
tax and advisory services, from January 2007 to September
2011.
TRANSACTIONS WITH RELATED PERSONS
Policy for Review, Approval or Ratification of Transactions with
Related Parties
Pursuant to its
written charter, the Audit Committee is responsible for reviewing
reports and disclosures of insider and affiliated party
transactions and monitoring compliance with The Spirit and The
Letter, which requires employees to disclose in writing any outside
activities, financial interests, relationships or other situations
that do or may involve a conflict of interest or that present the
appearance of impropriety.
Pursuant to the
written charter of the Governance Committee and the written
Governance Guidelines, members of the Board must properly notify
the President and Chief Executive Officer and the Chair of the
Governance Committee if any actual or potential conflict of
interest arises between the Board and such member. After
notification, the Governance Committee will evaluate the matter and
provide a recommendation for resolution to the Board. The Board,
taking into account the recommendation of the Governance Committee,
will resolve the matter in the best interest of the
Company.
It is also our
policy that the Audit Committee review and approve all transactions
(other than those that are de minimis in nature) in which we
participate and in which any related person has or will have a
direct or indirect material interest. In reviewing and approving
such transactions, the Audit Committee obtains all information it
believes to be relevant to a review and approval of the
transaction. After consideration of the relevant information, the
Audit Committee approves only those related person transactions
that are consistent with our best interests.
On March 15,
2019, we entered into the Second Lien Term Facility Agreement. At
the time of entering into such agreement, affiliates of Corre,
including Corre Master Fund, beneficially owned, in the aggregate,
9.99% of the outstanding Common Stock. JKI Holdings, LLC (“JKI
Holdings”), an entity owned by our Board Chair, John C. Kennedy, is
also a Second Lien Lender.
The Second Lien
Term Facility Agreement provides for a term loan facility (the
“Second Lien Term Facility”) in the aggregate principal amount of
approximately $51.0 million, all of which has been borrowed by the
Company. The interest on the term loans under the Second Lien Term
Facility may be paid, at the Company’s election, in cash, at the
customary eurocurrency rate plus a margin of 10.50% per annum, or
in-kind, at the customary eurocurrency rate plus a margin of
11.50%; provided that if the term loans are converted to base rate
loans, the interest rate on interest paid (i) in cash will be the
customary base rate plus a margin of 9.50% per annum and (ii)
in-kind will be the customary base rate plus a margin of 10.50%;
provided, further, however, that cash interest payments are
currently prohibited under the Company’s term loan facility and
revolving credit facility. There are no amortization payments
required under the Second Lien Term Facility. Borrowings under the
Second Lien Term Facility mature on September 30, 2021. The total
indebtedness under the Second Lien Term Facility is and will be
guaranteed by the Company’s existing and future domestic
subsidiaries and certain foreign subsidiaries and is and will be
secured by substantially all of the assets of the Company and such
guarantors.
The Corre Lenders
lent approximately $34.7 million and JKI Holdings lent
approximately $2.6 million under the Second Lien Term Facility. In
connection with entering into the Second Lien Term Facility, the
Company issued the Corre Lenders warrants to purchase up to an
aggregate of 1,260,280 shares of Common Stock and issued JKI
Holdings warrants to purchase up to 278,283 shares of Common
Stock.
The warrants have
an initial exercise price of $1.50 per share and may be exercised
for cash or on a cashless basis. The exercise price of the warrants
is subject to adjustment for stock splits, stock dividends,
combinations, recapitalizations and other comparable events. The
exercise price of the warrants is also subject to adjustment if we
issue or are deemed to have issued Common Stock or warrants or
other rights or options to purchase Common Stock or securities
convertible into Common Stock at a price less than the exercise
price in effect, subject to certain exceptions such as the issuance
of equity awards under our equity incentive plans. The warrants
expire on March 15, 2024.
Additionally in
connection with the closing of the Second Lien Term Facility, the
Company issued the Corre Lenders an aggregate of 90,667 shares of
Series A preferred stock (“Series A Preferred Stock”) with a
liquidation value of $100 per share. The shares of Series A
Preferred Stock were entitled to cumulative dividends, at a rate of
eighteen percent per annum, if and when declared by the Board. The
Series A Preferred Stock was non-voting. In the event of any
liquidation of the Company, each Series A Preferred Stockholder
would have been entitled to, prior and in preference to any other
distribution, two times the liquidation value per
share plus all
accrued but unpaid dividends. Upon the receipt of the approval of
the Company’s stockholders at the Company’s annual meeting of
stockholders held on June 25, 2019, the shares of Series A
Preferred Stock converted into warrants to purchase an additional
2,952,248 shares of Common Stock, including warrants issuable based
upon the amount of accrued and unpaid dividends at the time of such
approval.
The warrants
issued to the Corre Lenders contain a provision that restricts the
ability of each Corre Lender to exercise its warrant to the extent
that after giving effect to such exercise and issuance, such Corre
Lender (together with its affiliates, such as the other Corre
Lenders, and any other persons acting as a group together with such
Corre Lender or any of its affiliates) would beneficially own more
than 9.99% of the number of shares of Common Stock outstanding
immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of such warrant.
EXECUTIVE COMPENSATION
Introduction
As an emerging
growth company under the Jumpstart Our Business Startups (JOBS) Act
of 2012, we have opted to comply with the executive compensation
disclosure rules applicable to “smaller reporting companies,” which
rules require compensation disclosure for each person serving as
our principal executive officer during the last completed fiscal
year, the two most highly compensated executive officers (other
than our principal executive officer) serving as executive officers
at the end of the last completed fiscal year, and up to two
additional individuals who would have been among such two most
highly compensated executive officers other than the principal
executive officer but for the fact that they were not serving as
executive officers at the end of the last completed fiscal
year.
Leadership Transition
The Company
continued to experience significant executive management transition
in 2019. Carl S. Bizon served as President, Chief Executive
Officer, from October 29, 2018 to September 23, 2019. Effective
September 23, 2019, Mr. Terrence G. Gohl became President and Chief
Executive Officer, replacing Mr. Bizon.
On February 18,
2019, Barry G. Steele became Chief Financial Officer, replacing
Brian Whittman, who had been serving as Interim Chief Financial
Officer since November 9, 2018. Mr. Steele served as Chief
Financial Officer until June 10, 2019. Effective June 10, 2019,
Jamie G. Pierson became Chief Financial Officer, replacing Mr.
Steele. Mr. Pierson served as Chief Financial Officer until
December 13, 2019, at which time Richard J. Jok became interim
Chief Financial Officer.
On November 11,
2019, Matthew T. Pollick became Chief Operating Officer. On
December 9, 2019, James F. Sistek became Chief Administrative
Officer. On December 13, 2019, Matthew J. Meyer became Chief
Accounting Officer.
On March 3, 2020,
Mr. Meyer assumed the role of principal financial officer,
replacing Mr. Jok, who continued in his role as interim Chief
Financial Officer. On March 16, 2020, Dennis E. Richardville became
Chief Financial Officer and principal financial officer, at which
time Mr. Meyer continued in his role as Chief Accounting Officer
and Mr. Jok returned to his role as Vice President, Financial
Planning and Analysis.
This section
provides information about the executive compensation program in
place for the Company’s 2019 named executive officers (or NEOs),
who are:
|
|
|
▪
|
Terrence G. Gohl
- President and Chief Executive Officer;
|
|
|
|
▪
|
Carl Bizon -
former President and Chief Executive Officer;
|
|
|
|
▪
|
Jay Goldbaum -
General Counsel, Chief Compliance Officer and Corporate
Secretary;
|
|
|
|
▪
|
Matthew J. Meyer
- Chief Accounting Officer;
|
|
|
|
▪
|
Jamie G. Pierson
- former Chief Financial Officer; and
|
|
|
|
▪
|
Barry G. Steele -
former Chief Financial Officer.
|
2019 Summary Compensation Table
The following
table sets forth compensation information for 2018 and 2019, as
applicable for our NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
and
Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock
Awards
|
|
Option
Awards
|
|
Non-equity
Incentive Plan Compensation
|
|
All Other
Compensation
|
|
Total
|
|
($)
|
|
($)
(1)
|
|
($) (2)
|
|
($)
|
|
($)
|
|
($) (3)
|
|
($)
|
|
Terrence Gohl, President and
Chief Executive Officer (1)
|
|
2019
|
|
162,500
|
|
|
—
|
|
|
719,250
|
|
|
—
|
|
|
—
|
|
|
31,188
|
|
|
912,938
|
|
|
Carl Bizon, former President
and Chief Executive Officer
|
|
2019
|
|
511,269
|
|
|
840,752
|
|
|
1,859,999
|
|
|
—
|
|
|
—
|
|
|
1,828,276
|
|
|
5,040,296
|
|
|
|
2018
|
|
392,826
|
|
|
225,000
|
|
|
313,838
|
|
|
—
|
|
|
—
|
|
|
261,274
|
|
|
1,192,938
|
|
|
Jay Goldbaum, General Counsel,
Corporate Secretary
|
|
2019
|
|
280,000
|
|
|
420,376
|
|
|
864,380
|
|
|
—
|
|
|
—
|
|
|
42,248
|
|
|
1,607,004
|
|
|
2018
|
|
280,000
|
|
|
—
|
|
|
125,992
|
|
|
—
|
|
|
14,792
|
|
|
42,027
|
|
|
462,811
|
|
|
Matthew Meyer, Chief
Accounting Officer
|
|
2019
|
|
219,231
|
|
|
73,566
|
|
|
136,568
|
|
|
—
|
|
|
—
|
|
|
7,229
|
|
|
436,594
|
|
|
Jamie Pierson, former Chief
Financial Officer (2)
|
|
2019
|
|
259,615
|
|
|
420,376
|
|
|
1,170,375
|
|
|
—
|
|
|
—
|
|
|
24,099
|
|
|
1,874,465
|
|
|
Barry Steele, former Chief
Financial Officer (3)
|
|
2019
|
|
136,923
|
|
|
—
|
|
|
450,000
|
|
|
—
|
|
|
—
|
|
|
7,591
|
|
|
594,514
|
|
_______________________________
|
|
|
(1)
|
Amounts in this
column for 2019 represent discretionary cash bonuses for NEOs that
were approved by the Compensation Committee on September 18, 2019
in recognition of the Company’s successful completion of, and the
valuable contributions provided by each of the officers above and
beyond normal time and effort to help achieve, the sale of the
Company’s APAC operating segment.
|
|
|
|
(2)
|
All 2019 awards in
this column relate to service-based restricted stock units (“RSUs”)
and performance-based restricted stock units (“PSUs”) granted under
the Amended 2015 Plan, which amounts were calculated based on
aggregate grant date fair value in accordance with FASB ASC Topic
718. PSU award values are reported as follows:
|
|
|
|
•
|
With respect to
PSUs granted on March 19, 2019, the values reported in the table
above represent the probable outcome of the performance conditions
($300,000, $98,000, $21,000 and $150,000 for Messrs. Bizon,
Goldbaum, Meyer and Steele, respectively). Assuming that the
highest level of performance of the applicable performance
conditions is achieved, the grant date fair value of the March 19,
2019 PSUs would be as follows: $600,000 for Mr. Bizon, $196,000 for
Mr. Goldbaum, $42,000 for Mr. Meyer and $300,000 for Mr.
Steele.
|
|
|
|
•
|
With respect to
PSUs granted on June 6, 2019, the values reported in the table
above represent the probable outcome of the applicable performance
conditions ($320,000 and $50,000 for Messrs. Bizon and Goldbaum,
respectively). Assuming that the highest level of performance of
the applicable performance conditions is achieved, the grant date
fair value of the June 6, 2019 PSUs would be as follows: $640,000
for Mr. Bizon and $100,000 for Mr. Goldbaum.
|
|
|
|
•
|
With respect to
the PSUs granted to Mr. Pierson on June 10, 2019, the value
reported in the table above represents the probable outcome of the
performance conditions ($250,000). Assuming that the highest level
of performance of the applicable performance conditions is
achieved, the grant date fair value would be $500,000.
|
|
|
|
•
|
With respect to
the PSUs granted to Mr. Gohl on September 23, 2019, the value
reported in the table above represents the probable outcome of the
performance conditions ($411,000). Assuming that the highest level
of performance of the applicable performance conditions is
achieved, the grant date fair value of these September 23, 2019
PSUs would be $719,250.
|
Per the terms of
the applicable grant agreements, Messrs. Pierson and Steele
forfeited all stock awards at the time of their respective
resignations. As part of Mr. Bizon’s severance arrangement, his
outstanding awards were later pro-rated based on the abbreviated
employment period. For more information regarding these awards, see
“2019
Long-Term Incentive Program” below.
|
|
|
(3)
|
This column
includes flexible cash allowances, Company contributions to
retirement and 401(k) plans, Company payment of supplemental
long-term disability coverage payments, Company payment for
executive physicals, severance, and other compensation for the NEOs
(including relocation-related benefits for Mr. Bizon),
specifically, for 2019, as follows: (A) Messrs. Gohl, Bizon, and
Goldbaum each received a flexible cash allowance in the amount of
$12,500, $3,750, and $25,000, respectively; (B) Messrs. Gohl,
Bizon, Goldbaum, Meyer, Pierson, and Steele each received $8,938,
$17,006, $9,200, $7,125, $14,351, and $5,477, respectively, for
Company contributions to the 401(k) plans; (C) Messrs. Gohl, Bizon,
Goldbaum, Meyer, Pierson, and Steele each received Company
contributions for the executive retirement program in the amount of
$9,750, $20,475, $5,600, $104, $8,846, and $1,846 respectively; (D)
Messrs. Bizon, Goldbaum, Pierson, and Steele each received Company
premium payments for supplemental long-term disability coverage in
the amount of $4,239, $2,448, $902 and $268, respectively; (E) Mr.
Bizon received employment-related payments consisting of (1)
housing benefits of $61,360, (2) a company car benefit of $17,956,
(3) tax assistance of $228,238, and (4) a tax preparation benefit
of $1,000; (F) as part of his severance arrangement, Mr. Bizon
accrued severance compensation and benefits consisting of (in
addition to pro-rata vesting of equity awards described below and
payment of accrued benefits) cash severance of $1,417,500 and
health care coverage reimbursements of $6,752; and (G) in
connection with his severance arrangement, Mr. Bizon received
Company assistance related to his relocation from the United States
to Australia in the form of a moving allowance of
$50,000.
|
2019 Named Executive Officer Compensation Program
Description
Executive Compensation Program Objectives
The Compensation
Committee believes that the Company’s NEO compensation program
should be aimed at accomplishing five key objectives:
|
|
|
1.
|
Align executives’
interests with overall corporate goals and objectives, core values
and stockholder interests;
|
|
|
|
2.
|
Motivate and
incentivize executives to achieve financial
objectives;
|
|
|
|
3.
|
Reinforce
consistent attainment of above-market performance;
|
|
|
|
4.
|
Balance
short-term performance with long-term value creation;
and
|
|
|
|
5.
|
Help attract and
retain high-caliber executive talent needed to develop and execute
the Company’s strategy.
|
Executive Compensation Practices
The table below
highlights certain key features of our current NEO compensation
program. The Company believes that these features demonstrate our
commitment to serve our stockholders’ interests and drive NEO
performance.
|
|
|
|
|
|
|
|
|
What We Do
(Practices
We Have Implemented)
|
|
|
|
What We Don’t Do
(Practices
We Have Not Implemented)
|
|
þ
|
Generally consider
competitive market data to understand the market for executive
compensation decisions
|
|
|
|
ý
|
Do not maintain compensation
programs that we believe create risks reasonably likely to have a
material adverse effect on the Company
|
|
þ
|
Maintain policies prohibiting
executives from hedging Company stock and limiting executives’
ability to pledge Company stock
|
|
|
|
ý
|
Do not have employment
contracts with any of our NEOs
|
|
þ
|
Maintain strong stock
ownership guidelines for executives (five times base salary for
CEO; three times base salary for other NEOs)
|
|
|
|
ý
|
Do not provide excise tax
gross-ups upon a change in control
|
|
þ
|
Use different metrics for
annual and long-term incentive compensation
|
|
|
|
ý
|
Do not discount, reload or
reprice stock options without stockholder approval
|
|
þ
|
Obtain advice for the
Compensation Committee from an external, independent compensation
consultant
|
|
|
|
ý
|
Do not grant equity awards
that provide for “single-trigger” vesting upon a change in
control
|
|
þ
|
Utilize both time-vesting and
performance-based equity compensation as part of the Company’s
regular long-term incentive program
|
|
|
|
ý
|
Do not provide dividends or
dividend equivalents on unearned performance-based equity
awards
|
|
þ
|
Offer limited perquisites or
personal benefits that we believe provide a benefit to the
Company’s business
|
|
|
|
|
|
|
þ
|
Provide reasonable
post-employment and change in control protections
|
|
|
|
|
|
|
þ
|
Maintain a “clawback” policy
and include clawback provisions in long-term incentive
awards
|
|
|
|
|
|
Overview of Key 2019 Program Elements
The main elements
of the Company’s 2019 compensation structure for our NEOs, and a
description of each element are provided below:
|
|
|
|
|
|
|
Element
|
|
Nature
|
|
Description
|
|
Base Salary
|
|
Fixed
|
|
Fixed compensation component
payable in cash; reviewed annually and subject to
adjustment
|
|
Short-Term Incentive (“STI”)
Compensation Plan Awards
|
|
Variable
|
|
STI paid in cash based on
performance against annually established goals
|
|
Long-Term Incentive (“LTI”)
Plan Awards
|
|
Variable
|
|
LTI equity awards include
service and performance-based stock units
|
|
Retirement and Welfare
Benefits
|
|
Fixed
|
|
Retirement plans, health care
and insurance benefits
|
|
Perquisites and Personal
Benefits
|
|
Fixed
|
|
Flexible cash allowance,
supplemental long-term disability coverage, relocation benefits,
and executive physicals
|
|
Hire/Interim Role
Bonuses
|
|
Variable
|
|
Reasonable compensation for
recruiting executives and retaining during interim
roles
|
|
Severance
Compensation
|
|
Fixed
|
|
Reasonable and
market-competitive severance protection designed to attract and
retain executive talent
|
Role of Independent Consultant
Engagement of Frederic W. Cook & Co., Inc. (“FW
Cook”)
The Compensation
Committee has retained the services of an external independent
executive compensation consultant, FW Cook, to assist the
Compensation Committee in its review of executive and non-employee
director compensation practices, including the competitiveness of
pay levels, program design, market trends, and technical
considerations.
At no time has
the Compensation Committee directed FW Cook to perform its services
in any particular manner, or to use any particular
methodology.
The Compensation
Committee has the final authority to hire and terminate the
consultant, and the Compensation Committee will evaluate the
consultant annually. Pursuant to SEC rules, the Compensation
Committee has assessed the independence of FW Cook and, in 2019,
the Compensation Committee concluded that no conflict of interest
exists that would prevent FW Cook from providing independent advice
to the Compensation Committee. FW Cook does not provide any
consulting advice to the Company, or any of its subsidiaries,
outside the scope of executive compensation and will not do so
without the prior consent of the Compensation Committee chair. FW
Cook meets with the Compensation Committee chair and the
Compensation Committee outside the presence of
management.
Market Compensation Data Analysis
In general, FW
Cook provides the Company with external pay comparison data. The
Compensation Committee recognizes that over-reliance on external
comparisons can be of concern, and the Compensation Committee is
mindful of the value and limitations of comparative data.
Therefore, although the Compensation Committee uses comparative
data from FW Cook as one input in making certain of its NEO
compensation decisions, such data is not the primary factor in the
decision-making process.
In determining
2019 compensation levels for certain of the Company’s current NEOs,
the Compensation Committee asked FW Cook to conduct a competitive
market assessment. This study compared this NEO compensation to
survey data based on comparably sized general industry
organizations. We did not select the constituent companies
comprising this survey group, and the component companies’
identities were not a material factor in the applicable
compensation analysis.
In the case of
certain of the Company’s current NEOs, the Compensation Committee
used this competitive market assessment as only one factor in its
compensation decisions; the Compensation Committee also considered
other factors including, but not limited to, each NEO’s time in
their particular role, historical performance and, to a lesser
extent, internal equity considerations.
Meridian Compensation Partners, LLC (“Meridian”)
Prior to
retaining the services of FW Cook, the Company, in 2018, retained
Meridian as an external independent executive compensation
consultant. Meridian’s scope of work was similar in nature to that
of FW Cook.
At no time did
the Compensation Committee direct Meridian to perform its services
in any particular manner, or to use any particular
methodology.
The Compensation
Committee had the final authority to hire and terminate Meridian.
Pursuant to SEC rules, the Compensation Committee assessed the
independence of Meridian and, in 2018, the Compensation Committee
concluded that no conflict of interest existed that would prevent
Meridian from providing independent advice to the Compensation
Committee. Meridian did not provide any consulting advice to the
Company, or any of its subsidiaries, outside the scope of executive
compensation. Meridian met with the Compensation Committee chair
and the Compensation Committee outside the presence of
management.
Peer Group
In 2017, the
Compensation Committee, following a comprehensive review with
Meridian, approved a peer group of 19 companies (shown in the
column labeled “2017” in the following table) in September 2017,
that were used for purposes of 2018 executive compensation
decisions.
During 2018, the
Compensation Committee reconfirmed the appropriateness of this peer
group and approved the removal of Donaldson Company, Inc., LCI
Industries (formerly Drew Industries), Woodward, Inc., Gentex
Corporation and U.S. Auto Parts Network, Inc., as well as the
addition of Miller Industries, Inc. and Douglas Dynamics, Inc. The
companies removed had revenue and market capitalization that in
general exceeded those of Horizon Global. The two new additional
companies were deemed to be in an appropriate size range for
executive pay comparison purposes. This new peer group of 16
companies (shown in the column labeled “2018/2019” in the following
table) was used to inform compensation decisions for Mr. Bizon in
connection with his appointment as President and Chief Executive
Officer in October 2018, as well as certain other compensation
decisions for the Company’s executive officers in early
2019.
No changes were
made to the peer group in 2019.
The impact of the
changes in the peer group is detailed in the following
chart:
|
|
|
|
|
|
|
COMPANY
PEER
|
|
2017
|
|
2018/2019
|
|
Actuant Corporation
|
|
ü
|
|
ü
|
|
Arctic Cat
Inc.(2)
(3)
|
|
ü
|
|
|
|
Callaway Golf Company
|
|
ü
|
|
ü
|
|
Donaldson Company,
Inc.(2)
|
|
ü
|
|
|
|
Dorman Products, Inc.
|
|
ü
|
|
ü
|
|
Douglas Dynamics, Inc.(1)
|
|
|
|
ü
|
|
Duluth Holdings
|
|
ü
|
|
ü
|
|
Federal Signal Corporation
|
|
ü
|
|
ü
|
|
Gentex
Corporation(2)
|
|
ü
|
|
|
|
Gentherm Incorporated
|
|
ü
|
|
ü
|
|
Johnson Outdoors, Inc.
|
|
ü
|
|
ü
|
|
LCI Industries (formerly Drew
Industries)(2)
|
|
ü
|
|
|
|
Miller Industries, Inc.(1)
|
|
|
|
ü
|
|
Modine Manufacturing Company
|
|
ü
|
|
ü
|
|
Nautilus, Inc.
|
|
ü
|
|
ü
|
|
Shiloh Industries, Inc.
|
|
ü
|
|
ü
|
|
Spartan Motors, Inc.
|
|
ü
|
|
ü
|
|
Stoneridge, Inc.
|
|
ü
|
|
ü
|
|
U.S. Auto Parts Network,
Inc.(2)
|
|
ü
|
|
|
|
Wabash National Corporation
|
|
ü
|
|
ü
|
|
Winnebago Industries, Inc.
|
|
ü
|
|
ü
|
|
Woodward,
Inc.(2)
|
|
ü
|
|
|
_______________________________
|
|
|
(2)
|
Peers removed for
2018
|
|
|
|
(3)
|
Removed in March
2017 due to acquisition by Textron
|
Red -
2018/2019 compensation peers
Key 2019 Named Executive Officer Compensation Components and
Decisions
A description of
the material elements of the 2019 executive compensation program
for our NEOs is provided in the following paragraphs.
2019 Base Salary
Base salaries for
our NEOs are generally established based on the scope of their
responsibilities, prior relevant experience and skills, and
competitive market pay levels. For 2019, the Compensation Committee
considered whether to grant merit increases and/or merit-based
adjustments to certain of the Company’s NEOs. In doing so, it
considered several factors consisting of individual
responsibilities, Company and individual performance, experience
and alignment with market levels. The table below reflects the 2019
base salary rates for our NEOs.
|
|
|
|
|
|
|
| |
Name
|
|
Base Salary
Rate
|
| |
| |
Terrence G. Gohl
|
|
$
|
650,000
|
|
| |
Carl S. Bizon
|
|
$
|
630,000
|
|
| |
Jay Goldbaum
|
|
$
|
280,000
|
|
| |
Matthew J. Meyer
|
|
$
|
225,000
|
|
| |
Jamie G. Pierson
|
|
$
|
500,000
|
|
| |
Barry G. Steele
|
|
$
|
400,000
|
|
Messrs. Bizon and
Goldbaum did not receive a base salary increase in 2019. Mr. Meyer
received an increase in base salary from $210,000 to $225,000 on
May 13, 2019. The remaining NEOs were newly hired in
2019.
Effective March
30, 2020, in connection with an across-the-board salary reduction
for all of our salaried employees in the Americas region in light
of the uncertainty surrounding the COVID-19 pandemic, Mr. Gohl
agreed to a temporary salary reduction of 50%, and Messrs. Goldbaum
and Meyer each agreed to a temporary salary reduction of
20%.
2019 Short-Term Incentive Compensation Plan
The goal of STI
compensation is to support our overall business objectives by
aligning performance with the interests of stockholders and
focusing attention on key measures of success. STI compensation is
designed to accomplish this goal by providing the opportunity for
additional cash rewards when pre-established performance goals are
achieved. STI awards have been provided under our Amended 2015
Plan. The 2019 STI compensation for our NEOs is described
below.
Target Awards
2019 STI target
award opportunities were provided to our NEOs during 2019. Each of
our participating NEOs received a 2019 STI target award opportunity
that was expressed as a percentage of base salary.
The participating
NEOs’ 2019 STI target award opportunities were initially
established by the Compensation Committee and based on financial
performance metrics and targets for 2019 at the Company-wide level
(the “Financial Performance Measures”). Depending on the
performance results achieved, the participating NEOs’ actual awards
generally could vary as a percent of target from 0% to a maximum of
200%.
In July 2019, the
Compensation Committee amended the 2019 STI program to modify the
goals for the Financial Performance Measures and the target payouts
for the NEOs, except that it did not amend the target payout for
Mr. Steele, who left the Company in June 2019. Mr. Gohl, who joined
the Company in September 2019, was not eligible for a 2019 STI
award.
The initial and
amended 2019 STI target awards for the NEOs are shown in the
following chart:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Initial 2019
Target STI
Award
Amount
|
|
Initial
Target Award as a % of Base Salary
|
|
Amended 2019
Target STI Award Amount
|
|
Amended
Target Award as a % of Base Salary
|
|
Carl S. Bizon
|
|
$
|
630,000
|
|
|
100.0
|
%
|
|
$315,000
|
|
50.0
|
%
|
|
Jay Goldbaum
|
|
$
|
140,000
|
|
|
50.0
|
%
|
|
$70,000
|
|
25.0
|
%
|
|
Matthew J. Meyer
|
|
$
|
67,500
|
|
|
30.0
|
%
|
|
$33,750
|
|
15.0
|
%
|
|
Jamie G. Pierson
|
|
$
|
500,000
|
|
|
100.0
|
%
|
|
$250,000
|
|
50.0
|
%
|
|
Barry G. Steele
|
|
$
|
240,000
|
|
|
40.0
|
%
|
|
N/A
|
|
N/A
|
|
Financial Performance Measures
The Financial
Performance Measures consisted of the following
metrics:
|
|
|
▪
|
Recurring Operating Profit Margin - 40%. This metric provides for
rewards based on the Company’s performance in consolidated
recurring operating profit margin. For purposes of this
computation, recurring operating profit margin means earnings
before interest, taxes and other income/expense, excluding certain
non-recurring charges (cash and non-cash) associated with business
restructuring, cost savings projects and asset impairments
(recurring operating profit), as a percentage of
sales.
|
|
|
|
▪
|
Free Cash Flow - 60%. This metric provides for
rewards based on the Company’s recurring cash flow, which is the
sum of the
Company’s recurring operating profit (defined above), adjusted
(1) up or down for other income/expense, (2) up or down
for changes in working capital, (3) upward for depreciation
and amortization, and (4) downward for capital expenditures,
cash interest and cash taxes.
|
The initial
Financial Performance Measures established for the 2019 STI awards
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
Performance
|
|
|
Financial
Performance Measure
|
|
Weighting
|
|
Threshold
(50%
Payout)
|
|
Target
(100%
Payout)
|
|
Maximum
(200%
Payout)
|
|
|
Recurring Operating
Profit
|
|
40.0
|
%
|
|
$
|
25,160
|
|
|
$
|
31,450
|
|
|
$
|
37,740
|
|
|
|
Recurring Cash
Flow
|
|
60.0
|
%
|
|
$
|
18,400
|
|
|
$
|
23,000
|
|
|
$
|
27,600
|
|
|
|
Total
|
|
100.0
|
%
|
|
|
|
|
|
|
|
The amended
Financial Performance Measures used for the 2019 STI awards and
actual achievements were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target
Performance
|
|
|
|
|
|
Financial
Performance Measure
|
|
Weighting
|
|
Threshold
(20%
Payout)
|
|
Target
(50%
Payout)
|
|
Maximum
(100%
Payout)
|
|
Actual
Performance
|
|
Percentage of
Incentive Earned
|
|
|
|
|
|
(dollars in
thousands)
|
|
|
|
Recurring Operating
Profit
|
|
40.0
|
%
|
|
$
|
15,096
|
|
|
$
|
18,870
|
|
|
$
|
22,644
|
|
|
$
|
(35,216
|
)
|
|
0
|
%
|
|
Recurring Cash
Flow
|
|
60.0
|
%
|
|
$
|
8,336
|
|
|
$
|
10,420
|
|
|
$
|
12,504
|
|
|
$
|
(15,114
|
)
|
|
0
|
%
|
|
Total
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Award Determination
On March 3, 2020,
the Compensation Committee determined the degree to which the STI
goals for the 2019 performance period were achieved, which actual
results are highlighted in the table above for the Financial
Performance Measures.
As a result, our
continuing NEOs did not receive STI award payouts for the 2019
performance period (outlined in the chart below):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Target STI
Award as a % of Base Salary
|
|
Target STI
Award Amount
|
|
Actual STI
Award Earned (%)
|
|
STI Award
Amount Earned
|
|
Jay Goldbaum
|
|
50.0
|
%
|
|
$
|
140,000
|
|
|
0
|
%
|
|
$
|
0
|
|
|
Matthew J. Meyer
|
|
30.0
|
%
|
|
$
|
67,500
|
|
|
0
|
%
|
|
$
|
0
|
|
The Company’s
departed NEOs did not receive any STI award payouts for the 2019
performance period.
2019 Long-Term Incentive Program
On March 19,
2019, the Compensation Committee granted regular annual LTI awards
to Messrs. Bizon, Goldbaum, Meyer and Steele in order to promote
the achievement of the Company’s financial goals (the “2019 LTI
Awards”). The regular annual 2019 LTI Awards for Messrs. Bizon,
Goldbaum, Meyer and Steele, which consisted of RSUs and target
grants of PSUs, are summarized in the following chart:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Service-Based
RSUs Granted in 2019
|
|
Target PSUs
Granted
in
2019
|
|
Total Target
2019 LTI Award Amount
|
|
Total Target
2019 LTI Award Amount as Percent of Salary
|
|
Carl S.
Bizon(1)(2)
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
|
$
|
600,000
|
|
|
95.2
|
%
|
|
Jay
Goldbaum(2)
|
|
$
|
98,000
|
|
|
$
|
98,000
|
|
|
$
|
196,000
|
|
|
70.0
|
%
|
|
Matthew J.
Meyer(2)
|
|
$
|
21,000
|
|
|
$
|
21,000
|
|
|
$
|
42,000
|
|
|
18.7
|
%
|
|
Barry G.
Steele(2)(3)
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
|
$
|
300,000
|
|
|
75.0
|
%
|
_____________________________
|
|
|
(1)
|
Mr. Bizon’s grant
payouts are or were subject to pro-ration based on his severance of
employment with the Company in 2019. The RSUs were settled in
shares on April 7, 2020. Pro-rated PSUs are eligible for future
vesting to the extent the performance metrics are met.
|
|
|
|
(2)
|
Messrs. Bizon,
Goldbaum, Meyer and Steele’s RSU awards are or were generally
scheduled to vest ratably on March 19, 2020, March 19, 2021, and
March 19, 2022, respectively.
|
|
|
|
(3)
|
Pursuant to the
terms of the grant agreements, all LTI awards for Mr. Steele were
forfeited at time of resignation.
|
The target PSU
awards for Messrs. Bizon, Goldbaum, Meyer and Steele were
determined based on the applicable dollar amount and the applicable
market data input and methodology approved by the Compensation
Committee. For the 2019-2021 cycle (began on January 1, 2019 and
ends on December 31, 2021), the PSU award is earned based on the
achievement of a specified relative total shareholder return
(“RTSR”) percentile rank during the applicable performance period.
The Compensation Committee approved RTSR as the performance measure
and the use of a peer group (consisting of the companies listed as
our “2018/2019” peers under “Market
Compensation Data Analysis” above), as outlined in the
following table. If, upon the conclusion of the performance period,
RTSR falls between performance levels, straight-line mathematical
interpolation will be used to determine the amount of the target
PSUs (rounded up to the nearest whole number of PSUs) earned. Based
on the degree to which the performance goals are met, any PSUs
earned for the 2019-2021 cycle were designed to vest on March 1,
2022.
|
|
|
|
Percentile
in 3-Year RTSR Performance vs. Peer Group
|
Target PSUs
Earned
|
|
80th percentile or
above
|
200%
|
|
70th percentile
|
150%
|
|
50th percentile
|
100%
|
|
35th percentile
|
50%
|
|
Below 25th percentile
|
0%
|
On June 6, 2019,
Messrs. Bizon and Goldbaum received incremental service-based RSU
awards generally intended to vest ratably (with the first tranche
vesting after one year and the remaining tranches vesting on the
same schedule as the corresponding tranches for the March 19, 2019
RSU grants) with grant date fair values of $320,000 for Mr. Bizon
and $50,000 for Mr. Goldbaum. Additionally, on June 6, 2019,
Messrs. Bizon and Goldbaum each received target PSU awards
generally subject to the same three-year performance period and
terms described above with grant date fair values of $320,000 for
Mr. Bizon and $50,000 for Mr. Goldbaum. As part of Mr. Bizon’s
severance arrangement, his outstanding awards were later pro-rated
based on the abbreviated employment period.
On June 10, 2019,
Mr. Pierson received a service-based RSU award generally intended
to vest after a one-year period with a grant date fair value of
$250,000. On June 10, 2019, Mr. Pierson also received a target PSU
award generally subject to the same three-year performance period
and terms described above with a grant date fair value of $250,000.
On September 19, 2019, Messrs. Goldbaum, Meyer and Pierson each
received additional service-based RSU awards generally intended to
vest after a one-year period with grant date fair values of
$420,377, $73,568 and $420,377, respectively.
On September 19,
2019, Messrs. Goldbaum, Meyer and Pierson each received additional
service-based RSU awards generally intended to vest after a
one-year period with grant date fair values of $420,377, $73,568
and $420,377, respectively. These awards were granted in
recognition of the successful completion of, and the valuable
contributions provided by each of the officers above and beyond
normal time and effort to help achieve, the sale of
APAC.
Pursuant to the
terms of the applicable grant agreements, all unvested equity
awards held by Messrs. Steele and Pierson were forfeited upon their
departures from the Company.
On September 23,
2019, Mr. Gohl received 100,000 target PSUs generally subject a
three-year performance period beginning on September 23, 2019 and
ending on September 23, 2022. This PSU award is earned based on the
achievement of stock price performance during the performance
period, as shown in the following table:
|
|
|
|
|
Performance
Level
|
Ending Stock
Price Minus Beginning Stock Price
|
PSUs
Earned
|
|
Below Threshold
|
Less than $0.00
|
75%
|
|
Threshold
|
$0.00
|
100%
|
|
Target
|
$1.50
|
125%
|
|
Above Target
|
$3.00
|
150%
|
|
Maximum
|
$4.50 or greater
|
175%
|
For purposes of
the table above, the “Beginning Stock Price” is the closing price
of a share of common stock on the principal stock exchange on which
the common stock is then traded on September 23, 2019, and “Ending
Stock Price” is the average closing price of a share of common
stock on the principal stock exchange on which the common stock is
then traded for the last 30 trading days of the performance period.
If, upon the conclusion of the performance period, performance
falls between performance levels, straight-line mathematical
interpolation will be used to determine the amount of the target
PSUs (rounded up to the nearest whole number of PSUs)
earned.
Award Determinations
On March 2, 2020,
the Compensation Committee determined the degree to which the PSUs
granted in 2017 for a 2017-2019 performance period were earned.
These PSUs could have been earned based on the achievement of a
specified RTSR percentile rank during the performance period (which
began on January 1, 2017 and ended on December 31, 2019). The
Compensation Committee approved RTSR as the performance measure and
the use of a previously disclosed peer group for the performance
measurement comparison. If, upon the conclusion of the performance
period, RTSR fell between performance levels, straight-line
mathematical interpolation would be used to determine the amount of
the target PSUs (rounded up to the nearest whole number of PSUs)
earned.
|
|
|
|
Percentile
in 3-Year RTSR Performance vs. Peer Group
|
Target PSUs
Earned
|
|
80th percentile or
above
|
200%
|
|
70th percentile
|
150%
|
|
50th percentile
|
100%
|
|
35th percentile
|
50%
|
|
Below
25th percentile
|
0%
|
The Company’s
total shareholder return for the 2017-2019 performance period was
approximately -86%, which placed the Company below the
25th
percentile of its
RTSR peer group. Accordingly, no PSUs were earned for the 2017-2019
performance period.
On March 2, 2020,
the Compensation Committee determined the degree to which the
2018-2019 average return on invested capital (“ROIC”) metrics for
2018 ROIC cash awards were achieved. For these purposes, average
ROIC is determined by dividing (1) adjusted operating profit minus
cash taxes paid by (2) the difference between (a) the sum of
shareholders’ equity plus debt, minus (b) cash on books. The 2018
ROIC cash awards could have been earned based on ROIC achievement
during the performance period (which began on January 1, 2018 and
ended on December 31, 2019) as follows (with straight-line
mathematical interpolation between performance
levels):
|
|
|
|
|
Performance
Level
|
ROIC
|
Percentage
Earned
|
|
Maximum
|
15.0%
|
200%
|
|
|
14.0%
|
175%
|
|
Above
Target
|
13.0%
|
150%
|
|
|
12.0%
|
125%
|
|
Target
|
11.0%
|
100%
|
|
Below
Target
|
10.5%
|
75%
|
|
Threshold
|
9.9%
|
50%
|
|
Below
Threshold
|
< 9.9%
|
0%
|
For the 2018 ROIC
cash awards, the Committee reviewed each year during the
performance period separately. In 2018, the Company achieved a ROIC
of -3.3%, with participants earning a 0% payout level for this
interim period (the “2018 Interim ROIC Cash Achievement Level”). In
2019, the Company achieved a ROIC of -18.4%, with participants
earning a 0% payout level for
this interim
period (the “2019 Interim ROIC Cash Achievement Level”). The actual
payout under the 2018-2019 ROIC cash awards was then determined by
averaging the 2018 Interim ROIC Cash Achievement Level and the 2019
Interim ROIC Cash Achievement Level. For clarity, no payouts were
made during any interim period. As a result, our participating NEO
earned the following cash ROIC award for the 2018-2019 performance
period (outlined in the chart below):
|
|
|
|
|
|
|
|
|
Name
|
|
Target
2018-2019 ROIC Amount
|
|
Actual Award
Earned
(%)
|
|
Award Amount
Earned
|
|
Jay Goldbaum
|
|
65,333
|
|
0.0%
|
|
0
|
Bonus Compensation
On September 19,
2019, the Company completed the successful sale of the Company’s
APAC business segment. Effective upon completion of the sale, the
Compensation Committee approved discretionary cash bonuses for
certain of the NEOs in the following amounts: Mr. Bizon, $840,752
(paid pursuant to his separation agreement); Mr. Goldbaum,
$420,376; Mr. Meyer, $73,566; and Mr. Pierson, $420,376. These
bonuses were paid in recognition of the successful completion of,
and the valuable contributions provided by each of the officers
above and beyond normal time and effort to help achieve, the sale
of APAC.
Perquisites and Certain All Other Compensation Amounts
The following
NEOs were participants in the Company’s Flexible Cash Allowance
Policy, pursuant to which Mr. Gohl was entitled to a $50,000 annual
allowance paid monthly and received $12,500 in 2019, Mr. Bizon was
entitled to a $5,000 annual allowance paid quarterly and received
$3,750 in 2019, and Mr. Goldbaum was entitled to and received a
$25,000 annual allowance paid quarterly in cash. The Company’s
Flexible Cash Allowance Policy is in lieu of other Company provided
perquisites, including supplemental universal life insurance,
private club membership, and other benefits.
Mr. Bizon
received the following employment-related payments for 2019: (1)
housing benefits of $61,360; (2) a company car benefit of $17,956;
(3) tax assistance of $228,238; and (4) a tax preparation benefit
of $1,000.
The Company
provides a supplemental long-term disability insurance program for
certain officers, including the NEOs. This supplemental insurance
program, the premiums for which are paid by the Company, provides
additional protection for the NEOs above the Company’s broad-based
disability insurance plan. In addition, the Company continues to
make an executive physical program available to its NEOs, which
program allows participating officers to receive up to $3,500
annually in preventative health services. This benefit was not used
by any of the NEOs in 2019.
As part of his
severance, Mr. Bizon received company assistance related to his
relocation from the United States to Australia, in the form of a
moving allowance of $50,000.
No Employment Agreements
During 2019, the
Company was not a party to any employment contracts with our
NEOs.
Stock Ownership Guidelines
The continuing
NEOs are subject to stock ownership guidelines. Under the
guidelines, each covered executive is required to hold a number of
shares of the Company’s common stock having a market value equal to
or greater than a specified multiple of such executive’s base
salary, as set forth below:
|
|
|
|
|
Name
|
|
Multiple
|
|
Terrence G. Gohl
|
|
5x
|
|
Jay Goldbaum
|
|
3x
|
|
Matthew J. Meyer
|
|
3x
|
Shares owned (or
beneficially owned) by the executive, including shares acquired
upon the exercise of stock options or acquired through any Company
equity incentive plans, time-vesting restricted stock or restricted
stock units, whether vested or not, and vested, in the money stock
options are counted towards satisfaction of the guidelines.
Unvested or “underwater” stock options, unvested performance-based
restricted stock or other similar awards will not be counted
towards satisfaction of the guidelines.
Due to separation
from service, Messrs. Bizon, Pierson and Steele no longer have
stock ownership guidelines. Messrs. Gohl, Goldbaum, and Meyer have
until September 22, 2024, July 1, 2020 and December 12, 2024,
respectively, to meet these ownership guidelines.
New executives to
whom the stock ownership guidelines are applicable will have five
years from the time they are named to a qualifying position to meet
the stock ownership guidelines. Once an executive attains the
required ownership level, the executive will not be considered
noncompliant solely due to subsequent stock price declines. Prior
to meeting the stock ownership guidelines, an executive must hold
at least 50% of the shares acquired by the executive on (1) vesting
of restricted stock, (2) exercise of a stock option, (3) exercise
of a stock appreciation right, (4) payout of restricted stock units
in shares, and (5) payout (in shares) of any other equity award.
However, such holding requirement will be reduced by (1) any shares
retained by the Company to satisfy any portion of tax withholding
requirements attributable to such vesting, payout, or exercise
events, (2) any shares of common stock tendered by the executive to
pay any portion of the exercise price of a stock option, and
(3) if any portion of the taxes due in connection with such events
or the exercise price of options is satisfied by the executive
remitting cash to the Company or applicable taxing authority or by
the Company withholding amounts from the executive’s compensation
or payments otherwise due, the number of shares of common stock
having a fair market value equal to the amount so remitted or
withheld based on the closing price of the common stock on the
vesting or exercise date, as applicable.
If an executive
does not meet the applicable guidelines, the Compensation Committee
will consider this fact when determining the grant of future equity
awards to such executive, and may require all stock attained
through Company grants of equity be retained until the guidelines
are satisfied, or take any other action the Compensation Committee
deems appropriate.
Restrictions on Hedging and Pledging of Our Securities
The Company’s
anti-hedging policy prohibits our directors, and certain
executives, including the NEOs, from engaging in any transaction
that is designed to hedge or offset any decrease in the market
value of the Company’s common stock, including puts or calls,
prepaid variable forward contracts, equity swaps, collars, and
exchange funds. The policy also prohibits our directors and
executives from holding Company securities in margin accounts.
Under the policy, directors and covered executives may pledge
shares of Company common stock on a limited basis, provided that,
among other things, (a) any pledge is approved in writing in
advance by our Chief Executive Officer and General Counsel (or by
the Governance Committee in the case of a pledge by our Chief
Executive Officer or General Counsel), (b) any pledged shares
will cease to be counted as owned for purposes of our stock
ownership guidelines and (c) the sum of (i) the aggregate number of
shares of Company common stock pledged by all directors and
executives at the time of the requested pledge and (ii) the number
of shares requested to be pledged is equal to or less than two
times the average daily trading volume in Company common stock for
the preceding thirty (30) trading days.
Compensation Recovery
The Company
maintains a clawback policy that allows the Board to require
reimbursement of any STI or LTI award from certain officers,
including the NEOs (or others as determined by the Board) where:
(1) the payment was predicated upon achieving certain
financial results that were subsequently the subject of a
substantial restatement of Company financial statements filed with
the SEC or negatively adjusted in a manner that impacts a
performance measure upon which the STI or LTI award was based; (2)
the Board determines the covered person engaged in intentional
misconduct that caused or substantially caused the need for the
substantial restatement or negative adjustment; and (3) a lower
payment or award would have been made to the covered person as
determined by the Board based upon the restated or negatively
adjusted financial results. In each such instance, the Company may,
to the extent practicable, seek to recover from the individual
executive the amount by which the individual executive’s STI or LTI
payout for the relevant period exceeded the lower payout that would
have been made based on the restated or negatively adjusted
financial results.
Outstanding Equity Awards at 2019 Fiscal Year-End
The following
table provides information about the outstanding share-based equity
awards for each of our NEOs as of December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Grant
Date
|
|
Number of
Securities Underlying Unexercised Options
(#)
Exercisable
|
|
Number of
Securities Underlying Unexercised Options
(#)
Unexercisable
|
|
Option
Exercise Price
($)
|
|
Option
Expiration Date
|
|
Number
of
Shares
or
Units
of Stock
That
Have
Not
Vested
(#)
|
|
Market
Value
of Shares
or
Units of
Stock
That Have
Not
Vested
($) (1)
|
|
Equity
Incentive Plan Awards:
Number of
Unearned Shares, Units or Other Rights That Have Not Vested (#)
(1)
|
|
Equity
Incentive Plan Awards:
Market or
Payout Value of Unearned Shares, Units or Other Rights That Have
Not Vested
($)
(1)
|
|
Terrence Gohl
|
|
9/23/2019(11)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100,000
|
|
|
349,000
|
|
|
Carl Bizon (2)
|
|
3/19/2019 (5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,444
|
|
|
67,860
|
|
|
|
|
6/6/2019 (5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,648
|
|
|
40,652
|
|
|
Jay Goldbaum
|
|
8/15/2015
|
|
3,194
|
|
|
—
|
|
|
11.02
|
|
|
8/15/2025
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
10/7/2015
|
|
491
|
|
|
—
|
|
|
9.20
|
|
|
10/7/2025
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
3/1/2016 (6)
|
|
5,598
|
|
|
—
|
|
|
10.08
|
|
|
3/1/2026
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
3/1/2017 (7)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,140
|
|
|
3,978
|
|
|
—
|
|
|
—
|
|
|
|
|
3/1/2017(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,279
|
|
|
7,954
|
|
|
|
|
3/1/2018(9)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,947
|
|
|
20,755
|
|
|
—
|
|
|
—
|
|
|
|
|
3/1/2018(4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,929
|
|
|
27,672
|
|
|
|
|
3/19/2019(8)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,667
|
|
|
114,008
|
|
|
—
|
|
|
—
|
|
|
|
|
3/19/2019(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,667
|
|
|
114,008
|
|
|
|
|
6/6/2019(8)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,015
|
|
|
52,402
|
|
|
—
|
|
|
—
|
|
|
|
|
6/6/2019(5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,015
|
|
|
52,402
|
|
|
|
|
9/19/2019(10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
104,312
|
|
|
364,049
|
|
|
—
|
|
|
—
|
|
|
Matthew Meyer
|
|
3/19/2019 (8)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,000
|
|
|
24,430
|
|
|
—
|
|
|
—
|
|
|
|
|
3/19/2019 (5)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,000
|
|
|
24,430
|
|
|
|
|
9/19/2019 (10)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,255
|
|
|
63,710
|
|
|
—
|
|
|
—
|
|
|
Jamie Pierson
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Barry Steele
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
_______________________________________
|
|
|
(1)
|
The market value
is based on the Company’s stock price as of December 31, 2019
($3.49) multiplied by the number of shares or units granted (for
PSUs, at 100%).
|
|
|
|
(2)
|
Mr. Bizon’s RSU
awards granted on March 1,2018, March 19, 2019, and June 6, 2019
were vested on a pro-rated basis per the severance agreement and
were distributed on April 7, 2020.
|
|
|
|
(3)
|
PSU awards are
designed to be earned based on the achievement of specific
performance measures over a period that began on January 1, 2017
and ended on December 31, 2019.
|
|
|
|
(4)
|
PSU awards are
designed to be earned based on the achievement of specific
performance measures over a period that began on January 1, 2018
and ends on December 31, 2020.
|
|
|
|
(5)
|
PSU awards are
designed to be earned on the achievement of specific performance
measures over a period that began on January 1, 2019 and ends on
December 31, 2021. For more information regarding these PSU awards,
see “2019
Long-Term
Incentive Program.”
|
|
|
|
(6)
|
Stock options for
Mr. Goldbaum granted on March 1, 2016 fully vested and became
exercisable on March 1, 2019.
|
|
|
|
(7)
|
The remaining
portion of the March 1, 2017 RSU grant vests or vested in
substantially equal installments on March 1, 2020 and March 1,
2021.
|
|
|
|
(8)
|
These RSU awards
generally vest ratably on the first three anniversaries of the
grant date.
|
|
|
|
(9)
|
These RSU awards
generally vest ratably on the four anniversaries of the grant
date.
|
|
|
|
(10)
|
These RSU awards
generally vest on the first anniversary of the grant
date.
|
|
|
|
(11)
|
PSU awards are
designed to be earned on the achievement of specific performance
measures over a period that began on September 23, 2019 and ends on
September 23, 2022.
|
Benefits and Retirement Programs
Each NEO is
eligible to participate in benefit plans available to substantially
all the Company’s U.S. employees. These benefit plans include the
Company’s retirement program (comprised of a 401(k) savings
component and a Horizon Global contribution component) (the
“Retirement Program”), and the Company’s medical, dental, vision,
group life and accidental death and dismemberment insurance
programs (the “Health Benefits Program”). The Retirement Program
and the Health Benefits Program are designed to reward continued
employment with the Company, and the Retirement Program is also
designed to assist participants with financial preparation for
retirement.
Under the
Retirement Program, the Company makes matching contributions for
each active participant in the 401(k)-savings component equal to
25% of the participant’s permitted contributions, up to a maximum
of 5% of the participant’s eligible compensation. In addition, for
most employees, the Company may contribute an additional 25% of
matching contributions based on the Company’s annual financial
performance.
Under the terms
of the Retirement Program, the Company contributes to each eligible
employee’s plan account an amount determined as a percentage of
such employee’s eligible compensation. The percentage is based on
the employee’s age and for salaried employees and ranges from 1.0%
for employees under the age of 30 to 4.5% for employees age 50 and
over. Messrs. Gohl, Bizon, and Pierson were eligible for a
contribution amount equal to 4.5% of their respective eligible
compensation, Mr. Steele was eligible for a contribution amount
equal to 4.0% of his respective eligible compensation, and
Messrs. Goldbaum and Meyer were eligible for a contribution
amount equal to 2.0% of their respective eligible
compensation.
Executive Retirement Program
Each NEO is
eligible for the Company’s executive retirement program, which
provides retirement benefits in addition to those provided under
the Retirement Program. The Company offers these additional
programs to enhance total executive pay so that it remains
competitive in the market. Effective July 1, 2015, the Company
began funding a rabbi trust for its obligations under these
programs. Trust assets are subject to the claims of the Company’s
creditors in the event of bankruptcy.
Under the
Company’s Supplemental Executive Retirement Plan (“SERP”), the
Company contributed to each NEO’s account at the end of each
quarter with the amount determined as a fixed percentage of their
eligible compensation. The contribution percentages were based on
each participating NEO’s age on the date of the contribution. In
accordance with the terms of the SERP, the Company’s contributions
vest 100% after five years of eligible employment with the Company.
The Company’s contributions immediately vest upon attainment of
retirement age or death.
The Company’s
Compensation Limit Restoration Plan (“CLRP”) provides each
participating NEO benefits in the form of Company contributions
which would have been payable under the quarterly contribution
component of the Retirement Program, but for tax code limits on the
amount of pay that can be considered in a qualified plan. There are
no employee contributions permitted under the CLRP. The Company’s
contributions under the CLRP vary as a percent of eligible
compensation based on the age of each of our NEOs.
The executive
retirement program also includes an elective deferral compensation
feature to supplement the existing executive retirement program.
Subject to the terms of the Company’s executive retirement program,
each NEO may elect to defer up to 25% of base pay and up to 100% of
annual cash incentive awards. Contributions to the Company’s
executive retirement program are invested at the direction of each
NEO based on the investment options in the Company’s retirement
program. Each NEO’s investment directive may be amended at any
time.
Other Post-Employment Compensation
The Company
maintains an Executive Severance/Change of Control Policy
(“Severance Policy”). The Severance Policy covers each of our NEOs,
with the Compensation Committee designating Mr. Gohl as a Tier I
participant and Messrs. Goldbaum and Meyer as Tier II participants.
Prior to his separation from Horizon Global, Mr. Bizon was a Tier I
participant. Messrs. Steele and Pierson were each Tier II
participants prior to their respective separations from Horizon
Global. The Severance Policy provides that the Company will make
severance payments to a participant upon the termination of such
participant’s employment under certain circumstances. The Severance
Policy includes an excise tax “cap” provision, which will operate
to reduce the total amount of payments due under the Severance
Policy so as to avoid the imposition of excise taxes and the
resulting loss of tax deductions to the Company under Section 280G
of the Internal Revenue Code. The Severance Policy was amended in
November 2018 to (1) reduce the non-change-of-control severance
period for Tier I participants from two years to 18 months, (2)
reduce the change-of-control severance period for Tier I
participants from three years to two years, and (3) reduce the
change-of-control severance
period for Tier
II participants from two years to 18 months. Mr. Goldbaum’s
severance protections were not modified by this
amendment.
If the Company
terminates the employment of an NEO for any reason other than
cause, disability or death, or if any NEO terminates his employment
with the Company for good reason, (in each case, a “qualifying
termination”), the Company will provide such NEO with: (1) one
year’s (1.5 years’ for Mr. Gohl) annual base salary; (2) the value
of STI payments equal to one year’s (1.5 years’ for Mr. Gohl)
payout at his target level in effect at the date of termination
(generally paid in equal installments over one or 1.5 years, as
applicable); (3) the value of any STI payment that has been
declared for the NEO but not paid; (4) the NEO’s pro-rated STI for
the year of termination through the date of termination based on
his target level and actual full-year performance; (5) immediate
vesting upon the termination date of a pro-rata portion of equity
awards granted under the Amended 2015 Plan through the termination
date (for performance-based equity awards, based on actual
performance); (6) executive level outplacement services for up to
12 months; and (7) continued medical benefits for up to
12 months (18 months for Mr. Gohl) following the
termination date.
In the case of an
NEO’s voluntary termination or termination for cause, the Company
will pay the NEO’s accrued base salary through termination plus
earned but unused vacation compensation (and, in the case of
voluntary termination, the value of any STI payment that has been
declared but not paid). All other benefits will cease as of the
termination date. If the employment of one of our NEOs is
terminated due to death, the Company will pay the NEO’s accrued but
unpaid base salary and the value of the NEO’s accrued but unpaid
STI compensation as of the date of death, and such NEO will fully
vest in his outstanding equity awards, including performance-based
equity awards at the target performance level. Other than continued
participation in the Company’s medical benefit plan for such NEO’s
dependents for up to 36 months, all other benefits will cease
as of the date of such NEO’s death. If one of our NEOs is
terminated following disability, the Company will pay the NEO’s
earned but unpaid base salary and the value of STI payments, and
such NEO will fully vest in all his outstanding time-based equity
awards and performance-based equity awards at the end of the
performance period based on actual performance. In addition, such
NEO will be eligible for disability benefits under the Company’s
disability programs, including the supplemental executive long-term
disability insurance program. All other benefits will cease as of
the date of such termination in accordance with the terms of such
benefit plans.
In the case of a
qualifying termination of an NEO’s employment with the Company
within two years of a change-of-control (as defined below), then,
in place of any other severance payments or benefits, the Company
will provide such NEO with: (1) a payment equal to 1.5 years’ (2
years’ for Messrs. Gohl and Goldbaum) of his base salary rate in
effect at the date of termination; (2) the value of 1.5 years’ (2
years’ for Messrs. Gohl and Goldbaum) STI payouts at his target
level in effect at the date of termination; (3) the value of any
STI payment that has been declared for the NEO but not paid; (4)
the NEO’s pro-rated STI payout for the year of termination through
the date of termination based on his target level and actual
full-year performance; (5) immediate vesting upon the termination
date of all unvested and outstanding time-based vesting equity
awards; (6) immediate vesting upon the termination date of all
unvested and outstanding performance-based equity awards based on
target performance; (7) executive level outplacement services for
up to 12 months; and (8) continued medical benefits for up to
18 months (24 months for Messrs. Gohl and Goldbaum) following the
termination date. Certain of such payments would be made in
installments in certain circumstances if necessary to comply with
Code Section 409A.
For purposes of
the Severance Policy, “change-of-control” is generally deemed to
have occurred upon the first of the following events:
|
|
|
1.
|
Any individual,
entity or group acquires beneficial ownership of 35% or more of the
voting power of the Company’s outstanding common stock, subject to
certain exceptions, as further described in the Severance
Policy;
|
|
|
|
2.
|
A majority of
members of the Board are replaced by directors whose appointment or
election is not approved by a majority of the Company’s directors,
subject to certain exceptions, as described in the Severance
Policy;
|
|
|
|
3.
|
The Company
consummates a reorganization, merger or certain other substantial
corporate transactions resulting in a substantial change in the
Company’s ownership or leadership, subject to certain exceptions,
as described in the Severance Policy; or
|
|
|
|
4.
|
Approval by the
Company’s stockholders of a complete liquidation or dissolution of
the Company, subject to certain exceptions, as described in the
Severance Policy.
|
In addition, the
Severance Policy requires that, in return for these benefits, each
NEO has to refrain from competing against the Company for a period
following termination that corresponds to the duration of any
severance payments such NEO would be entitled to receive or
24 months (if no severance payments are payable). The
Severance Policy may be modified by the Compensation Committee at
any time, provided that prior written consent is required of any
NEO who is adversely impacted by the modification. Further, the
Compensation Committee may amend or terminate the Severance Policy
at any time upon 12 months’ written notice to any adversely
affected NEO.
Mr. Bizon became
entitled to benefits and compensation under the Severance Policy in
connection with his departure from the Company during 2019.
Specifically, in addition to certain accrued benefits, Mr. Bizon
was entitled to cash severance equaling $1,417,500, his earned cash
bonus of $840,752 for the successful sale of the Company’s APAC
business segment, health care coverage reimbursements of $6,752,
and a moving allowance of $50,000. The unvested RSUs held by Mr.
Bizon vested on a pro-rata basis upon termination (valued at
$87,787). PSUs and ROIC cash awards held by Mr. Bizon at the time
of termination remained eligible to vest on a pro-rata basis based
on actual performance for the full performance period.
In connection
with their departures from the Company, Messrs. Pierson and Steele
did not receive any enhanced benefits or payments.
FREQUENTLY ASKED QUESTIONS ABOUT THE MEETING
Who is entitled to vote?
The Company’s
Common Stock constitutes the voting stock of the Company. Only
record holders of Common Stock at the close of business on the
Record Date are entitled to receive notice of the Annual Meeting
and to vote those shares of Common Stock that they held on the
Record Date. Each outstanding share of Common Stock is entitled
to one
vote on
each matter to be voted upon at the Annual Meeting.
What constitutes a quorum?
For business to
be conducted at the Annual Meeting, a quorum must be present. The
presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote on the Record Date will constitute
a quorum for all purposes. As of the Record Date, 25,472,634 shares
of Common Stock were issued and outstanding and entitled to vote.
Broker non-votes and proxies marked with abstentions or
instructions to withhold votes will be counted as present in
determining whether there is a quorum.
How do I vote?
Stockholders of Record. If you complete and properly
sign the accompanying proxy card and return it to the Company, it
will be voted as you direct. You may also vote via telephone or
Internet (as indicated on your proxy card).
Beneficial Owners. If you complete and properly
sign the accompanying voting instruction card and return it to your
broker, trustee, bank or other nominee, it will be voted as you
direct. You may also vote via telephone or Internet (as indicated
on your voting instruction card). If you want to vote your shares
electronically at the Annual Meeting via live webcast, you must
request and obtain a legal proxy from such broker, trustee, bank or
other nominee confirming that you beneficially own such shares and
giving you the power to vote such shares.
This year’s
Annual Meeting will be held entirely online. Stockholders may
participate in the Annual Meeting by visiting the following
website: www.virtualshareholdermeeting.com/HZN2020. To participate
in the Annual Meeting, you will need the sixteen-digit control
number included on your Notice, on your proxy card or on the
instructions that accompanied your proxy materials. If you do not
have your sixteen-digit control number, you will only be able to
listen to the Annual Meeting.
How will my shares be voted?
Stockholders of Record. All shares represented by the
proxies mailed to stockholders will be voted at the Annual Meeting
in accordance with instructions given by the stockholders. Where no
instructions are given, the shares will be voted: (1) for the
election of the Boards’ nominees for eight directors; (2) for the
approval of the Horizon Global Corporation 2020 Equity and
Incentive Compensation Plan; and (3) for the ratification of the
appointment of Deloitte as the Company’s independent registered
public accounting firm for the year ending December 31,
2020.
Beneficial Owners. The brokers, banks, or
nominees holding shares for beneficial owners must vote those
shares as instructed, and if no instructions from the beneficial
owner are received on a matter deemed to be non-routine, they may
not vote the shares on that matter. Under applicable law, a broker,
bank, or nominee has the discretion to vote on routine matters,
such as the ratification of the appointment of the Company’s
independent registered public accounting firm, but does not have
discretion to vote for or against the election of directors. Common
Stock subject to broker non-votes will be considered present at the
meeting for purposes of determining whether there is a quorum but
the broker non-votes will not be considered votes cast with respect
to that proposal. In order to avoid a broker non-vote of your
shares on this proposal, you must send voting instructions to your
bank, broker or other nominee.
What vote is required to approve each item?
Proposal 1 - Election of Directors.
The eight
nominees who receive the most votes cast at the Annual Meeting will
be elected as directors. Accordingly, abstentions and broker
non-votes will have no effect in determining the outcome of the
vote on the election of directors. A properly signed proxy with
instructions to withhold authority with respect to the election of
one or more directors will not be voted for the director(s) so
indicated.
Proposal 2 - Approval of the Horizon Global Corporation 2020 Equity
and Incentive Compensation Plan.
The affirmative
vote of a majority of the shares of Common Stock present or
represented by proxy at the Annual Meeting and entitled to vote on
the matter will be necessary to approve the Horizon Global
Corporation 2020 Equity and Incentive Compensation Plan, provided
that a quorum is present. Abstentions will have the same effect as
a vote against the matter. Broker non-votes will have no effect on
the outcome of the matter. Proxies submitted pursuant to this
solicitation will be voted “FOR” the proposal, unless specified
otherwise.
Proposal 3 - Ratification of the Appointment of Independent
Registered Public Accounting Firm.
The affirmative
vote of a majority of the shares of Common Stock present or
represented by proxy at the Annual Meeting and entitled to vote on
the matter will be necessary to ratify the Audit Committee’s
appointment of Deloitte as the Company’s independent registered
public accounting firm for the fiscal year ending December 31,
2020, provided that a quorum is present. Abstentions will have the
same effect as a vote against the matter. Although stockholder
ratification of the appointment is not
FREQUENTLY ASKED QUESTIONS ABOUT THE MEETING
required by law
and is not binding on the Company, the Audit Committee will take
the appointment under advisement if such appointment is not so
ratified.
Can I change my vote after I return my proxy card or voting
instruction card?
Stockholders of Record. You may change your vote at
any time before the proxy is exercised by filing with the Corporate
Secretary of the Company, at 47912 Halyard Drive, Suite 100,
Plymouth, Michigan 48170, either written notice revoking the proxy
or a properly signed proxy that is dated later than the proxy card.
If you attend the virtual Annual Meeting electronically, the
individuals named as proxy holders in the enclosed proxy card will
nevertheless have authority to vote your shares in accordance with
your instructions on the proxy card unless you properly file such
notice or new proxy.
Beneficial Owners. If you hold your shares
through a bank, trustee, broker or other nominee, you should
contact such person to submit new voting instructions prior to the
time such voting instructions are exercised.
What will happen if other matters are raised at the
meeting?
If any other
matter is properly submitted to the stockholders at the Annual
Meeting, its adoption will require the affirmative vote of a
majority of the shares of Common Stock outstanding on the Record
Date that is present or represented at the Annual Meeting. The
Board of Directors does not propose to conduct any business at the
Annual Meeting other than as stated above.
Who pays for the solicitation of proxies?
The accompanying
proxy is being solicited by the Company’s Board. The Company will
bear the cost of soliciting the proxies. Officers and other
management employees of the Company will receive no additional
compensation for the solicitation of proxies and may use mail,
e-mail, personal interview and/or telephone.
How can I access the Company’s proxy materials and annual report on
Form 10-K?
The SEC Filings
subsection under the Investor Relations section on the Company’s
website, https://www.horizonglobal.com,
provides access, free of charge, to SEC reports as soon as
reasonably practicable after the Company electronically files such
reports with, or furnishes such reports to, the SEC, including
proxy materials, Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and
amendments to these reports. The Company
has posted printable and searchable 2020 proxy materials to the
Company’s website at
https://investors.horizonglobal.com/2020proxystatement.
A copy of the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2019, as filed with the SEC, will be sent to
any
stockholder,
without charge, upon written request sent to the Company’s
executive offices at Horizon Global Corporation, Attention: General
Counsel, 47912 Halyard Drive, Suite 100, Plymouth, Michigan 48170
or by email to generalcounsel@horizonglobal.com.
The
references to the website address of the Company and SEC in this
proxy statement are not intended to function as a hyperlink and,
except as specified herein, the information contained on such
websites is not part of this proxy statement.
How and when may I submit a stockholder proposal or director
nomination for the 2021 Annual Meeting of Stockholders (“2021
Annual Meeting”)?
For a stockholder
proposal to be considered for inclusion in the Company’s proxy
statement for the 2021 Annual Meeting, the Corporate Secretary must
receive the written proposal at the Company’s principal executive
offices no later than January 18, 2021. Such proposals also must
comply with SEC regulations under Rule 14a-8 regarding the
inclusion of stockholder proposals in company-sponsored proxy
materials. Proposals should be addressed to Horizon Global
Corporation, Attention: General Counsel, Chief Compliance Officer
and Corporate Secretary, 47912 Halyard Drive, Suite 100, Plymouth,
Michigan 48170 or by fax to (248) 480-4175.
For a stockholder
proposal or director nomination that is intended to be considered
at the 2021 Annual Meeting, but not included in the Company’s proxy
statement, the stockholder must give timely notice to the Corporate
Secretary not earlier than February 19, 2021 and not later than the
close of business on March 21, 2021. Any stockholder proposal must
set forth, among other matters (1) a brief description of the
business desired to be brought before the 2021 Annual Meeting and
the reasons for conducting such business, (2) the name and
address, as they appear on the Company’s books, of the stockholder
proposing such business, (3) the number of shares of Common
Stock that are beneficially owned by the stockholder, (4) any
material interest of the stockholder in such business, and
(5) any additional information that is required to be provided
by the stockholder pursuant to the Company’s Amended and Restated
Bylaws and Regulation 14A under the Exchange Act.
Additional Information About the Virtual Annual
Meeting
To participate in
the Annual Meeting, you will need the sixteen-digit control number
included on your proxy card or your voting instruction form. We
encourage you to access the Annual Meeting prior to commencement of
the meeting, and online access will begin at 1:45 p.m. Eastern
Time.
The virtual
Annual Meeting platform is fully supported across browsers
(Internet Explorer, Firefox, Chrome, and Safari) and devices
(desktops, laptops, tablets, and cell phones) running the most
updated version of applicable software and plug-ins. Participants
should ensure they have a strong Internet connection wherever they
intend to participate in the Annual Meeting.
FREQUENTLY ASKED QUESTIONS ABOUT THE MEETING
Participants
should also allow plenty of time to log in and ensure that they can
hear streaming audio prior to the start of the Annual Meeting,
which will start promptly at 2:00 p.m. Eastern Time.
Questions
Stockholders may
submit appropriate questions for the Annual Meeting after logging
in. If you wish to submit a question, you may do so by logging into
the virtual meeting platform at
www.virtualshareholdermeeting.com/HZN2020, typing your question
into the “Ask a Question” field, and clicking “Submit.” Appropriate
questions related to the business of the Annual Meeting (the
proposals being voted upon) will be answered during the Annual
Meeting, subject to time constraints.
Technical Difficulties
Technical
support, including related technical support phone numbers, will be
available on the virtual meeting platform at
www.virtualshareholdermeeting.com/HZN2020 beginning at 1:45 p.m.
Eastern Time on June 19, 2020 through the conclusion of the Annual
Meeting.
Horizon
Global Corporation
2020 Equity
and Incentive Compensation Plan
1.Purpose.
The purpose of
this Plan is to permit award grants to
non-employee Directors, officers and other employees
of the Company and
its Subsidiaries, and certain consultants to the Company and its
Subsidiaries, and to provide to such persons incentives and rewards
for performance and/or service.
2.Definitions.
As used in this
Plan:
(a)“Appreciation Right” means a
right granted pursuant to
Section 5 of this Plan.
(b)“Base
Price” means the price to be used as the basis for determining the
Spread upon the exercise of an Appreciation Right.
(c)“Board”
means the Board of Directors of the Company.
(d)“Cash
Incentive Award” means a cash award granted pursuant to
Section 8 of this Plan.
(e)“Change
in Control” has the meaning set forth in
Section 12 of this Plan.
(f)“Code”
means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations thereunder, as such law and regulations
may be amended from time to time.
(g)“Committee” means the
Compensation Committee of the Board (or its successor(s)), or any
other committee of the Board designated by the Board to administer
this Plan pursuant to
Section 10 of this Plan.
(h)“Common
Shares” means the shares of common stock, par value $0.01 per
share, of the Company or any security into which such common stock
may be changed by reason of any transaction or event of the type
referred to in
Section 11 of this Plan.
(i)“Company” means Horizon Global
Corporation, a Delaware corporation, and its
successors.
(j)“Date of
Grant” means the date provided for by the Committee on which a
grant of Option Rights, Appreciation Rights, Performance Shares,
Performance Units, Cash Incentive Awards, or other awards
contemplated by
Section 9 of this Plan, or a grant or
sale of Restricted Shares, Restricted Stock Units, or other awards
contemplated by
Section 9 of this Plan, will become
effective (which date will not be earlier than the date on which
the Committee takes action with respect thereto).
(k)“Director” means a member of
the Board.
(l)“Effective Date” means the
date this Plan is approved by the Shareholders.
(m)“Evidence of Award” means an
agreement, certificate, resolution or other type or form of writing
or other evidence approved by the Committee that sets forth the
terms and conditions of the awards granted under this Plan. An
Evidence of Award may be in an electronic medium, may be limited to
notation on the books and records of the Company and, unless
otherwise determined by the Committee, need not be signed by a
representative of the Company or a Participant.
(n)“Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time, and
the rules and regulations thereunder, as such law, rules and
regulations may be amended from time to time.
(o)“Incentive Stock Option” means
an Option Right that is intended to qualify as an “incentive stock
option” under Section 422 of the Code or any successor
provision.
(p)“Management Objectives” means
the measurable performance objective or objectives established
pursuant to this Plan for Participants who have received grants of
Performance Shares, Performance Units or Cash Incentive Awards or,
when so determined by the Committee, Option Rights, Appreciation
Rights, Restricted Shares, Restricted Stock Units, dividend
equivalents or other awards pursuant to this Plan. The Management
Objectives applicable to an award under this Plan (if any) shall be
determined by the Committee, and may be based on one or more, or a
combination, of the following metrics or such other metrics as may
be determined by the Committee (including relative or growth
achievement regarding such metrics):
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(i)
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Profits
(e.g., gross
profit, EBITDA, operating income, EBIT, EBT, net income, net sales,
cost of sales, earnings per share, residual or economic earnings,
inventory turnover, operating profit, economic profit - these
profitability metrics could be measured before certain specified
special items and/or subject to GAAP definition);
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(ii)
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Cash
Flow (e.g.,
free cash flow, free cash flow with or without specific capital
expenditure target or range, including or excluding divestments
and/or acquisitions, net cash provided by operating activities, net
increase (or decrease) in cash and cash equivalents, total cash
flow, cash flow in excess of cost of capital or residual cash flow
or cash flow return on investment);
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(iii)
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Returns
(e.g., profits or
cash flow returns on: assets, invested capital, net capital
employed, and equity);
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(iv)
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Working
Capital (e.g., working capital divided
by sales, days’ sales outstanding, days’ sales inventory, and days’
sales in payables);
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(v)
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Profit
Margins (e.g., profits divided by
revenues, gross margins and material margins divided by revenues,
and material margin divided by weight or volume);
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(vi)
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Liquidity
Measures (e.g., debt-to-capital,
debt-to-EBITDA, total debt ratio);
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(vii)
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Sales Growth,
Gross Margin Growth, Cost Initiative and Stock Price Metrics
(e.g., revenues,
revenue growth, revenue growth outside the United States, gross
margin and gross margin growth, material margin and material margin
growth, stock price appreciation, market capitalization, total
return to shareholders, sales and administrative costs divided by
sales, and sales and administrative costs divided by profits);
and
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(viii)
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Strategic
Initiative Key Deliverable Metrics consisting of one or more of
the following: product development, strategic partnering, research
and development, vitality index, market penetration, market share,
geographic
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business expansion
goals, cost targets, selling, general and administrative expenses,
customer satisfaction, employee satisfaction, management of
employment practices and employee benefits, supervision of
litigation and information technology, productivity, economic value
added (or another measure of profitability that considers the cost
of capital employed), product quality, sales of new products, and
goals relating to acquisitions or divestitures of subsidiaries,
affiliates and joint ventures.
If the Committee
determines that a change in the business, operations, corporate
structure or capital structure of the Company, or the manner in
which it conducts its business, or other events or circumstances
render the Management Objectives unsuitable, the Committee may in
its discretion modify such Management Objectives or the goals or
actual levels of achievement regarding the Management Objectives,
in whole or in part, as the Committee deems appropriate and
equitable.
(q)“Market
Value per Share” means, as of any particular date, the closing
price of a Common Share as reported for that date on the New York
Stock Exchange or, if the Common Shares are not then listed on the
New York Stock Exchange, on any other national securities exchange
on which the Common Shares are listed, or if there are no sales on
such date, on the next preceding trading day during which a sale
occurred. If there is no regular public trading market for the
Common Shares, then the Market Value per Share shall be the fair
market value as determined in good faith by the Committee. The
Committee is authorized to adopt another fair market value pricing
method provided such method is stated in the applicable Evidence of
Award and is in compliance with the fair market value pricing rules
set forth in Section 409A of the Code.
(r)“Optionee” means the optionee
named in an Evidence of Award evidencing an outstanding Option
Right.
(s)“Option
Price” means the purchase price payable on exercise of an Option
Right.
(t)“Option
Right” means the right to purchase Common Shares upon exercise of
an award granted pursuant to
Section 4 of this Plan.
(u)“Participant” means a person
who is selected by the Committee to receive benefits under this
Plan and who is at the time (i) a non-employee Director, (ii) an
officer or other employee of the Company or any Subsidiary,
including a person who has agreed to commence serving in such
capacity within 90 days of the Date of Grant, or (iii) a person,
including a consultant, who provides services to the Company or any
Subsidiary that are equivalent to those typically provided by an
employee (provided that such person satisfies the Form S-8
definition of an “employee”).
(v)“Performance Period” means, in
respect of a Cash Incentive Award, Performance Share or Performance
Unit, a period of time established pursuant to
Section 8 of this Plan within which the
Management Objectives relating to such Cash Incentive Award,
Performance Share or Performance Unit are to be
achieved.
(w)“Performance Share” means a
bookkeeping entry that records the equivalent of one Common Share
awarded pursuant to
Section 8 of this Plan.
(x)“Performance Unit” means a
bookkeeping entry awarded pursuant to
Section 8 of this Plan that records a
unit equivalent to $1.00 or such other value as is determined by
the Committee.
(y)“Plan”
means this Horizon Global Corporation 2020 Equity and Incentive
Compensation Plan, as may be amended or amended and restated from
time to time.
(z)“Predecessor Plan” means the
Horizon Global Corporation 2015 Equity and Incentive Compensation
Plan, including as amended or amended and restated from time to
time.
(aa)“Restricted Shares” means
Common Shares granted or sold pursuant to
Section 6 of this Plan as to which
neither the substantial risk of forfeiture nor the prohibition on
transfers has expired.
(bb)“Restricted Stock Units” means
an award made pursuant to
Section 7 of this Plan of the right to
receive Common Shares, cash or a combination thereof at the end of
the applicable Restriction Period.
(cc)“Restriction Period” means the
period of time during which Restricted Stock Units are subject to
restrictions, as provided in
Section 7 of this Plan.
(dd)“Shareholder” means an
individual or entity that owns one or more Common
Shares.
(ee)“Spread” means the excess of
the Market Value per Share on the date when an Appreciation Right
is exercised over the Base Price provided for with respect to the
Appreciation Right.
(ff)“Subsidiary” means a
corporation, company or other entity (i) more than 50% of whose
outstanding shares or securities (representing the right to vote
for the election of directors or other managing authority) are, or
(ii) which does not have outstanding shares or securities (as may
be the case in a partnership, joint venture, limited liability
company, unincorporated association or other similar entity), but
more than 50% of whose ownership interest representing the right
generally to make decisions for such other entity is, now or
hereafter, owned or controlled, directly or indirectly, by the
Company; provided,
however,
that for purposes of determining whether any person may be a
Participant for purposes of any grant of Incentive Stock Options,
“Subsidiary” means any corporation in which the Company at the time
owns or controls, directly or indirectly, more than 50% of the
total combined Voting Power represented by all classes of stock
issued by such corporation.
(gg)“Voting
Power” means, at any time, the combined voting power of the
then-outstanding securities entitled to vote generally in the
election of Directors in the case of the Company, or members of the
board of directors or similar body in the case of another
entity.
3.Shares
Available Under this Plan.
(a)Maximum
Shares Available Under this Plan.
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(i)
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Subject to
adjustment as provided in
Section 11 of this Plan and the share
counting rules set forth in
Section 3(b) of this Plan, the number of
Common Shares available under this Plan for awards of
(A) Option Rights or Appreciation Rights, (B) Restricted
Shares, (C) Restricted Stock Units, (D) Performance Shares or
Performance
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Units, (E) awards
contemplated by
Section 9 of this Plan, or (F) dividend
equivalents paid with respect to awards made under this Plan
will not exceed in
the aggregate (x) 3,800,752 Common Shares, plus (y) the
total number of Common Shares remaining available for awards under
the Predecessor Plan as of the Effective Date, plus (z) the Common
Shares that are subject to awards granted under this Plan or the
Predecessor Plan that are added (or added back, as applicable) to
the aggregate number of Common Shares available under this
Section 3(a)(i) pursuant to the share counting
rules of this Plan. Such shares may be shares of original issuance
or treasury shares or a combination of the foregoing.
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(ii)
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Subject to the
share counting rules set forth in
Section 3(b) of this Plan, the aggregate
number of Common Shares available under
Section 3(a)(i) of this Plan will be reduced
by one Common Share for every one Common Share subject to an award
granted under this Plan.
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(b)Share
Counting Rules.
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(i)
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Except as provided
in
Section 22 of this Plan, if any award
granted under this Plan (in whole or in part) is cancelled or
forfeited, expires, is settled for cash, or is unearned, the Common
Shares subject to such award will, to the extent of such
cancellation, forfeiture, expiration, cash settlement, or unearned
amount, again be available under
Section 3(a)(i) above.
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(ii)
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If, after the
Effective Date, any Common Shares subject to an award granted under
the Predecessor Plan are forfeited, or an award granted under the
Predecessor Plan (in whole or in part) is cancelled or forfeited,
expires, is settled for cash, or is unearned, the Common Shares
subject to such award will, to the extent of such cancellation,
forfeiture, expiration, cash settlement, or unearned amount, be
available for awards under this Plan.
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(iii)
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Notwithstanding
anything to the contrary contained in this Plan: (A) Common Shares
withheld by the Company, tendered or otherwise used in payment of
the Option Price of an Option Right (or the option price of an
option granted under the Predecessor Plan) will not be added (or
added back, as applicable) to the aggregate number of Common Shares
available under
Section 3(a)(i) of this Plan; (B) Common
Shares withheld by the Company, tendered or otherwise used to
satisfy tax withholding with respect to awards (other than as
described in clause (C)) will not be added (or added back, as
applicable) to the aggregate number of Common Shares available
under
Section 3(a)(i) of this Plan; (C) Common
Shares withheld by the Company, tendered or otherwise used to
satisfy tax withholding with respect to awards other than Option
Rights or Appreciation Rights (or options or stock appreciation
rights granted under the Predecessor Plan) will be added back to
the aggregate number of Common Shares available under
Section 3(a)(i) of this Plan (provided,
however, that such recycling of Common Shares for tax withholding
purposes will be limited to 10 years from the date of Shareholder
approval of the Plan if such recycling involves Common Shares that
have actually been issued by the Company); (D) Common Shares
subject to a share-settled Appreciation Right that are not actually
issued in connection with the settlement of such Appreciation Right
on the exercise thereof will not be added (or added back, as
applicable) to the aggregate number of Common Shares available
under
Section 3(a)(i) of this Plan; and (E) Common
Shares reacquired by the Company on the open market or otherwise
using cash proceeds from the exercise of Option Rights will not be
added (or added back, as applicable) to the aggregate number of
Common Shares available under
Section 3(a)(i) of this Plan.
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(iv)
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If, under this
Plan, a Participant has elected to give up the right to receive
compensation in exchange for Common Shares based on fair market
value, such Common Shares will not count against the aggregate
limit under
Section 3(a)(i) of this Plan.
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(c)Limit
on Incentive Stock Options. Notwithstanding anything to
the contrary contained in this Plan, and subject to adjustment as
provided in
Section 11 of this Plan, the aggregate
number of Common Shares actually issued or transferred by the
Company upon the exercise of Incentive Stock Options will not
exceed 3,800,752 Common Shares.
(d)Non-Employee
Director Compensation Limit. Notwithstanding anything to
the contrary contained in this Plan, in no event will any
non-employee Director in any one calendar year be granted
compensation for such service having an aggregate maximum value
(measured at the Date of Grant as applicable, and calculating the
value of any awards based on the grant date fair value for
financial reporting purposes) in excess of $500,000. The
independent members of the Board may make exceptions to this limit
up to an additional $200,000 for a non-executive chair of the
Board, provided that the non-employee Director receiving such
additional compensation may not participate in the decision to
award such compensation.
(e)Minimum
Vesting Requirement. Notwithstanding any other
provision of this Plan (outside of this
Section 3(e)) to the contrary, awards
granted under this Plan (other than cash-based awards) shall vest
no earlier than the first anniversary of the applicable Date of
Grant; provided,
that the following awards shall not be subject to the foregoing
minimum vesting requirement: any (i) awards granted in
connection with awards that are assumed, converted or substituted
pursuant to
Section 22(a) of this Plan; (ii) Common
Shares delivered in lieu of fully vested cash obligations; (iii)
awards to non-employee Directors that vest on the earlier of the
one-year anniversary of the applicable Date of Grant and the next
annual meeting of Shareholders which is at least 50 weeks after the
immediately preceding year’s annual meeting of Shareholders; and
(iv) any additional awards the Committee may grant, up to a
maximum of five percent (5%) of the available share reserve
authorized for issuance under the Plan pursuant to
Section 3(a)(i) (subject to adjustment under
Section 11). Nothing in this
Section 3(e) or otherwise in this Plan,
however, shall preclude the Committee, in is sole discretion, from
(x) providing for continued vesting or accelerated vesting for
any award under this Plan upon certain events, including in
connection with or following a Participant’s death, disability, or
termination of service or a Change in Control, or
(y) exercising its authority under
Section 18(c) at any time following the
grant of an award.
4.Option
Rights. The
Committee may, from time to time and upon such terms and conditions
as it may determine, authorize the granting to Participants of
Option Rights. Each such grant may utilize any or all of the
authorizations, and will be subject to all of the requirements,
contained in the following provisions:
(a)Each
grant will specify the number of Common Shares to which it pertains
subject to the limitations set forth in
Section 3 of this Plan.
(b)Each
grant will specify an Option Price per Common Share, which Option
Price (except with respect to awards under
Section 22 of this Plan) may not be less
than the Market Value per Share on the Date of Grant.
(c)Each
grant will specify whether the Option Price will be payable
(i) in cash, by check acceptable to the Company or by wire
transfer of immediately available funds, (ii) by the actual or
constructive transfer to the Company of Common Shares owned by the
Optionee having a value at the time of exercise equal to the total
Option Price, (iii) subject to any conditions or limitations
established by the Committee, by the withholding of Common Shares
otherwise issuable upon exercise of an Option Right pursuant to a
“net exercise” arrangement (it being understood that, solely for
purposes of determining the number of treasury shares held by the
Company, the Common Shares so withheld will not be treated as
issued and acquired by the Company upon such exercise), (iv) by a
combination of such methods of payment, or (v) by such other
methods as may be approved by the Committee.
(d)To the
extent permitted by law, any grant may provide for deferred payment
of the Option Price from the proceeds of sale through a bank or
broker on a date satisfactory to the Company of some or all of the
Common Shares to which such exercise relates.
(e)Each
grant will specify the period or periods of continuous service by
the Optionee with the Company or any Subsidiary, if any, that is
necessary before any Option Rights or installments thereof will
vest. Option Rights may provide for continued vesting or the
earlier vesting of such Option Rights, including in the event of
the retirement, death, disability or termination of employment or
service of a Participant or in the event of a Change in
Control.
(f)Any
grant of Option Rights may specify Management Objectives regarding
the vesting of such rights.
(g)Option
Rights granted under this Plan may be (i) options, including
Incentive Stock Options, that are intended to qualify under
particular provisions of the Code, (ii) options that are not
intended to so qualify, or (iii) combinations of the foregoing.
Incentive Stock Options may only be granted to Participants who
meet the definition of “employees” under Section 3401(c) of
the Code.
(h)No
Option Right will be exercisable more than 10 years from the Date
of Grant. The Committee may provide in any Evidence of Award for
the automatic exercise of an Option Right upon such terms and
conditions as established by the Committee.
(i)Option
Rights granted under this Plan may not provide for any dividends or
dividend equivalents thereon.
(j)Each
grant of Option Rights will be evidenced by an Evidence of Award.
Each Evidence of Award will be subject to this Plan and will
contain such terms and provisions, consistent with this Plan, as
the Committee may approve.
5.Appreciation
Rights.
(a)The
Committee may, from time to time and upon such terms and conditions
as it may determine, authorize the granting to any Participant of
Appreciation Rights. An Appreciation Right will be the right of the
Participant to receive from the Company an amount determined by the
Committee, which will be expressed as a percentage of the Spread
(not exceeding 100%) at the time of exercise.
(b)Each
grant of Appreciation Rights may utilize any or all of the
authorizations, and will be subject to all of the requirements,
contained in the following provisions:
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(i)
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Each grant may
specify that the amount payable on exercise of an Appreciation
Right will be paid by the Company in cash, Common Shares or any
combination thereof.
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(ii)
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Each grant will
specify the period or periods of continuous service by the
Participant with the Company or any Subsidiary, if any, that is
necessary before the Appreciation Rights or installments thereof
will vest. Appreciation Rights may provide for continued vesting or
the earlier vesting of such Appreciation Rights, including in the
event of the retirement, death, disability or termination of
employment or service of a Participant or in the event of a Change
in Control.
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(iii)
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Any grant of
Appreciation Rights may specify Management Objectives regarding the
vesting of such Appreciation Rights.
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(iv)
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Appreciation
Rights granted under this Plan may not provide for any dividends or
dividend equivalents thereon.
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(v)
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Each grant of
Appreciation Rights will be evidenced by an Evidence of Award. Each
Evidence of Award will be subject to this Plan and will contain
such terms and provisions, consistent with this Plan, as the
Committee may approve.
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(c)Also,
regarding Appreciation Rights:
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(i)
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Each grant will
specify in respect of each Appreciation Right a Base Price, which
(except with respect to awards under
Section 22 of this Plan) may not be less
than the Market Value per Share on the Date of Grant;
and
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(ii)
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No Appreciation
Right granted under this Plan may be exercised more than 10 years
from the Date of Grant. The Committee may provide in any Evidence
of Award for the automatic exercise of an Appreciation Right upon
such terms and conditions as established by the
Committee.
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6.Restricted
Shares. The
Committee may, from time to time and upon such terms and conditions
as it may determine, authorize the grant or sale of Restricted
Shares to Participants. Each such grant or sale may utilize any or
all of the authorizations, and will be subject to all of the
requirements, contained in the following provisions:
(a)Each
such grant or sale will constitute an immediate transfer of the
ownership of Common Shares to the Participant in consideration of
the performance of services, entitling such Participant to voting,
dividend and other ownership rights (subject in particular
to
Section 6(g) of this Plan), but subject to
the substantial risk of forfeiture and restrictions on transfer
hereinafter described.
(b)Each
such grant or sale may be made without additional consideration or
in consideration of a payment by such Participant that is less than
the Market Value per Share on the Date of Grant.
(c)Each
such grant or sale will provide that the Restricted Shares covered
by such grant or sale will be subject to a “substantial risk of
forfeiture” within the meaning of Section 83 of the Code for a
period to be determined by the Committee on the Date of Grant or
until achievement of Management Objectives referred to in
Section 6(e) of this Plan.
(d)Each
such grant or sale will provide that during or after the period for
which such substantial risk of forfeiture is to continue, the
transferability of the Restricted Shares will be prohibited or
restricted in the manner and to the extent prescribed by the
Committee on the Date of Grant (which restrictions may include
rights of repurchase or first refusal of the Company or provisions
subjecting the Restricted Shares to a continuing substantial risk
of forfeiture while held by any transferee).
(e)Any
grant of Restricted Shares may specify Management Objectives
regarding the vesting of such Restricted Stock.
(f)Notwithstanding anything to
the contrary contained in this Plan, Restricted Shares may provide
for continued vesting or the earlier vesting of such Restricted
Shares, including in the event of the retirement, death, disability
or termination of employment or service of a Participant or in the
event of a Change in Control.
(g)Any such
grant or sale of Restricted Shares may require that any and all
dividends or other distributions paid thereon during the period of
such restrictions be automatically deferred and/or reinvested in
additional Restricted Shares, which will be subject to the same
restrictions as the underlying award. For the avoidance of doubt,
any such dividends or other distributions on Restricted Shares will
be deferred until, and paid contingent upon, the vesting of such
Restricted Shares.
(h)Each
grant or sale of Restricted Shares will be evidenced by an Evidence
of Award. Each Evidence of Award will be subject to this Plan and
will contain such terms and provisions, consistent with this Plan,
as the Committee may approve. Unless otherwise directed by the
Committee, (i) all certificates representing Restricted Shares will
be held in custody by the Company until all restrictions thereon
will have lapsed, together with a stock power or powers executed by
the Participant in whose name such certificates are registered,
endorsed in blank and covering such shares or (ii) all
Restricted Shares will be held at the Company’s transfer agent in
book entry form with appropriate restrictions relating to the
transfer of such Restricted Shares.
7.Restricted
Stock Units. The Committee may, from time
to time and upon such terms and conditions as it may determine,
authorize the granting or sale of Restricted Stock Units to
Participants. Each such grant or sale may utilize any or all of the
authorizations, and will be subject to all of the requirements,
contained in the following provisions:
(a)Each
such grant or sale will constitute the agreement by the Company to
deliver Common Shares or cash, or a combination thereof, to the
Participant in the future in consideration of the performance of
services, but subject to the fulfillment of such conditions (which
may include achievement regarding Management Objectives) during the
Restriction Period as the Committee may specify.
(b)Each
such grant or sale may be made without additional consideration or
in consideration of a payment by such Participant that is less than
the Market Value per Share on the Date of Grant.
(c)Notwithstanding anything to
the contrary contained in this Plan, Restricted Stock Units may
provide for continued vesting or the earlier lapse or other
modification of the Restriction Period, including in the event of
the retirement, death, disability or termination of employment or
service of a Participant or in the event of a Change in
Control.
(d)During
the Restriction Period, the Participant will have no right to
transfer any rights under his or her award and will have no rights
of ownership in the Common Shares deliverable upon payment of the
Restricted Stock Units and will have no right to vote them, but the
Committee may, at or after the Date of Grant, authorize the payment
of dividend equivalents on such Restricted Stock Units on a
deferred and contingent basis, either in cash or in additional
Common Shares; provided,
however,
that dividend equivalents or other distributions on Common Shares
underlying Restricted Stock Units shall be deferred until, and paid
contingent upon, the vesting of such Restricted Stock
Units.
(e)Each
grant or sale of Restricted Stock Units will specify the time and
manner of payment of the Restricted Stock Units that have been
earned. Each grant or sale will specify that the amount payable
with respect thereto will be paid by the Company in Common Shares
or cash, or a combination thereof.
(f)Each
grant or sale of Restricted Stock Units will be evidenced by an
Evidence of Award. Each Evidence of Award will be subject to this
Plan and will contain such terms and provisions, consistent with
this Plan, as the Committee may approve.
8.Cash
Incentive Awards, Performance Shares and Performance Units.
The Committee may,
from time to time and upon such terms and conditions as it may
determine, authorize the granting of Cash Incentive Awards,
Performance Shares and Performance Units. Each such grant may
utilize any or all of the authorizations, and will be subject to
all of the requirements, contained in the following
provisions:
(a)Each
grant will specify the number or amount of Performance Shares or
Performance Units, or amount payable with respect to a Cash
Incentive Award, to which it pertains, which number or amount may
be subject to adjustment to reflect changes in compensation or
other factors.
(b)The
Performance Period with respect to each Cash Incentive Award or
grant of Performance Shares or Performance Units will be such
period of time as will be determined by the Committee, which may be
subject to continued vesting or earlier lapse or other
modification, including in the event of the retirement, death,
disability or termination of employment or service of a Participant
or in the event of a Change in Control.
(c)Each
grant of a Cash Incentive Award, Performance Shares or Performance
Units will specify Management Objectives regarding the earning of
the award.
(d)Each
grant will specify the time and manner of payment of a Cash
Incentive Award, Performance Shares or Performance Units that have
been earned.
(e)The
Committee may, on the Date of Grant of Performance Shares or
Performance Units, provide for the payment of dividend equivalents
to the holder thereof either in cash or in additional Common
Shares, which dividend equivalents will be subject to deferral and
payment on a contingent basis based on the Participant’s earning
and vesting of the Performance Shares or Performance Units, as
applicable, with respect to which such dividend equivalents are
paid.
(f)Each
grant of a Cash Incentive Award, Performance Shares or Performance
Units will be evidenced by an Evidence of Award. Each Evidence of
Award will be subject to this Plan and will contain such terms and
provisions, consistent with this Plan, as the Committee may
approve.
9.Other
Awards.
(a)Subject
to applicable law and the applicable limits set forth in
Section 3 of this Plan, the Committee
may authorize the grant to any Participant of Common Shares or such
other awards that may be denominated or payable in, valued in whole
or in part by reference to, or otherwise based on, or related to,
Common Shares or factors that may influence the value of such
shares, including, without limitation, convertible or exchangeable
debt securities, other rights convertible or exchangeable into
Common Shares, purchase rights for Common Shares, awards with value
and payment contingent upon performance of the Company or specified
Subsidiaries, affiliates or other business units thereof or any
other factors designated by the Committee, and awards valued by
reference to the book value of the Common Shares or the value of
securities of, or the performance of specified Subsidiaries or
affiliates or other business units of the Company. The Committee
will determine the terms and conditions of such awards. Common
Shares delivered pursuant to an award in the nature of a purchase
right granted under this
Section 9 will be purchased for such
consideration, paid for at such time, by such methods, and in such
forms, including, without limitation, Common Shares, other awards,
notes or other property, as the Committee determines.
(b)Cash
awards, as an element of or supplement to any other award granted
under this Plan, may also be granted pursuant to this
Section 9.
(c)The
Committee may authorize the grant of Common Shares as a bonus, or
may authorize the grant of other awards in lieu of obligations of
the Company or a Subsidiary to pay cash or deliver other property
under this Plan or under other plans or compensatory arrangements,
subject to such terms as will be determined by the Committee in a
manner that complies with Section 409A of the
Code.
(d)The
Committee may, at or after the Date of Grant, authorize the payment
of dividends or dividend equivalents on awards granted under
this
Section 9 on a deferred and contingent
basis, either in cash or in additional Common Shares, based upon
the earning and vesting of such awards.
(e)Each
grant of an award under this
Section 9 will be evidenced by an
Evidence of Award. Each such Evidence of Award will be subject to
this Plan and will contain such terms and provisions, consistent
with this Plan, as the Committee may approve, and will specify the
time and terms of delivery of the applicable award.
(f)Notwithstanding anything to
the contrary contained in this Plan, awards under this
Section 9 may provide for the earning or
vesting of, or earlier elimination of restrictions applicable to,
such award, including in the event of the retirement, death,
disability or termination of employment or service of a Participant
or in the event of a Change in Control.
10.Administration
of this Plan.
(a)This
Plan will be administered by the Committee; provided,
however,
that notwithstanding anything in this Plan to the contrary, the
Board may grant awards under this Plan to non-employee Directors
and administer this Plan with respect to such awards. The Committee
may from time to time delegate all or any part of its authority
under this Plan to a subcommittee thereof. To the extent of any
such delegation, references in this Plan to the Committee will be
deemed to be references to such subcommittee.
(b)The
interpretation and construction by the Committee of any provision
of this Plan or of any Evidence of Award (or related documents) and
any determination by the Committee pursuant to any provision of
this Plan or of any such agreement, notification or document will
be final and conclusive. No member of the Committee shall be liable
for any such action or determination made in good faith. In
addition, the Committee is authorized to take any action it
determines in its sole discretion to be appropriate subject only to
the express limitations contained in this Plan, and no
authorization in any Plan section or other provision of this Plan
is intended or may be deemed to constitute a limitation on the
authority of the Committee.
(c)To the
extent permitted by law, the Committee may delegate to one or more
of its memb