36 / 72
Response to Say-on-Pay Vote
The Company has a history and a well-earned
reputation with its shareholders as a transparent
organization. That commitment to transparency on all
levels was certainly a driving force in our decision in
2008 to allow shareholders a “say-on-pay” advisory
vote, far ahead of the requirement later imposed on
companies by the Dodd-Frank Wall Street Reform and
Consumer Protection Act. In 2015, our say-on-pay vote
received strong support, with 87% of our shareholders
voting in favor of our executive compensation
programs.
Consistent with our approach in prior years, the
Company engaged in extensive shareholder outreach
efforts throughout 2015. The feedback from these
conversations was incorporated into the regular review
of compensation practices by the Compensation
Committee, which in turn conducted a thorough
analysis of best practices. The Compensation
Committee referenced both internal analysis and
analysis from the Consultant. Based on the feedback
resulting from the Company’s shareholder engagement
and analysis:
In 2014, we changed the process for setting the
CEO’s compensation to better align our relative
financial and TSR performance with the CEO’s
pay in the same year, thus eliminating the
timing disconnect under the prior method.
In 2015, we eliminated the overlap in
performance metrics used in the annual non-
equity incentive plan and long-term equity
incentive plan.
In 2016, performance-based restricted share
objectives will be measured using a three-year
average vesting metric. For more information,
see the “Metric Changes for 2016” section
below.
We constantly analyze our practices to ensure that we
remain current in our approaches, a leader in executive
compensation best practices, and cognizant of
shareholder concerns. As such, we will continue our
review to determine if additional changes should be
made in 2016. The Company is currently evaluating its
definition of operating earnings, and whether hedge
costs related to foreign currency investments should be
included in the definition. See the “Metric Changes for
2016” section below for additional information.
As a company, we pride ourselves on incorporating
ethics and transparency into everything we do,
including compensation disclosure.
Summary of Executive Compensation Programs
As a leader in our industry segment, we recognize that
a sound management compensation program is a part
of what makes a company an employer of choice. Our
compensation philosophy is to provide pay that is
directly linked to the Company’s performance results.
Of the four pay elements set forth below, we consider
the annual and long-term incentive forms of
compensation to be the most important because they
represent the largest part of total rewards for
executives, and therefore provide the strongest link to
company results and shareholder value creation, while
also enabling us to attract, retain, motivate and reward
talented individuals who have the necessary skills to
manage our growing global enterprise on a day-to-day
basis, as well as for the future.
Key Elements of Our Executive Compensation Programs
Element
Objective
Purpose
Base Salary
Talent attraction and retention
Alignment with shareholder value
creation
Provide annual cash income that is both market
competitive and commensurate with an individual’s talents
and level in the organization
Motivate and retain key talent
Management
Incentive Plan
(“MIP”)
Pay-for-performance
Alignment with operating growth
metrics that drive shareholder
value creation
Motivate executives and reward achievement for
performance on key annual operational and strategic goals
Focus on key short-term value drivers for our business
Motivate and retain key talent
Long-term Incentives
(“LTI”)
Pay-for-performance
Alignment with long-term
shareholder value creation
Motivate executives and reward achievement for
performance on key long-term operational and strategic
goals
Focus on key long-term value drivers for our business
Motivate and retain key talent
Retirement &
Benefits
Talent retention
Tax effective pay
Security
Provide market competitive retirement benefits (pension,
401(k), etc.) to aid in talent retention
Satisfy employee health and welfare needs
29