Form DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant ¨
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Section 240.14a-12 |
RPM INTERNATIONAL INC.
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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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) |
Title of each class of securities to which transaction applies: |
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(2) |
Aggregate number of securities to which transaction applies: |
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(3) |
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on the filing fee is calculated and state how it was
determined): |
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(4) |
Proposed maximum aggregate value of transaction: |
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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) |
Amount Previously Paid: |
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(2) |
Form, Schedule or Registration Statement No.: |
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Frank C. Sullivan |
Chairman and Chief Executive Officer |
August 26, 2014
TO RPM INTERNATIONAL STOCKHOLDERS:
I would like to extend a personal invitation for you to join us at this years Annual Meeting of RPM Stockholders which will be held at 2:00 p.m., Eastern Daylight Time, Thursday, October 9, 2014, at the
Holiday Inn located at Interstate 71 and Route 82 East, Strongsville, Ohio.
At this years Annual Meeting, you will vote (i) on the election
of four Directors, (ii) in a non-binding, advisory capacity, on a proposal to approve our executive compensation, (iii) on a proposal to approve our 2014 Omnibus Equity and Incentive Plan, and (iv) on a proposal to ratify the
appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending May 31, 2015. We also look forward to giving you a report on the first quarter of our current fiscal year, which ends on
August 31. As in the past, there will be a discussion of the Companys business, during which time your questions and comments will be welcomed.
We hope that you are planning to attend the Annual Meeting in person, and we look forward to seeing you. Whether or not you expect to attend in person, the return
of the enclosed Proxy as soon as possible would be greatly appreciated and will ensure that your shares will be represented at the Annual Meeting. If you do attend the Annual Meeting, you may, of course, withdraw your Proxy should you wish to vote
in person.
On behalf of the Directors and management of RPM, I would like to thank you for your continued support and confidence.
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Sincerely yours, |
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FRANK C. SULLIVAN |
2628 PEARL
ROAD P.O. BOX 777
MEDINA, OHIO 44258
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby
given that the Annual Meeting of Stockholders of RPM International Inc. will be held at the Holiday Inn located at Interstate 71 and Route 82 East, Strongsville, Ohio, on Thursday, October 9, 2014, at 2:00 p.m., Eastern Daylight Time, for the
following purposes:
(1) |
To elect four Directors in Class III for a three-year term ending in 2017; |
(2) |
To hold a non-binding, advisory vote to approve the Companys executive compensation; |
(3) |
To approve the RPM International Inc. 2014 Omnibus Equity and Incentive Plan; |
(4) |
To ratify the appointment of Ernst & Young LLP as the Companys independent registered public accounting firm for the fiscal year ending May 31, 2015; and
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To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
Holders of shares of Common Stock of record at the close of business on August 15, 2014 are entitled to receive notice of and to vote at the Annual Meeting.
By Order of the Board of Directors.
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EDWARD W. MOORE |
Secretary |
August 26, 2014
Please fill in and sign the enclosed Proxy and return the Proxy
in the envelope enclosed herewith.
2628 PEARL ROAD P.O. BOX 777
MEDINA, OHIO 44258
PROXY STATEMENT
Mailed on or about August 26, 2014
Annual Meeting of Stockholders to be held on October 9, 2014
This Proxy Statement is furnished in connection with the solicitation of Proxies by the Board of Directors of RPM International Inc. (the
Company or RPM) to be used at the Annual Meeting of Stockholders of the Company to be held on October 9, 2014, and any adjournment or postponement thereof. The time, place and purposes of the Annual Meeting are stated in
the Notice of Annual Meeting of Stockholders which accompanies this Proxy Statement.
The accompanying Proxy is solicited by the Board of Directors of
the Company. All validly executed Proxies received by the Board of Directors of the Company pursuant to this solicitation will be voted at the Annual Meeting, and the directions contained in such Proxies will be followed in each instance. If no
directions are given, the Proxy will be voted (i) FOR the election of the four nominees listed on the Proxy, (ii) FOR Proposal Two relating to the advisory vote on executive compensation, (iii) FOR approval of the RPM International
Inc. 2014 Omnibus Equity and Incentive Plan, and (iv) FOR ratifying the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending May 31, 2015.
Any person giving a Proxy pursuant to this solicitation may revoke it. A stockholder, without affecting any vote previously taken, may revoke a Proxy by giving
notice to the Company in writing, in open meeting or by a duly executed Proxy bearing a later date.
The expense of soliciting Proxies, including the
cost of preparing, assembling and mailing the Notice, Proxy Statement and Proxy, will be borne by the Company. The Company may pay persons holding shares for others their expenses for sending proxy materials to their principals. In addition to
solicitation of Proxies by mail, the Companys Directors, officers and employees, without additional compensation, may solicit Proxies by telephone, electronic means and personal interview. Also, the Company has engaged a professional proxy
solicitation firm, Georgeson Inc., to assist it in soliciting proxies. The Company will pay a fee of approximately $10,500, plus expenses, to Georgeson Inc. for these services.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on October 9, 2014: Proxy materials for the Companys Annual Meeting, including the 2014
Annual Report and this Proxy Statement, are now available over the Internet by accessing the Investor Information section of our website at www.rpminc.com. To access the proxy materials over the Internet or to request an additional printed copy,
go to www.rpminc.com. You also can obtain a printed copy of this Proxy Statement, free of charge, by writing to: RPM International Inc., c/o Secretary, 2628 Pearl Road, P.O. Box 777, Medina, Ohio 44258.
1
This summary highlights information contained elsewhere in this Proxy
Statement and in the Companys Annual Report on Form 10-K. For more complete information about these topics, please review the Companys complete Proxy Statement and Annual Report on Form 10-K.
RPM International Inc.
RPM International Inc., a holding
company, owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services serving both industrial and consumer markets. The Companys industrial products include roofing systems, sealants,
corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline, Flowcrete, Universal Sealants, Fibergrate and Euco. The Companys consumer products are used by
professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP, Varathane and Testors.
The Company achieved strong business results for the fiscal year ended May 31, 2014, including:
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Net sales increased 7.3% to a record $4.38 billion in fiscal 2014 from $4.08 billion in fiscal 2013 (net sales for fiscal 2014 increased 7.2% compared to
adjusted fiscal 2013 net sales*); |
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Net income increased 195.8% to a record $291.7 million in fiscal 2014 from $98.6 million in fiscal 2013 (net income for fiscal 2014 increased 20.9% compared to
adjusted fiscal 2013 net income of $241.3 million*); and |
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Diluted earnings per share increased 194.6% to a record $2.18 in fiscal 2014 from $0.74 in fiscal 2013 (diluted earnings per share for fiscal 2014 increased
19.8% compared to adjusted fiscal 2013 diluted earnings per share of $1.82*). |
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For a description of our fiscal 2013 adjustments, and for a reconciliation of our as reported fiscal 2013 results to our as adjusted fiscal 2013 results,
see the notes to the consolidated financial statements included in our Annual Report to Stockholders, which can be found on our website at www.rpminc.com. |
Achievement of another year of strong financial performance was driven by the Companys success on a broad range of initiatives that are intended to position the Company for future growth.
Dividend
On October 10, 2013, the Board of Directors
increased the quarterly dividend on shares of the Companys Common Stock to $0.24 per share, an increase of 6.7% from the prior year and the highest ever paid by the Company. With a 40-year track record of a continuously increasing cash
dividend, the Company is in an elite category of less than 50 companies, out of more than 19,000 publicly traded U.S. companies (less than one-half of one percent), to have increased the dividend for this period of time or longer, according to the
2013 edition of the Mergent Handbook of Dividend Achievers.
Corporate Transactions
The Company acquired five companies with combined sales of more than $65 million during fiscal 2014 and early fiscal 2015:
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XIM Products, Inc. is an $8 million producer and marketer of specialty primers for difficult-to-paint surfaces and other problem-solving coatings based in
Westlake, Ohio. XIM was acquired on June 17, 2013 by the Rust-Oleum Group. |
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Expanko, Inc. is a $12 million producer of terrazzo tile sold under the Fritztile brand, as well as cork, rubber and rubber/cork floor tiles, primarily for the
education, healthcare, hospitality and sports/entertainment commercial markets, based in Exton, Pennsylvania. Acquired on September 3, 2013, Expanko is part of the Companys Performance Coatings Group. |
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Citadel Restoration and Repair, Inc. is a producer and marketer of premium concrete and wood deck floor coatings for both the professional contractor and
Do-It-Yourself (DIY) markets. Based in North St. Paul, Minnesota, Citadel has annual sales of approximately $10 million. Acquired on January 22, 2014, Citadel is part of the Rust-Oleum Group. |
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Betumat Quimica Ltda. is a $22 million waterproofing products manufacturer based in Candeias (Bahia), Brazil. Betumat offers a full line of waterproofing
products, including asphaltic membranes, cementitious grouts and modified asphalt products marketed to professional contractors and builders, primarily in northern Brazil. Betumat was acquired on June 11, 2014, by Viapol Ltda., the construction
products company in Brazil acquired by the Company in fiscal 2013. |
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Krud Kutter Inc. is a $13 million producer of specialty cleaners and removers based in Alpharetta, Georgia. Its premium-priced products serve residential,
commercial and industrial markets and are water-based, bio-degradable, non-toxic and VOC compliant. Krud Kutter was acquired on July 3, 2014 by the Rust-Oleum Group. |
PROXY STATEMENT SUMMARY (CONTINUED)
Stock
Repurchase Program
On January 8, 2008, the Board of Directors authorized a stock repurchase program under which the Company may repurchase
shares of its Common Stock at managements discretion for general corporate purposes. The Company may limit or terminate the stock repurchase program at any time. The Company did not purchase any shares of Common Stock under this program during
the year ended May 31, 2014.
Corporate Governance
The Company is committed to meeting high standards of ethical behavior, corporate governance and business conduct. This commitment has led the Company to implement the following practices:
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Board Independence eleven of thirteen Directors are independent under the Companys Corporate Governance Guidelines and NYSE listing
standards. All members of the Audit Committee, the Compensation Committee and the Governance and Nominating Committee are independent. |
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Independent Directors Meetings independent Directors meet in executive sessions each year in January, April and July, without management
present. |
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Lead Director one independent Director serves as Lead Director. |
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Majority Voting for Directors in an uncontested election, any nominee for Director who receives more votes withheld from his or
her election than votes for such election is expected to tender his or her resignation for prompt consideration by the Governance and Nominating Committee and by the Board of Directors. |
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Director Tenure the average tenure of our independent Directors has decreased from 16.5 years for each of the 11 independent Directors in
2011 to 7.5 years for each of our current 11 independent Directors. |
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Stock Ownership Guidelines for Directors and Executive Officers the Company adopted stock ownership guidelines for Directors and executive
officers in July 2012, and the Company increased the stock ownership guidelines for Directors in July 2014. Each of the Directors and executive officers satisfies the stock ownership guidelines or is within the grace period provided by the stock
ownership guidelines to achieve compliance. |
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Annual Board and Chief Executive Officer Self-Evaluations each year, the Governance and Nominating Committee of the Board of Directors
administers self-evaluations of the Board of Directors and its committees, and the Compensation Committee of the Board of Directors administers an evaluation of the Chief Executive Officer. |
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Hedging Transactions Prohibited the Companys insider trading policy prohibits short sales and hedging transactions of shares of the
Companys Common Stock by Directors, officers and employees. |
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Performance-Based Compensation the Company relies heavily on performance-based compensation for executive officers, including awards of
performance-based restricted stock. |
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Clawback Policy the Board of Directors may require reimbursement of certain bonuses or incentive compensation awarded to an executive
officer if, as the result of that executive officers misconduct, the Company is required to restate all or a portion of its financial statements. |
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CEO Succession Planning the Companys succession plan, which the Board of Directors reviews annually, addresses both an unexpected loss
of the CEO as well as longer-term succession. |
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The Values & Expectations of 168 in April 2014, the Company adopted a new code of business conduct and ethics entitled The
Values & Expectations of 168 which emphasizes individual responsibility and accountability, encourages reporting and dialogue about ethics concerns, and focuses on the Companys core principles of integrity, commitment,
responsible entrepreneurship and moral courage. |
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Strong Benefits for Employees the Company is among less than 25 percent of the Fortune 1,000 companies that offer both an active defined
benefit pension plan and a matching 401(k) plan for U.S. employees. The Companys worldwide employees enjoy comprehensive health coverage and other extremely competitive benefit packages, in keeping with local laws and customs.
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PROXY STATEMENT SUMMARY (CONTINUED)
See also Information Regarding Meetings and Committees of the Board of Directors at page 18 for further information on the Companys governance
practices. Additional information about our majority voting policy appears under the caption Voting Rights on page 7.
Enterprise-Wide
Risk Oversight
The Board of Directors, assisted by its committees, oversees managements enterprise-wide risk management activities. Risk
management activities include assessing and taking actions necessary to manage risk incurred in connection with the long-term strategic direction and operation of the Companys business. See Information Regarding Meetings and Committees
of the Board of Directors Role in Risk Oversight for further information.
Executive Compensation
The Companys executive compensation program utilizes a mix of base salary, annual and long-term cash incentives, equity awards and standard benefits to
attract and retain highly qualified executives and maintain a strong relationship between executive pay and Company performance. Seventy-five percent (75%) of the votes cast on the say-on-pay proposal last year were voted in support of
the compensation of our named executive officers set forth in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables and narratives in last years Proxy Statement. In connection with last
years say-on-pay vote, we reached out to 20 of our largest stockholders representing approximately 44.0% of our shares of Common Stock outstanding. In response to those conversations, for fiscal 2014 the Compensation Committee took steps to
help ensure we are providing compensation to the named executive officers and Directors that is competitive with the market median by engaging Towers Watson to conduct compensation benchmark studies, as more fully described in this Proxy Statement.
The Compensation Committee will continue to consider results from future stockholder advisory votes, which will be held annually until the next stockholder advisory vote on the frequency of future votes on executive compensation, as well as input
from its stockholders between meetings, in its ongoing evaluation of the Companys executive compensation programs and practices.
Overall
Compensation Program Principles
Pay for performance The Companys general compensation philosophy is performance-based in that
the Companys executive officers should be well compensated for achieving strong operating and financial results. The Company engages in a rigorous process intended to provide its executive officers a fair level of compensation that reflects
the Companys positive operating financial results, the relative skills and experience of the individuals involved, peer group compensation levels and other similar benchmarks.
Compensation weighted toward at-risk pay The mix of compensation of the Companys named executive officers is weighted toward at-risk pay (consisting of cash and equity compensation). Maintaining
this pay mix results in a pay-for-performance orientation, which aligns to the Companys compensation philosophy of paying total direct compensation that is competitive with peer group levels based on relative company performance. For fiscal
2014, 52% of the amounts of the principal compensation components for our named executive officers in the aggregate was variable and tied to our performance.
Compensation Benchmark Study In 2014, the Compensation Committee retained the professional consulting firm of Towers Watson to conduct an executive compensation benchmark study. Based on its analysis
and findings, Towers Watson concluded that our Chief Executive Officers actual total direct compensation was competitive with the market median, and that his compensation was weighted more toward long-term incentive opportunity than is typical
in the market. Overall, Towers Watson concluded that our executive officers salaries are competitive with the market median, the mix of the elements of our executive officers compensation was weighted more toward variable compensation
(consisting of bonuses and long-term incentive opportunity) than is typical in the market, and that their long-term incentive opportunity is above the market median. Towers Watson also found that our Vice President and Chief Financial Officers
salary was well below the market median.
PROXY STATEMENT SUMMARY (CONTINUED)
Summary of Compensation Paid to Frank C. Sullivan, the Companys Chief Executive Officer, in Fiscal 2014
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Base salary $920,000, which was 2.8% above his fiscal 2013 base salary. |
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Annual cash incentive compensation Annual cash incentive compensation of $1,335,000. |
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Equity compensation Performance earned restricted stock (PERS) with a grant date fair value of $2,408,400; stock appreciation rights
(SARs) with 200,000 shares of Common Stock underlying the award; and 11,408 shares of supplemental executive retirement plan (SERP) restricted stock. |
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Other compensation Matching contribution of $10,400 under the Companys 401(k); automobile allowance of $31,799; and life insurance premiums
of $78,153. |
Stockholder Actions
Proposal 1 Election of Directors (see pages 10-17)
The Board of Directors has nominated four candidates for election to serve in Class III of the Board. The Board recommends that stockholders vote FOR the election of each nominee.
Proposal 2 Advisory Vote to Approve the Companys Executive Compensation (see pages 24-26)
The Board of Directors is seeking an advisory vote to approve the Companys executive compensation. Before considering this proposal, please read the
Compensation Discussion and Analysis in this Proxy Statement, which explains the Compensation Committees compensation decisions and how the Companys executive compensation program aligns the interests of the executive officers with those
of the Companys stockholders. Although the vote is advisory and is not binding on the Board of Directors, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions.
The Board recommends that stockholders vote FOR the approval of the Companys executive compensation.
Proposal 3
Approval of the RPM International Inc. 2014 Omnibus Equity and Incentive Plan (see pages 59-68)
The RPM International Inc. 2014 Omnibus Equity
and Incentive Plan (the 2014 Omnibus Plan) was approved by the Compensation Committee of the Board of Directors (the Compensation Committee) and further approved and adopted by the Board of Directors in July 2014, subject to
stockholder approval. The Board recommends that stockholders vote FOR the approval of the 2014 Omnibus Plan.
PROXY STATEMENT SUMMARY (CONTINUED)
Proposal 4 Ratification of Appointment of Independent Registered Public Accounting Firm (see page 70)
The Audit Committee has appointed Ernst & Young LLP as the Companys independent registered public accounting firm for the year ending May 31,
2015. The Board of Directors is seeking stockholder ratification of this appointment. The Board recommends that stockholders vote FOR ratification of the selection of Ernst & Young LLP.
The record date for determination of stockholders entitled to vote at the Annual Meeting was the close of business on
August 15, 2014. On that date, the Company had 133,509,649 shares of Common Stock, par value $0.01 per share (the Common Stock), outstanding and entitled to vote at the Annual Meeting. Each share of Common Stock is entitled to one
vote.
At the Annual Meeting, in accordance with the General Corporation Law of the State of Delaware and the Companys Amended and Restated By-Laws
(the By-Laws), the inspectors of election appointed by the Board of Directors for the Annual Meeting will determine the presence of a quorum and will tabulate the results of stockholder voting. As provided by the General Corporation Law
of the State of Delaware and the By-Laws, holders of shares entitling them to exercise a majority of the voting power of the Company, present in person or by proxy at the Annual Meeting, will constitute a quorum for such meeting. Under applicable
Delaware law, if a broker returns a Proxy and has not voted on a certain proposal (generally referred to as a broker non-vote), such broker non-votes will count for purposes of determining a quorum. The shares represented at the Annual
Meeting by Proxies which are marked withheld with respect to the election of Directors will be counted as shares present for the purpose of determining whether a quorum is present.
Under the rules of the New York Stock Exchange, if you are the beneficial owner of shares held in street name and do not provide the bank, broker or other intermediary that holds your shares with specific voting
instructions, that bank, broker or other intermediary may generally vote on routine matters but cannot vote on non-routine matters. Proposals One, Two and Three are considered non-routine matters. Unless you instruct the bank, broker or other
intermediary that holds your shares to vote on Proposals One, Two and Three, no votes will be cast on your behalf for Proposals One, Two and Three for which you do not provide such voting instructions. Therefore, it is important that you instruct
the bank, broker or other intermediary to cast your vote if you want it to count on Proposals One, Two and Three. Proposal Four is considered a routine matter and, therefore, broker non-votes are not expected to exist on Proposal Four.
Nominees for election as Directors who receive the greatest number of votes will be elected Directors. The General Corporation Law of the State of Delaware provides
that stockholders cannot elect Directors by cumulative voting unless a companys certificate of incorporation so provides. The Companys Amended and Restated Certificate of Incorporation (the Certificate) does not provide for
cumulative voting.
Our Corporate Governance Guidelines include a majority voting policy, which sets forth our procedures if a
Director-nominee is elected, but receives a majority of withheld votes. In an uncontested election, the Board of Directors expects any nominee for Director who receives a greater number of votes withheld from his or her
election than votes for such election to tender his or her resignation following certification of the stockholder vote. The Board of Directors shall fill Board vacancies and new Directorships and shall nominate for election or
re-election as Director only candidates who agree to tender their resignations in such circumstances. The Governance and Nominating Committee will act on an expedited basis to determine whether to accept a Directors resignation tendered in
accordance with the policy and will make recommendations to the Board of Directors for its prompt consideration with respect to any such letter of resignation. For the full details of our majority voting policy, which is part of our Corporate
Governance Guidelines, please see our Corporate Governance Guidelines on our website at www.rpminc.com.
Pursuant to the By-Laws, proposals other than
the election of Directors and matters brought before the Annual Meeting will be decided, unless otherwise provided by law or by the Certificate, by the vote of the holders of a majority of the shares entitled to vote thereon present in person or by
proxy at the Annual Meeting. In voting for other proposals, votes may be cast in favor, against or abstained. Abstentions will count as present for purposes of the items on which the abstention is noted and will have the effect of a vote against the
proposal. Broker non-votes, however, are not counted as present for purposes of determining whether a proposal has been approved and will have no effect on the outcome of any such proposal.
If you have any questions or need any assistance in voting your shares of Common Stock, please contact the Companys proxy solicitor:
Georgeson Inc.
480 Washington Boulevard, 26th Floor
Jersey City, NJ 07310
(888) 206-0860
(Toll Free)
Banks and Brokerages please call:
(800) 223-2064
STOCK OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of shares of
Common Stock as of May 31, 2014, unless otherwise indicated, by (i) each person or group known by the Company to own beneficially more than 5% of the outstanding shares of Common Stock, (ii) each Director and nominee for election as a
Director of the Company, (iii) each executive officer named in the Executive Compensation tables in this Proxy Statement and (iv) all Directors and executive officers as a group. All information with respect to beneficial ownership of
Directors, Director nominees and executive officers has been furnished by the respective Director, nominee for election as a Director, or executive officer, as the case may be. Unless otherwise indicated below, each person named below has sole
voting and investment power with respect to the number of shares set forth opposite his or her name. The address of each Director nominee, Director and executive officer is 2628 Pearl Road, P.O. Box 777, Medina, Ohio 44258.
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Name of Beneficial Owner |
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Number of Shares
of Common Stock
Beneficially Owned(1) |
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Percentage of
Shares of
Common Stock(1) |
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BlackRock, Inc.(2) |
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9,748,115 |
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7.1 |
% |
The Vanguard Group(3) |
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8,480,491 |
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5.4 |
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State Street Corporation(4) |
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6,211,205 |
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5.5 |
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Capital Research Global Investors(5) |
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6,000,000 |
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6.3 |
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John P. Abizaid(6) |
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20,277 |
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* |
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Bruce A. Carbonari(7) |
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24,823 |
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* |
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David A. Daberko(8) |
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20,925 |
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* |
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Salvatore D. Fazzolari(9) |
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3,500 |
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* |
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Russell L. Gordon(10) |
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81,561 |
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* |
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Thomas S. Gross(11) |
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5,650 |
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* |
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Paul G. P. Hoogenboom(12) |
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313,422 |
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0.2 |
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Edward W. Moore(13) |
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80,079 |
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* |
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Craig S. Morford(14) |
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2,500 |
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* |
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Frederick R. Nance(15) |
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15,219 |
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* |
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Charles A. Ratner(16) |
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26,068 |
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* |
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Ronald A. Rice(17) |
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462,827 |
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0.3 |
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Frank C. Sullivan(18) |
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1,591,595 |
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1.2 |
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Thomas C. Sullivan(19) |
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102,161 |
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* |
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William B. Summers, Jr.(20) |
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32,530 |
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* |
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Jerry Sue Thornton(21) |
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33,407 |
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* |
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Joseph P. Viviano(22) |
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32,250 |
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* |
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All Directors and executive officers as a group (twenty persons including the Directors and executive officers named above)(23) |
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3,032,609 |
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2.3 |
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(1) |
In accordance with Securities and Exchange Commission (Commission) rules, each beneficial owners holdings have been calculated assuming full exercise of
outstanding options covering Common Stock, if any, exercisable by such owner within 60 days after May 31, 2014, but no exercise of outstanding options covering Common Stock held by any other person. |
(2) |
According to an amended Schedule 13G filed with the Commission on January 17, 2014, BlackRock, Inc., together with its subsidiaries BlackRock Advisors (UK) Limited,
BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Fund Management Ireland Limited, BlackRock Institutional Trust
Company, N.A., BlackRock International Limited, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Ltd., and BlackRock Investment Management, LLC (together, BlackRock), as of December 31, 2013,
has sole voting power over 9,275,811 shares of Common Stock, and sole dispositive power over the 9,748,115 shares of Common Stock shown in the table above. BlackRock is located at 40 East 52nd Street, New York, New York 10022.
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(3) |
According to an amended Schedule 13G filed with the Commission on February 6, 2014, The Vanguard Group (Vanguard) has sole voting power over 84,250 shares of
Common Stock, sole dispositive power over 8,405,741 shares of Common Stock, and shared dispositive power, with Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., wholly-owned subsidiaries of Vanguard, over 74,750 shares of
Common Stock shown in the table above. Vanguard is located at 100 Vanguard Blvd., Malvern, Pennsylvania 19355. |
STOCK OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT (CONTINUED)
(4) |
According to a Schedule 13G filed with the Commission on February 3, 2014, State Street Corporation, together with its subsidiaries State Street Bank and Trust Company, SSGA
Funds Management, Inc., State Street Global Advisors Limited, State Street Global Advisors Ltd., State Street Global Advisors, Australia Limited, and State Street Global Advisors, Asia Limited (together, State Street), as of
December 31, 2013, has shared voting power and shared dispositive power over the 6,211,205 shares of Common Stock shown in the table above. State Street is located at State Street Financial Center, One Lincoln Street, Boston, Massachusetts
02111. |
(5) |
According to an amended Schedule 13G filed with the Commission on February 7, 2014, Capital Research Global Investors, a division of Capital Research and Management Company,
as of December 31, 2013, has sole voting power and sole dispositive power over the 6,000,000 shares of Common Stock shown in the table above. Capital Research Global Investors is located at 333 South Hope Street, Los Angeles, California 90071.
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(6) |
Mr. Abizaid is a Director of the Company. |
(7) |
Mr. Carbonari is a Director of the Company. |
(8) |
Mr. Daberko is a Director of the Company. |
(9) |
Mr. Fazzolari is a Director of the Company. |
(10) |
Mr. Gordon is an executive officer of the Company. His ownership is comprised of 73,002 shares of Common Stock which he owns directly and 8,559 shares of Common Stock
issuable under stock-settled stock appreciation rights currently exercisable or exercisable within 60 days of May 31, 2014. |
(11) |
Mr. Gross is a Director of the Company. |
(12) |
Mr. Hoogenboom was an executive officer of the Company until May 31, 2014. Effective May 31, 2014, Mr. Hoogenboom resigned as Senior Vice President
Manufacturing and Operations and Chief Information Officer of the Company to devote all of his time and efforts to his duties as President of Tremco Incorporated, a wholly-owned subsidiary of the Company. His ownership is comprised of 221,782 shares
of Common Stock which he owns directly, 89,644 shares of Common Stock issuable under stock-settled stock appreciation rights currently exercisable or exercisable within 60 days of May 31, 2014, and approximately 1,996 shares of Common Stock
held by Wells Fargo Bank, N.A., as trustee of the RPM International Inc. 401(k) Plan which represents Mr. Hoogenbooms approximate percentage ownership of the total shares of Common Stock held in the RPM International Inc. 401(k) Plan as
of May 31, 2014. |
(13) |
Mr. Moore is an executive officer of the Company. His ownership is comprised of 65,287 shares of Common Stock which he owns directly, 6,038 shares of Common Stock issuable
under stock-settled stock appreciation rights currently exercisable or exercisable within 60 days of May 31, 2014, and approximately 8,754 shares of Common Stock held by Wells Fargo Bank, N.A., as trustee of the RPM International Inc. 401(k) Plan,
which represents Mr. Moores approximate percentage ownership of the total shares of Common Stock held in the RPM International Inc. 401(k) Plan as of May 31, 2014. |
(14) |
Mr. Morford is a Director of the Company. |
(15) |
Mr. Nance is a Director of the Company. |
(16) |
Mr. Ratner is a Director of the Company. Mr. Ratners ownership is comprised of 21,068 shares of Common Stock which he owns directly and 5,000 shares of Common
Stock which are held by a trust of which Mr. Ratner is settlor and co-trustee. Ownership of the shares of Common Stock held by the trust is attributed to Mr. Ratner pursuant to Commission rules. Mr. Ratner received a portion of his
Directors fees in the form of stock equivalent units in connection with the Companys Deferred Compensation Program. As of May 31, 2014, Mr. Ratner had approximately 7,722 stock equivalent units in the Deferred Compensation
Program, which stock equivalent units are excluded from the amount reported in the table pursuant to Commission guidance. |
(17) |
Mr. Rice is an executive officer of the Company. His ownership is comprised of 352,102 shares of Common Stock which he owns directly, 106,260 shares of Common Stock issuable
under stock-settled stock appreciation rights currently exercisable or exercisable within 60 days of May 31, 2014, and approximately 4,465 shares of Common Stock held by Wells Fargo Bank, N.A., as trustee of the RPM International Inc. 401(k)
Plan, which represents Mr. Rices approximate percentage ownership of the total shares of Common Stock held in the RPM International Inc. 401(k) Plan as of May 31, 2014. |
(18) |
Frank C. Sullivan is a Director and an executive officer of the Company. Frank C. Sullivans ownership is comprised of 953,872 shares of Common Stock which he owns
directly, 9,000 shares of Common Stock which he holds as custodian for his sons, 588,670 shares of Common Stock issuable under stock-settled stock appreciation rights currently exercisable or exercisable within 60 days of May 31, 2014, 11,305
shares of Common Stock which are held in a trust for the benefit of Frank C. Sullivans sons, 15,000 shares of Common Stock held by a limited liability company of with Frank C. Sullivan is one-fifth owner and a managing member, 9,630
shares of Common Stock held in a trust for the benefit of Frank C. Sullivan, and approximately 4,118 shares of Common Stock held by Wells Fargo Bank, N.A., as trustee of the RPM International Inc. 401(k) Plan, which represents Frank C.
Sullivans approximate percentage ownership of the total shares of Common Stock held in the RPM International Inc. 401(k) Plan as of May 31, 2014. Ownership of the shares of Common Stock held as custodian for his sons and those held in
trusts for the benefit of his sons is attributed to Frank C. Sullivan pursuant to Commission rules. |
(19) |
Thomas C. Sullivan is Chairman Emeritus of the Board of Directors of the Company. Thomas C. Sullivans ownership is comprised of 12,979 shares of Common Stock
which he owns directly, 74,619 shares of Common Stock that are held by the Thomas C. Sullivan Grantor Retained Annuity Trust dated June 23, 2010 of which Thomas C. Sullivan is a trustee and a beneficiary, and 14,563 shares of Common Stock
which are owned by his wife. Ownership of the shares of Common Stock held by his wife is attributed to Thomas C. Sullivan pursuant to Commission rules. |
(20) |
Mr. Summers is a Director of the Company. |
(21) |
Dr. Thornton is a Director of the Company. Dr. Thornton received a portion of her Directors fees in the form of stock equivalent units in connection with the
Companys Deferred Compensation Program. As of May 31, 2014, Dr. Thornton had approximately 18,132 stock equivalent units in the Deferred Compensation Program, which stock equivalent units are excluded from the amount reported in the
table pursuant to Commission guidance. |
(22) |
Mr. Viviano is a Director of the Company. Mr. Viviano received a portion of his Directors fees in the form of stock equivalent units in connection with the
Companys Deferred Compensation Program. As of May 31, 2014, Mr. Viviano had approximately 15,430 stock equivalent units in the Deferred Compensation Program, which stock equivalent units are excluded from the amount reported in the
table pursuant to Commission guidance. |
(23) |
The number of shares of Common Stock shown as beneficially owned by the Directors and executive officers as a group on May 31, 2014 includes 8,000 shares of Common
Stock which the Directors and executive officers as a group have the right to acquire within 60 days of said date through the exercise of stock options, and approximately 25,458 shares of Common Stock held by Wells Fargo Bank, N.A., as trustee of
the RPM International Inc. 401(k) Plan, which represents the groups approximate percentage ownership of the total shares of Common Stock held in the RPM International Inc. 401(k) Plan as of May 31, 2014. |
ELECTION OF DIRECTORS
The authorized number of Directors of the Company presently is fixed at thirteen, with the Board of Directors divided into three Classes. Currently, each of Class I and Class III has four Directors, and Class II
has five Directors. The term of office of one Class of Directors expires each year, and at each Annual Meeting of Stockholders the successors to the Directors of the Class whose term is expiring at that time are elected to hold office for a term of
three years.
The term of office of Class III of the Board of Directors expires at this years Annual Meeting. The term of
office of the persons elected Directors in Class III at this years Annual Meeting will expire at the time of the Annual Meeting held in 2017. Each Director in Class III will serve until the expiration of that term or until his or her successor
shall have been duly elected. The Board of Directors nominees for election as Directors in Class III are Frederick R. Nance, Charles A. Ratner, William B. Summers, Jr. and Dr. Jerry Sue Thornton. Each of Messrs. Nance, Ratner and Summers
and Dr. Thornton currently serves as a Director in Class III.
The Proxy holders named in the accompanying
Proxy or their substitutes will vote such Proxy at the Annual Meeting or any adjournment or postponement thereof for the election as Directors of the four nominees unless the stockholder instructs, by marking the appropriate space on the Proxy, that
authority to vote is withheld. If any nominee should become unavailable for election (which contingency is not now contemplated or foreseen), it is intended that the shares represented by the Proxy will be voted for such substitute nominee as may be
named by the Board of Directors. In no event will the accompanying Proxy be voted for more than four nominees or for persons other than those named below and any such substitute nominee for any of them.
NOMINEES FOR ELECTION
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Frederick R. Nance, age 60 Director since 2007
Regional Managing Partner of Squire Patton Boggs (US) LLP, Attorneys-at-law, Cleveland, Ohio,
since 2007. Mr. Nance has also served on the firms worldwide, seven-person Management Committee since 2007. He received his B.A. degree from Harvard University and his J.D. degree from the University of Michigan. Mr. Nance joined Squire
Patton Boggs directly from law school, became partner in 1987 and served as the Managing Partner of the firms Cleveland office from 2002 until 2007. In addition to his duties at Squire Patton Boggs, Mr. Nance also currently serves as Senior
Advisor and Special Counsel of the Cleveland Browns. Mr. Nance serves on the boards of Greater Cleveland Partnership, The Cleveland Foundation, and the Cleveland Clinic.
The Board of Directors has determined that Mr. Nance should serve as a Director primarily due to his significant legal background and management experience.
Mr. Nances background allows him to provide valuable insights to the Board of Directors, particularly in regard to corporate governance and risk issues that confront the Company. Mr. Nance also provides the Board of Directors a valuable
perspective as a member of the boards of several prominent local non-profit organizations. |
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Shares of Common Stock beneficially owned:
15,219 |
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Nominee to Class III (term expiring in
2017) |
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Charles A. Ratner, age 73 Director since 2005
Chairman of Forest City Enterprises, Inc. (FCE), a diversified real estate development
corporation, since 2011. Prior to becoming Chairman in 2011, Mr. Ratner served as President and Chief Executive Officer of FCE since 1993 and 1995, respectively. Mr. Ratner serves on the Board of Directors for FCE, Greater Cleveland
Partnership, University Hospitals of Cleveland, United Way of Greater Cleveland, the Cleveland Foundation, and the United Jewish Communities. Mr. Ratner also serves on the Board of Trustees for the Musical Arts Association, Mandel Associated
Foundations, the Jewish Federation of Cleveland, and the David and Inez Myers Foundation. Mr. Ratner previously served as a director for American Greetings Corporation from 2001 to 2013.
The Board of Directors has determined that Mr. Ratner should serve as a Director because
of his extensive executive management experience, with a particular emphasis in real estate development, along with particular strengths with respect to leadership, management and corporate governance skills gained from more than 41 years of
senior management experience at FCE, as well as his experience on other boards of directors. Mr. Ratner also provides the Board of Directors a valuable perspective as a member of the boards of several prominent local non-profit
organizations. |
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Shares of Common Stock beneficially owned:
26,068* |
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Nominee to Class III (term expiring in
2017) |
* |
Mr. Ratner previously participated in the Companys Deferred Compensation Program, and deferred a portion of his Directors fees in the form of stock equivalent
units. As of May 31, 2014, Mr. Ratner had approximately 7,722 stock equivalent units in the Deferred Compensation Program. |
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William B. Summers, Jr., age 64 Director since 2004
Retired Chairman and Chief Executive Officer of McDonald Investments Inc., an investment
banking and securities firm and a part of KeyBanc Capital Markets. Prior to his retirement, Mr. Summers served as Chairman of McDonald Investments Inc. from 2000 to 2006, and as its Chief Executive Officer from 1994 to 2000. From 1998 until
2000, Mr. Summers served as the Chairman of Key Capital Partners and an Executive Vice President of KeyCorp. Mr. Summers is a director of Greatbatch, Inc., and a member of the Advisory Boards of Molded Fiber Glass Companies, IQWare
Solutions and MAI Wealth Advisors. From 2004 until May 2011, Mr. Summers was a director of Developers Diversified Realty Corporation.
The Board of Directors has determined that Mr. Summers should serve as a Director because of his extensive executive management experience, including over
15 years of experience as Chairman and Chief Executive Officer of McDonald Investments Inc., service on the boards of both the New York Stock Exchange and National Association of Securities Dealers, and his experience serving as a director of
other private and public companies. His experience enables Mr. Summers to provide keen insight and diverse perspectives on several critical areas impacting the Company, including capital markets, financial and external reporting, long-term
strategic planning and business modeling. With his extensive financial background, Mr. Summers serves as the chairman of, and a financial expert for, the Companys Audit Committee. Mr. Summers also provides the Board of Directors a
valuable perspective as a member of the boards of several prominent local non-profit organizations. |
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Shares of Common Stock beneficially owned:
32,530 |
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Nominee to Class III (term expiring in
2017) |
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Dr. Jerry Sue Thornton, age 67 Director since 1999
Retired President of Cuyahoga Community College. Prior to her retirement, Dr. Thornton
served as President of Cuyahoga Community College from 1992 to 2013. From 1985 to 1992, Dr. Thornton served as President of Lakewood Community College in White Bear Lake, Minnesota. She received her Ph.D. degree from the University of Texas at
Austin and her M.A. and B.A. degrees from Murray State University. Dr. Thornton is also a director of Applied Industrial Technologies, Inc. Dr. Thornton is also a board member of United Way of Greater Cleveland, Greater Cleveland
Partnership, the Rock and Roll Hall of Fame and Museum Cleveland and New York, University Hospitals of Cleveland, the Cleveland Museum of Art, and Playhouse Square Foundation. From 2004 until 2011, Dr. Thornton was a director of American
Family Insurance, and from 2001 until 2008, Dr. Thornton was a director of National City Corporation. Dr. Thornton previously served as a director for American Greetings Corporation from 2000 to 2013.
The Board of Directors has determined that Dr. Thornton should serve as a Director because
of her extensive executive management experience and her experience serving on boards of directors of public companies. In addition, as the president of Cuyahoga Community College, Dr. Thornton demonstrated management expertise. She also is a
recognized leader in the local community. Dr. Thornton, because of this experience, among other things, provides the Board of Directors a valuable perspective on engagement with the public sector and the communities in which the Company operates.
Dr. Thornton also provides the Board of Directors a valuable perspective as a member of the boards of several local non-profit organizations. |
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Shares of Common Stock beneficially owned:
33,407** |
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Nominee to Class III
(term expiring in 2017) |
** |
Dr. Thornton previously participated in the Companys Deferred Compensation Program, and deferred a portion of her Directors fees in the form of stock equivalent
units. As of May 31, 2014, Dr. Thornton had approximately 18,132 stock equivalent units in the Deferred Compensation Program. |
DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE ANNUAL MEETING
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David A. Daberko, age 69 Director since 2007
Retired Chairman of the Board and Chief Executive Officer, National City Corporation, now a
part of PNC Financial Services Group, Inc. Mr. Daberko earned a bachelors degree from Denison University and a M.B.A. degree from the Weatherhead School of Management at Case Western Reserve University. He joined National City Bank in
1968. Mr. Daberko was elected Deputy Chairman of National City Corporation and President of National City Bank in Cleveland in 1987. He served as President and Chief Operating Officer of National City Corporation from 1993 until 1995. From 1995
until his retirement in 2007, Mr. Daberko served as Chairman and Chief Executive Officer of National City Corporation. Mr. Daberko is also a director of Marathon Petroleum Corporation, MPLX L.P. and Access Midstream Partners, L.P., where
he serves as Chairman. He is a trustee of Case Western Reserve University, University Hospitals of Cleveland and Hawken School.
The Board of Directors has determined that Mr. Daberko should serve as a Director because of his extensive executive management experience, including
12 years as Chairman and Chief Executive Officer of National City Corporation. In that position, Mr. Daberko dealt with many of the major issues, such as financial, strategic, technology, compensation, management development, acquisitions,
capital allocation, government and stockholder relations, that the Company deals with today. His service on other boards of directors has given him exposure to different industries and approaches to governance and other key issues. Mr. Daberko
also provides the Board of Directors a valuable perspective as a member of the boards of several prominent local non-profit organizations. |
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Shares of Common Stock beneficially owned: 20,925 |
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Director in Class I (term expiring in 2016) |
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Craig S. Morford, age 55 Director since 2013
Chief Legal and Compliance Officer of Cardinal Health, Inc. (CAH). Mr. Morford joined Cardinal
Health in 2008 as Chief Compliance Officer, and became Chief Legal and Compliance Officer in 2009. Before joining Cardinal Health, Mr. Morford spent 20 years with the U.S. Department of Justice, which included an appointment by President George
W. Bush as acting U.S. deputy attorney general. Mr. Morford is a member of The Association of General Counsel. He also serves on the audit and compliance committee of the board of trustees of The Ohio State University. Mr. Morford earned his
bachelor degree in economics from Hope College, and a juris doctorate from Valparaiso University. The Board of Directors has determined that Mr. Morford should serve as a Director primarily due to his significant experience in legal affairs, regulatory compliance, corporate governance, corporate ethics and
enterprise risk management at Cardinal Health and his service with the U.S. Department of Justice. Mr. Morfords background allows him to provide valuable insights to the Board of Directors, particularly in regard to corporate governance and
risk issues that confront the Company. Mr. Morford also provides the Board of Directors a valuable perspective as a member of the boards of prominent non-profit organizations. |
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Shares of Common Stock beneficially owned:
2,500 |
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Director in Class I (term expiring in 2016) |
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Frank C. Sullivan, age 53 Director since 1995
Chairman and Chief Executive Officer, RPM International Inc. Frank C. Sullivan entered the
University of North Carolina as a Morehead Scholar and received his B.A. degree in 1983. From 1983 to 1987, Frank C. Sullivan held various commercial lending and corporate finance positions at Harris Bank and First Union National Bank prior to
joining RPM as Regional Sales Manager from 1987 to 1989 at RPMs AGR Company joint venture. In 1989, he became RPMs Director of Corporate Development. He became a Vice President in 1991, Chief Financial Officer in 1993, Executive Vice
President in 1995, President in 1999, Chief Operating Officer in 2001, Chief Executive Officer in 2002, and was elected Chairman of the Board in 2008. Frank C. Sullivan serves on the boards of The Timken Company, The Cleveland Foundation, the
American Coatings Association, the Cleveland Rock and Roll Hall of Fame and Museum, Greater Cleveland Partnership, the Ohio Business Roundtable, the Army War College Foundation, Inc., the Chamber of Commerce of the United States, and the Medina
County Bluecoats. Frank C. Sullivan is the son of Thomas C. Sullivan. The Board
of Directors has determined that Frank C. Sullivan should serve as a Director because of his role as the Companys Chief Executive Officer, his intimate knowledge of the Company, and his experience serving as a director of other public
companies and non-profit organizations. The Board of Directors believes that Frank C. Sullivans extensive experience in and knowledge of the Companys business gained as a result of his long-time service as a member of management is
essential to the Board of Directors oversight of the Company and its business operations. The Board of Directors also believes that continuing participation by qualified members of the Sullivan family on the Board of Directors is an important
part of the Companys corporate culture that has contributed significantly to its long-term success. |
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Shares of Common Stock beneficially owned:
1,536,591 |
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Director in Class I
(term expiring in 2016) |
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Thomas C. Sullivan, age 77 Director since 1963
Chairman Emeritus, RPM International Inc. Thomas C. Sullivan received his B.S. degree in
Business Administration from Miami University (Ohio). He joined RPM as a Divisional Sales Manager in 1961 and was elected Vice President in 1967. He became Executive Vice President in 1969, and in 1971 Thomas C. Sullivan was elected Chairman of the
Board. He also served as President from 1970 to 1978 and Chief Executive Officer from 1971 to 2002. In October 2008, Thomas C. Sullivan retired after 37 years of serving as Chairman, and now serves on the Board of Directors as Chairman
Emeritus. From 1998 until May 2010, Thomas C. Sullivan was a director of Kaydon Corporation, and from 1984 until 2007, Thomas C. Sullivan was a director of Agilysys, Inc.
The Board of Directors has determined that Thomas C. Sullivan should serve as a Director
because of his prior service as the Companys Chairman and Chief Executive Officer, his intimate knowledge of the Company, and his experience serving as a director of other private and public companies. The Board of Directors believes that
Thomas C. Sullivans extensive experience in and knowledge of the Companys business gained as a result of his long-time service as a member of management, including 51 years of service on the Board of Directors, is essential to the Board
of Directors oversight of the Company and its business operations. The Board of Directors also believes that continuing participation by qualified members of the Sullivan family on the Board of Directors is an important part of the
Companys corporate culture that has contributed significantly to its long-term success. |
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Shares of Common Stock beneficially owned:
102,161 |
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Director in Class I (term expiring in
2016) |
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General John P. Abizaid, age 63 Director since 2008
Senior Partner, JPA Partners LLC, a Nevada-based strategic and analytic consulting firm. Gen.
Abizaid retired from the U.S. Army in 2007 after 34 years of service, during which he rose from an infantry platoon leader to become a four-star general and the longest-serving commander of U.S. Central Command. During his distinguished career,
his command assignments ranged from infantry combat to delicate international negotiations. Gen. Abizaid graduated from the U.S. Military Academy with a bachelor of science degree in 1973. His civilian studies include an Olmsted Scholarship at the
University of Jordan, Amman, and a master of arts degree in Middle Eastern studies at Harvard University. Gen. Abizaid is a highly decorated officer who has been awarded the Defense Distinguished Service Medal, the Army Distinguished Service Medal,
Legion of Merit and the Bronze Star. The Board of Directors has determined that Gen.
Abizaid should serve as a Director because of the extensive leadership and management experience he gained during his distinguished military career in which he ultimately became a four-star general in the U.S. Army. As commander of U.S. Central
Command, Gen. Abizaid was responsible for military operations in 27 countries and commanded over 500,000 U.S. and allied air, naval and land forces for over three years. Furthermore, as director of strategic plans and policies for the United States
Armed Forces Joint Staff, Gen. Abizaid led numerous delegations to foreign nations and conducted extensive negotiations on a number of sensitive subjects. His experience also enables him to assist the Company with leadership development and also
provide a unique strategic perspective to the Company. |
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Shares of Common Stock beneficially owned:
20,277 |
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Director in Class II
(term expiring in 2015) |
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Bruce A. Carbonari, age 58 Director since 2002
Retired Chairman and Chief Executive Officer, Fortune Brands, Inc., a diversified consumer
products company. Prior to his retirement, Mr. Carbonari served as the Chairman and Chief Executive Officer of Fortune Brands from 2008 to 2011, and as its President and Chief Executive Officer from 2007 to 2008. Previously, he held positions with
Fortune Brands business unit, Fortune Brands Home & Hardware LLC, as Chairman and Chief Executive Officer from 2005 until 2007 and as President and Chief Executive Officer from 2001 to 2005. Mr. Carbonari was the President and Chief
Executive Officer of Fortune Brands Kitchen and Bath Group from 1998 to 2001, and was previously the President and Chief Executive Officer of Moen, Inc. from 1990 to 1998. Prior to joining Moen in 1990, Mr. Carbonari was Executive Vice
President and Chief Financial Officer of Stanadyne, Inc., Moens parent company at that time. He began his career at PricewaterhouseCoopers prior to joining Stanadyne in 1981.
The Board of Directors has determined that Mr. Carbonari should serve as a Director
because of his extensive executive management experience, including his service as Chairman and Chief Executive Officer of Fortune Brands, Inc. In that position, Mr. Carbonari dealt with many of the major issues, such as financial, strategic,
technology, compensation, management development, acquisitions, capital allocation, government and stockholder relations, that the Company deals with today. Also, with his extensive financial background, Mr. Carbonari is a financial expert for the
Companys Audit Committee. |
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Shares of Common Stock beneficially owned:
24,823 |
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Director in Class II (term expiring in
2015) |
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Salvatore D. Fazzolari, age 61 Director since 2013
Former Chairman, President and Chief Executive Officer of Harsco Corporation (HSC), a
diversified global industrial company. Mr. Fazzolari served as Chairman and Chief Executive Officer of Harsco Corporation from 2008 until February 2012, in addition to serving as its President from 2010 until February 2012. During the course of his
over 30 years of service to Harsco Corporation, Mr. Fazzolari held various other positions, including President (2006 2007), Chief Financial Officer (1998 2007) and Treasurer and Corporate Controller. Mr. Fazzolari is a certified
public accountant (inactive) and a certified information systems auditor (inactive). He serves on the board of directors of Gannett Fleming Affiliates, Inc. and Bollman Hat Company. He is also an advisory board member of Current Capital LLC, and is
a trustee of Susquehanna University. He earned his bachelor of business administration degree in accounting from Pennsylvania State University.
The Board of Directors has determined that Mr. Fazzolari should serve as a Director because of his extensive executive management experience, including his service
as Chairman, President and Chief Executive Officer of Harsco Corporation. In that position, Mr. Fazzolari dealt with many of the major issues, such as financial, strategic, technology, compensation, management development, acquisitions, capital
allocation, government and stockholder relations, that the Company deals with today. Also, Mr. Fazzolari has extensive global experience, and because of his considerable financial background, he is a financial expert for the Companys Audit
Committee. |
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Shares of Common Stock beneficially owned:
3,500 |
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Director in Class II
(term expiring in 2015) |
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Thomas S. Gross, age 59 Director since 2012
Vice Chairman and Chief Operating Officer for the Electrical Sector of Eaton Corporation plc, a
global diversified power management company, since January 2009. Mr. Gross joined Eaton in 2003 as Vice President, Eaton Business Systems, and from June 2004 to December 2009 served as President of Eatons power quality and controls business.
Prior to joining Eaton, Mr. Gross held executive leadership positions with Danaher Corporation, Xycom Automation and Rockwell Automation. Mr. Gross currently serves on the board of governors of the National Electrical Manufacturers Association. Mr.
Gross received his B.S. degree in electrical and computer engineering from the University of Wisconsin and his M.B.A. degree from the University of Michigan.
The Board of Directors has determined that Mr. Gross should serve as a Director because of his extensive executive management experience at Eaton Corporation plc.
At Eaton, Mr. Gross deals with many of the major issues, such as financial, strategic, technology, compensation, management development, acquisitions and capital allocation, that the Company deals with today. |
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Shares of Common Stock beneficially owned:
5,650 |
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Director in Class II (term expiring in
2015) |
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Joseph P. Viviano, age 76 Director since 2001
Retired Vice Chairman of Hershey Foods Corporation, a manufacturer, distributor and marketer of
consumer food products. Prior to his retirement, Mr. Viviano served as the Vice Chairman of Hershey Foods from 1999 to 2000, and as its President and Chief Operating Officer from 1994 to 1999. From 2004 until 2009, Mr. Viviano was a
director of Reynolds American Inc. (a successor corporation to R.J. Reynolds Tobacco Company, where he served as a director from 2000 until 2004), from 1999 until 2008, Mr. Viviano was a director of Harsco Corporation, and from 1988 until 2008,
Mr. Viviano was a director of Chesapeake Corporation (now Canal Corporation).
The Board of Directors has determined that Mr. Viviano should serve as a Director because of his extensive executive management experience at Hershey Foods
Corporation. At Hershey Foods, Mr. Viviano dealt with many of the major issues, such as financial, strategic, technology, compensation, management development, acquisitions, capital allocation, government and stockholder relations, that the
Company deals with today. Furthermore, his service on other boards of directors has given him exposure to different industries and approaches to governance and other key issues. |
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Shares of Common Stock beneficially owned:
32,250*** |
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Director in Class II
(term expiring in 2015) |
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Mr. Viviano previously participated in the Companys Deferred Compensation Program, and deferred a portion of his Directors fees in the form of stock equivalent
units. As of May 31, 2014, Mr. Viviano had approximately 15,430 stock equivalent units in the Deferred Compensation Program. |
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, an Audit Committee, a Compensation Committee and a Governance and
Nominating Committee. The Executive Committee exercises the power and authority of the Board of Directors in the interim period between Board meetings. The functions of each of the Audit Committee, the Compensation Committee and the Governance and
Nominating Committee are governed by charters that have been adopted by the Board of Directors. The Board of Directors also has adopted Corporate Governance Guidelines to assist the Board of Directors in the exercise of its responsibilities, and a
code of business conduct and ethics (The Values & Expectations of 168) that applies to the Companys Directors, officers, and employees.
The charters of the Audit Committee, Compensation Committee and Governance and Nominating Committee and the Corporate Governance Guidelines and The Values & Expectations of 168 are available on the
Companys website at www.rpminc.com and in print to any stockholder who requests a copy. Requests for copies should be directed to Manager of Investor Relations, RPM International Inc., P.O. Box 777, Medina, Ohio 44258. The Company
intends to disclose any amendments to The Values & Expectations of 168, and any waiver of The Values & Expectations of 168 granted to any Director or executive officer of the Company, on the Companys website. As of the date
of this Proxy Statement, there have been no such waivers.
Board Independence
The Companys Corporate Governance Guidelines and the New York Stock Exchange (the NYSE) listing standards provide that at least a majority of the members of the Board of Directors must be
independent, i.e., free of any material relationship with the Company, other than his or her relationship as a Director or Board Committee member. A Director is not independent if he or she fails to satisfy the standards for independence under the
NYSE listing standards, the rules of the Commission, and any other applicable laws, rules and regulations. The Board of Directors adopted categorical standards (the Categorical Standards) to assist it in making independence
determinations. The Categorical Standards specify the criteria by which the independence of the Directors will be determined and meet or exceed the independence requirements set forth in the NYSE listing standards and the rules of the Commission.
The Categorical Standards are available on the Companys website at www.rpminc.com.
During the Board of Directors annual review of director
independence, the Board of Directors considers transactions, relationships and arrangements between each Director or an immediate family member of the Director and RPM. The
Board of Directors also considers transactions, relationships and arrangements between each Director or an immediate family member of the Director and RPMs senior management.
In July 2014, the Board of Directors performed its annual director independence review for fiscal 2014. As a result of this review, the Board of Directors
determined that 11 out of 13 current Directors are independent, and that all members of the Audit Committee, the Compensation Committee and the Governance and Nominating Committee are independent. The Board of Directors determined that
Dr. Thornton and Messrs. Abizaid, Carbonari, Daberko, Fazzolari, Gross, Morford, Nance, Ratner, Summers and Viviano meet the Categorical Standards and are independent and, in addition, satisfy the independence requirements of the NYSE.
Frank C. Sullivan is not considered to be independent because of his position as Chairman and Chief Executive Officer of RPM. Thomas C. Sullivan is not considered to be independent because he is the father of Frank C. Sullivan.
As part of this review, the Board of Directors considered common private and charitable board memberships among our executive officers and Directors, including
Dr. Thornton and Messrs. Daberko, Nance, Ratner and Summers. The Board of Directors does not believe that any of these common board memberships impairs the independence of the Directors.
In determining the independence of Mr. Gross, the Board of Directors considered that he is the Vice Chairman and Chief Operating Officer for the Electrical
Sector of Eaton Corporation plc, a global diversified power management company from which the Company has purchased products from time to time in the ordinary course of the Companys business. For the Companys fiscal year ended
May 31, 2014, the Company purchased approximately $141,000 of products and services of a transactional nature from Eaton, representing less than 0.0007% of Eatons $22.0 billion in net sales on an annual basis. The Board of Directors does
not believe that this relationship impairs Mr. Gross independence.
Audit Committee
The Audit Committee assists the Board of Directors in fulfilling its oversight of the integrity of the Companys financial statements, the Companys
compliance with legal and regulatory requirements, the independent auditors qualifications and independence, and the performance of the Companys internal audit function and independent auditor, and prepares the report of the Audit
Committee. The specific functions and responsibilities of the Audit Committee are set forth in the Audit Committee Charter which is available on the Companys website.
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
(CONTINUED)
The Board of Directors has determined that each member of the Audit Committee is financially literate and satisfies
the current independence standards of the NYSE listing standards and Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended (the Exchange Act). The Board of Directors has also determined that each of Messrs. Carbonari,
Fazzolari and Summers qualifies as an audit committee financial expert as that term is defined in Item 407(d) of Regulation S-K. Each of Messrs. Carbonari, Fazzolari and Summers also satisfies the NYSE accounting and financial
management expertise requirements.
Compensation Committee
The Compensation Committee assists the Board of Directors in discharging its oversight responsibilities relating to, among other things, executive compensation, equity and incentive compensation plans, management
succession planning and producing the Compensation Committee Report. The Compensation Committee administers the Companys Stock Option Plans, Incentive Compensation Plan, Restricted Stock Plan, Restricted Stock Plan for Directors, and Omnibus
Equity and Incentive Plan. The Compensation Committee reviews and determines the salary and bonus compensation of the Chief Executive Officer, as well as reviews and recommends to the Board of Directors for its approval the compensation of the other
executive officers of the Company. The Compensation Committee may delegate its authority to a subcommittee or subcommittees. Each member of the Compensation Committee is independent within the meaning of the NYSE listing standards and the
Companys Corporate Governance Guidelines.
Our Chief Executive Officer and our President and Chief Operating Officer, together with the
Compensation Committee, review assessments of executive compensation practices at least annually against our defined comparative framework. Our Chief Executive Officer and our President and Chief Operating Officer make recommendations to the
Compensation Committee with the intent of keeping our executive officer pay practices aligned with our intended pay philosophy. The Compensation Committee must approve any recommended changes before they can be made. The Compensation Committee has
the sole authority to retain and terminate any compensation and benefits consultant, independent legal counsel or other adviser, to assess the independence of such compensation and benefits consultant, independent legal counsel or other adviser and
any potential conflicts of interest prior to engagement, and to approve the related fees and other retention terms of such compensation and benefits consultant, independent legal counsel or other adviser.
Before selecting any compensation and benefits consultant, independent legal counsel or other adviser, the Compensation
Committee takes into account all factors relevant to that advisers independence from management, including the following six factors:
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the provision of other services to the Company by the advisers employer; |
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the amount of fees received from the Company by the advisers employer, as a percentage of total revenues of the employer; |
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the policies and procedures of the advisers employer that are designed to prevent conflicts of interest; |
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any business or personal relationship of the adviser with a member of the Compensation Committee; |
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any Common Stock of the Company owned by the adviser; and |
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any business or personal relationship of the adviser or the advisers employer with an executive officer of the Company. |
Governance and Nominating Committee
The Governance and
Nominating Committee reports to the Board of Directors on all matters relating to corporate governance of the Company, including the development and recommendation to the Board of Directors of a set of corporate governance principles applicable to
the Company, selection, qualification and nomination of the members of the Board of Directors and nominees to the Board of Directors, and administration of the Boards evaluation process. Each of the members of the Governance and Nominating
Committee is independent within the meaning of the NYSE listing standards and the Companys Corporate Governance Guidelines.
In identifying and
considering possible candidates for election as a Director, the Governance and Nominating Committee, after consultation with the Board and the Chief Executive Officer, will consider all relevant factors and will be guided by the following
principles: (1) each Director should be an individual of the highest character and integrity; (2) each Director shall have demonstrated exceptional ability and judgment and should have substantial experience which is of particular
relevance to the Company; (3) each Director should have sufficient time available to devote to the affairs of the Company; and (4) each Director should represent the best interests of the stockholders as a whole rather than special
interest groups. This evaluation is performed in light of the Governance and Nominating Committees views as to the needs of the Board of Directors and the Company as well as what skill set and other characteristics would most complement those
of the current Directors.
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
(CONTINUED)
The Governance and Nominating Committee and the Board of Directors consider a diverse group of experiences,
characteristics, attributes, and skills, including diversity in gender, ethnicity, race, cultural background, and age, in determining whether an individual is qualified to serve as a Director of the Company. While the Board of Directors does not
maintain a formal policy regarding diversity, pursuant to its Charter the Governance and Nominating Committee does consider the diversity of the Board of Directors when considering Director nominees for recommendation to the Board of Directors. The
Governance and Nominating Committee and the Board of Directors also consider the composition of the Board of Directors as a whole in evaluating whether a particular individual should serve on the Board of Directors, as the Board of Directors seeks
to comprise itself of members which, collectively, possess a range of relevant skills, experience, and expertise.
The Governance and Nominating
Committee will consider potential candidates recommended by stockholders, current Directors, Company officers, employees and others. The Governance and Nominating Committee will use the above enumerated factors to consider potential candidates
regardless of the source of the recommendation. Stockholder recommendations for director nominations may be submitted to the Secretary of the Company at P.O. Box 777, Medina, Ohio 44258, and they will be forwarded to the Governance and Nominating
Committee for consideration, provided such recommendations are accompanied by sufficient information to permit the Governance and Nominating Committee to evaluate the qualifications and experience of the potential candidates. Recommendations should
include, at a minimum, the following:
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the name, age, business address and residence address of the proposed nominee; |
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the principal occupation or employment of the proposed nominee; |
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the number of shares of Common Stock which are beneficially owned by such candidate;
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a description of all arrangements or understandings between the stockholder(s) making such nomination and each candidate and any other person or persons (naming
such person or persons) pursuant to which nominations are to be made by the stockholder; |
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detailed biographical data and qualifications and information regarding any relationships between the candidate and the Company within the past three years;
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any other information relating to the proposed nominee that would be required to be disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; |
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any other information the stockholder believes is relevant concerning the proposed nominee; |
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a written consent of the proposed nominee(s) to being named as a nominee and to serve as a director if elected; |
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a written agreement of the proposed nominee(s) to comply with the provisions of the Companys majority voting policy; |
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the name and record address of the stockholder who is submitting the notice; and |
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the number of shares of Common Stock which are owned of record or beneficially by the stockholder who is submitting the notice and the date such shares were
acquired by the stockholder and if such person is not a stockholder of record or if such shares are owned by an entity, reasonable evidence of such persons ownership of such shares or such persons authority to act on behalf of such
entity. |
Stockholders who desire to nominate a proposed nominee for Director at an Annual Meeting must also comply with the
requirements set forth in the By-Laws concerning such nominations.
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS (CONTINUED)
Committee Membership
Set forth below is the current
membership of each of the Committees, with the number of meetings held during the fiscal year ended May 31, 2014 in parentheses:
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Executive Committee(0) |
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Audit Committee(4) |
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Compensation
Committee(3) |
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Governance and
Nominating Committee(3) |
Frank C. Sullivan |
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William B. Summers, Jr. |
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Charles A. Ratner |
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Bruce A. Carbonari |
(Chairman) |
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(Chairman) |
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(Chairman) |
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(Chairman) |
Bruce A. Carbonari |
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Bruce A. Carbonari |
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John P. Abizaid |
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Craig S. Morford |
Charles A. Ratner |
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Salvatore D. Fazzolari |
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David A. Daberko |
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Frederick R. Nance |
Thomas C. Sullivan |
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Thomas S. Gross |
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Dr. Jerry Sue Thornton |
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Joseph P. Viviano |
William B. Summers, Jr. |
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Board Meetings
The Board of Directors held four meetings during the fiscal year ended May 31, 2014. No Director, during the fiscal year ended May 31, 2014, attended
fewer than 75% of the aggregate of (i) the total number of meetings of the Board of Directors held during the period that the Director served and (ii) the total number of meetings held by Committees of the Board of Directors on which the
Director served, during the period that the Director served.
Independent Directors Meetings
Each of the Directors, other than Frank C. Sullivan, is a non-management Director. Each of the non-management Directors, other than Thomas C. Sullivan, was
independent within the meaning of the NYSE listing standards and the Companys Corporate Governance Guidelines during fiscal 2014. The Companys independent Directors generally meet in executive sessions each year in January, April and
July. Bruce A. Carbonari served as the Lead Director for the January, April and July meetings of the Companys independent Directors in 2014. The Companys Corporate Governance Guidelines define such Lead Directors role and
responsibilities. Bruce A. Carbonari currently serves as Lead Director.
Structure of the Board of Directors
The By-Laws provide that one person may hold the position of Chairman of the Board of Directors and Chief Executive Officer. The Chief Executive Officer of the
Company currently serves as the Chairman of the Board of Directors. The Board of Directors believes that the Chief Executive Officer is best situated to serve as Chairman because he is one of the Directors most familiar with the Companys
business and industry. The Board of Directors believes that combining the roles of Chief Executive Officer and Chairman of the Board of Directors provides an efficient and effective leadership model
for the Company by fostering clear accountability, effective decision-making, and alignment of corporate strategy. The independent Directors bring experience, oversight, and expertise from
outside the Company and its industry, while the Chief Executive Officer brings Company and industry-specific experience and expertise. One of the key responsibilities of the Board of Directors is to develop strategic direction and hold management
accountable for the execution of managements strategy once it is developed.
The Corporate Governance Guidelines provide for a Lead Director, and
define such Lead Directors role and responsibilities. The Lead Director:
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presides at all executive sessions of the independent Directors or other meetings at which the Chairman of the Board is not present;
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is authorized to call meetings of the independent Directors; |
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works with the Chairman of the Board to call Board meetings; |
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serves as a liaison between the Chairman of the Board and the independent Directors as required (each Director is free, however, to communicate directly with the
Chairman of the Board); |
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works with the Chairman of the Board to set and approve the Board schedule and agenda to assure sufficient time for discussion of all agenda items;
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approves the materials to be provided to the Board; |
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consults with other Directors and facilitates communication between the Board and the Chief Executive Officer; |
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serves as focal point for stockholder communications and requests for consultation addressed to the independent Directors;
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INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
(CONTINUED)
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has the ability to retain outside professionals on behalf of the Board as the Board may determine is necessary or appropriate; and |
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performs such other functions either specified in the Corporate Governance Guidelines or assigned from time to time by the Board. |
The Board of Directors believes the combined role of Chief Executive Officer and Chairman of the Board of Directors, together with independent Directors having the
duties described above, is in the best interests of stockholders because it strikes an appropriate balance for the Company. With the Chief Executive Officer also serving as Chairman of the Board of Directors, there is unified leadership and a focus
on strategic development and execution, while the independent Directors help assure independent oversight of management.
Role in Risk Oversight
Risk is inherent in any business and the Companys management is responsible for the day-to-day management of risks that the Company faces. The
Board of Directors, on the other hand, has responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors has the responsibility to evaluate the risk management process to ensure its adequacy and that it is
implemented properly by management.
The Board of Directors believes that full and open communication between management and the Board of Directors is
essential for effective risk management and oversight. Senior management, which includes the Chief Compliance Officer, attends quarterly meetings of the Board of Directors, as well as certain committee meetings, in order to address any questions or
concerns raised by the Board of Directors on risk management and any other matters. Each quarter, the Board of Directors receives presentations from senior management on business operations, financial results, and strategic issues. In addition,
senior management holds an annual strategic planning retreat attended by members of the Board of Directors, as well as periodic strategic planning sessions, to discuss strategies, key challenges, and risks and opportunities for the Company. Senior
management then reviews the results of each strategic planning session with the Board of Directors.
The Board Committees assist the Board of Directors
in fulfilling its oversight responsibilities in certain areas of risk. The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal
controls, and compliance with legal and regulatory requirements. Risk
assessment reports are regularly provided by management and the Companys internal auditors to the Audit Committee. The Compensation Committee assists the Board of Directors in fulfilling
its oversight responsibilities with respect to the management of risks arising from the Companys compensation policies and programs, including overseeing the Companys compensation-related risk assessment described further below in this
Proxy Statement. The Governance and Nominating Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to the management of risks associated with the organization of the Board of Directors and its
membership and structure, succession planning for Directors and executive officers, and corporate governance, including the annual monitoring of corporate governance issues, administering regular self-evaluations of the Board and its committees, and
reviewing potential conflicts of interest.
All of these Board Committees report back to the full Board of Directors at meetings of the Board of
Directors as to the Board Committees activities and matters discussed and reviewed at the Board Committees meetings. In addition, the Board of Directors is encouraged to participate in external Director education courses to keep apprised
of current issues, including areas of risk.
Succession Planning
The Company actively engages in succession planning in order to assure that it has sufficient depth and breadth of executive talent. While effective succession planning is a fluid process, there are certain annual
processes in which the Company engages to determine appropriate candidates and leadership potential. Information is gathered and analyzed to assess the staffing of the Companys key positions to identify and develop employees for such
positions. To further this process, an offsite leadership development program is conducted each year for purposes of recognizing the Companys emerging leaders and uniting them in a three-day formal program with peers and representatives from
the Board of Directors. In addition, after completing this leadership development program, certain employees are selected to work with a top-ranked global provider of executive education to enhance senior level personal leadership development and
leadership team strategy development.
Communications with the Board of Directors
Stockholders and other persons may communicate with the non-management Directors as a group or any chair of a Board Committee. Such communications may be confidential or anonymous, if so designated, and may be
submitted in writing to Board of Directors Communications c/o General Counsel,
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
(CONTINUED)
RPM International Inc., P.O. Box 777, Medina, Ohio 44258 or by email to directors@rpminc.com. Unless specifically directed to one of the Committee chairs, communications will be forwarded to the
Lead Director for the next scheduled meeting of independent Directors.
All communications received in accordance with these procedures will be reviewed
initially by the Companys General Counsel, who will relay all such communications (or a summary thereof) to the appropriate Director or Directors unless he determines that such communication:
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does not relate to the business or affairs of the Company or the functioning or constitution of the Board of Directors or any of its Committees; or
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relates to routine or insignificant matters that do not warrant the attention of the Board of Directors. |
In the alternative to the procedures outlined above, any stockholder or interested party may report any suspected accounting or financial misconduct confidentially
through our compliance hotline. Information regarding our compliance hotline is available on our website, www.rpminc.com.
Attendance at Annual
Meetings of Stockholders
It is a policy of the Board of Directors that all its members attend the Annual Meeting absent exceptional cause. All of
the Directors who were at that time members of the Board of Directors were present at the October 2013 Annual Meeting.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, contains a provision that is commonly known as Say-on-Pay. Say-on-Pay gives our stockholders an opportunity
to vote on an advisory, non-binding basis to approve the compensation of our named executive officers as disclosed in this Proxy Statement pursuant to Commission rules.
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the executive compensation program and practices described in this
Proxy Statement. Please read the Compensation Discussion and Analysis and the executive compensation tables and narrative disclosure for a detailed explanation of our executive compensation program and practices. Accordingly, we are asking our
stockholders to vote FOR the following resolution:
RESOLVED, that RPM International Inc.s stockholders hereby approve, on an advisory basis, the
compensation of the named executive officers as disclosed pursuant to the compensation disclosure rules of the Commission, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this Proxy
Statement.
We are focused on delivering operating results with the ultimate goal of creating and maximizing value for our stockholders on a
long-term basis. Our compensation programs and practices have been designed to drive those results, and they have served our Company well. For fiscal 2014, 52% of the amounts of the principal compensation components for our named executive officers
in the aggregate was variable and tied to our performance. Our compensation programs and practices have been integral to our success in attracting and retaining an experienced and effective management team.
Consistent with our focus on delivering sustained long-term operating results, over the past 10 years our sales grew at a compound annual growth rate of 6.6%. Our stockholders have been rewarded
for this performance over this 10-year period, enjoying a compound annual growth rate in cumulative total return, including the reinvestment of dividends, of 15.5%, compared to the compound annual growth rate in cumulative
total return for the S&P 500 of 7.8%. In addition, 2014 marked our 40th consecutive year of increased dividends. The following table shows the cumulative total stockholder return, including
the reinvestment of dividends, of shares of our Common Stock compared to the S&P 500 and a peer group over the past 10 years.
This advisory vote on executive compensation is not binding on us. However, the Board and the Compensation Committee
highly value the opinions of our stockholders. To the extent there is a significant vote against this proposal, we will seek to determine the reasons for our stockholders concerns, and the Compensation Committee will evaluate whether any
actions are necessary to address those concerns when making future executive compensation decisions.
Proposal Two will be decided by the vote of the
holders of a majority of the shares entitled to vote thereon
present in person or by proxy at the Annual Meeting. In voting for Proposal Two, votes may be cast in favor, against or abstained. Abstentions will count as present and will have the effect of a
vote against Proposal Two. Broker non-votes, however, are not counted as present for purposes of determining whether Proposal Two has been approved, and will have no effect on the outcome of Proposal Two.
Our Board of Directors unanimously recommends a vote FOR Proposal Two relating to the advisory vote on executive compensation.
Compensation Discussion and Analysis
Executive Summary
In this section, we describe the material components of our executive compensation program
for our named executive officers whose compensation is set forth in the Summary Compensation Table and other compensation tables contained in this Proxy Statement.
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Frank C. Sullivan, our Chairman and Chief Executive Officer; |
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Ronald A. Rice, our President and Chief Operating Officer; |
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Paul G. P. Hoogenboom, our Senior Vice President Manufacturing and Operations, and our Chief Information Officer until May 31, 2014;
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Russell L. Gordon, our Vice President and Chief Financial Officer; and |
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Edward W. Moore, our Senior Vice President, General Counsel and Chief Compliance Officer. |
We also provide an overview of our executive compensation philosophy and our executive compensation program. In addition, we explain how and why the Compensation
Committee arrives at specific compensation policies and decisions involving the named executive officers.
Our Business
RPM International Inc., a holding company, owns subsidiaries that are world leaders in specialty coatings, sealants, building materials and related services serving
both industrial and consumer markets. The Companys industrial products include roofing systems, sealants, corrosion control coatings, flooring coatings and specialty chemicals. Industrial brands include Stonhard, Tremco, illbruck, Carboline,
Flowcrete, Universal Sealants, Fibergrate and Euco. The Companys consumer products are used by professionals and do-it-yourselfers for home maintenance and improvement and by hobbyists. Consumer brands include Zinsser, Rust-Oleum, DAP,
Varathane and Testors.
For more information about our business, please see Business and Managements Discussion and Analysis of
Financial Condition and Results of Operations in our Annual Report on Form 10-K filed with the Commission on August 14, 2014.
Fiscal
2014 Business Highlights
The Company achieved strong business results for the fiscal year ended May 31, 2014, including:
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Net sales increased 7.3% to a record $4.38 billion in fiscal 2014 from $4.08 billion in fiscal 2013 (net sales for fiscal
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2014 increased 7.2% compared to adjusted fiscal 2013 net sales*); |
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Net income increased 195.8% to a record $291.7 million in fiscal 2014 from $98.6 million in fiscal 2013 (net income for fiscal 2014 increased 20.9% compared to
adjusted fiscal 2013 net income of $241.3 million*); and |
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Diluted earnings per share increased 194.6% to a record $2.18 in fiscal 2014 from $0.74 in fiscal 2013 (diluted earnings per share for fiscal 2014 increased
19.8% compared to adjusted fiscal 2013 diluted earnings per share of $1.82*). |
* |
For a description of our fiscal 2013 adjustments, and for a reconciliation of our as reported fiscal 2013 results to our as adjusted fiscal 2013 results,
see the notes to the consolidated financial statements included in our Annual Report to Stockholders, which can be found on our website at www.rpminc.com. |
Achievement of another year of strong financial performance was driven by the Companys success on a broad range of initiatives that are intended to position the Company for future growth.
In fiscal 2014, we also continued to benefit from effective capital management, which remains a significant priority. Maintaining robust capital and liquidity
positions provides us with a protective cushion during difficult periods, as well as the ability to pursue new opportunities.
Fiscal 2014
Executive Compensation Highlights
For fiscal 2014, the Compensation Committee:
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Increased the base salaries of Frank C. Sullivan by 2.8% and Mr. Rice by 3.0%; increased the base salary of Mr. Hoogenboom by 10.4% in conjunction with
his new role as President of Tremco Incorporated; increased the base salary of Mr. Gordon by 10% to bring his base salary in line with market rates; increased the base salary of Mr. Moore by a total of 7.0% in conjunction with his promotion to
Senior Vice President; |
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Awarded performance earned restricted stock and stock appreciation rights consistent with fiscal 2013 awards; however, performance earned restricted stock awards
were adjusted slightly to bring their value in line with market compensation rates; furthermore, performance earned restricted stock awards were reduced in light of the significant increase in the price of our shares of Common Stock throughout
fiscal 2014 and the effect of that increase on the value of the performance earned restricted stock awards; and |
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Increased cash awards under the Incentive Plan for fiscal 2014 compared to fiscal 2013 by $585,000 for Frank C.
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EXECUTIVE COMPENSATION (CONTINUED)
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Sullivan, $295,000 for Mr. Rice, $60,000 for Mr. Hoogenboom, $100,000 for Mr. Gordon and $100,000 for Mr. Moore to reflect their role in the Companys results for fiscal
2014. |
As a result, total fiscal 2014 compensation, as set forth in the Summary Compensation Table, increased compared to total fiscal
2013 compensation for our named executive officers.
Fiscal 2014 Corporate Governance Highlights
We place a high priority on maintaining good governance standards, including the oversight of our executive compensation policies and practices. The following
policies and practices were in effect during fiscal 2014:
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The leadership structure of our Board consists of a Chairman (who is also our Chief Executive Officer), a Lead Director (who leads the meetings of our
independent Directors held in January, April and July of each year), and strong Board committee chairs. |
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We maintain a majority voting policy for the election of Directors in uncontested elections, and require an offer to resign by any incumbent Director who is not
re-elected. |
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The Compensation Committee is composed solely of independent Directors who have established methods to communicate with stockholders regarding their executive
compensation ideas and concerns. |
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The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review of our compensation-related risk profile, to
ensure that our compensation-related risks are not reasonably likely to have a material adverse effect on the Company. |
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We maintain stock ownership guidelines for our executive officers and Directors, each of whom either satisfied the applicable ownership guidelines as of
May 31, 2014 or is within the grace period for achieving such ownership thresholds. |
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Our insider trading policy prohibits short sales and hedging transactions of shares of our Common Stock by Directors, officers and employees.
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Performance-based compensation arrangements that use a variety of performance measures, including performance-based equity awards. |
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We maintain a clawback of executive compensation policy, which applies to the Companys executive officers. |
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Our 2004 Omnibus Plan prohibits the repricing of stock options or stock appreciation rights without stockholder approval.
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Consideration of Last Years Say on Pay Vote
Following our Annual Meeting of Stockholders in October 2013, the Compensation Committee reviewed the results of the stockholder advisory vote on executive
compensation that was held at the meeting with respect to the fiscal 2013 compensation actions and decisions for Frank C. Sullivan and the other named executive officers. Seventy-five percent (75%) of the votes cast on the
say-on-pay proposal last year were voted in support of the compensation of our named executive officers set forth in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables and
narratives in last years Proxy Statement. In connection with last years say-on-pay vote, we reached out to 20 of our largest stockholders representing approximately 44.0% of our shares of Common Stock outstanding. In response to those
conversations, for fiscal 2014 the Compensation Committee took steps to help ensure we are providing compensation to the named executive officers and Directors that is competitive with the market median by engaging Towers Watson to conduct
compensation benchmark studies, as more fully described in this Proxy Statement. The Compensation Committee will continue to consider results from future stockholder advisory votes, which will be held annually until the next stockholder advisory
vote on the frequency of future votes on executive compensation, as well as input from its stockholders between meetings, in its ongoing evaluation of the Companys executive compensation programs and practices.
Opportunity for Stockholder Feedback
The
Compensation Committee carefully considers feedback from our stockholders regarding our executive compensation program. Stockholders are invited to express their views to the Compensation Committee as described under the heading Communications
with the Board of Directors in this Proxy Statement. In addition, the advisory vote on the compensation of the named executive officers provides stockholders with an opportunity to communicate their views on our executive compensation program.
You should read this Compensation Discussion and Analysis in conjunction with the advisory vote that we are conducting on the compensation of the named
executive officers (see Proposal Two Advisory Vote on Executive Compensation). This Compensation Discussion and Analysis, as well as the accompanying compensation tables, contains information that is relevant to your voting
decision.
EXECUTIVE COMPENSATION (CONTINUED)
Overview
RPMs compensation programs are designed to support our founders philosophy:
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Hire the best people you can find. |
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Create an atmosphere that will keep them. |
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Then let them do their jobs. |
Our general
compensation philosophy is performance-based in that our executive officers should be well compensated for achieving strong operating and financial results that contribute to enhanced stockholder value. We engage in a rigorous process intended to
provide our executive officers a fair level of compensation that reflects RPMs operating and financial results, the relative skills and experience of the individuals involved, peer group compensation levels and other similar benchmarks.
The Compensation Committee has designed compensation policies and programs for our executive officers which are intended to compensate the executive
officers at about the market median for a relevant group of similarly-sized companies and competitors within RPMs industry, with the potential for higher than average compensation when our performance levels exceed our annual business plan.
Our primary compensation goals are to retain key leaders, reward good past performance, incentivize strong future performance and align executives long-term interests with those of our stockholders.
Role of the Compensation Committee
The Compensation
Committee Charter provides for the Compensation Committee to oversee RPMs compensation programs and, in consultation with the Chief Executive Officer, develop and recommend to the Board of Directors an appropriate compensation and benefits
philosophy and strategy for RPM. The Compensation Committee consists of
four independent Directors who are appointed to the Compensation Committee by, and report to, the entire Board of Directors. Each member of the Compensation Committee, as well as the alternate
member, qualifies as a non-employee director within the definition of Rule 16b-3 under the Exchange Act, as an outside director within the meaning of Section 162(m) of the Internal Revenue Code, and as an
independent director under the rules of the NYSE. The Compensation Committee Charter is available on our website at www.rpminc.com.
Role
of Executives in Determining Compensation
Our Chief Executive Officer and our President and Chief Operating Officer, together with the Compensation
Committee, review assessments of executive compensation practices at least annually against our defined comparative framework. These assessments involve the gathering of compensation data, such as base salary, cash incentive and equity awards for
similarly situated officers at companies in the diversified chemicals and specialty chemicals industries which fall within a reasonable size range (in terms of sales) and operate businesses similar to that of the Company. See Comparative
Framework for more information about this review. With this information in hand, and as stated on the previous page under the heading Overview, our Chief Executive Officer and our President and Chief Operating Officer recommend to
the Compensation Committee levels of compensation for themselves and for the other named executive officers that are at about the market median for a relevant group of similarly-sized companies and competitors within RPMs industry
and aligned with our intended pay philosophy. After receiving the recommendations of our Chief Executive Officer and our President and Chief Operating Officer, the Compensation Committee meets without our Chief Executive Officer and our President
and Chief Operating Officer present to consider their recommendations. The Compensation Committee must approve any recommended changes before they can be made.
Comparative Framework
We periodically evaluate the competitiveness of our executive compensation programs. In 2014, the Compensation Committee retained the professional compensation
consulting firm of Towers Watson to conduct a compensation benchmark study. Towers Watson reviewed and evaluated our compensation packages for our key officers in light of the levels of compensation being offered by companies in the specialty
chemicals industry and other related industries which fall within a reasonable size range (in terms of revenues) and operate businesses similar to that of the Company. These companies included:
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A. Schulman, Inc. |
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Albemarle Corporation |
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Cytec Industries Inc. |
Eastman Chemical Company |
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Ecolab Inc. |
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Ferro Corporation |
FMC Corporation |
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PolyOne Corporation |
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PPG Industries Inc. |
Rockwood Holdings, Inc. |
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The Sherwin-Williams Company |
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The Valspar Corporation |
Towers Watson reviewed both published survey and peer group proxy statement data to determine competitive pay levels
for the executives for the following elements of compensation: base salary, bonuses (including actual and target annual bonuses, but excluding bonus payments to
executives for one-time, non performance-based awards), long-term incentive opportunity, actual total direct compensation (the sum of base salary, actual annual bonuses and long-term incentive
opportunity) and target total direct compensation (the sum of base salary, target annual bonuses
EXECUTIVE COMPENSATION (CONTINUED)
and long-term incentive opportunity). In its analysis, Towers Watson compiled competitive data from the 2013 Towers Watson CDB General Industry Executive Compensation Survey Report. Based on its
analysis and findings, Towers Watson concluded that our Chief Executive Officers actual total direct compensation was competitive with the market median, and that his compensation was weighted more toward long-term incentive opportunity than
is typical in the market. Overall, Towers Watson concluded that our executive officers salaries
are competitive with the market median, the mix of the elements of our executive officers compensation was weighted more toward variable compensation (consisting of bonuses and long-term
incentive opportunity) than is typical in the market, and that their long-term incentive opportunity is above the market median. Towers Watson also found that our Vice President and Chief Financial Officers salary was well below the market
median.
Specifically with regard to our Chief Executive Officer, Towers Watson found that his base salary was 10% below the
market median, and that his target bonus opportunity was 18% below the market median. Long-term incentive opportunity for our Chief Executive Officer was 9% above the market median. Overall, our Chief Executive Officers actual total direct
compensation was 13% below the market median, and his target total direct compensation was 2% below the market median.
For services performed by Towers
Watson relating to work performed for, and at the direction of, the Compensation Committee, including conducting an executive compensation benchmarking study, a Director compensation benchmarking study, and an analysis of our proposed 2014 Omnibus
Equity and Incentive Plan, Towers Watson was paid $76,577 by the Company.
Elements of Compensation
Our named executive officer compensation program for fiscal 2014 included three main elements:
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Annual cash incentive compensation; and |
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Performance-based equity incentives, including restricted stock and stock appreciation rights. |
Pay Mix
We use these particular elements of compensation
because we believe that they provide a balanced mix of fixed compensation and at-risk compensation that produces short-term and long-term performance incentives and rewards. With this balanced portfolio, we provide the executive with a competitive
base salary while motivating the executive to focus on the business metrics that will produce a high level of performance for the Company and provide the executive with additional compensation through short- and long-term incentives.
EXECUTIVE COMPENSATION (CONTINUED)
The mix of compensation for our named executive officers is weighted toward at-risk pay (consisting of cash and
equity compensation). In October 2010, our Compensation Committee granted long-term incentive awards in order to continue to weight the mix of compensation for our named
executive officers toward at-risk pay. Maintaining this pay mix is intended to result in a pay-for-performance orientation, which aligns to our compensation philosophy of paying total direct
compensation that is competitive with peer group levels based on relative company performance.
Elements of Our Named
Executive Officer Compensation Program
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Compensation Component |
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Key Characteristics |
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Purpose |
Base Salary |
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Fixed compensation, reviewed and adjusted annually if and when appropriate |
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Compensate named executive officers fairly for the responsibility level of the position held |
Annual Cash Incentive Compensation |
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Variable, performance-based compensation, awarded under the Incentive Compensation Plan |
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Motivate and reward named executive officers for achieving annual business objectives based on Company performance and individual
achievements |
Equity Compensation Performance Earned Restricted Stock (PERS) |
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Variable, performance-based compensation, awarded under the 2004 Omnibus Equity and Incentive Plan |
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Motivate and reward named executive officers for achieving long-term business objectives; the threshold and maximum number of and performance
goals for the award of PERS for a given fiscal year are set in July of that year; PERS are single- year performance awards |
Equity Compensation Performance Contingent Restricted Stock (PCRS) |
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Variable, performance-based compensation, awarded under the 2004 Omnibus Equity and Incentive Plan |
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Motivate and reward named executive officers for achieving long-term, multi-year business objectives |
Equity Compensation Stock Appreciation Rights (SARs) |
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Variable, performance-based compensation, awarded under the 2004 Omnibus Equity and Incentive Plan |
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Motivate and reward named executive officers for achieving long-term business objectives by tying incentives to the performance of our Common
Stock |
Equity Compensation Supplemental Executive Retirement Plan (SERP) Restricted
Stock |
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Fixed compensation awarded under the 2007 Restricted Stock Plan |
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Provides stock-based supplemental retirement and death benefits to officers and other key employees whose retirement plan benefits may be
limited under applicable law |
Health and Retirement Plans |
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Fixed compensation |
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Intended to provide benefits that promote employee health and support employees in attaining financial security |
Perks and other Personal Benefits |
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Fixed compensation |
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Intended to provide a business-related benefit to the Company, and to assist in attracting and retaining executive officers |
Post-Employment Compensation and Change in Control |
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Fixed compensation |
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Intended to provide temporary income following a named executive officers involuntary termination of employment and, in the case of a
change of control, to also provide continuity of management |
EXECUTIVE COMPENSATION (CONTINUED)
Base Salary
Base salary represents amounts paid during the fiscal year to named executive officers as direct compensation for their services to us. Base salary and increases to
base salary recognize the overall experience, position and responsibilities within RPM and expected contributions to RPM of each named executive officer. Adjustments to salaries are used to reward superior individual performance of our named
executive officers on a day-to-day basis during the year and to encourage them to perform at their highest levels. We also use our base salary to retain top quality executives and attract management employees from other companies.
In July 2014, our Chief Executive Officer and our President and Chief Operating Officer recommended to the Compensation Committee an increase in the base salary for
themselves and for each of the other named executive officers for fiscal 2015. As in the past, this recommendation was based upon an analysis of:
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RPMs fiscal 2014 operating results; |
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A comparison of the Five-Year Cumulative Total Returns among RPM, the S&P 500 Index and proxy statement peer group of companies; and
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Base salary and bonus compensation information for 2013 and 2014 and proposed amounts for 2015. |
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NAMED EXECUTIVE
OFFICER BASE SALARY AMOUNTS |
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Fiscal
2015 |
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Fiscal
2014 |
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Fiscal
2013 |
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Frank C. Sullivan |
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$ |
940,000 |
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$ |
920,000 |
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$ |
895,000 |
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Ronald A. Rice |
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$ |
700,000 |
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$ |
685,000 |
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$ |
665,000 |
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Paul G.P. Hoogenboom |
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$ |
440,000 |
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$ |
425,000 |
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$ |
385,000 |
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Russell L. Gordon |
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$ |
450,000 |
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$ |
330,000 |
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$ |
300,000 |
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Edward W. Moore |
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$ |
330,000 |
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$ |
294,375 |
(1) |
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$ |
275,000 |
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(1) |
Mr. Moores base salary was increased from $285,000 to $300,000 upon his becoming Senior Vice President in October 2013. |
Annual Cash Incentive Compensation
For fiscal 2014, we
provided annual cash incentive compensation under the Amended and Restated 1995 Incentive Compensation Plan, which was designed to motivate participants to achieve our financial objectives and reward executives for their achievements when those
objectives are met. All named executive officers who are Covered Employees under Section 162(m) of the Internal Revenue Code, namely the Chief Executive Officer and the next three highest paid
executive officers, excluding the Chief Financial Officer, participated in the fiscal 2014 incentives. In addition, although the Chief Financial Officer is not a Covered Employee by definition,
the Compensation Committee evaluated Mr. Gordon under similar performance criteria in awarding incentive compensation as used to determine the cash incentive compensation of the other named executive officers. The amount of cash incentive
compensation earned by our named executive officers in fiscal 2014 is set forth in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table. We paid these amounts in July 2014.
In July 2013, the Compensation Committee determined, on a percentage basis, the portion of the aggregate cash incentive compensation award pool under the Incentive
Compensation Plan, or the Incentive Plan, to be awarded to each of the Covered Employees in respect of the Companys performance for the fiscal year ending May 31, 2014 as follows: Frank C. Sullivan, 40%; Mr. Rice, 30%;
Mr. Hoogenboom, 15%; and Mr. Moore, 15%. The Compensation Committee determined that cash incentives paid would range from zero to 150% of salary with a target of 100% for all direct reports of the Chief Executive Officer, regardless of
title, namely, Messrs. Rice, Hoogenboom, Gordon and Moore. The Compensation Committee may reduce or eliminate the amount of a named executive officers annual cash incentive award, at the Compensation Committees sole discretion, based
solely on individual performance.
The Incentive Plan in place for fiscal 2014 provided for an aggregate cash incentive compensation award pool of 1.5%
of our pre-tax income for fiscal 2014. In July 2014, the Compensation Committee calculated the aggregate non-equity compensation award pool based on our audited pre-tax income and each individuals cash incentive payout amount. For fiscal 2014,
the Companys pre-tax income as defined in the Incentive Plan was $424.0 million, providing a cash incentive compensation award pool under the Incentive Plan for the Covered Employees of approximately $6.3 million. Upon the recommendation of
our Chief Executive Officer, and after a review of a variety of factors described below, the Compensation Committee awarded cash incentives totaling $3,240,000 to the Covered Employees, which was significantly below the aggregate amount authorized
to be paid pursuant to the award pool formula. The cash incentive compensation paid to the Covered Employees equaled approximately 140% of their salary for fiscal 2014.
EXECUTIVE COMPENSATION (CONTINUED)
In
July 2014, the Compensation Committee determined, on a percentage basis, the portion of the aggregate cash incentive award pool under the Incentive Plan to be awarded to each of the Covered Employees under Section 162(m) of the Internal Revenue
Code in respect of the Companys performance for the fiscal year ending May 31, 2015 as follows: Frank C. Sullivan, 40%; Mr. Rice, 30%; Mr. Moore, 15%; and the fourth Covered Employee for fiscal 2015, 15%. Mr. Gordon,
the Chief Financial Officer of the Company, although not a Covered Employee under the Section 162(m) definition, is eligible to receive cash incentive compensation for fiscal 2015 based on the same performance criteria as the Covered Employees
listed above. The Compensation Committee also determined that for fiscal 2015 the cash incentive compensation paid would range from zero to 150% of salary with a target of 100% of salary for each of the Covered Employees and Mr. Gordon.
As disclosed above, the Incentive Plan in place for fiscal 2014 provided for an aggregate cash incentive compensation award pool of approximately $6.3
million. The maximum portion of the award pool that each Covered Employee could be awarded was: Frank C. Sullivan 40% or $2,520,000; Mr. Rice 30% or $1,890,000; Mr. Hoogenboom 15% or $945,000; and Mr. Moore
15% or $945,000. However, the Compensation Committee had set a maximum award of 150% of the Covered Employees base salary as a limit, with a target award of 100% of the Covered Employees base salary. As a result, the maximum award
that could be earned by the Covered Employee was: Frank C. Sullivan $1,380,000; Mr. Rice $1,027,500; Mr. Hoogenboom $637,500; and Mr Moore $450,000. The actual awards were as follows: Frank C.
Sullivan, $1,335,000; Mr. Rice, $995,000; Mr. Hoogenboom, $510,000; and Mr. Moore, $400,000.
Fiscal 2014 Incentive
Compensation Plan Awards
EXECUTIVE COMPENSATION (CONTINUED)
In determining the actual incentive compensation awards for fiscal 2014, the named executive would receive a portion
of his award equal to:
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50% of his base salary, if the Company achieved an 11.6% increase in adjusted earnings before interest and taxes (EBIT)*. The Company achieved a
14.5% increase in adjusted EBIT, so each named executive earned this portion of his award; |
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30% of his base salary, if the Company achieved revenue growth of 8.0% or above. The Company achieved revenue growth of 8.0%, as adjusted, taking into account
foreign exchange rates, so each named executive earned this portion of his award; |
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30% of his base salary, if the Company achieved growth in other financially measured objectives, which for fiscal 2014 were improvement in (i) gross profit
margin and (ii) capital adjusted net earnings. For fiscal 2014, gross profit margin improved to 42.9% of net sales versus 41.7% of net sales in fiscal 2013, and capital adjusted net earnings for fiscal 2014 increased compared to fiscal 2013.
Based on the gross profit margin and capital adjusted net earnings improvement, the Compensation Committee determined that each named executive earned this portion of his award; and |
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40% of his base salary, in the discretion of the Chief Executive Officer, based upon the achievement of non-financially measured management objectives, which
were such named executives involvement in the Companys merger and acquisition transactions in fiscal 2014, the Companys overall return to stockholders versus both the market and the Companys peers, and the Companys free
cash flow as adjusted for the settlement with the General Services Administration. Each named executive earned a portion of his award based upon achievement of applicable individual objectives. |
* |
For a description of EBIT, including why we consider EBIT and a reconciliation of EBIT to income (loss) before income taxes, see Managements Discussion and Analysis
of Financial Condition and Results of Operations included in our Annual Report to Stockholders, which can be found on our website at www.rpminc.com. |
As a result, Messrs. Frank C. Sullivan and Rice each were awarded incentive compensation equal to approximately 145% of their base salaries, and Mr. Gordon and Mr. Moore were awarded approximately 136% and 133% of
their respective base salaries. Mr. Hoogenboom was awarded
incentive compensation equal to approximately 120% of his base salary, in part based on his service as President of Tremco Incorporated, a role he assumed full-time as of May 31, 2014.
Equity Compensation
We use equity compensation
to align our named executive officers interests with those of our stockholders and to attract and retain high-caliber executives through recognition of anticipated future performance. Under our 2004 Omnibus Equity and Incentive Plan, or 2004
Omnibus Plan, we can grant a variety of stock-based awards, including awards of performance-based restricted stock and stock appreciation rights. After reviewing executive compensation practices against our defined comparative framework, including
reviewing equity awards for similarly situated officers at companies in the diversified chemicals and specialty chemicals industries which fall within a reasonable size range (in terms of sales) and operate businesses similar to that of the Company,
our Chief Executive Officer and our President and Chief Operating Officer make annual recommendations to the Compensation Committee of the type and amount of equity awards for the Chief Executive Officer, the President and Chief Operating Officer,
and the other executive officers. In determining the equity incentive compensation component of Chief Executive Officer compensation, the Compensation Committee considers, in addition to the factors used to determine salary and cash incentive
compensation:
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the value of similar incentive awards to chief executive officers in our peer group and other similar companies, and |
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awards given to the Chief Executive Officer in past years. |
In determining the equity incentive compensation of the other executive officers, the Compensation Committee reviews and approves a mix of business plan goals, with a significant amount of emphasis placed on the
compensation recommendations of our Chief Executive Officer and our President and Chief Operating Officer. After receiving the recommendations of our Chief Executive Officer and our President and Chief Operating Officer, the Compensation Committee
meets without our Chief Executive Officer and our President and Chief Operating Officer present to consider their recommendations. The Compensation Committee must approve any recommended equity grants before they can be made.
EXECUTIVE COMPENSATION (CONTINUED)
The Compensation Committee uses the various equity incentive awards available to it under the 2004 Omnibus Plan to
retain executives and other key employees and achieve the following additional goals:
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to reward past performance; |
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to incentivize future performance (both short-term and long-term); |
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to align executives long-term interest with that of the stockholders; and |
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to enhance the longer-term performance and profitability of the Company. |
The Compensation Committees current intention is to achieve these goals by making annual awards to the Companys executive officers and other key employees, using a combination of performance-based
restricted stock and stock-settled stock appreciation rights.
Performance Earned Restricted Stock (PERS). The Compensation Committee
awards Performance Earned Restricted Stock, or PERS, under the 2004 Omnibus Plan. The threshold and maximum number of and performance goals for the award of PERS for a given fiscal year are set in July of that year. The determination of whether and
to what extent the PERS have been achieved for a fiscal year is made at the July meeting of the Compensation Committee following the close of that fiscal year. Based on that determination, the actual grants, if any, with respect to a fiscal year are
made at that same meeting. With respect to fiscal 2014, the maximum number and performance goals were set in July 2013 and the Compensation Committee determined whether and to what extent the PERS were achieved at its meeting in July 2014.
The percentage of shares with respect to which the performance goal has been achieved is determined by reference to the percentage increase of planned
EBIT which is attained. In making the determination of whether the planned increase has been attained, the actual fiscal year results are adjusted for the exclusion of restructuring, asbestos and other similar charges or credits that are not central
to the Companys operations as shown on the Companys financial statements as certified by the Companys independent registered public accounting firm. If less than 75% of the planned increase is attained, then the performance goal
will not be achieved with respect to any shares. If 75% to 100% of the planned increase is attained, then the performance goal will be achieved with respect to an equivalent percentage of shares. For example, if 91% of the planned increase is
attained, then the performance goal will be achieved with respect to a maximum amount of 91% of the shares. The
percentage of the planned increase attained will be rounded down to the closest whole number (e.g., 85.5% would be rounded down to 85%). If more than 100% of the planned increase is
attained, then the performance goal will be achieved with respect to 100% of the shares.
In July 2013, pursuant to the 2004 Omnibus Plan, the
Compensation Committee approved a contingent award of PERS to the Covered Employees of up to 125,000 shares (including 60,000 shares for the Chief Executive Officer) to be based on the level of attainment of fiscal 2014 performance goals related to
an increase in planned EBIT. In July 2013, the Compensation Committee established a 11.6% increase in adjusted EBIT over fiscal 2013 levels as the target for purposes of determining the amount of PERS awards earned by the named executive officers
with respect to fiscal 2014. The actual increase in adjusted EBIT for fiscal 2014 over fiscal 2013 was 14.5%. As a result, the maximum amount of PERS could have been granted. However, the Compensation Committee elected to reduce the number of PERS
awarded to the Covered Employees and Mr. Gordon in light of the significant increase in the price of our shares of Common Stock throughout fiscal 2014 and the effect of that increase on the value of the PERS awards. The PERS granted to each of the
named executive officers are set forth below in the Grants of Plan-Based Awards for Fiscal 2014 table.
Stock Appreciation Rights (SARs).
In July 2014, pursuant to the 2004 Omnibus Plan, the Compensation Committee awarded SARs totaling 390,000 shares to the executive officers. The SARs awards granted to the named executive officers in July 2014 are set forth below in the Grants of
Plan-Based Awards for Fiscal 2014 table. The value of SARs is one component of the named executive officers long term incentive compensation intended to maintain such compensation competitive with the market median.
Supplemental Executive Retirement Plan (SERP) Restricted Stock. The RPM International Inc. 2007 Restricted Stock Plan was established to provide for
supplemental retirement and death benefits to officers and other key employees of the Company designated by the Board of Directors whose retirement plan benefits may be limited under applicable law and the Internal Revenue Code. In July 2013, the
Compensation Committee awarded 33,949 shares of restricted stock to the executive officers under the 2007 Restricted Stock Plan.
Performance
Contingent Restricted Stock (PCRS). In October 2010, the Compensation Committee approved contingent awards of Performance Contingent Restricted Stock, or PCRS, to Messrs. Frank C. Sullivan, Rice, Hoogenboom, Gordon and Moore, of up to
450,000 shares (subject to a grant limit for
EXECUTIVE COMPENSATION (CONTINUED)
each individual of no more than 175,000 shares of PCRS and PERS, in the aggregate, during any one fiscal year). As a result of the application of the annual grant limit, portions of Frank C.
Sullivans October 2010 contingent award equal to 115,000 PCRS and 50,000 PCRS were deferred to fiscal 2012 and fiscal 2013, respectively. Awarded pursuant to the 2004 Omnibus Plan, the purpose of the 2010 PCRS awards is to provide an added
incentive to key officers to improve the long-term performance of the Company.
The 2010 PCRS awards were made contingent upon the level of attainment of
performance goals for (i) the three-year performance period from June 1, 2010 ended May 31, 2013 and (ii) the five-year performance period from June 1, 2010 ending May 31, 2015. For each such performance period, the
percentage of PCRS with respect to which the performance goals are achieved relates to the increase in EBIT for the period. Actual results are adjusted for the exclusion of restructuring, asbestos and other similar unusual charges or credits that
are not central to the operations of the Company as shown on the Companys consolidated financial statements as audited by the Companys independent registered public accounting firm. If the increase in EBIT is less than 75% of the planned
increase in EBIT for the performance period, then the performance goals are not achieved with respect to any PCRS for the period. If the increase in EBIT is 75% to 100% of the planned increase in EBIT for the performance period, then the performance
goals are achieved with respect to an equivalent percentage of PCRS for the period. The percentage of EBIT attained is rounded down to the closest whole number. If the increase in EBIT is more than 100% of the planned increase in EBIT for the
performance period, then the performance goals are achieved with respect to 100% of the PCRS for the period. The Compensation Committee set the performance goals related to the 2010 PCRS awards at levels it believed to be achievable but would
require the Company to meaningfully grow earnings.
For the three-year performance period from June 1, 2010 ended May 31, 2013, up to one-half
of an individuals aggregate PCRS grant could have been earned if the Company achieved EBIT of $420.0 million, after adjustments. In July 2013, the Compensation Committee determined that adjusted EBIT for the three-year performance period from
June 1, 2010 ended May 31, 2013 was $421.7 million. Accordingly, one-half of the 2010 PCRS grants (representing 100% of the PCRS that could have been earned for the three-year performance period) were earned at the end of the three-year
performance period.
The balance of an individuals aggregate PCRS grant may be earned at the end of the five-year performance period
from June 1, 2010 ending May 31, 2015, if the performance goals for such period are achieved, multiplied by the percentages set forth above. The percentage of PCRS with respect to which the performance goals are not achieved for the
five-year performance period will be forfeited. The determination of whether and to what extent the 2010 PCRS awards are achieved for the five-year performance period will be made following the close of fiscal 2015.
Timing of Equity Grants
Equity grants to the named executive
officers are made in July at regularly scheduled meetings of the Compensation Committee. Board and Compensation Committee meetings are generally scheduled at least a year in advance. Scheduling decisions are made without regard to anticipated
earnings or other major announcements by the Company.
Minimum Stock Ownership Guidelines
The Company adopted minimum stock ownership guidelines for its executive officers and Directors in July 2012. Under the stock ownership guidelines certain executive officers are required to maintain the following
minimum equity stakes in the Company:
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for the Companys Chief Executive Officer, Common Stock equivalent to five times annual base salary; |
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for the Companys President and Chief Operating Officer, Common Stock equivalent to four times annual base salary; and |
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for those other executive officers of the Company who report directly to the Chief Executive Officer, Common Stock equivalent to three times annual base salary.
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Executives are expected to achieve targets within five years of the later of the date of the adoption of the minimum stock ownership
guidelines or the date of assuming their positions. Each of the Companys executive officers met the minimum stock ownership guidelines as of May 31, 2014.
Under the Companys stock ownership guidelines, the following executive officers must own Common Stock in the
following amounts: our Chief Executive Officer, five times base salary; our President and Chief Operating Officer, four times base salary; and our other executive officers who report directly to our Chief Executive Officer, three times base salary.
EXECUTIVE COMPENSATION (CONTINUED)
Employment Agreements and Related Arrangements
We are a party to the following employment agreements with our named executive officers, each of which has been in effect since December 31, 2008:
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Frank C. Sullivan. Pursuant to an employment agreement whereby Frank C. Sullivan serves as our Chairman and Chief Executive Officer, Frank C. Sullivan is
entitled to an annual base salary of not less than $940,000 effective as of June 1, 2014. |
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Ronald A. Rice. Pursuant to an employment agreement whereby Mr. Rice serves as our President and Chief Operating Officer, Mr. Rice is entitled
to an annual base salary of not less than $700,000 effective as of June 1, 2014. |
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Paul G. P. Hoogenboom. Pursuant to an employment agreement, Mr. Hoogenboom served as our Senior Vice President Manufacturing and Operations
and Chief Information Officer until May 31, 2014, and was entitled to an annual base salary of not less than $425,000. Mr. Hoogenbooms employment agreement was amended effective May 31, 2014 to reflect his full-time position as President
of Tremco Incorporated, a wholly-owned subsidiary of the Company. |
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Russell L. Gordon. Pursuant to an employment agreement that the Company had entered into with Mr. Gordon prior to his promotion to Chief Financial
Officer, Mr. Gordon is entitled to an annual base salary of not less than $450,000 effective as of June 1, 2014. |
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Edward W. Moore. Pursuant to an employment agreement whereby Mr. Moore serves as our Senior Vice President, General Counsel, Chief Compliance Officer
and Secretary, Mr. Moore is entitled to an annual base salary of not less than $330,000 effective as of June 1, 2014. |
Pursuant to the employment agreements, each of Messrs. Frank C. Sullivan, Rice, Hoogenboom, Gordon and Moore serves for a term ending on May 31, 2014,
which is automatically extended for additional one-year periods unless either party gives the other party notice of nonrenewal two months in advance of the annual renewal date. In accordance with these automatic extension provisions, the employment
agreement with each of these named executive officers has been extended to May 31, 2015. Each of Messrs. Frank C. Sullivan, Rice, Hoogenboom, Gordon and Moore is also eligible to receive such annual cash incentive compensation or bonuses
as our Compensation Committee may determine based upon our results of operations and other relevant factors. Messrs. Frank C. Sullivan, Rice, Hoogenboom, Gordon and Moore are also generally entitled to participate in our employee benefit plans.
Under the employment agreements, each of these named executive officers is entitled
to receive fringe benefits in line with our present practice relating to the officers position, including the use of the most recent model of a full-sized automobile.
See Other Potential Post-Employment Compensation for a discussion of additional terms of the employment agreements related to restrictive covenants and
potential post-employment compensation.
Policy on Clawback of Executive Compensation
In July 2012, the Board of Directors adopted a policy regarding the clawback of executive compensation. If, as the result of the gross negligence or willful misconduct of any executive officer of the Company, the
Company is required to restate all or a portion of its financial statements, the Board of Directors will, to the extent permitted by governing law, require reimbursement of any bonus or incentive compensation awarded to such executive officer or
effect the cancellation of unvested restricted or deferred stock awards or stock options previously granted to the executive officer if:
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the amount of the bonus, incentive compensation or stock or option award was calculated based upon the achievement of certain financial results that were
subsequently the subject of a restatement, |
|
|
the amount of the bonus, incentive compensation or stock or option award that would have been awarded to the executive officer had the financial results been
properly reported would have been lower than the amount actually awarded, and |
|
|
it is reasonable to do so (e.g., the expense of recovering the compensation does not exceed the amount recovered). |
Post-Employment Compensation and Change in Control
Each of
the employment agreements with Messrs. Frank C. Sullivan, Rice, Hoogenboom, Gordon and Moore provides for payments and other benefits if the named executive officers employment terminates under certain circumstances, such as being
terminated without cause within two years of a change in control, which is often referred to as a double-trigger. We believe that these payments and other benefits are important to recruiting and retaining our named executive officers,
as many of the companies with which we compete for executive talent provide for similar payments to their senior employees. Additional information regarding these payments and other benefits is found under the heading Other Potential
Post-Employment Compensation.
Section 162(m) of the Internal Revenue Code
In the course of fulfilling its responsibilities, the Compensation Committee routinely reviews the impact of Section 162(m) of the Internal Revenue Code, which disallows a tax deduction for certain
compensation paid in
EXECUTIVE COMPENSATION (CONTINUED)
excess of $1,000,000 to the Chief Executive Officer and the next three highest paid executive officers of the Company, excluding the Chief Financial Officer. The regulations under
Section 162(m), however, except from this $1,000,000 limit various forms of compensation, including performance-based compensation. The Companys performance-based Incentive Plan, described above, and the 2004 Omnibus Plan
satisfy the requirements of this Section 162(m) exemption. Although the Compensation Committee considers the impact of Section 162(m) when administering the Companys compensation programs, the Compensation Committee does not make
decisions regarding executive compensation solely based on the expected tax treatment of such compensation.
In order to maintain flexibility in
designing compensation programs that retain key leaders, reward past performance, incentivize strong future performance and align executives long-term interests with stockholders, the Compensation Committee may deem it appropriate at times to
forgo Section 162(m) qualified awards in favor of awards that may not be fully tax-deductible. This has occurred, for example, when the Companys operating results were adversely impacted by restructuring, asbestos or other non-operating
charges, yet the Company performed significantly better than its business plan notwithstanding the charges.
Perks and Other Benefits
Our named executive officers participate in various employee benefit plans that are generally available to all employees and on the same terms and conditions as
with respect to other similarly situated employees. These include normal and customary programs for life insurance, health insurance, prescription drug insurance, dental insurance, short and long term disability insurance, pension benefits, and
matching gifts for charitable contributions. While these benefits are considered to be an important and appropriate employment benefit for all employees, they are not considered to be a material component of a named executive officers annual
compensation program. Because the named executive officers receive these benefits on the same basis as other employees, these benefits are not established or determined by the Compensation Committee separately for each named executive officer as
part of the named executive officers annual compensation package.
In addition, we maintain a 401(k) retirement savings plan for the benefit of all
of our employees, including our named executive officers. In fiscal 2014, we provided a Company match of up to 4% of the qualified retirement plan compensation limit per employee, which executives also were able to receive. RPMs company match
is fully vested to all employees, including executives, at the time of contribution.
As is the case with all employees, unless they elect to make their contributions on an after-tax basis, named executive officers are not taxed on their contributions to the 401(k) retirement
savings plan or earnings on those contributions until they receive distributions from the 401(k) retirement savings plan, and all RPM contributions are tax deductible by us when made.
During fiscal 2014 we provided the use of cars to our named executive officers. Also during fiscal 2014, we provided financial and estate planning to Messrs. Frank C. Sullivan and Rice, and we paid executive
life insurance premiums for the benefit of our named executive officers.
We periodically review the perquisites that named executive officers receive.
Other Plans
In addition to the above described
plans, the Company offers a tax qualified defined benefit retirement plan. Information about this plan can be found under the heading Pension Benefits for Fiscal 2014. The Company also offers a deferred compensation plan. Under this
plan, selected management employees, certain highly compensated employees and Directors are eligible to defer a portion of their salary, bonus, incentive plan amounts and Director fees until a future date. A participants account will be
credited with investment gains or losses as if the amounts credited to the account were invested in selected investment funds. Any compensation deferred under the plan is not included in the $1,000,000 limit provided for under Section 162(m) of
the Internal Revenue Code until the year in which the compensation actually is paid. Additional information about this plan can be found under the heading, Nonqualified Deferred Compensation for Fiscal 2014.
Report of the Compensation Committee
The Compensation
Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the Companys management and legal counsel. Based on that review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Companys Annual Report on Form 10-K and in the Companys definitive proxy statement prepared in connection with its 2014 Annual Meeting
of Stockholders.
COMPENSATION COMMITTEE
Charles A. Ratner, Chairman
John P. Abizaid
David A. Daberko
Dr. Jerry Sue
Thornton
EXECUTIVE COMPENSATION (CONTINUED)
The above Report of the Compensation Committee does not constitute soliciting material and should not be deemed
filed with the Commission or subject to Regulation 14A or 14C (other than as provided in Item 407 of Regulation S-K) or to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests
that the information in this Report be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act of 1933 (the Securities Act) or the Exchange Act. If this Report is
incorporated by reference into the Companys Annual Report on Form 10-K, such disclosure will be furnished in such Annual Report on Form 10-K and will not be deemed incorporated by reference into any filing under the Securities Act or the
Exchange Act as a result of furnishing the disclosure in this manner.
Compensation-Related Risk Assessment
The Compensation Committee considers risks related to the attraction and retention of talent and risks relating to the design of compensation programs and arrangements affecting executive officers and employees.
Our compensation programs reward outstanding performance by our operating companies, and do not encourage excessive risk taking on the part of our executive officers and employees. Further, elements of our compensation programs, including our
minimum stock ownership guidelines, our clawback policy, and the three- and five-year performance period structure of our PCRS awards, help mitigate compensation-related risk. After considering the Companys compensation program as a whole and
receiving the input of the Compensation Committee, we have concluded that risks arising from our compensation policies and practices applicable to our employees are not reasonably likely to have a material adverse effect on the Company. In reaching
that conclusion, we considered, among other things, the general performance-based philosophy of our compensation program, the material consistency of our compensation structure throughout all key employee levels of the Company, the balance of long
and short term components of compensation, and the Companys risk profile generally.
EXECUTIVE COMPENSATION (CONTINUED)
Summary
Compensation Table
The following table sets forth information regarding the compensation of our Chief Executive Officer, our Chief Financial Officer
and our other three highest paid executive officers for fiscal 2014 and, where required, for fiscal 2013 and fiscal 2012.
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Name and Principal Position (a) |
|
Year
(b) |
|
|
Salary
($)
(c) |
|
|
Bonus
($)(1)
(d) |
|
|
Stock
Awards
($) (2)(3)
(e) |
|
|
Option
Awards
($)(2)(3)
(f) |
|
|
Non-Equity
Incentive
Plan
Compensation
($)(4)
(g) |
|
|
Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(5)
(h) |
|
|
All
Other
Compensation
($) (6)
(i) |
|
|
Total
($)
(j) |
|
Frank C. Sullivan |
|
|
2014 |
|
|
|
920,000 |
|
|
|
0 |
|
|
|
2,793,990 |
|
|
|
2,126,000 |
|
|
|
1,335,000 |
|
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63,338 |
|
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|
120,834 |
|
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7,359,162 |
|
Chairman and Chief Executive Officer |
|
|
2013 |
|
|
|
895,000 |
|
|
|
0 |
|
|
|
3,680,213 |
|
|
|
1,476,000 |
|
|
|
750,000 |
|
|
|
26,492 |
|
|
|
118,633 |
|
|
|
6,946,338 |
|
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|
2012 |
|
|
|
875,000 |
|
|
|
0 |
|
|
|
4,469,608 |
|
|
|
992,000 |
|
|
|
1,100,000 |
|
|
|
117,936 |
|
|
|
109,320 |
|
|
|
7,663,864 |
|
Ronald A. Rice |
|
|
2014 |
|
|
|
685,000 |
|
|
|
0 |
|
|
|
1,714,001 |
|
|
|
1,063,000 |
|
|
|
995,000 |
|
|
|
53,693 |
|
|
|
115,227 |
|
|
|
4,625,921 |
|
President and Chief Operating Officer |
|
|
2013 |
|
|
|
665,000 |
|
|
|
0 |
|
|
|
1,463,353 |
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|
|
738,000 |
|
|
|
700,000 |
|
|
|
23,140 |
|
|
|
104,075 |
|
|
|
3,693,568 |
|
|
|
2012 |
|
|
|
650,000 |
|
|
|
0 |
|
|
|
1,185,685 |
|
|
|
496,000 |
|
|
|
800,000 |
|
|
|
95,597 |
|
|
|
96,108 |
|
|
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3,323,390 |
|
Paul G. P. Hoogenboom |
|
|
2014 |
|
|
|
425,000 |
|
|
|
0 |
|
|
|
740,748 |
|
|
|
318,900 |
|
|
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510,000 |
|
|
|
53,409 |
|
|
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52,673 |
|
|
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2,100,730 |
|
Senior Vice President
Manufacturing and Operations, Chief Information
Officer(7) |
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|
2013 |
|
|
|
385,000 |
|
|
|
0 |
|
|
|
631,305 |
|
|
|
221,400 |
|
|
|
450,000 |
|
|
|
27,579 |
|
|
|
55,377 |
|
|
|
1,770,661 |
|
|
|
2012 |
|
|
|
370,000 |
|
|
|
0 |
|
|
|
514,451 |
|
|
|
148,800 |
|
|
|
475,000 |
|
|
|
84,354 |
|
|
|
51,975 |
|
|
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1,644,580 |
|
Russell L. Gordon |
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2014 |
|
|
|
330,000 |
|
|
|
0 |
|
|
|
701,337 |
|
|
|
318,900 |
|
|
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450,000 |
|
|
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44,414 |
|
|
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41,340 |
|
|
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1,885,991 |
|
Vice President and Chief
Financial Officer(8) |
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2013 2012 |
|
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300,000 235,000 |
|
|
|
0 0 |
|
|
|
573,589 310,222 |
|
|
|
221,400 99,200 |
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|
|
350,000 175,000 |
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|
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24,359 75,264 |
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37,180 35,540 |
|
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1,506,528 930,226 |
|
Edward W. Moore |
|
|
2014 |
|
|
|
294,375 |
|
|
|
0 |
|
|
|
647,933 |
|
|
|
318,900 |
|
|
|
400,000 |
|
|
|
41,867 |
|
|
|
60,728 |
|
|
|
1,763,803 |
|
Senior Vice President, General Counsel
and Chief Compliance Officer |
|
|
2013 2012 |
|
|
|
275,000 260,000 |
|
|
|
0 0 |
|
|
|
548,133 296,173 |
|
|
|
221,400 99,200 |
|
|
|
300,000 175,000 |
|
|
|
27,955 48,210 |
|
|
|
56,497 54,374 |
|
|
|
1,428,985 932,957 |
|
(1) |
Amounts earned under the Incentive Plan are reported in the Non-Equity Incentive Plan Compensation column. |
(2) |
The dollar value of restricted stock, SARs and stock options set forth in these columns is equal to the fair market value as of the date of the respective grant.
|
(3) |
Information regarding the shares of PERS and SARs granted to our named executive officers in July 2014 is set forth in the Grants of Plan-Based Awards for Fiscal 2014 table. The
Grants of Plan-Based Awards for Fiscal 2014 table also sets forth the aggregate grant date fair value of the restricted stock and SARs granted during fiscal 2013 computed in accordance with ASC 718. Shares of restricted stock and SARs are
subject to risk of forfeiture. |
(4) |
The amounts set forth in this column were earned during fiscal 2014 and paid in July 2014, earned during fiscal 2013 and paid in July 2013 and earned during fiscal 2012 and paid
in July 2012 for 2014, 2013 and 2012, respectively, under our Incentive Plan. |
(5) |
The amounts set forth in this column reflect the change in present value of the executive officers accumulated benefits under the RPM International Inc. Retirement Plan
(the Retirement Plan). During 2014, 2013 and 2012, there were no above-market or preferential earnings on nonqualified deferred compensation. |
(6) |
All Other Compensation includes Company contributions to the 401(k) plan, life insurance premiums, automobile allowances, financial/estate planning, periodic executive physical
examinations and charitable matching programs. For each named executive officer for whom the total value of all personal benefits exceed $10,000 in fiscal 2014, the amount of incremental cost to the Company for each personal benefit listed below, if
applicable and to the extent such cost exceeded the greater of $25,000 or 10% of the total personal benefits for such named executive officer is as follows: automobile allowance: Frank C. Sullivan $31,799 and Mr. Rice $37,759; life insurance
premiums: Frank C. Sullivan $78,153, Mr. Rice $60,318, Mr. Hoogenboom $26,815 and Mr. Moore $29,329. The value of the automobile allowance is determined by adding all of the costs of the program, including lease costs and costs of
maintenance, fuel, license and taxes and includes personal and business use. |
(7) |
Effective May 31, 2014, Mr. Hoogenboom resigned as Senior Vice President Manufacturing and Operations and Chief Information Officer of the Company to devote all
of his time and efforts to his duties as President of Tremco Incorporated, a wholly-owned subsidiary of the Company. |
(8) |
Mr. Gordon was elected Vice President and Chief Financial Officer effective April 10, 2012. |
EXECUTIVE COMPENSATION (CONTINUED)
Grants of Plan-Based Awards For Fiscal 2014
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Estimated Possible Payouts Under
Non-Equity Incentive Plan
Awards(1) |
|
|
Estimated Possible Payouts Under
Equity Incentive Plan Awards |
|
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All
Other Stock Awards: Number of Shares of Stock or Units (#) (i) |
|
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All
Other Option Awards: Number of Securities Underlying Options (#) (j) |
|
|
Exercise or
Base Price of Option
Awards ($/Sh) (k) |
|
|
|
|
Name (a) |
|
Grant Date
(b) |
|
Threshold ($)
(c) |
|
|
Target ($) (d) |
|
Maximum ($)
(e) |
|
|
Threshold (#)
(f) |
|
|
Target (#) (g) |
|
Maximum (#)
(h) |
|
|
|
|
|
Grant Date Fair
Value of Stock and Option
Awards
($)(2)
(I) |
|
Frank C. Sullivan |
|
7/18/13 |
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SERP |
|
|
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|
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|
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Restricted Stock(3) |
|
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|
|
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|
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|
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|
|
|
|
|
|
|
|
|
11,408 |
|
|
|
|
|
|
|
|
|
|
|
385,590 |
|
|
|
Incentive Plan Award |
|
|
920,000 |
|
|
|
|
|
1,380,000 |
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
|
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|
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|
|
|
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|
7/21/14 PERS(4) |
|
|
|
|
|
|
|
|
|
|
|
|
45,000 |
|
|
|
|
|
60,000 |
|
|
|
54,000 |
|
|
|
|
|
|
|
|
|
|
|
2,408,400 |
|
|
|
7/21/14 SARs(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
200,000 |
|
|
|
44.60 |
|
|
|
2,126,000 |
|
Ronald A. Rice |
|
7/18/13 |
|
|
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|
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|
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|
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|
|
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|
SERP |
|
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|
|
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|
|
Restricted Stock(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,145 |
|
|
|
|
|
|
|
|
|
|
|
309,101 |
|
|
|
Incentive Plan Award |
|
|
685,000 |
|
|
|
|
|
1,027,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/21/14 PERS(4) |
|
|
|
|
|
|
|
|
|
|
|
|
26,250 |
|
|
|
|
|
35,000 |
|
|
|
31,500 |
|
|
|
|
|
|
|
|
|
|
|
1,404,900 |
|
|
|
7/21/14 SARs(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
44.60 |
|
|
|
1,063,000 |
|
Paul G. P. Hoogenboom |
|
7/18/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,102 |
|
|
|
|
|
|
|
|
|
|
|
138,648 |
|
|
|
Incentive Plan Award |
|
|
425,000 |
|
|
|
|
|
637,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
7/21/14 PERS(4) |
|
|
|
|
|
|
|
|
|
|
|
|
11,250 |
|
|
|
|
|
15,000 |
|
|
|
13,500 |
|
|
|
|
|
|
|
|
|
|
|
602,100 |
|
|
|
7/21/14 SARs(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
44.60 |
|
|
|
318,900 |
|
EXECUTIVE COMPENSATION (CONTINUED)
|
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|
|
Name (a) |
|
Grant Date
(b) |
|
Estimated Possible
Payouts Under Non- Equity Incentive Plan Awards(1) |
|
|
Estimated Possible Payouts Under Equity Incentive
Plan Awards |
|
|
All
Other Stock Awards: Number
of Shares
of Stock
or Units (#)
(i) |
|
|
All
Other Option Awards: Number of Securities Underlying Options (#) (j) |
|
|
Exercise or Base Price of Option
Awards ($/Sh) (k) |
|
|
|
|
|
|
Threshold ($)
(c) |
|
|
Target
($)
(d) |
|
Maximum ($)
(e) |
|
|
Threshold (#)
(f) |
|
|
Target (#) (g) |
|
|
Maximum (#)
(h) |
|
|
|
|
|
Grant Date Fair Value of Stock
and Option Awards
($)(2)
(I) |
|
Russell L. Gordon |
|
7/18/13 |
|
|
|
|
|
|
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|
SERP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,936 |
|
|
|
|
|
|
|
|
|
|
|
99,237 |
|
|
|
Incentive Plan Award |
|
|
330,000 |
|
|
|
|
|
495,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/21/14 PERS(4)(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
|
|
|
|
13,500 |
|
|
|
|
|
|
|
|
|
|
|
602,100 |
|
|
|
7/21/14 SARs(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
44.60 |
|
|
|
318,900 |
|
Edward W. Moore |
|
7/18/13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,356 |
|
|
|
|
|
|
|
|
|
|
|
45,833 |
|
|
|
Incentive Plan Award |
|
|
285,000 |
|
|
|
|
|
427,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/21/14 PERS(4) |
|
|
|
|
|
|
|
|
|
|
|
|
11,250 |
|
|
|
|
|
|
|
15,000 |
|
|
|
13,500 |
|
|
|
|
|
|
|
|
|
|
|
602,100 |
|
|
|
7/21/14 SARs(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
44.60 |
|
|
|
318,900 |
|
(1) |
These columns show the possible payouts for each named executive officer under the Incentive Plan for fiscal 2014 based on the goals set in July 2013. Detail regarding actual
awards under the Incentive Plan is reported in the Summary Compensation Table and is included in the Compensation Discussion and Analysis. |
(2) |
The values included in this column represent the grant date fair value of restricted stock computed in accordance with ASC 718, except no assumptions for forfeitures were
included. A discussion of the assumptions used in calculating the compensation cost is set forth in Note I of the Notes to Consolidated Financial Statements of our 2014 Annual Report to Stockholders. |
(3) |
Shares of SERP restricted stock awarded under the 2007 Restricted Stock Plan. These shares vest on the earliest to occur of (a) the later of either the employees
attainment of age 55 or the fifth anniversary of the May 31st immediately preceding the date on which the shares of restricted stock were awarded, (b) the retirement of the employee on or after the attainment of age 65 or
(c) a change in control with respect to the Company. |
(4) |
PERS for which the threshold and maximum number of shares and performance goals with respect to fiscal 2014 were determined in July 2013 and are disclosed herein pursuant to
Commission rules. The performance goals for such PERS were achieved in fiscal 2014, and therefore the maximum amount of PERS could have been granted. However, the Compensation Committee elected to reduce the number of PERS awarded to the Covered
Employees and Mr. Gordon in light of the significant increase in the price of our shares of Common Stock throughout fiscal 2014 and the effect of that increase on the value of the PERS awards. |
(5) |
SARs granted pursuant to the 2004 Omnibus Plan. These SARs vest in four equal installments, beginning July 21, 2015. |
(6) |
As Chief Financial Officer, Mr. Gordon is not a Covered Employee under Section 162(m) of the Internal Revenue Code, and as such, threshold and maximum amounts do not apply to his
PERS award. |
EXECUTIVE COMPENSATION (CONTINUED)
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Salary. Salaries paid to our named executive officers pursuant to their employment arrangements with us are set forth in the Summary
Compensation Table. For fiscal 2014, salaries paid to our named executive officers accounted for the following percentages of their total compensation reported in the Total column of the Summary Compensation Table: Frank C. Sullivan
(13%), Mr. Rice (15%), Mr. Hoogenboom (20%), Mr. Gordon (17%), and Mr. Moore (17%). For fiscal 2013, salaries paid to our current named executive officers accounted for the following percentages of their total compensation
reported in the Total column of the Summary Compensation Table: Frank C. Sullivan (13%), Mr. Rice (18%), Mr. Hoogenboom (22%), Mr. Gordon (20%), and Mr. Moore (19%). For fiscal 2012, salaries paid to our current
named executive officers accounted for the following percentages of their total compensation reported in the Total column of the Summary Compensation Table: Frank C. Sullivan (11%), Mr. Rice (20%), Mr. Hoogenboom (22%),
Mr. Gordon (25%), and Mr. Moore (28%).
Bonus. No bonuses were awarded to our named executive officers during fiscal 2014, fiscal 2013
or fiscal 2012, although the named executive officers did receive cash awards under our Incentive Plan, as further described under the caption Non-Equity Incentive Plan Compensation below.
Stock Awards. The amounts in the Stock Awards column of the Grants of Plan-Based Awards for Fiscal 2014 table consist of restricted
stock and performance earned restricted stock grants. Each of these grants is described in further detail under the heading Compensation Discussion and Analysis Equity Compensation.
|
|
SERP Restricted Stock. We granted restricted stock under our 2007 Restricted Stock Plan. The SERP restricted stock awards granted to our named executive
officers are set forth in the table Grants of Plan-Based Awards for Fiscal 2014. The vesting of SERP restricted stock upon either the death or disability of the named executive officer or upon a change in control of our Company is
described under the heading Other Potential Post-Employment Compensation. |
|
|
PCRS. Pursuant to our 2004 Omnibus Plan, we awarded performance contingent restricted stock grants, or PCRS, to our named executive officers. The PCRS
awards are contingent upon the level of attainment of performance goals for the three-year and five-year periods from June 1, 2010 ended May 31, 2013, and from June 1, 2010 ending May 31, 2015, respectively. The performance goals
were attained for the three-year performance period, and
|
|
|
accordingly one-half of the PCRS awards have been earned. The determination of whether and to what extent the balance of the PCRS awards are achieved for the five-year performance period will be
made following the close of fiscal 2015. |
|
|
PERS. Pursuant to our 2004 Omnibus Plan, we awarded performance earned restricted stock grants, or PERS, to our named executive officers. The PERS granted
to our named executive officers are set forth in the table Grants of Plan-Based Awards for Fiscal 2014. |
The amounts
included in the Stock Awards column of the Summary Compensation Table represent the grant date fair value of grants made in accordance with ASC 718.
Option Awards. Pursuant to our 2004 Omnibus Plan, we awarded stock appreciation rights, or SARs, to our named executive officers. The SARs granted to our named executive officers are set forth in the table
Grants of Plan-Based Awards for Fiscal 2014. These grants are described in further detail under the heading Compensation Discussion and Analysis Equity Compensation Stock Appreciation Rights (SARs). The amounts
included in the Option Awards column of the Summary Compensation Table represent the grant date fair value of grants made in accordance with ASC 718.
Non-Equity Incentive Plan Compensation. The non-equity incentive plan compensation set forth in the Summary Compensation Table reflects annual cash incentive compensation under our Incentive Plan. Annual
cash incentive compensation is earned based upon the achievement of performance objectives as described under the heading Compensation Discussion and Analysis Annual Cash Incentive Compensation.
Change in Pension Value and Nonqualified Deferred Compensation Earnings. The change in the present value from May 31, 2013 to May 31, 2014, from
May 31, 2012 to May 31, 2013 and from May 31, 2011 to May 31, 2012 of each of our named executive officers accrued pension benefits under our Retirement Plan was based upon the RP2000 generational mortality table for males
and females, projected using scale AA, blended 50% blue collar and 50% white collar. The interest rate used to determine the present values was 4.25% as of May 31, 2012, 4.45% as of May 31, 2013, and 4.30% as of May 31, 2014. The
present values were determined assuming that such amounts were payable to each of our named executive officers at their earliest unreduced retirement age in our Retirement Plan 65 years with five years of participation in our Retirement
Plan. The present values for 2012, 2013 and 2014 also assumed that 35% of our named executive officers will be paid a life annuity and 65% will be paid a lump sum.
EXECUTIVE COMPENSATION (CONTINUED)
The lump sums were determined using a 4.25% interest rate for May 31, 2012, a 4.45% interest rate for
May 31, 2013, and a 4.30% interest rate for May 31, 2014, and the applicable mortality table outlined in IRC Section 417(e) projected to 2022 for 2012 and 2013 calculations, and projected to 2023 for 2014 calculations. No
pre-retirement decrements, including mortality, were assumed in these calculations.
All Other Compensation. All other compensation of our named
executive officers is set forth in the Summary Compensation Table and described in detail in footnote (6) of the table. These benefits are discussed in further detail under the heading Compensation Discussion and Analysis Perks and
Other Benefits.
Employment Agreements and Related Arrangements. Each named executive officer is employed under an employment
agreement. The terms of the employment agreements are described under the headings Compensation Discussion and Analysis Employment Agreements and Related Arrangements and Other Potential Post-Employment Compensation.
Additional Information. We have provided additional information regarding the compensation we pay to our named executive officers under the
headings Compensation Discussion and Analysis and Other Potential Post-Employment Compensation.
EXECUTIVE COMPENSATION (CONTINUED)
Outstanding Equity Awards at Fiscal Year-End for 2014
The
following table provides information on the holdings of stock options, SARs and restricted stock by the named executive officers at May 31, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
Name (a) |
|
Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable (b) |
|
|
Number of Securities
Underlying
Unexercised
Options
(#) Unexercisable
(c) |
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned Options
(#)
(d) |
|
Option
Exercise
Price
($)
(e) |
|
|
Option
Expiration
Date
(f) |
|
|
Number of
Shares or Units of Stock That Have Not Vested (#)
(g) |
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(1)
(h) |
|
|
Equity Incentive Plan
Awards: Number
of Unearned Shares, Units or Other Rights That
Have Not Vested (#)(2)
(i) |
|
|
Equity
Incentive
Plan
Awards:
Market or Payout
Value
of Unearned Shares,
Units
or Other
Rights That
Have Not
Vested
($)(3)
(j) |
|
Frank C. Sullivan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
204,282 |
(4) |
|
|
8,798,426 |
|
|
|
|
|
|
|
|
|
PERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,000 |
(5) |
|
|
7,752,600 |
|
|
|
|
|
|
|
|
|
PERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
(6) |
|
|
2,584,200 |
(6) |
PCRS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,000 |
(7) |
|
|
10,336,800 |
(7) |
SARs |
|
|
300,000 |
|
|
|
0 |
|
|
|
|
|
22.8800 |
|
|
|
10/04/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
0 |
|
|
|
|
|
14.0500 |
|
|
|
10/10/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
0 |
|
|
|
|
|
18.9600 |
|
|
|
10/08/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
|
|
50,000 |
(8) |
|
|
|
|
20.7300 |
|
|
|
10/07/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
100,000 |
(9) |
|
|
|
|
22.1600 |
|
|
|
7/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
150,000 |
(10) |
|
|
|
|
25.8700 |
|
|
|
7/16/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
200,000 |
(11) |
|
|
|
|
33.8000 |
|
|
|
7/18/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald A. Rice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,411 |
(12) |
|
|
4,367,772 |
|
|
|
|
|
|
|
|
|
PERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,000 |
(13) |
|
|
4,522,350 |
|
|
|
|
|
|
|
|
|
PERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000 |
(6) |
|
|
1,507,450 |
(6) |
PCRS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000 |
(7) |
|
|
5,168,400 |
(7) |
SARs |
|
|
10,000 |
|
|
|
0 |
|
|
|
|
|
18.9600 |
|
|
|
10/08/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
|
|
25,000 |
(8) |
|
|
|
|
20.7300 |
|
|
|
10/07/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
50,000 |
(9) |
|
|
|
|
22.1600 |
|
|
|
7/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
75,000 |
(10) |
|
|
|
|
25.8700 |
|
|
|
7/16/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
100,000 |
(11) |
|
|
|
|
33.8000 |
|
|
|
7/18/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul G. P. Hoogenboom |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,429 |
(14) |
|
|
2,344,257 |
|
|
|
|
|
|
|
|
|
PERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000 |
(15) |
|
|
1,938,150 |
|
|
|
|
|
|
|
|
|
PERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
(6) |
|
|
646,050 |
(6) |
PCRS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
(7) |
|
|
2,584,200 |
(7) |
SARs |
|
|
25,000 |
|
|
|
0 |
|
|
|
|
|
18.8000 |
|
|
|
10/05/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
0 |
|
|
|
|
|
22.8800 |
|
|
|
10/04/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
0 |
|
|
|
|
|
14.0500 |
|
|
|
10/10/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000 |
|
|
|
0 |
|
|
|
|
|
18.9600 |
|
|
|
10/08/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,500 |
|
|
|
7,500 |
(8) |
|
|
|
|
20.7300 |
|
|
|
10/07/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
15,000 |
(9) |
|
|
|
|
22.1600 |
|
|
|
7/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500 |
|
|
|
22,500 |
(10) |
|
|
|
|
25.8700 |
|
|
|
7/16/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
30,000 |
(11) |
|
|
|
|
33.8000 |
|
|
|
7/18/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXECUTIVE COMPENSATION (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
Name (a) |
|
Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable (b) |
|
|
Number of Securities
Underlying
Unexercised
Options
(#) Unexercisable
(c) |
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned Options
(#)
(d) |
|
Option
Exercise
Price
($)
(e) |
|
|
Option
Expiration
Date
(f) |
|
|
Number of Shares or Units of Stock
That
Have
Not
Vested
(#)
(g) |
|
|
Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)(1)
(h) |
|
|
Equity Incentive Plan
Awards: Number
of Unearned Shares, Units
or Other Rights That Have Not Vested
(#)(2)
(i) |
|
|
Equity
Incentive
Plan
Awards:
Market or Payout Value
of Unearned Shares, Units
or Other
Rights That
Have Not
Vested
($)(3)
(j) |
|
Russell L. Gordon |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,708 |
(16) |
|
|
676,544 |
|
|
|
|
|
|
|
|
|
PERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,000 |
(17) |
|
|
1,335,170 |
|
|
|
|
|
|
|
|
|
PERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
(6) |
|
|
646,050 |
(6) |
PCRS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
(7) |
|
|
646,050 |
(7) |
SARs |
|
|
5,000 |
|
|
|
0 |
|
|
|
|
|
17.6500 |
|
|
|
10/05/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
15,000 |
(10) |
|
|
|
|
25.8700 |
|
|
|
7/16/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
30,000 |
(11) |
|
|
|
|
33.8000 |
|
|
|
7/18/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward W. Moore |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,297 |
(18) |
|
|
271,212 |
|
|
|
|
|
|
|
|
|
PERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,000 |
(19) |
|
|
1,335,170 |
|
|
|
|
|
|
|
|
|
PERS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
(6) |
|
|
646,050 |
(6) |
PCRS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
(7) |
|
|
646,050 |
(7) |
SARs |
|
|
0 |
|
|
|
5,000 |
(8) |
|
|
|
|
20.7300 |
|
|
|
10/07/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
10,000 |
(9) |
|
|
|
|
22.1600 |
|
|
|
7/18/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
15,000 |
(10) |
|
|
|
|
25.8700 |
|
|
|
7/16/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
|
30,000 |
(11) |
|
|
|
|
33.8000 |
|
|
|
7/18/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Market value of Common Stock reported in column (h) was calculated by multiplying $43.07, the closing market price of the Companys Common Stock on May 30, 2014,
the last business day of fiscal 2014, by the number of shares. |
(2) |
Represents the maximum number of shares that could be paid out. |
(3) |
Market value of equity incentive awards of stock reported in column (j) was calculated by multiplying the closing market price of the Companys Common Stock on
May 30, 2014, the last business day of fiscal 2014, by the maximum number of shares that could be paid out. |
(4) |
These shares of SERP restricted stock vest on December 15, 2015, except for the 2011, 2012 and 2013 grants which will vest according to schedule on May 31, 2016,
May 31, 2017 and May 31, 2018, respectively. These shares could vest earlier upon the death or disability of Frank C. Sullivan or upon a change in control of the Company prior to those dates. |
(5) |
These PERS vest according to the following schedule: 60,000 shares on July 18, 2014, 60,000 shares on July 16, 2015, and 60,000 shares on July 18, 2016.
|
(6) |
In July 2013, the Compensation Committee determined the maximum number of and performance goals for the award of PERS with respect to fiscal 2014. Market value reported in column
(j) was calculated by multiplying the closing market price of the Companys Common Stock on May 30, 2014 by the estimated number of shares in column (i). The performance goals for such PERS were achieved in fiscal 2014, and therefore
the maximum amount of PERS could have been granted. However, the Compensation Committee elected to reduce the number of PERS awarded to the Covered Employees and Mr. Gordon in light of the significant increase in the price of our shares of Common
Stock throughout fiscal 2014 and the effect of that increase on the value of the PERS awards. |
(7) |
The PCRS awards were made pursuant to the 2004 Omnibus Plan and are contingent upon the level of attainment of performance goals for the three-year and five-year periods from
June 1, 2010 ended May 31, 2013, and from June 1, 2010 ending May 31, 2015, respectively. For the three-year performance period from June 1, 2010 ended May 31, 2013, up to one-half of an individuals aggregate PCRS
grant could have been earned. In July 2013, the Compensation Committee determined that the performance goals were attained for such period. Accordingly, one-half of the 2010 PCRS grants were earned at the end of the three-year performance period.
The determination of whether and to what extent the balance of the PCRS awards are achieved for the five-year performance period from June 1, 2010 ending May 31, 2015 will be made following the close of fiscal 2015. The amounts set forth
in columns (i) and (j) assume the maximum amount of PCRS are awarded. Market value reported in column (j) was calculated by multiplying the closing market price of the Companys Common Stock on May 30, 2014, the last
business day of fiscal 2014, by the maximum number of shares in column (i). |
EXECUTIVE COMPENSATION (CONTINUED)
(8) |
These SARs become exercisable on October 7, 2014. |
(9) |
These SARs become exercisable in two equal installments on July 18, 2014 and July 18, 2015. |
(10) |
These SARs become exercisable in three equal installments on July 16, 2014, July 16, 2015 and July 16, 2016. |
(11) |
These SARs become exercisable in four equal installments on July 18, 2014, July 18, 2015, July 18, 2016 and July 18, 2017. |
(12) |
These shares of SERP restricted stock vest on November 7, 2017, except for the 2013 grant which will vest according to schedule on May 31, 2018, or earlier upon the
death or disability of Mr. Rice or upon a change in control of the Company prior to that date. |
(13) |
These PERS vest according to the following schedule: 35,000 shares on July 18, 2014, 35,000 shares on July 16, 2015 and 35,000 shares on July 18, 2016.
|
(14) |
These shares of SERP restricted stock vest on March 17, 2015, except for the 2010, 2011, 2012 and 2013 grants which will vest according to schedule on May 31, 2015,
May 31, 2016, May 31, 2017 and May 31, 2018, respectively. The shares could vest earlier upon the death or disability of Mr. Hoogenboom or upon a change in control of the Company prior to those dates. |
(15) |
These PERS vest according to the following schedule: 15,000 shares on July 18, 2014, 15,000 shares on July 16, 2015 and 15,000 shares on July 18, 2016.
|
(16) |
These shares of SERP restricted stock vest on January 26, 2021 or earlier upon the death or disability of Mr. Gordon or upon a change in control of the Company prior to
that date. |
(17) |
There PERS vest according to the following schedule: 6,000 shares on July 18, 2014, 10,000 shares on July 16, 2015 and 15,000 shares on July 18, 2016.
|
(18) |
These shares of SERP restricted stock vest on the fifth anniversary of the May 31st immediately preceding the date on which each grant of restricted stock was made. These
shares could vest earlier upon the death or disability of Mr. Moore or upon a change in control of the Company prior to those dates. |
(19) |
These PERS vest according to the following schedule: 6,000 shares vest on July 18, 2014, 10,000 shares vest on July 16, 2015 and 15,000 shares on July 18, 2016.
|
EXECUTIVE COMPENSATION (CONTINUED)
Option
Exercises and Stock Vested During Fiscal 2014
This table provides information for the named executive officers on stock option and SAR exercises and
restricted stock vesting during fiscal 2014, including the number of shares acquired upon exercise and the value realized, before payment of any applicable withholding tax and broker commissions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards |
|
|
Stock
Awards |
|
Name (a) |
|
Number of Shares Acquired on Exercise (#)(b) |
|
|
Value
Realized
on
Exercise
($)
(c) |
|
|
Number
of Shares Acquired on Vesting
(#)
(d) |
|
|
Value
Realized
on
Vesting
($)
(e) |
|
Frank C. Sullivan |
|
|
375,000 |
|
|
|
7,798,051 |
|
|
|
100,000 |
|
|
|
3,412,000 |
|
Ronald A. Rice |
|
|
80,000 |
|
|
|
1,610,400 |
|
|
|
50,000 |
|
|
|
1,706,000 |
|
Paul G. P. Hoogenboom |
|
|
0 |
|
|
|
0 |
|
|
|
25,000 |
|
|
|
853,000 |
|
Russell L. Gordon |
|
|
5,000 |
|
|
|
86,702 |
|
|
|
6,000 |
|
|
|
204,720 |
|
Edward W. Moore |
|
|
35,000 |
|
|
|
552,700 |
|
|
|
13,678 |
|
|
|
499,611 |
|
Pension Benefits for Fiscal 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name (a) |
|
Plan Name
(b) |
|
Number
of
Years
Credited
Service
at
5/31/14
(c) |
|
|
Present
Value of
Accumulated
Benefit
($)
(d) |
|
|
Payments
During
Last
Fiscal
Year
($)
(e) |
|
Frank C. Sullivan |
|
RPM International Inc. Retirement Plan |
|
|
25.3 |
|
|
|
495,593 |
|
|
|
0 |
|
Ronald A. Rice |
|
RPM International Inc. Retirement Plan |
|
|
19.3 |
|
|
|
380,937 |
|
|
|
0 |
|
Paul G. P. Hoogenboom |
|
RPM International Inc. Retirement Plan |
|
|
15.0 |
|
|
|
352,552 |
|
|
|
0 |
|
Russell L. Gordon |
|
RPM International Inc. Retirement Plan |
|
|
19.3 |
|
|
|
307,879 |
|
|
|
0 |
|
Edward W. Moore |
|
RPM International Inc. Retirement Plan |
|
|
7.6 |
|
|
|
201,200 |
|
|
|
0 |
|
The preceding table shows the present value of accumulated benefits payable to each named executive officer,
including each such named executive officers number of years of credited service, under our Retirement Plan determined using interest rate and mortality rate assumptions consistent with those used in our financial statements.
The Retirement Plan is a funded and tax qualified retirement plan. The monthly benefit provided by the Retirement Plans formula on a single life annuity basis
is equal to the sum of 22.5% of a participants average monthly compensation, reduced pro rata for years of benefit service (as defined in the Retirement Plan) less than 30 years, plus 22.5% of a participants average monthly
compensation in excess of his monthly Social Security covered compensation, reduced pro rata for years of benefit service less than 35 years. Average monthly compensation is the average monthly compensation earned during the 60 consecutive
months providing the
highest such average during the last 120 months preceding the applicable determination date. The compensation used to determine benefits under the Retirement Plan is generally a
participants W-2 compensation, adjusted for certain amounts, but may not exceed the limit under the Internal Revenue Code which is applicable to tax qualified plans ($255,000 for 2013). Compensation for each of the named executive officers
during 2013 only includes $255,000 of the amount shown for 2013 in column (c) of the Summary Compensation Table. A participants Social Security covered compensation is based on the average of the Social Security taxable wage bases in
effect during the 35-year period ending with his attainment of the Social Security retirement age assuming his compensation is and has always been at least equal to the taxable wage base.
Benefits are payable as an annuity or in a single lump sum payment and are actuarially adjusted to reflect payment in a form other than a life annuity. Life annuity benefits are
EXECUTIVE COMPENSATION (CONTINUED)
unreduced if paid on account of normal retirement or completion of 40 years of vesting service (as defined in the Retirement Plan). Normal retirement age is when a participant attains
age 65 and, in general, has completed 5 years of
service. Benefits are reduced for early commencement by multiplying the accrued benefit by an early retirement factor. Participants vest in the Retirement Plan after 5 years of vesting
service.
Nonqualified Deferred Compensation for
Fiscal 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name (a) |
|
Executive
Contributions
in Last FY ($)
(b) |
|
|
Registrant
Contributions
in Last FY ($)
(c) |
|
|
Aggregate
Earnings
in Last FY ($)(1)
(d) |
|
|
Aggregate
Withdrawals/
Distributions ($)
(e) |
|
|
Aggregate
Balance
at Last FYE ($)
(f) |
|
Frank C. Sullivan |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Ronald A. Rice |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Paul G. P. Hoogenboom |
|
|
0 |
|
|
|
0 |
|
|
|
7,021 |
|
|
|
0 |
|
|
|
28,178 |
|
Russell L. Gordon |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Edward W. Moore |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
(1) |
None of the earnings in this column is included in the Summary Compensation Table because they were not preferential or above market. |
The preceding table provides information on the non-qualified deferred compensation of the named executive officers
in 2014. Participants in the RPM International Inc. Deferred Compensation Plan (Deferred Compensation Plan), including the named executive officers, may defer up to 90% of their base salary and non-equity incentive plan compensation.
A participants deferrals and any matching contributions are credited to a bookkeeping account under the Deferred Compensation Plan. A participant
may direct that his or her account be deemed to be invested in Company stock or in mutual funds that are selected by the administrative committee of the Deferred Compensation Plan. The participants account is credited with phantom earnings or
losses based on the investment performance of the deemed investment. A participant may change the investment funds used to calculate the investment performance of his or her account on a daily basis. Deferrals of equity awards that would have been
paid in Company stock before the deferral are not subject to investment direction by participants and are deemed to be invested in Company stock.
Deferrals of base salary, annual bonus amounts and deferred equity grants, earnings on such amounts and stock dividends credited to a participants account are
100% vested.
Distribution from a participants account is payable in a lump sum at a specified time, or upon retirement, death, termination of
employment or disability prior to retirement. In the case of retirement, a participant may also elect annual installments for up to 10 years. Upon approval of the
Compensation Committee, amounts can also be distributed as a result of an unforeseeable financial emergency. Earlier withdrawal of deferred compensation earned and vested as of December 31,
2004 is available but is subject to a 10% penalty.
Other Potential Post-Employment Compensation
The following table reflects the amount of compensation payable to each of the named executive officers (a) in the event of termination of the executives
employment due to retirement, death, disability, voluntary termination, termination for cause, involuntary termination without cause and not within two years of a change in control and involuntary termination without cause or resignation with good
reason within two years of a change in control, and (b) upon a change in control. The amounts shown assume that the termination was effective as of May 30, 2014 (the last business day of fiscal 2014). Consequently, the table reflects
amounts earned as of May 30, 2014 (the last business day of fiscal 2014) and includes estimates of amounts that would be paid to the named executive officer upon the occurrence of the event. The estimates are considered forward-looking
information that falls within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual
amounts paid or distributed may differ materially. Factors that could affect these amounts include the timing during the year of such event and the amount of future non-equity incentive compensation. Please see Forward-Looking
Statements.
EXECUTIVE COMPENSATION (CONTINUED)
Estimated
Payments on Termination or Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Event |
|
Frank
C. Sullivan |
|
|
Ronald
A. Rice |
|
|
Paul G.
P. Hoogenboom |
|
|
Russell
L. Gordon |
|
|
Edward
W. Moore |
|
Retirement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated SARs |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
856,900 |
|
Accelerated PERS |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,335,170 |
|
Accelerated SERP restricted stock |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
271,212 |
|
Accelerated stock options |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Total |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
2,463,282 |
|
Death |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned incentive compensation |
|
$ |
1,335,000 |
|
|
$ |
995,000 |
|
|
$ |
510,000 |
|
|
$ |
325,000 |
|
|
$ |
291,667 |
|
Accelerated SARs |
|
|
7,642,000 |
|
|
|
3,821,000 |
|
|
|
1,146,300 |
|
|
|
536,100 |
|
|
|
856,900 |
|
Accelerated PERS |
|
|
7,752,600 |
|
|
|
4,522,350 |
|
|
|
1,938,150 |
|
|
|
1,335,170 |
|
|
|
1,335,170 |
|
Accelerated SERP restricted stock |
|
|
8,798,426 |
|
|
|
4,367,772 |
|
|
|
2,344,257 |
|
|
|
676,544 |
|
|
|
271,212 |
|
Accelerated stock options |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Total |
|
$ |
25,528,026 |
|
|
$ |
13,706,122 |
|
|
$ |
5,938,707 |
|
|
$ |
2,872,814 |
|
|
$ |
2,754,949 |
|
Disability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned incentive compensation |
|
$ |
1,335,000 |
|
|
$ |
995,000 |
|
|
$ |
510,000 |
|
|
$ |
325,000 |
|
|
$ |
291,667 |
|
Accelerated SARs |
|
|
7,642,000 |
|
|
|
3,821,000 |
|
|
|
1,146,300 |
|
|
|
536,100 |
|
|
|
856,900 |
|
Accelerated PERS |
|
|
7,752,600 |
|
|
|
4,522,350 |
|
|
|
1,938,150 |
|
|
|
1,335,170 |
|
|
|
1,335,170 |
|
Accelerated SERP restricted stock |
|
|
8,798,426 |
|
|
|
4,367,772 |
|
|
|
2,344,257 |
|
|
|
676,544 |
|
|
|
271,212 |
|
Total |
|
$ |
25,528,026 |
|
|
$ |
13,706,122 |
|
|
$ |
5,938,707 |
|
|
$ |
2,872,814 |
|
|
$ |
2,754,949 |
|
Voluntary Termination and Termination for Cause |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No payments |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Total |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
Involuntary Termination Without Cause and not within Two Years of a Change in Control |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum |
|
$ |
6,765,000 |
|
|
$ |
3,360,000 |
|
|
$ |
1,870,000 |
|
|
$ |
982,500 |
|
|
$ |
1,183,334 |
|
Health and welfare benefits |
|
|
58,536 |
|
|
|
39,024 |
|
|
|
36,624 |
|
|
|
29,268 |
|
|
|
39,024 |
|
Estate and financial planning |
|
|
5,000 |
|
|
|
5,000 |
|
|
|
5,000 |
|
|
|
5,000 |
|
|
|
5,000 |
|
Executive life insurance coverage |
|
|
282,134 |
|
|
|
138,350 |
|
|
|
61,520 |
|
|
|
20,945 |
|
|
|
102,791 |
|
Cash value of benefits under restricted stock plan |
|
|
1,474,028 |
|
|
|
787,750 |
|
|
|
353,346 |
|
|
|
189,680 |
|
|
|
116,805 |
|
Accelerated SERP restricted stock |
|
|
8,798,426 |
|
|
|
4,367,772 |
|
|
|
2,344,257 |
|
|
|
676,544 |
|
|
|
271,212 |
|
Total |
|
$ |
17,383,124 |
|
|
$ |
8,697,896 |
|
|
$ |
4,670,747 |
|
|
$ |
1,903,937 |
|
|
$ |
1,718,166 |
|
Involuntary Termination Without Cause or Resignation for Good Reason within Two Years of a Change in Control |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lump sum |
|
$ |
6,765,000 |
|
|
$ |
5,040,000 |
|
|
$ |
2,805,000 |
|
|
$ |
982,500 |
|
|
$ |
1,775,001 |
|
Health and welfare benefits |
|
|
58,536 |
|
|
|
58,536 |
|
|
|
54,936 |
|
|
|
29,268 |
|
|
|
58,536 |
|
Estate and financial planning |
|
|
10,000 |
|
|
|
10,000 |
|
|
|
10,000 |
|
|
|
5,000 |
|
|
|
10,000 |
|
Executive life insurance coverage |
|
|
541,212 |
|
|
|
417,380 |
|
|
|
185,615 |
|
|
|
40,177 |
|
|
|
309,217 |
|
Cash value of benefits under restricted stock plan |
|
|
1,474,028 |
|
|
|
1,181,625 |
|
|
|
530,019 |
|
|
|
189,680 |
|
|
|
175,209 |
|
Accelerated SERP restricted stock |
|
|
8,798,426 |
|
|
|
4,367,772 |
|
|
|
2,344,257 |
|
|
|
676,544 |
|
|
|
271,212 |
|
Accelerated PCRS, PERS and SARs |
|
|
25,731,400 |
|
|
|
13,511,750 |
|
|
|
5,668,650 |
|
|
|
2,517,320 |
|
|
|
2,838,120 |
|
Accelerated stock options |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Outplacement assistance |
|
|
26,000 |
|
|
|
26,000 |
|
|
|
26,000 |
|
|
|
26,000 |
|
|
|
26,000 |
|
Excise taxes |
|
|
11,196,922 |
|
|
|
7,192,583 |
|
|
|
3,269,965 |
|
|
|
1,375,171 |
|
|
|
1,609,953 |
|
Total |
|
$ |
54,601,524 |
|
|
$ |
31,805,646 |
|
|
$ |
14,894,442 |
|
|
$ |
5,841,660 |
|
|
$ |
7,073,248 |
|
Change in Control Only |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated SERP restricted stock |
|
$ |
8,798,426 |
|
|
$ |
4,367,772 |
|
|
$ |
2,344,257 |
|
|
$ |
676,544 |
|
|
$ |
271,212 |
|
Accelerated PCRS, PERS and SARs |
|
|
25,731,400 |
|
|
|
13,511,750 |
|
|
|
5,668,650 |
|
|
|
2,517,320 |
|
|
|
2,838,120 |
|
Accelerated stock options |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Excise taxes |
|
|
6,060,229 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Total |
|
$ |
40,590,055 |
|
|
$ |
17,879,522 |
|
|
$ |
8,012,907 |
|
|
$ |
3,193,864 |
|
|
$ |
3,109,332 |
|
EXECUTIVE COMPENSATION (CONTINUED)
Payments upon Retirement
Treatment of SARs. Under the terms of the stock appreciation rights agreements under which SARs were granted, in the event of the executives voluntary retirement after attaining age 55 and
completing five years of consecutive service with the Company the executive will be entitled to immediately exercise all unvested SARs. None of the named executive officers were eligible for retirement as of May 31, 2014, with the exception of
Mr. Moore.
Treatment of PERS Awards. Under the terms of the Performance Earned Restricted Stock (PERS) and escrow agreements, in the event
of the executives voluntary retirement after attaining age 55 and completing at least five years of consecutive service with the Company, the restrictions on unvested PERS will lapse. None of the named executive officers were eligible for
retirement as of May 31, 2014, with the exception of Mr. Moore.
Treatment of SERP Restricted Stock. Under the terms of the 2007
Restricted Stock Plan and the 1997 Restricted Stock Plan, upon (a) the later of the executives attainment of age 55 or the fifth anniversary of the May 31 immediately before the date of the SERP restricted stock grant or
(b) the executives retirement on or after the age of 65, the restrictions on SERP restricted stock will lapse. None of the named executive officers were eligible for retirement as of May 31, 2014, with the exception of
Mr. Moore.
Treatment of Stock Options. Under the terms of the stock option agreements under which stock options were awarded, in the event
of the executives voluntary retirement after attaining the age of 55 and completing at least five years of consecutive service with the Company, unvested stock options will become immediately exercisable. None of the named executive officers
were eligible for retirement as of May 31, 2014, with the exception of Mr. Moore. None of the named executive officers currently hold options.
Payments upon Death
Non-Equity Incentive
Compensation. Under the terms of the employment agreements with Messrs. Frank C. Sullivan, Rice, Hoogenboom, Gordon and Moore, in the event of the executives death, the executive is entitled to receive any earned incentive compensation.
Earned incentive compensation is calculated as the sum of (a) any incentive compensation payable but not yet paid for the fiscal year preceding the fiscal year in which the termination date occurs, and (b) a pro rata portion of
(i) for Messrs. Frank C. Sullivan, Rice and Hoogenboom, the annual incentive compensation for the most recently completed fiscal year and (ii) for Messrs. Gordon and Moore, the average incentive compensation for the three most
recently completed fiscal
years. The pro rata portion is determined by multiplying the annual or average incentive compensation, as the case may be, by a fraction, the numerator of which is the number of days in the
current fiscal year of the Company that have expired prior to the termination date and the denominator of which is 365.
Treatment of SARs. Under
the terms of the stock appreciation rights agreement under which SARs were granted, in the event of the executives death all unvested SARs will become immediately exercisable. The amounts set forth in the table for SARs reflect the difference
between the closing price of our Common Stock on May 30, 2014, the last business day of fiscal year 2014, and the exercise prices for the SARs for which vesting would be accelerated and for which the closing price exceeded the SAR exercise
price.
Treatment of PERS Awards. Under the terms of the Performance Earned Restricted Stock (PERS) and escrow agreements, PERS awards vest
automatically in the event of the executives death, and vesting for such PERS is reflected in the foregoing table.
Treatment of SERP Restricted
Stock. Under the terms of the 2007 Restricted Stock Plan and the 1997 Restricted Stock Plan, in the event of the executives death, the restrictions on SERP restricted stock will lapse. The amounts set forth in the table for restricted
stock reflect the number of shares of restricted stock for which vesting would be accelerated multiplied by the closing price of our Common Stock on May 30, 2014, the last business day of fiscal year 2014.
Treatment of Stock Options. Under the terms of the stock option agreements under which stock options were awarded, in the event of the executives death
unvested stock options will become immediately exercisable. As all options held by the named executive officers were already vested as of October 29, 2008, the table reflects no value to the named executive officers under this provision at the
end of fiscal 2014.
Payments upon Disability
Non-Equity Incentive Compensation. Under the terms of the employment agreements with Messrs. Frank C. Sullivan, Rice, Hoogenboom, Gordon and Moore, in the
event of the executives disability, the executive is entitled to receive any earned incentive compensation. Earned incentive compensation is calculated as the sum of (a) any incentive compensation payable but not yet paid for the fiscal
year preceding the fiscal year in which the termination date occurs, and (b) a pro rata portion of (i) for Messrs. Frank C. Sullivan, Rice and Hoogenboom, the annual incentive compensation for the most recently completed fiscal year and
(ii) for
EXECUTIVE COMPENSATION (CONTINUED)
Messrs. Gordon and Moore, the average incentive compensation for the three most recently completed fiscal years. The pro rata portion is determined by multiplying the annual or average
incentive compensation, as the case may be, by a fraction, the numerator of which is the number of days in the current fiscal year of the Company that have expired prior to the termination date and the denominator of which is 365.
Treatment of SARs. Under the terms of the stock appreciation rights agreements under which SARs were granted, in the event of the executives
disability, the executive will be entitled to immediately exercise all unvested SARs. The amounts set forth in the table for SARs reflect the difference between the closing price of our Common Stock on May 30, 2014, the last business day of
fiscal year 2014, and the exercise prices for the SARs for which vesting would be accelerated and for which the closing price exceeded the SAR exercise price.
Treatment of PERS Awards. Under the terms of the Performance Earned Restricted Stock (PERS) and escrow agreements, PERS awards vest automatically in the event of the executives total disability, and
vesting for such PERS is reflected in the foregoing table.
Treatment of SERP Restricted Stock. Under the terms of the 2007 Restricted Stock Plan
and the 1997 Restricted Stock Plan, in the event of the executives disability, the restrictions on SERP restricted stock will lapse. The amounts set forth in the table for restricted stock reflect the number of shares of restricted stock for
which vesting would be accelerated multiplied by the closing price of our Common Stock on May 30, 2014, the last business day of fiscal year 2014.
Payments upon Voluntary Termination and Termination for Cause
A named executive officer is not entitled to receive any additional forms of severance payments or benefits upon his voluntary decision to terminate employment with
RPM prior to being eligible for retirement or upon termination for cause.
Payments upon Involuntary Termination Without Cause and not within Two
Years of a Change in Control
Under the terms of the employment agreements with Messrs. Frank C. Sullivan, Rice, Hoogenboom, Gordon and Moore, in the
event that the executive is terminated without cause and the termination does not occur during a two-year period following a change in control, the executive would be entitled to the following:
|
|
for Messrs. Frank C. Sullivan, Rice and Hoogenboom, a lump sum amount equal to the executives incentive compensation for the preceding fiscal year (if not
yet paid) plus, for Frank C. Sullivan, three times the sum of, and for
|
|
|
Messrs. Rice and Hoogenboom, two times the sum of: (i) the greater of the executives annual base salary in effect on the date of termination or the highest base salary in effect at any
time during the three years immediately preceding the termination date, and (ii) for Messrs. Frank C. Sullivan, Rice and Hoogenboom, the highest annual incentive compensation received by the executive in the five years prior to the termination
date. Messrs. Gordon and Moore would be entitled to receive a lump sum amount equal to the executives incentive compensation for the preceding fiscal year (if not yet paid), plus the sum of (x) for Mr. Moore, two times, and for
Mr. Gordon, one and one-half times the executives annual base salary in effect on the date of termination, and (y) a pro rata portion of the executives average incentive compensation for the three most recently completed fiscal
years. The pro rata portion is determined by multiplying the average incentive compensation by a fraction, the numerator of which is the number of days in the current fiscal year of the Company that have expired prior to the termination date and the
denominator of which is 365; |
|
|
continuation of health and welfare benefits for three years for Frank C. Sullivan, for two years for Messrs. Rice, Hoogenboom and Moore, and for 18 months
for Mr. Gordon; |
|
|
estate and financial planning services for a period of six months; |
|
|
a lump sum payment equal to three times, for Frank C. Sullivan, two times, for Messrs. Rice, Hoogenboom and Moore, and one and one-half times for
Mr. Gordon, the most recent annual premium or other cost for the executive life insurance coverage in effect on the date of termination (or, if greater, the next scheduled annual premium shown on the then current schedule of coverage);
|
|
|
a lump sum amount equal to the cash value of three years for Frank C. Sullivan, two years for Messrs. Rice, Hoogenboom and Moore, and 18 months for
Mr. Gordon, of benefits that the executive would have received had he continued to participate and receive awards under the Restricted Stock Plan (as determined in accordance with the Companys past practice); and
|
|
|
the lapse of all transfer restrictions and forfeiture provisions on restricted stock awarded under the 1997 and 2007 Restricted Stock Plans.
|
The employment agreements provide that the Company will not be obligated to make the lump sum payments or provide
EXECUTIVE
COMPENSATION (CONTINUED)
the additional benefits described above unless the executive signs a release and waiver of claims and refrains from revoking, rescinding or otherwise repudiating the release of claims during
certain time periods.
Payments upon Involuntary Termination Without Cause or Resignation for Good Reason within Two Years of a Change in Control
Under the terms of each named executive officers employment agreement, in the event that the executive is terminated without cause or resigns
for good reason within two years following a change in control, the executive would be entitled to the following:
|
|
for Messrs. Frank C. Sullivan, Rice and Hoogenboom, a lump sum amount equal to the executives incentive compensation for the preceding fiscal year (if not
yet paid) plus three times the sum of (i) the greater of the executives annual base salary in effect on the date of termination or the highest base salary in effect at any time during the three years immediately preceding the change in
control, and (ii) the highest annual incentive compensation received by the executive in the five years prior to the change in control. Messrs. Gordon and Moore would be entitled to receive a lump sum amount equal to the executives
incentive compensation for the preceding fiscal year (if not yet paid), plus the sum of (x) for Mr. Moore, three times and for Mr. Gordon, one and one-half times the executives annual base salary in effect on the date of
termination, and (y) a pro rata portion of the executives average incentive compensation for the three most recently completed fiscal years. The pro rata portion is determined by multiplying the average incentive compensation by a
fraction, the numerator of which is the number of days in the current fiscal year of the Company that have expired prior to the termination date and the denominator of which is 365; |
|
|
continuation of health and welfare benefits for a period of three years for Messrs. Frank C. Sullivan, Rice, Hoogenboom and Moore, and for a period of 18 months
for Mr. Gordon; |
|
|
estate and financial planning services for a period of one year for Messrs. Frank C. Sullivan, Rice, Hoogenboom and Moore, and for a period of 6 months for
Mr. Gordon; |
|
|
a lump sum payment equal to, for Messrs. Frank C. Sullivan, Rice, Hoogenboom and Moore, three times and for Mr. Gordon, one and one-half times the most
recent annual premium or other cost for the executive life insurance coverage in effect on the date of termination, grossed up to compensate for the tax impact of the
|
|
|
payment (or, if greater, the next scheduled annual premium payment shown on the then-current schedule of coverage); |
|
|
a lump sum amount equal to the cash value of, for Messrs. Frank C. Sullivan, Rice, Hoogenboom and Moore, three years, and for Mr. Gordon, 18 months of
benefits that the executive would have received had he continued to participate and received awards under the Restricted Stock Plan (as determined in accordance with the Companys past practice); |
|
|
the lapse of all transfer restrictions and forfeiture provisions on restricted stock awarded under the 1997 and 2007 Restricted Stock Plans;
|
|
|
the lapse of transfer restrictions on any awards under the 2004 Omnibus Plan; |
|
|
outplacement assistance for two years following the change in control; |
|
|
a lump sum payment, or gross-up, equal to the amount of any excise tax imposed on the executive under Section 4999 of the Internal Revenue Code, or any
similar state or local tax law, and any taxes, interest or penalties incurred with respect thereto; |
|
|
interest on certain of the above payments if not made in a timely manner in accordance with the employment agreement or change in control agreement; and
|
|
|
up to an amount of $250,000 in legal fees incurred by the executive in each of the two calendar years following termination of employment in the event that,
following a change in control, he may be caused to institute or defend legal proceedings to enforce his rights under the employment agreement or change in control agreement. |
The employment agreements provide that the Company will not be obligated to make the lump sum payments or provide the additional benefits described above unless the executive signs a release and waiver of claims
and refrains from revoking, rescinding or otherwise repudiating the release of claims during certain time periods. In the table above, we have assumed that the Company timely made all payments and the executive did not incur legal fees.
Restrictive Covenants that Apply During and After Termination of Employment
Pursuant to the terms of the employment agreements, each of our named executive officers is subject to certain restrictive covenants that apply during and after their termination of employment. Each named executive
officer is subject to a covenant not to disclose our confidential information during
EXECUTIVE
COMPENSATION (CONTINUED)
their term of employment with us and at all times thereafter. During their employment with us and for a period of two years thereafter our named executive officers are also subject to covenants
not to (i) compete with us (or any of our subsidiaries) or (ii) solicit our employees or customers.
Payments upon a Change in Control Only
Treatment of SARs. Under the terms of the stock appreciation rights agreements under which SARs were granted, in the event of a change in
control, the executive will be entitled to immediately exercise all unvested SARs. The amounts set forth in the table for SARs reflect the difference between the closing price of our Common Stock on May 30, 2014, the last business day of fiscal
year 2014, and the exercise prices for the SARs for which vesting would be accelerated and for which the closing price exceeded the SAR exercise price.
Treatment of PERS Awards. Under the terms of the Performance Earned Restricted Stock (PERS) and escrow agreements under which PERS were granted, in the event
of a change in control, the restrictions on unvested PERS will lapse. The amounts set forth in the table for PERS reflect the number of PERS for which vesting would be accelerated multiplied by the closing price of our Common Stock on May 30,
2014, the last business day of fiscal year 2014.
Treatment of PCRS Awards. Under the terms of the Performance Contingent Restricted Stock (PCRS)
and escrow agreements under which PCRS were granted, in the event of a change in control, the restrictions on unvested PCRS will lapse. The amounts set forth in the table for PCRS reflect the
number of PCRS for which vesting would be accelerated multiplied by the closing price of our Common Stock on May 30, 2014, the last business day of fiscal year 2014.
Treatment of SERP Restricted Stock. Under the terms of the 2007 Restricted Stock Plan and the 1997 Restricted Stock Plan, in the event of a change in
control, the restrictions on SERP restricted stock will lapse. The amounts set forth in the table for restricted stock reflect the number of shares of restricted stock for which vesting would be accelerated multiplied by the closing price of our
Common Stock on May 30, 2014, the last business day of fiscal year 2014.
Treatment of Stock Options. Under the terms of the stock option
agreements under which stock options were awarded, in the event of a change in control, unvested stock options will become immediately exercisable. As options held by the named executive officers were already vested as of October 29, 2008, the
table reflects no value to the named executive officers under this provision at the end of fiscal 2014.
Excise Taxes. The employment agreements
provide that to the extent that any payment or distribution by the Company for the benefit of the executive would be subject to any excise tax imposed on the executive under Section 4999 of the Internal Revenue Code, the executive will be
entitled to a lump sum payment, or gross-up, equal to the amount of any excise tax imposed on the executive under Section 4999 of the Internal Revenue Code, or any similar state or local tax law, and any taxes, interest or penalties incurred
with respect thereto.
Director Compensation for
Fiscal 2014
The following table sets forth information regarding the compensation of our non-employee Directors for fiscal 2014. Frank C. Sullivan,
our Chairman and Chief Executive Officer, does not receive any additional compensation for his service as a Director.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name (a) |
|
Fees
Earned
or
Paid in
Cash
($)(1)
(b) |
|
|
Stock
Awards
($)(2)
(c) |
|
|
Option
Awards
($)
(d) |
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(e) |
|
|
Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(f) |
|
|
All
Other
Compensation
($)
(g) |
|
|
Total
($)
(h) |
|
John P. Abizaid |
|
|
80,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
171,575 |
|
Bruce A. Carbonari |
|
|
100,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
191,575 |
|
David A. Daberko |
|
|
80,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,500 |
(3) |
|
|
174,075 |
|
Salvatore D. Fazzolari |
|
|
80,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
171,575 |
|
Thomas S. Gross |
|
|
80,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
171,575 |
|
Craig S. Morford |
|
|
80,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
171,575 |
|
Frederick R. Nance |
|
|
80,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,500 |
(3) |
|
|
174,075 |
|
William A. Papenbrock(4) |
|
|
40,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,500 |
(3) |
|
|
42,500 |
|
Charles A. Ratner(5) |
|
|
95,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
186,575 |
|
Thomas C. Sullivan |
|
|
80,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
171,575 |
|
William B. Summers, Jr. |
|
|
95,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
186,575 |
|
Dr. Jerry Sue Thornton(5) |
|
|
80,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
171,575 |
|
Joseph P. Viviano(5) |
|
|
80,000 |
|
|
|
91,575 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2,500 |
(3) |
|
|
174,075 |
|
(1) |
Cash fees include fees for attending Board and Committee meetings in fiscal 2014 as well as the quarterly retainer amount for serving on the Board of Directors and as the chair
for a committee during fiscal 2014. These cash fee amounts have not been reduced to reflect a Directors election to defer receipt of cash fees pursuant to the Deferred Compensation Plan. These deferrals are indicated in note (7) below.
|
(2) |
The amounts set forth in this column reflect the fair market value of shares of restricted stock granted during fiscal 2014 under the 2003 Restricted Stock Plan for Directors.
|
|
The unvested number of shares of restricted stock held by Directors under the 2003 Restricted Stock Plan for Directors at May 31, 2014 was as follows: Mr. Abizaid
(9,650), Mr. Carbonari (9,650), Mr. Daberko (9,650), Mr. Fazzolari (2,500), Mr. Gross (5,650), Mr. Morford (2,500), Mr. Nance (9,650), Mr. Ratner (9,650), Thomas C. Sullivan (9,650), Mr. Summers (9,650),
Dr. Thornton (9,650) and Mr. Viviano (9,650). Dividends are paid on shares of restricted stock at the same rate as paid on our Common Stock that is not restricted. On October 31, 2013, shares of restricted stock awarded in 2010
vested and were delivered to the Directors. |
(3) |
These amounts represent the dollar value that RPM matches of the Directors charitable contributions made in accordance with our employee charitable contributions matching
program. RPM matches a Directors charitable contributions by up to $2,500 per year under this program, which is also available to RPM International Inc. employees. These amounts are not taxable to the Directors. |
(4) |
Mr. Papenbrock retired from the Board of Directors effective October 10, 2013. |
(5) |
During fiscal 2014, Dr. Thornton, Mr. Morford and Mr. Viviano elected to defer specified payments of their Director fees paid under our Deferred Compensation Plan.
Cash amounts deferred related to fiscal 2014 were as follows: Dr. Thornton ($40,000), Mr. Morford ($40,000) and Mr. Viviano ($20,000). These amounts were credited to equivalent unit accounts under the Deferred Compensation Plan. The
number of RPM stock equivalent units (which includes accrued dividends thereon) held by Directors under the Deferred Compensation Plan at May 31, 2014 were as follows: Mr. Ratner (7,722), Dr. Thornton (18,132) and
Mr. Viviano (15,430). The cash value of the these stock equivalent units that are related to fiscal 2014 is included within the Fees Earned or Paid in Cash column and is excluded from the calculations in the Stock Awards column.
|
DIRECTOR
COMPENSATION (CONTINUED)
For fiscal 2014, Directors who were not employees of or consultants to the Company
received a quarterly fee of $20,000. In addition, each of the Audit Committee Chair, the Compensation Committee Chair, and the Chair of the Governance and Nominating Committee received a quarterly fee of $3,750. The Lead Director also received an
additional quarterly fee of $1,250. With respect to equity compensation, Directors who were eligible to participate in the Restricted Stock Plan for Directors were granted a number of shares of restricted stock under the Restricted Stock Plan for
Directors in an amount approximately equal to $85,000.
In 2014, the Compensation Committee retained the professional compensation consulting firm of
Towers Watson to conduct a compensation benchmark study focused on Director compensation. Towers Watson found that both total cash compensation and equity compensation for our Directors was at the 25th percentile of both (i) the average director
compensation for the Companys peer group and (ii) the average director compensation for a group of 120 similarly-situated companies. To bring total cash compensation and equity compensation more in line with the market median, for fiscal 2015,
Directors who are not employees of or consultants to the Company will receive a quarterly fee of $22,500. In addition, each of the Compensation Committee Chair and the Chair of the Governance and Nominating Committee will receive a quarterly fee of
$3,750, and the Audit Committee Chair will receive a quarterly fee of $5,000. The Lead Director will also receive a quarterly fee of $3,750, unless he or she is also the Chair of one of the other Committees of the Board of Directors, in which case
the Lead Director will receive a quarterly fee of $1,250 in addition to the quarterly fee he or she receives as Committee Chair. With respect to equity compensation, Directors eligible to participate in the Restricted Stock Plan for Directors will
be granted a number of shares of restricted stock under the Restricted Stock Plan for Directors in an amount approximately equal to $110,000.
In July
2012, the Company adopted minimum stock ownership guidelines for its executive officers and Directors under which each Director who had served on the Board of Directors for at least five years was expected to own Common Stock with a value of at
least four times the annual cash retainer for Directors. In July 2014, the Company increased the minimum stock ownership guidelines for its Directors from four times to five times the annual cash retainer for Directors. Directors are expected to
achieve targets within five years of the later of the date of initial adoption of the minimum stock ownership guidelines or the date of such Directors initial appointment as a Director. Each of the Companys Directors met the guidelines
in effect as of May 31, 2014 (and would have met the new guidelines had they been in effect as of that date), except for the Companys three newest Directors, Messrs. Gross, Fazzolari and Morford. Mr. Gross joined the Board of
Directors in April 2012, and is expected to achieve compliance with the minimum stock ownership guidelines before July 2017. Mr. Fazzolari joined the Board of Directors in January 2013, and is expected to achieve compliance with the minimum
stock ownership guidelines before January 2018. Mr. Morford joined the Board of Directors in April 2013, and is expected to achieve compliance with the minimum stock ownership guidelines before April 2018.
Under the Companys newly increased stock ownership guidelines for Directors, each Director who has served on the Board of
Directors for at least five years is expected to own Common Stock with a value of at least five times the annual cash retainer for Directors.
RELATED PERSON TRANSACTIONS
The Related Person Transaction Policy of the Board of Directors ensures that the Companys transactions with
certain persons are not inconsistent with the best interests of the Company. A Related Person Transaction is a transaction with the Company in an amount exceeding $120,000 in which a Related Person has a direct or indirect material
interest. A Related Person includes the executive officers, Directors, and five percent stockholders of the Company, and any immediate family member of such a person. Under the Related Person Transaction Policy, Company management screens for any
potential Related Person Transactions, primarily through the annual circulation of a Directors and Officers Questionnaire to each member of the Board of Directors and each officer of the Company that is a reporting person under Section 16 of
the Exchange Act. If Company management identifies a Related Person Transaction, such transaction is brought to the
attention of the Audit Committee for its approval, ratification, revision, or rejection in consideration of all of the relevant facts and circumstances.
Thomas C. Sullivan, Jr., the brother of Frank C. Sullivan and son of Thomas C. Sullivan, is Vice President Corporate Development for the Company and
earned $415,000 in salary and annual bonus in fiscal 2014. His compensation is commensurate with his peers. He has also received equity awards in the past. Thomas C. Sullivan, Jr., has been employed by the Company or its subsidiaries for more
than 28 years, including at Republic Powdered Metals, Inc. from 1987 to 1993, Consolidated Coatings Corporation from 1993 to 1995, ESPAN Corporation PTE LTD. and RPM Asia PTE LTD. from 1995 to 1998, Tremco Incorporated from 1998 to 2002, and the
Companys corporate offices since 2002.
FORWARD-LOOKING STATEMENTS
Some of the amounts set forth in this Proxy Statement in the disclosure regarding executive and director compensation
are forward-looking statements within the meaning of the federal securities laws. These amounts include estimates of future amounts payable under awards, plans and agreements or the present value of such future amounts, as well as the
estimated value at May 31, 2014 of awards, the vesting of which will depend on performance over future periods. Estimating future payments of this nature is necessarily subject to contingencies and uncertainties, many of which are difficult to
predict. In order to estimate amounts that may be paid in the future, we had to make assumptions as to a
number of variables, which may, and in many cases will, differ from future actual conditions. These variables include the price of our Common Stock, the date of termination of employment,
applicable tax rates and other assumptions. In estimating the year-end values of unvested awards, we were required to make certain assumptions about the extent to which the performance or other conditions will be satisfied and, accordingly, the rate
at which those awards will ultimately vest and/or payout. Accordingly, amounts and awards paid out in future periods may vary from the related estimates and values set forth in this Proxy Statement.
PROPOSAL THREE APPROVAL OF RPM INTERNATIONAL INC. 2014 OMNIBUS EQUITY AND INCENTIVE PLAN
APPROVAL AND ADOPTION OF THE
RPM INTERNATIONAL INC.
2014 OMNIBUS EQUITY AND INCENTIVE PLAN
The description of the RPM International Inc. 2014
Omnibus Equity and Incentive Plan, as proposed (the 2014 Omnibus Plan), in this Proxy Statement is qualified in its entirety by reference to the 2014 Omnibus Plan, which is attached as Appendix A to this Proxy Statement.
BACKGROUND AND SUMMARY
Q: WHAT IS THE 2014
OMNIBUS PLAN AND HOW DOES IT RELATE TO THE COMPANYS OTHER EXISTING COMPENSATION PLANS?
A: The 2014 Omnibus Plan would be the primary stock-based
award program for covered employees. The 2014 Omnibus Plan would provide the Company with the flexibility to grant a wide variety of stock and stock-based awards, as well as dollar-denominated performance-based awards. The 2014 Omnibus Plan would
replace the Companys current equity compensation plan, the RPM International Inc. 2004 Omnibus Equity and Incentive Plan (the 2004 Omnibus Plan), which expires under its own terms on October 7, 2014.
The Companys other existing equity compensation plans also will remain in effect, and shares available for future issuance under such
plans may be awarded from time to time. (See WHAT IMPACT WILL THE 2014 OMNIBUS PLAN HAVE ON THE COMPANYS DILUTION OR OVERHANG FROM EQUITY COMPENSATION PLANS? below for more information regarding shares available for grant).
Q: WHAT AM I VOTING ON?
A: A proposal to approve and adopt the 2014 Omnibus Plan. The 2014 Omnibus Plan would allow
the Company to issue up to 6,000,000 shares of Common Stock in the form of equity and equity-based compensation to certain eligible employees. In addition, any shares of Common Stock that are subject to awards that were granted under the 2004
Omnibus Plan and are forfeited or cancelled will be available for new awards under the 2014 Omnibus Plan.
By approving the 2014 Omnibus Plan,
stockholders will also be approving, as required by Section 162(m) (Section 162(m)) of the Internal Revenue Code of 1986, as amended (the Code), the performance measures for performance-based awards that may be
granted under the 2014 Omnibus Plan (such performance measures are discussed below under WHAT CRITERIA MAY THE COMPENSATION COMMITTEE USE TO SPECIFY PERFORMANCE GOALS FOR AWARDS MADE UNDER THE 2014 OMNIBUS PLAN?).
The 2014 Omnibus Plan is designed to enable the Company to make awards that may qualify for tax-deductibility under Section 162(m). For compensation in excess
of $1 million paid in any year to certain executive officers to be deductible by the Company, Section 162(m) requires that such compensation qualify as performance-based. Generally, these executive officers are the Chief Executive
Officer and the three named executive officers (other than the Chief Financial Officer) who are named in the Summary Compensation Table of the Companys Proxy Statement each year (the covered employees). For compensation to be
eligible to qualify as performance-based under Section 162(m), stockholders must approve the performance measures for stock-based awards at least every five years.
Because the performance-based compensation exception under Section 162(m) requires a review of individual facts, and there is limited binding guidance under 162(m), the Company cannot guarantee that the awards
under the 2014 Omnibus Plan to covered employees will qualify for exemption under Section 162(m). However, the Companys intention is to have the ability to deduct performance-based awards under the 2014 Omnibus Plan in compliance with
Section 162(m).
Q: HAS THE 2014 OMNIBUS PLAN BEEN APPROVED AND ADOPTED BY THE COMPANYS BOARD OF DIRECTORS?
A: Yes, but subject to stockholder approval. The 2014 Omnibus Plan was approved by the Compensation Committee of the Board of Directors (the Compensation
Committee) and further approved and adopted by the Board of Directors on July 22, 2014, subject to stockholder approval. Under Commission and NYSE rules, the Company is required to submit the 2014 Omnibus Plan to a vote of the
stockholders.
PROPOSAL THREE (CONTINUED)
Q: WHY DID THE
BOARD OF DIRECTORS APPROVE THE 2014 OMNIBUS PLAN?
A: The Board of Directors believes that stock-based and performance-based awards are an important
component of the Companys compensation programs. The 2014 Omnibus Plan will give the Compensation Committee, which administers the 2014 Omnibus Plan, the flexibility to grant a wide variety of either service-based or performance-based awards.
Furthermore, the 2004 Omnibus Plan expires under its own terms on October 7, 2014. Therefore, the Board of Directors and the Compensation Committee approved the 2014 Omnibus Plan in order to provide access to a new pool of equity awards. The
goal of the 2014 Omnibus Plan continues to be to make the most appropriate award depending upon various factors and to promote the interests of the Company and its stockholders by attracting, retaining, motivating and rewarding employees who render
services that benefit the Company, its subsidiaries and allied business enterprises and aligning the interests of these employees with the Companys stockholders. An allied business enterprise is a business in which the Company or its
subsidiaries have an ownership interest.
Q: WHAT CRITERIA MAY THE COMPENSATION COMMITTEE USE TO SPECIFY PERFORMANCE GOALS FOR AWARDS MADE UNDER THE 2014
OMNIBUS PLAN?
A: The Compensation Committee may use performance objectives based on one or more measures. Specific performance goals may be based on:
|
|
|
Profits (e.g., operating income; earnings; earnings before interest, taxes, depreciation, and amortization (EBITDA); earnings before
taxes; net income; earnings per share; residual or economic earnings; economic profit; performance profit (operating income minus an allocated charge approximating the Companys cost of capital)); |
|
|
|
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; total cash flow; cash flow in excess of cost of capital or residual cash flow or cash flow return on investment); |
|
|
|
Returns (e.g., profits or cash flow returns on: assets, invested capital, net capital employed, and stockholders equity);
|
|
|
|
Working Capital (e.g., working capital divided by sales; days sales outstanding; days sales inventory; and days sales in
payables); |
|
|
|
Profit Margins (e.g., Profits divided by revenues; gross margins and material margins divided by revenues; and material margin divided by sales
pounds); |
|
|
|
Liquidity Measures (e.g., debt-to-capital; debt-to-EBITDA; total debt ratio); |
|
|
|
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; total return to shareholders; sales and administrative costs divided by sales; and sales and administrative costs divided by
profits); and |
|
|
|
Strategic Initiative Key Deliverable Metrics consisting of one or more of the following: product development; strategic partnering; research and
development; vitality index; market penetration; geographic business expansion goals, cost targets; customer satisfaction; employee satisfaction; management of employment practices and employee benefits; supervision of litigation and information
technology; and goals relating to acquisitions or divestitures of subsidiaries; affiliates and joint ventures. |
If more than one
performance measure is selected by the Committee for a plan year, the performance measures will be weighted by the Committee to reflect their relative importance to the Company in the applicable plan year. Performance measures may differ from
participant to participant and from award to award.
Performance measures may be (i) based on a corporate-wide or business-unit basis,
(ii) include or exclude one or more affiliates or subsidiaries, (iii) in comparison with plan, budget, or prior performance, and/or (iv) on an absolute basis or in comparison with peer-group performance.
PROPOSAL THREE (CONTINUED)
In establishing
performance goals, the Compensation Committee may provide that any financial factor will be determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP) or will be adjusted to exclude any or all GAAP or non-GAAP
items, subject to any requirements under Section 162(m). The Committee may grant awards subject to performance measures that are either intended or not intended to qualify as performance-based compensation under Section 162(m).
Q: WHAT IMPACT WILL THE 2014 OMNIBUS PLAN HAVE ON THE COMPANYS EQUITY COMPENSATION PLAN RUN RATE?
A: Run rate, a means of measuring annual stock dilution, shows how rapidly a company is deploying its shares reserved for issuance under its equity compensation
plans. Run rate is calculated as the number of shares of Common Stock subject to awards granted in a given year divided by the number of shares of Common Stock outstanding. The higher the run rate, the greater the dilution of stock. In the last
three fiscal years, the Companys average annual run rate has been 0.9%, which the Company estimates is consistent with its peer group median of 0.9% determined by its compensation consultant, Towers Watson. The Company also manages its run
rate to take into account proxy advisor-developed industry run rate caps. If the stockholders approve and adopt the 2014 Omnibus Plan, the Company estimates its future run rates will be similar to the current rate.
Q: WHAT IMPACT WILL THE 2014 OMNIBUS PLAN HAVE ON THE COMPANYS DILUTION OR OVERHANG FROM EQUITY COMPENSATION PLANS?
A: Overhang is an analysis of potential dilution to stockholders from the equity being transferred to employees via equity incentive plans. Overhang is calculated
by dividing (a) the number of shares of Common Stock issued and options granted but unexercised under the Companys equity compensation plans plus the number of shares of Common Stock available for future grant under the Companys
equity compensation plans by (b) the number of shares described in clause (a) above plus the total number of shares of Common Stock outstanding. As of August 15, 2014, the Companys overhang was approximately 5.6%. Based on the
Companys equity plans in effect and outstanding awards as of August 15, 2014, if the stockholders approve the 2014 Omnibus Plan, the total number of shares of Common Stock available for future issuance under all continuing equity compensation
plans would be:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Unexercised Options/SARs |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Term |
|
|
Outstanding Full Value Awards |
|
|
Shares Available for
Grant |
|
RPM International Inc. Amended and Restated 2004 Omnibus Equity and Incentive Plan |
|
|
3,759,500 |
|
|
$ |
27.24 |
|
|
|
4.73 |
|
|
|
2,246,912 |
|
|
|
883,927 |
* |
RPM International Inc. 1997 Restricted Stock Plan |
|
|
|
|
|
|
|
|
|
|