DEF 14A 1 d846508ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14 (a) of the Securities

Exchange Act of 1934 (Amendment No.    )

Filed by the Registrant  

Filed by a Party other than the Registrant  

Check the appropriate box:

 

   Preliminary Proxy Statement

 

  

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   Definitive Proxy Statement

 

   Definitive Additional Materials

 

  

   Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

 

 

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  (1)

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Notes:

Reg. (S) 240.14a-101

SEC 1913 (3–99)


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WHIRLPOOL CORPORATION

Global Headquarters

2000 North M-63

Benton Harbor, Michigan 49022-2692

Dear Fellow Shareholder:

First and foremost, we would like to express our sincere appreciation for your continued support as a Whirlpool shareholder. Whirlpool is committed to operating sustainably and to creating shareholder value over the long-term, and we have a high functioning Board and sound corporate governance structure in place to oversee this commitment. We are proud to tell our corporate governance story in the following pages, which includes these highlights.

Strategic Objectives

During 2019, Whirlpool accomplished a number of significant strategic objectives. We completed the divestiture of our Embraco compressor business, took decisive actions to return our EMEA business to profitability in the fourth quarter, and made significant progress in meeting our long-term gross debt-to-EBITDA goal. Our Board is deeply involved in developing and overseeing our strategy, and played a critical role in ensuring the success of these strategic objectives in 2019.

Board Refreshment and Diversity

Whirlpool is committed to a Board composition that reflects an effective mix of business expertise, company knowledge, and diverse perspectives, and our goal is to strike the right balance between board refreshment and continuity. Last year, we appointed Patricia K. Poppe, who is President and Chief Executive Officer of CMS Energy Corporation, to our Board of Directors. She brings extensive leadership experience in consumer-facing industries and environmental stewardship to our Board. We are also pleased to nominate to our Board Jennifer A. LaClair, who is Chief Financial Officer of Ally Financial Inc. She will bring significant finance, accounting and capital markets expertise to our Board. With these additions, we will have added five new directors to our Board in the past four years.

Sustainability and Corporate Responsibility

Our Board is committed to overseeing Whirlpool Corporation’s integration of environmental, social, and governance principles throughout Whirlpool. In December 2019, we became a signatory to the UN Global Compact. In 2019, we set new science-based targets for GHG emissions reductions, celebrated our 20th year of collaboration with Habitat for Humanity, continued to collaborate with the United Way to fund hundreds of non-profit campaigns for our communities, and sponsored our first-ever Global Inclusion Week with events for employees at company offices around the world.

Shareholder Engagement

Whirlpool values the feedback of our shareholders and seeks opportunities to engage on company performance, strategy, and governance, among other topics. In May 2019, we held an Investor Day at the New York Stock Exchange where senior leadership presented on our long-term shareholder value creation goals and key strategic initiatives.

It is our pleasure to invite you to attend the 2020 Whirlpool Corporation annual meeting of stockholders to be held on Tuesday, April 21, 2020, at 8:00 a.m., Chicago time, at 331 North LaSalle, Chicago, Illinois. At the meeting, stockholders will vote on the matters set forth in the formal notice of the meeting that follows on the next page. In addition, we will discuss our 2019 performance and our outlook for this year, and we will answer your questions. We have included with this booklet an annual report containing important financial and other information about Whirlpool.

Your vote is important and much appreciated!

 

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MARC R. BITZER

Chairman of the Board

and Chief Executive Officer

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SAMUEL R. ALLEN

Presiding Director

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March 6, 2020


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NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS

 

 

The 2020 annual meeting of stockholders of WHIRLPOOL CORPORATION will be held on Tuesday, April 21, 2020, at 8:00 a.m., Chicago time, at 331 North LaSalle, Chicago, Illinois, for the following purposes:

 

  1.

To elect 13 persons to the Whirlpool Corporation Board of Directors (the “Board”);

 

  2.

To approve, on an advisory basis, Whirlpool Corporation’s executive compensation;

 

  3.

To ratify the appointment of Ernst & Young LLP as Whirlpool Corporation’s independent registered public accounting firm for fiscal 2020; and

 

  4.

To transact such other business as may properly come before the meeting.

A list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose relevant to the meeting during ordinary business hours for at least ten days prior to April 21, 2020, at Whirlpool Corporation’s Global Headquarters, 2000 North M-63, Benton Harbor, Michigan 49022-2692 and also during the annual meeting.

By Order of the Board of Directors,

 

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BRIDGET K. QUINN

Assistant General Counsel and Corporate Secretary

March 6, 2020

Important Notice Regarding the Availability of Proxy Materials for

the Annual Meeting of Stockholders to be Held on April 21, 2020

This Proxy Statement and the Accompanying Annual Report are Available at:

https://investors.whirlpoolcorp.com/financial-information/annual-reports-and-proxy-statements/


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    PROXY SUMMARY                           

    

 

 

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PROXY SUMMARY

This summary highlights information contained elsewhere in the proxy statement. This summary provides an overview and is not intended to contain all the information that you should consider before voting. We encourage you to read the entire proxy statement for more detailed information on each topic prior to casting your vote.

General Information

 

 
                                                 

u   Meeting: Annual Meeting of Stockholders

 

u   Date: Tuesday, April 21, 2020

 

u   Time: 8:00 a.m., Chicago time

 

u   Location: 331 N. LaSalle, Chicago, Illinois

 

u   Record Date: February 24, 2020

 

u   Stock Symbol: WHR

 

u   Exchange: NYSE & CHX

 

u   Common Stock Outstanding as of the Record Date: 62,677,753 shares

 

u   Registrar & Transfer Agent: Computershare Trust Company, N.A.

 

u   Corporate Website: www.whirlpoolcorp.com

                                                 

2019 Company Performance Highlights *

In 2019, Whirlpool delivered record full-year GAAP earnings per share of $18.45, and ongoing (non-GAAP) earnings per share of $16.00. Our GAAP net earnings margin expanded 6.7 points to 5.8% and our ongoing EBIT margin expanded by 60 basis points to 6.9%. We generated $1.2 billion of cash from operating activities, flat compared to prior year, and $912 million of free cash flow, a 6.9% improvement compared to 2018. We also closed the sale of our Embraco compressor business and made significant progress towards our long-term gross debt/EBITDA target of 2x.

 

     

Record earnings

per share of

$18.45 (GAAP)

and $16.00 (Ongoing)

            

Free cash

flow of

$912 million

            

Significant progress

toward long-term

Gross Debt/

EBITDA target

of 2x

 

*

See page 20 for details of the Company’s results for the 2019 fiscal year. Please also see Annex A for a reconciliation of non-GAAP financial measures.

The proxy statement and annual report are available at www.proxyvote.com.


 

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                           PROXY SUMMARY     

 


Overview of Voting Matters

 

   
      Board
recommendation
   

Item 1: Election of Directors (page: 1)

 

You are being asked to vote on the election of 13 Directors. The Corporate Governance and Nominating Committee believes that these nominees possess the experience and qualifications to provide sound guidance and oversight to management. Directors are elected by majority vote for a term of one year.

   FOR
each nominee
   

Item 2: Advisory Vote to Approve Whirlpool Corporation’s Executive Compensation (page: 50)

 

You are being asked to approve, on an advisory basis, the compensation of Whirlpool Corporation’s Named Executive Officers for 2019.

   FOR
   

Item 3: Ratification of the Appointment of Ernst & Young LLP as Whirlpool Corporation’s Independent Registered Public Accounting Firm for fiscal 2020 (page: 54)

 

You are being asked to ratify the Audit Committee’s appointment of Ernst & Young LLP as Whirlpool Corporation’s Independent Registered Public Accounting Firm for fiscal 2020.

   FOR

Corporate Governance Highlights

For more information about the Company’s corporate governance policies, please refer to the Board of Directors and Corporate Governance section beginning on page 6 of the proxy statement.

 

 
                                           

u   Proxy Access

 

u   Majority Voting in Director Elections

 

u   Board Refreshment (Will Yield Five New Directors over the Past Four Years)

 

u   Annual Director Elections

 

u   Independent Presiding Director

 

u   Shareholder Engagement

 

u   Our Integrity Manual (Global Code of Ethics)

                                           

 

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    PROXY SUMMARY                           

 

Director Nominees

Additional details about each of the director nominees can be found beginning on page 1.

 

         
                 Committee Membership
   

Name

  Age   Director
since
  Independent   Audit   Human
Resources
  Finance   Corporate
Governance
&
Nominating
   

Samuel Allen

  66   2010   *        
   

Marc Bitzer

  55   2015            
   

Greg Creed

  62   2017   *          
   

Gary DiCamillo

  69   1997   *          
   

Diane Dietz

  54   2013   *        
   

Gerri Elliott

  63   2014   *          
   

Jennifer LaClair

  48     *          
   

John Liu

  51   2010   *          
   

James Loree

  61   2017   *        
   

Harish Manwani

  66   2011   *        
   

Patricia Poppe

  51   2019   *        
   

Larry Spencer

  66   2016   *        
   

Michael White

  68   2004   *            

Tenure, Experience, and Diversity

Our Board of Directors reflects an effective mix of business expertise, company knowledge, and diverse perspectives.

 

Board Tenure of

Independent Director Nominees

 

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Board Diversity and Experience of

Independent Director Nominees

 

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                           PROXY SUMMARY     

 

Compensation Highlights

The Compensation Discussion & Analysis (“CD&A”) section beginning on page 20 includes the following highlights:

 

     
What We Do   What We Don’t Do  

    

   
  Pay for performance  

 

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  Allow hedging or pledging    
   
  Robust executive stock ownership guidelines  

 

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  Gross up for excise taxes    
   
  “Double trigger” change in control  

 

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  Reprice stock options    
   
  Claw-back policies for all variable pay  

 

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  Enter into employment contracts with U.S.-based NEOs    

Our Compensation Philosophy: Pay for Performance

Whirlpool employs a pay-for-performance philosophy under which a significant portion of pay is performance-based and tied to the drivers of long-term stockholder value, including both business results and individual performance. The majority of 2019 CEO and NEO target compensation consisted of at-risk pay, as demonstrated in the illustration below.

Executive Compensation Pay Mix

 

CEO Total Target Compensation

 

 

Other NEOs’ Average Total Target Compensation

 

 

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TABLE OF CONTENTS

 

Proxy Summary

     i  

Item 1  - Directors and Nominees for Election as Directors

     1  
Board of Directors and Corporate Governance      6  
Related Person Transactions      15  
Human Resources Committee Interlocks and Insider Participation      15  
Security Ownership      16  
Delinquent Section 16(a) Reports      16  
Beneficial Ownership      17  
Non-employee Director Compensation      18  

Compensation Discussion and Analysis

     20  
Human Resources Committee Report      36  
2019 Executive Compensation Tables      37  

2019 Summary Compensation Table

     37  

2019 Grants of Plan-Based Awards

     38  

2019 Outstanding Equity Awards at Fiscal Year-End

     40  

2019 Option Exercises and Stock Vested

     42  

2019 Pension Benefits

     43  

2019 Non-Qualified Deferred Compensation

     44  

2019 Potential Post-Termination Payments

     45  
Pay Ratio Disclosure      49  

Item 2  - Advisory Vote to Approve Whirlpool Corporation’s Executive Compensation

     50  
Equity Compensation Plan Information      51  
Matters Relating to Independent Registered Public Accounting Firm      52  
Audit Committee Report      53  

Item 3  - Ratification of the Appointment of Ernst & Young LLP as Whirlpool Corporation’s Independent Registered Public Accounting Firm for fiscal 2020

     54  

Information about the Annual Meeting and Voting

     55  

Annex A: Non-GAAP Reconciliation

     A-1  


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    ITEM 1 - ELECTION OF DIRECTORS                           

 

ITEM 1 – DIRECTORS AND NOMINEES

FOR ELECTION AS DIRECTORS

Whirlpool is committed to delivering significant, long-term value to our consumers and our stockholders, and we believe our Board should be composed of individuals with experience and demonstrated expertise in many substantive areas that impact our business and align with our strategy. We believe our directors and nominees possess the professional and personal qualifications necessary for service on our Board. We have highlighted below the specific qualifications of our directors and nominees in relation to our strategy.

 

                         

 

Global Strategic Imperatives

   LOGO    Deliver Product            Leadership              LOGO      Redefine What            Product is              LOGO      Win the Digital Consumer Journey                         LOGO     

Reinvent Our           

Value Chain

 

     

 

   

Skills and Experience

   Relevance to Our Strategy

Leadership of Large/
Complex Organizations

 

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  Whirlpool is a large, complex, global company, and directors who have successfully held leadership positions in such organizations possess experience and the ability to drive strong results.

 

Directors with expertise: Allen, Bitzer, Creed, DiCamillo, Dietz, Elliott, Johnston, LaClair, Loree, Manwani, Perez, Poppe, Spencer, White

Global Business

Operations

 

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  Our continued profitable growth depends on strong operational execution in emerging markets and other countries beyond the United States, and global experience aids directors in oversight of our global business and strategy.

 

Directors with expertise: Allen, Bitzer, Creed, DiCamillo, Dietz, Elliott, Johnston, Loree, Manwani, Perez, Poppe, Spencer, White

International

Work Experience

 

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  Whirlpool sells products in nearly every country throughout the world, and directors with international experience possess unique perspectives on the countries in which we operate.

 

Directors with expertise: Allen, Bitzer, Creed, DiCamillo, Elliott, Johnston, LaClair, Manwani, Perez, Spencer, White

Corporate

Strategy/M&A

 

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  Whirlpool evaluates M&A opportunities to determine if there is a strategic fit, strong value creation potential, and clear execution capacity. Directors with strategy and M&A expertise provide critical insights in evaluating such opportunities.

 

Directors with expertise: Allen, Bitzer, Creed, DiCamillo, Dietz, Johnston, LaClair, Liu, Loree, Manwani, Perez, Spencer, White

Sales and

Trade Management

 

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  A strong distribution strategy, maintaining excellent relationships, and delivering on our promises to trade customers are key drivers of our profitable growth, and such skills enable directors to provide effective oversight of this aspect of our business.

 

Directors with expertise: Allen, Bitzer, Creed, DiCamillo, Dietz, Elliott, Loree, Manwani, Perez, White

Product

Development

 

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  Product leadership is key to our growth and success, and directors with this expertise provide development strategy and process insights.

 

Directors with expertise: Allen, Bitzer, Creed, DiCamillo, Dietz, Johnston, Loree, Manwani, Spencer, White

Innovation, Technology

and Engineering

 

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  Whirlpool is committed to industry-leading and consumer-relevant innovation, and directors with this experience provide unique perspectives on our innovation strategy and execution.

 

Directors with expertise: Allen, Bitzer, DiCamillo, Dietz, Elliott, Johnston, Loree, Poppe, Spencer, White

Global Supply Chain,

Manufacturing, Logistics

 

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  Whirlpool is focused on maintaining the best cost structure in the industry, and directors with this experience provide oversight of our manufacturing and logistics strategies.

 

Directors with expertise: Allen, Bitzer, DiCamillo, Dietz, Johnston, Loree, Manwani, Poppe, Spencer, White

Marketing/Digital Marketing/ Branded Consumer Products

 

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  Brand leadership and enhancing the consumer experience for our branded products are key Whirlpool strategies, and directors with this expertise provide valuable insights.

 

Directors with expertise: Bitzer, Creed, DiCamillo, Dietz, Elliott, Loree, Manwani, Perez, Poppe, Spencer, White

Accounting, Finance and

Capital Structure

 

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  Whirlpool conducts business throughout the world and engages in complex financial transactions in numerous countries and currencies, and such skills assist our directors in evaluating our capital structure and overseeing our financial reporting.

 

Directors with expertise: Allen, Bitzer, DiCamillo, Johnston, LaClair, Liu, Loree, Perez, Poppe, Spencer, White

Board Practices of Other

Major Corporations

 

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  Whirlpool believes that effective corporate governance is a key to achieving strong results, and that experience on other boards provides our directors with valuable insights on emerging trends and effective governance and oversight.

 

Directors with expertise: Allen, Creed, DiCamillo, Dietz, Elliott, Johnston, Liu, Loree, Manwani, Perez, Spencer, White

Legal/Regulatory and Government Affairs

 

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  Whirlpool regularly faces legal and regulatory issues around the world. Such experience aids directors in overseeing our risk management and compliance in these constantly evolving areas.

 

Directors with expertise: Dietz, LaClair, Loree, Poppe, Spencer, White

Human Resources

and Development Practices

 

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  Thoughtful succession planning and talent management are key to ensuring our continued success, and directors with HR and development expertise are adept at assessing our talent pipeline.

 

Directors with expertise: Allen, Bitzer, Creed, Dietz, Johnston, LaClair, Loree, Manwani, Perez, Poppe, Spencer, White


 

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Table of Contents
                           ITEM 1 - ELECTION OF DIRECTORS     

 

We currently have 14 directors on the Board. Directors who are elected will serve until our next annual meeting of stockholders and stand for re-election annually. Each of the nominees below has consented to be a nominee named in this proxy statement and to serve if elected. Messrs. Johnston and Perez will not be standing for re-election at the annual meeting of stockholders. The Board recommends a vote FOR the election of each of the director nominees below.

 

 SAMUEL R. ALLEN

 

 

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Mr. Allen, 66, has served as a director since 2010. Mr. Allen serves as Chairman of the Board of
Deere & Co., a farm machinery and equipment company, a position he has held since February 2010.
Mr. Allen will retire from the Deere & Co. Board effective May 1, 2020. He previously served in the
additional role of Chief Executive Officer, which he held from 2009 until November 2019. Mr. Allen
joined Deere & Co. in 1975 and since that time has held positions of increasing responsibility. Mr. Allen
also has served as a director of Dow Inc. since August 2019.

 

Committees: Corporate Governance and Nominating (chair), Human Resources

 

 MARC R. BITZER

 

 

 

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Mr. Bitzer, 55, has served as Chairman of the Board of Whirlpool Corporation since January 2019 and a
director since 2015. Mr. Bitzer has been President and Chief Executive Officer of Whirlpool Corporation
since 2017. He served as President and Chief Operating Officer of Whirlpool Corporation from 2015 to
2017. Prior to this role, Mr. Bitzer was Vice Chairman, Whirlpool Corporation, a position he held from
2014 to 2015. Mr. Bitzer had been President of Whirlpool North America and Whirlpool Europe, Middle
East, and Africa after holding other positions of increasing responsibility since 1999.

 

 GREG CREED

 

 

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Mr. Creed, 62, has served as a director since 2017. Mr. Creed served as Chief Executive Officer of Yum!
Brands, Inc., a leading operator of quick service restaurants, from 2015 until his retirement on
December 31, 2019. He served as Chief Executive Officer of Taco Bell Division from 2011 to 2014, and
as President and Chief Concept Officer of Taco Bell U.S. from 2007 to 2011 after holding other
positions of increasing responsibility with the company since 1994. Mr. Creed has served as a director
of Aramark since January 2020 and Yum! since 2014. Mr. Creed also served as a director of
International Game Technology from 2010 to 2015.

 

Committees: Human Resources, Finance

 

 GARY T. DICAMILLO

 

 

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Mr. DiCamillo, 69, has served as a director since 1997. He has been a Partner at Eaglepoint Advisors,
LLC, a turnaround, restructuring, and strategic advisory firm, since 2010. He also served as President
and Chief Executive Officer of Universal Trailer Corporation from June 2017 to January 2020. Prior to
joining Eaglepoint Advisors, LLC, Mr. DiCamillo was President and Chief Executive Officer of Advantage
Resourcing, a professional and commercial staffing company, from 2002 until August 2009. From
1995 to 2002, Mr. DiCamillo served as Chairman and Chief Executive Officer of Polaroid Corporation.
Mr. DiCamillo is a director of Purple Innovation, Inc. (formerly known as Global Partner Acquisition
Corp.) since 2015 and Universal Trailer Corporation since 2011. He previously served as a director of
Pella Corporation from 1993 to 2007 and 2010 to 2018; the Sheridan Group, Inc. from 1989 to 2017;
and as a director, as well as Lead Director, of 3Com Corporation from 2000 to 2009.

 

Committees: Audit, Finance

 

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    ITEM 1 - ELECTION OF DIRECTORS                           

 

 DIANE M. DIETZ

 

 

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Ms. Dietz, 54, has served as a director since 2013. Ms. Dietz has been the President and Chief
Executive Officer of Rodan & Fields, LLC, a leading premium skincare company, since 2016. Ms. Dietz
served as Executive Vice President and Chief Marketing Officer of Safeway, Inc., a leading food and
drug retailer, from 2008 to 2015. Prior to joining Safeway, Inc., Ms. Dietz held positions of increasing
responsibility with The Procter & Gamble Company from 1989 through 2008.

 

Committees: Corporate Governance and Nominating, Human Resources

 

 GERRI T. ELLIOTT

 

 

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Ms. Elliott, 63, has served as a director since 2014. Ms. Elliott has served as the Executive Vice
President and Chief Sales and Marketing Officer of Cisco Systems, Inc. since 2018. Ms. Elliott
previously served as the Executive Vice President, Strategic Advisor and Chief Customer Officer of
Juniper Networks, a producer of high-performance networking equipment, from 2013 to 2014.
Ms. Elliott began her employment with Juniper Networks in 2009 and held positions of increasing
responsibility with the company through 2014. Before joining Juniper Networks, Ms. Elliott held
positions of increasing responsibility at Microsoft Corporation and IBM Corporation. Ms. Elliott was
previously a director of Bed Bath & Beyond, Inc. from 2014 to 2017; Imperva, Inc. from 2015 to 2018;
Marvell Technology Group Ltd. from 2017 to 2018; and Mimecast Limited from 2017 to 2018.

 

Committees: Audit, Finance

 

 JENNIFER A. LACLAIR

 

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Ms. LaClair, 48, has served as Chief Financial Officer of Ally Financial Inc., a leading financial services
provider, since joining the company in March 2018. Prior to joining Ally, Ms. LaClair spent 10 years at
PNC Financial Services, where she held positions of increasing responsibility, most recently as leader
of the company’s business bank. Before that, she served as chief financial officer for all of PNC’s lines
of business, including Retail Banking, Asset Management, Mortgage Banking, and Corporate &
Commercial Banking. Prior to joining PNC, Ms. LaClair was a consultant with McKinsey and Company.
Ms. LaClair was recommended to our Corporate Governance and Nominating Committee and Board by
a third party search firm.

 

 Director Nominee

 

 JOHN D. LIU

 

 

 

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Mr. Liu, 51, has served as a director since 2010. Mr. Liu has been the Chief Executive Officer of Essex
Equity Management, a financial services company, and Managing Partner of Richmond Hill
Investments, an investment management firm, since 2008. Prior to that time, Mr. Liu was employed for
12 years by Greenhill & Co. Inc., a global investment banking firm, in positions of increasing
responsibility including Chief Financial Officer. Mr. Liu has served as a director of Greenhill since 2017.

 

Committees: Audit, Finance

 

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Table of Contents
                           ITEM 1 - ELECTION OF DIRECTORS     

 

 JAMES M. LOREE

 

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Mr. Loree, 61, has served as a director since 2017. Mr. Loree has been President and Chief Executive
Officer of Stanley Black & Decker, Inc., a leading industrial and consumer products company, since
2016. Mr. Loree served as President and Chief Operating Officer of the company from 2013 to 2016;
Chief Operating Officer from 2009 to 2013; Executive Vice President and Chief Financial Officer from
2002 to 2009; and Vice President and Chief Financial Officer from 1999 to 2002. Prior to joining Stanley
Black & Decker, Mr. Loree held positions of increasing responsibility in financial and operating
management in business, corporate, and financial services at General Electric from 1980 to 1999.
Mr. Loree has served as a director of Stanley Black & Decker since 2016, and previously served on the
board of Harsco Corporation from 2010 to 2016 and as chairman of Harsco’s Audit Committee from
2012 to 2016.

 

Committees: Audit, Corporate Governance and Nominating

 

 HARISH MANWANI

 

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Mr. Manwani, 66, has served as a director since 2011. Mr. Manwani is a Senior Operating Partner for
Blackstone Group, having served with Blackstone since 2015. Mr. Manwani is the former Chief
Operating Officer of Unilever, a global consumer product brands company, a position he held from
2011 until his retirement in 2014. Mr. Manwani is also a director of Gilead Sciences, Inc. since 2018,
Qualcomm Inc. since 2014, and Nielsen Holdings plc since 2015. Mr. Manwani previously served as the
non-executive Chairman of Hindustan Unilever Limited from 2005 to 2018 and as a director of Pearson
plc from 2013 to 2018.

 

Committees: Corporate Governance and Nominating, Human Resources

 

 PATRICIA K. POPPE

 

 

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Ms. Poppe, 51, has served as a director since December 2019. Ms. Poppe has been President and
Chief Executive Officer of CMS Energy Corporation and its principal subsidiary, Consumers Energy
Company, Michigan’s largest utility and the nation’s fourth largest combination utility, since 2016.
Ms. Poppe served as Senior Vice President of distribution operations, engineering, and transmission
from 2015 to 2016, after holding positions of increasing responsibility since joining the company in
2011. Ms. Poppe held a variety of automotive management positions and served as power plant
director at Detroit, Michigan-based DTE Energy before joining Consumers Energy in 2011. Ms. Poppe
has served as a director of CMS Energy and Consumers Energy since 2016. Ms. Poppe was
recommended to our Corporate Governance and Nominating Committee and Board by a third-party
search firm.

 

Committees: Audit, Corporate Governance and Nominating

 

 LARRY O. SPENCER

 

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General Spencer, 66, has served as a director since 2016. General Spencer serves as President of the
Armed Forces Benefit Association, a position he has held since March 2020. General Spencer served
until March 2019 as President of the Air Force Association, a position he held since his retirement as a
four-star general in 2015 after serving 44 years with the United States Air Force. General Spencer held
positions of increasing responsibility with the Air Force, which included Vice Chief of Staff, the second
highest-ranking military member in the Air Force. General Spencer was the first Air Force officer to
serve as the Assistant Chief of Staff in the White House Military Office and he served as Chief Financial
Officer and then Director of Mission Support at a major command. General Spencer is also a director of
Triumph Group, Inc. since 2018 and Haynes International, Inc. since January 2020.

 

Committees: Corporate Governance and Nominating, Finance

 

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    ITEM 1 - ELECTION OF DIRECTORS                           

 

 MICHAEL D. WHITE

 

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Mr. White, 68, has served as a director since 2004. Mr. White served as the Chairman, President and
Chief Executive Officer of DIRECTV, a leading provider of digital television entertainment services, from
2010 until his retirement in 2015. He also served as a director of DIRECTV from 2009 until 2015. From
2003 until 2009, Mr. White was Chief Executive Officer of PepsiCo International, and Vice Chairman,
PepsiCo, Inc. after holding positions of increasing responsibility with PepsiCo since 1990. Mr. White is
also a director of Kimberly-Clark Corporation since 2015 and Bank of America Corporation since 2016.

 

Committees: Audit (chair), Corporate Governance and Nominating

 

 

The Board of Directors recommends that stockholders vote FOR the election of each of these nominees as a director.

 

 

The following directors are not standing for re-election

 

 MICHAEL F. JOHNSTON

 

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Mr. Johnston, 72, has served as a director since 2003. Mr. Johnston retired from Visteon Corporation,
an automotive components supplier, in 2008. At Visteon, he served as Chairman of the Board and Chief
Executive Officer, President, and Chief Operating Officer at various times since 2000. Before joining
Visteon, Mr. Johnston held various positions in the automotive and building services industry.
Mr. Johnston is also a director of Armstrong Flooring, Inc. since 2016 and Dover Corporation since
2013, and previously served as a director of Armstrong World Industries, Inc. from 2010 to 2016, and
Flowserve Corporation from 1997 to 2013.

 

Committees: Audit; Human Resources (chair)

 

 WILLIAM D. PEREZ

 

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Mr. Perez, 72, has served as a director since 2009. Mr. Perez was a Senior Advisor to Greenhill & Co.,
Inc., a global investment banking firm, from 2010 to 2017. Prior to joining Greenhill, Mr. Perez was
President and Chief Executive Officer of the Wm. Wrigley Jr. Company from 2006 to 2008, and
President, Chief Executive Officer, and a director of Nike, Inc. from 2004 to 2006. Mr. Perez spent 34
years at S.C. Johnson in various positions, including Chief Executive Officer and President. Mr. Perez is
also a director of Johnson & Johnson since 2007 and Johnson Outdoors, Inc. since December 2018,
and previously served as a director of Kellogg Company from 2000 to 2006 and Campbell Soup
Company from 2009 to 2012.

 

Committees: Finance (chair), Human Resources

 

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                           BOARD OF DIRECTORS AND CORPORATE GOVERNANCE     

 

 

 I. Board of Directors and Committees

 

 

Board of Directors

During 2019, our Board met six times and had four committees. The committees consisted of an Audit Committee, a Corporate Governance and Nominating Committee, a Human Resources Committee, and a Finance Committee. Each committee may form subcommittees and delegate certain actions to those subcommittees. Each director attended at least 75% of the total number of meetings of the Board and the Board committees on which he or she served. All directors properly nominated for election are expected to attend the annual meeting of stockholders. In 2019, all of our directors attended the annual meeting.

The table below lists the number of times each committee met in 2019, the major responsibilities and 2019 accomplishments of each committee, and the current membership for each committee.

 

Committee

         Key Responsibilities and Accomplishments
Audit  

 

 Oversee accounting functions, internal controls, and the integrity of financial statements and related reports

 Oversee compliance with legal and regulatory requirements, and monitor risk management and assessment processes

 Retain the independent registered public accounting firm; monitor the firm’s performance, qualifications, and independence; and approve all fees

 Oversee the performance of our internal audit function

8 meetings

 

 In 2019, oversaw selection of new lead audit partner and Embraco sale accounting

Committee Members:

 

White (Chair), DiCamillo, Elliott, Johnston, Liu, Loree, and Poppe

Corporate Governance

and Nominating

 

 Identify potential Board members and recommend director nominees

 Annually review Board and committee effectiveness

 Recommend changes to director compensation and committee rotation

 Recommend the corporate governance principles adopted by Whirlpool

3 meetings

 

 In 2019, evaluated and recommended Patricia K. Poppe as new director to Board

Committee members:

 

Allen (Chair), Dietz, Loree, Manwani, Poppe, Spencer, and White

Human Resources  

 Determine and approve compensation for CEO and other executive officers

 Approve goals/objectives for CEO compensation and evaluate CEO performance

 Determine and approve equity grants for executive officers and each employee subject to Section 16 of the Securities Exchange Act of 1934

 Make recommendations to the Board on Company incentive plans

3 meetings

 

 For 2019, oversaw the development of new long-term incentive plan structure

Committee members:

 

Johnston (Chair), Allen, Creed, Dietz, Manwani, and Perez

Finance  

 Review capital policies and strategies to set an acceptable capital structure, including debt issuance and share repurchases

 Review policies regarding dividends, derivatives, liquidity management, interest rates, and foreign exchange rates

 Review tax-planning strategy and initiatives

 Oversee the establishment and implementation of guidelines relating to the management of significant financial structure risks

2 meetings

 

 For 2019, oversaw actions facilitating corporate deleveraging goals

Committee members:

 

Perez (Chair), Creed, DiCamillo, Elliott, Liu, and Spencer

 

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    BOARD OF DIRECTORS AND CORPORATE GOVERNANCE                           

 

Director Independence

The Corporate Governance and Nominating Committee conducts an annual review of the independence of the members of the Board and its committees, and reports its findings to the full Board. Thirteen of our 14 directors are non-employee directors (all except Mr. Bitzer). Our new director nominee, Ms. LaClair, also has no employment relationship with Whirlpool. The Board has adopted the New York Stock Exchange (“NYSE”) listing standards for evaluating director independence, but has not adopted any other categorical standards of materiality for independence purposes. When assessing director independence, the Board considers the various transactions and relationships known to the Board (including those identified through annual director questionnaires) that exist between Whirlpool and the entities with which our directors or members of their immediate families are, or have been, affiliated. For 2019, the Committee evaluated certain transactions that arose in the ordinary course of business between Whirlpool Corporation and such entities and which did not exceed the thresholds provided under the NYSE listing standards. Information provided by the directors, new director nominee, and Whirlpool did not indicate any relationships (e.g., commercial, industrial, banking, consulting, legal, accounting, charitable, or familial) that would impair the independence of any of the non-employee directors or new director nominee. Based on the report and recommendation of the Corporate Governance and Nominating Committee, the Board has determined that each of its non-employee directors and new director nominee satisfy the independence standards set forth in the listing standards of the NYSE.

Committee Member Independence and Expertise

Each Board committee is comprised solely of independent directors who meet the independence standards under the NYSE listing standards.

In addition, the Audit Committee members all meet the enhanced independence standards for audit committee members set forth in the NYSE listing standards (which incorporates the standards set forth in the rules of the Securities and Exchange Commission (“SEC”)). The Board has determined that each member of the Audit Committee satisfies the financial literacy qualifications of the NYSE listing standards, and that Mr. White, the Audit Committee Chair, and Mr. DiCamillo, the prior Audit Committee Chair, qualify under the “audit committee financial expert” criteria established by the SEC and have accounting and financial management expertise as required under the NYSE listing rules.

Similarly, the Human Resources Committee members all meet the enhanced independence standards for compensation committee members under the NYSE listing standards (which incorporates the standards set forth in the rules of the SEC), and qualify as “outside directors” for purposes of compensation intended to be grandfathered under Section 162(m) of the Internal Revenue Code, and as “non-employee directors” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934. For information about the Human Resources Committee’s processes for establishing and overseeing executive compensation, refer to “Compensation Discussion and Analysis – Role of the Human Resources Committee.”

 

 

 II. Corporate Governance

 

 

Board Leadership Structure

As noted above, our Board is currently comprised of thirteen independent directors and one employee director.

The Board regularly evaluates our Board leadership structure to ensure that it serves the interests of our stockholders. We recognize that different Board leadership structures may be appropriate for companies in different situations and believe that no one structure is suitable for all companies. The Board of Directors believes that the Board leadership structure, with a unified Chairman and CEO and independent Presiding Director, is optimal for Whirlpool because it demonstrates to our employees, suppliers, customers, and other stakeholders that Whirlpool is under strong leadership, with a single person setting the tone and having primary responsibility for managing our operations. Having a single leader for both Whirlpool and the Board eliminates the potential for confusion or duplication of efforts, and provides clear leadership for Whirlpool. In addition, Mr. Bitzer’s unique expertise and experience, having served Whirlpool for 20 years in positions of increasing responsibility globally, contributes significantly to how the Board guides our strategy.

 

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                           BOARD OF DIRECTORS AND CORPORATE GOVERNANCE     

 

Since 2003, the Board has designated one of the independent directors as Presiding Director. We believe that the number of independent, experienced directors that make up our Board, along with the independent oversight of our Presiding Director, benefits Whirlpool and its stockholders. Mr. Allen is currently serving as the Presiding Director.

 

        

Presiding Director Responsibilities

   

 Preside at executive sessions of non-employee directors;

 

   

 Coordinate with the Chairman of the Board and Chief Executive Officer in establishing the annual agenda and topic items for Board meetings;

 

   

 Serve as a focal point for managing stockholder communication with independent directors;

 

   

 Retain independent advisors on behalf of the Board as the Board may determine is necessary or appropriate;

 

   

 Assist the Human Resources Committee with the annual evaluation of the performance of the Chairman of the Board and Chief Executive Officer, and in conjunction with the Chair of the Human Resources Committee, meet with the Chairman of the Board and Chief Executive Officer to discuss the results of such evaluation; and

 

   

 Perform such other functions as the independent directors may designate from time to time.

 

   

Our Board conducts an annual evaluation in order to determine whether it and its committees are functioning effectively. As part of this annual self-evaluation, the Board evaluates whether the current leadership structure continues to be optimal for Whirlpool and its stockholders. Our Corporate Governance Guidelines provide the flexibility for our Board to modify or continue our leadership structure in the future, as it deems appropriate.

Strategy Oversight

Our Board is actively involved in overseeing, reviewing, and guiding our corporate strategy, and the Board’s skills and experiences align to our strategic objectives. The Board formally reviews strategy, including risks and opportunities facing Whirlpool, at an annual strategic planning meeting. In addition, long-range strategic issues, including business performance and strategic fit, are discussed regularly at Board meetings. The Board regularly discusses strategy throughout the year with management and during executive sessions of the Board, as appropriate.

Risk Oversight

Our Board is responsible for overseeing risk management. The Board focuses on our general risk management strategy and the most significant risks facing Whirlpool, and ensures that appropriate risk mitigation policies and procedures are implemented by management. The Board receives risk management updates from management in connection with its general oversight and approval of corporate matters.

The Board has delegated to the Audit Committee oversight of our risk management process. Among its duties, the Audit Committee reviews with management:

 

   

Company guidelines with respect to risk assessment and management of risks that may be material to Whirlpool;

 

   

Our system of disclosure controls and system of internal controls over financial reporting;

 

   

Our compliance with legal and regulatory requirements; and

 

   

Situations where new activities, major changes in operations, or other developments may create financial risk.

Our other Board committees also consider and address risk as they perform their respective committee responsibilities. All committees report to the full Board as appropriate, including when a matter rises to the level of a material or enterprise level risk.

Our Board is responsible for overseeing and holding senior management accountable for our global information security programs. This includes understanding our business needs and associated risks, and reviewing management’s strategy and recommendations for managing cyber risk. In line with this oversight responsibility, the Audit Committee receives reports on cyber program effectiveness periodically, and the Board receives a full presentation annually from the chief information officer.

 

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    BOARD OF DIRECTORS AND CORPORATE GOVERNANCE                           

 

Our management is responsible for day-to-day risk management. Our risk management, internal audit, and compliance areas serve as the primary monitoring and testing functions for Company-wide policies and procedures and manage the day-to-day oversight of the risk management strategy for the ongoing business of Whirlpool. This oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, operational, and compliance and financial reporting levels.

We believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing Whirlpool, and that our Board leadership structure supports this approach.

Compensation Risk Assessment

Whirlpool regularly reviews its employee compensation programs based on several criteria, including the extent to which they may result in risk to Whirlpool. Our compensation function, with assistance from the risk management and internal audit functions, annually assesses whether our compensation programs create incentives or disincentives that materially affect risk taking or are reasonably likely to have a material adverse effect on Whirlpool. The Human Resources Committee, with the assistance of its independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), evaluates the results of this assessment. As part of this assessment, management and the Human Resources Committee considered the following risk-mitigating features of our compensation programs.

 

      

Risk-Mitigating Features of Whirlpool Corporation’s Compensation Programs

      

 Annual and long-term performance metrics used in our global compensation programs are multiple, different, balanced, and more heavily weighted toward corporate-wide, audited metrics;

 

   

 Long-term incentive compensation represents a significant portion of our compensation mix;

 

   

 Metrics used in the executive compensation programs are approved by the Human Resources Committee, which is composed solely of independent directors;

 

   

 The Human Resources Committee retains an independent consultant that is involved with an ongoing review of the executive compensation program;

 

   

 Significant stock ownership guidelines are in place for executives;

 

   

 Claw-back provisions for variable compensation programs are in place in the event of misconduct;

 

   

 Our incentive designs avoid objectives that might maximize short-term payouts at the expense of long-term sustainable performance; and

 

   

 We have limited commission incentive programs which are designed to pay out based on profitability and are subject to multiple layers of management review, including an annual review of plan design and results by regional senior management.

 

 

   

Based on this assessment, the Human Resources Committee has concluded that our compensation programs do not create risks that would be reasonably likely to have a material adverse effect on Whirlpool Corporation.

Succession Planning

Our Board is responsible for executive succession planning. Under the Corporate Governance Guidelines, the Board is responsible for regularly reviewing leadership development initiatives and short and long-term succession plans for the CEO and other senior management positions. The Board is responsible for the selection of the CEO, as well as plans regarding succession in the event of an emergency or the retirement of the CEO. Each year, as part of its succession planning process, our Chief Human Resources Officer provides the Board with recommendations on, and evaluations of, potential successors for all senior management roles. The Board reviews the senior executive team’s experience, skills, competencies and potential to assess which executives possess or can develop the attributes that the Board believes are necessary to lead and achieve our goals. Among other steps taken to promote this process throughout the year, the CEO’s direct reports regularly attend Board meetings and present to the Board, providing the Board with opportunities to interact with our senior management and assess their leadership capabilities.

 

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                           BOARD OF DIRECTORS AND CORPORATE GOVERNANCE     

 

Communications Between Stockholders and the Board

The Board has adopted procedures for communications by stockholders and other interested parties with the Board, the Presiding Director, the independent directors as a group, and individual directors. The Board has designated the Corporate Secretary as its agent for the receipt and processing of such communications.

Interested parties may send communications to the Board as a whole, the Chairman of the Board, the Presiding Director, the independent directors as a group, a committee of the Board, a committee chair, or individual directors:

 

   

Electronically by email to: corporate_secretary@whirlpool.com; or

 

   

In writing by letter to:

[Name of Director or Group]

c/o Corporate Secretary

Whirlpool Corporation

2000 North M-63, MD 3602

Benton Harbor, MI 49022

Such communications should clearly identify the intended recipient.

Investor Engagement

We value the input and insights of our stockholders and are committed to continued engagement with investors, which we undertook in 2019. Key topics of focus included environmental, social and governance matters, Whirlpool strategy and results, board composition, and executive compensation performance metrics. The Board considers investor feedback on these issues in its decision making and direction to management.

Majority Voting for Directors; Director Resignation Policy

Our by-laws require directors to be elected by the majority of the votes cast with respect to such director in uncontested elections (number of shares voted “for” a director must exceed the number of votes cast “against” that director). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected), directors will be elected by a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. If a nominee who is serving as a director is not elected at the annual meeting, under Delaware law the director would continue to serve on the Board as a “holdover director.” However, under our Board’s policy, any director who fails to be elected must offer to tender his or her resignation to the Board. The Board will nominate for election or re-election as director only candidates who agree to tender, promptly following the annual meeting at which they are elected or re-elected as director, irrevocable resignations that will be effective upon the failure to receive the required vote at the next annual meeting at which they face re-election, and Board acceptance of such resignation. In addition, the Board will fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors in accordance with this Board policy.

If an incumbent director fails to receive the required vote for re-election, the Corporate Governance and Nominating Committee will act on an expedited basis to determine whether to accept the director’s resignation and will submit such recommendation for prompt consideration by the Board. The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. The Corporate Governance and Nominating Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation.

Our Integrity Manual (Global Code of Ethics)

All of our directors and employees, including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, are required to abide by our global code of ethics to ensure that our business is conducted in a legal and ethical manner. Our global code of ethics, titled “Our Integrity Manual,” defines our principles for ethical business conduct, and requires strict adherence to all laws and regulations applicable to our business. We believe Our Integrity Manual provides a strong foundation for continued enhancement of our strong culture of integrity. We intend to disclose future amendments to Our Integrity Manual, or waivers from its provisions for executive officers and directors, on our website within four business days following the date of any such amendment or waiver.

 

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    BOARD OF DIRECTORS AND CORPORATE GOVERNANCE                           

 

Director Nominations by Stockholders

Our proxy access by-law allows a stockholder, or a group of up to 20 stockholders, who have held 3% or more of our outstanding shares continuously for at least three years to nominate, and include in our proxy materials, director nominees constituting up to the greater of two individuals or 20% of our Board, provided that the stockholder(s) and nominee(s) satisfy the requirements specified in Article II, Section 13 of our by-laws.

To be included in the proxy materials for our 2021 annual meeting of stockholders, we must receive a stockholder’s notice to nominate a director under our proxy access by-law between October 12, 2020 and November 11, 2020. Such notice must be delivered to, or mailed to and received by, the Corporate Secretary of Whirlpool at the mailing or email address under “Communications Between Stockholders and the Board.” The notice must contain the information required by our by-laws, and the stockholder(s) and nominee(s) must comply with the information and other requirements in our by-laws relating to the inclusion of stockholder nominees in our proxy materials.

Nomination of a director to be submitted for consideration at the 2021 annual meeting of stockholders, but not intended to be included as a “proxy access” nominee, must be received by the Corporate Secretary of Whirlpool personally or by registered or certified mail at the mailing address under “Communications Between Stockholders and the Board” by January 20, 2021, and must satisfy the procedures set forth in the Whirlpool by-laws to be considered at the meeting. Our by-laws are posted for your convenience on the Whirlpool website: www.whirlpoolcorp.com/by-laws. Whirlpool believes that all nominees must, at a minimum, meet the selection criteria established by the Corporate Governance and Nominating Committee. The Board evaluates director nominees recommended by stockholders in the same manner in which it evaluates other director nominees. Whirlpool has established, through its Corporate Governance and Nominating Committee, selection criteria that identify desirable skills and experience for prospective Board members, including those properly nominated by stockholders.

Board Refreshment, Evaluation, and Diversity

Refreshment

The Board, with the assistance of the Corporate Governance and Nominating Committee, selects potential new Board members using criteria and priorities established from time to time. We believe it is valuable to have directors with varying lengths of service in order to strike the right balance between continuity and renewal. The four independent directors who joined the Board in the past four years and our new director nominee bring fresh perspectives and critical skill sets. Our experienced directors have deep knowledge of our operations and the evolution of our strategy. In addition, longer service on our Board has provided several directors with significant exposure during various economic cycles to both our business and our industry. Our Corporate Governance Guidelines provide for retirement at age 72. Currently, our average tenure of independent director nominees is 7.4 years.

To assist the Corporate Governance and Nominating Committee in identifying potential director nominees who meet the established criteria and priorities and to facilitate the screening and nomination process for such nominees, the Corporate Governance and Nominating Committee has retained third-party search firms. The Corporate Governance and Nominating Committee retains the sole authority to retain and terminate any search firm to be used to identify director candidates, including sole authority to approve the search firm’s fees and other retention terms. During 2019, the Corporate Governance and Nominating Committee engaged Heidrick & Struggles to assist the Committee in identifying and selecting potential candidates to join our Board.

Desired personal qualifications for director candidates include: a reputation for personal and professional integrity, strength of character, sound business judgment, and the availability and commitment to devote sufficient time to the duties of the Board. Candidates should have strong interpersonal and communication skills in order to assess and challenge the way things are done and recommend alternative solutions to problems in a constructive manner. Candidates should be independent with the ability to represent the long-term interests of all stockholders. Candidates should not be employed by or affiliated with any organization that has significantly competitive lines of business or that may otherwise present a conflict of interest. The Corporate Governance and Nominating Committee has determined that the skills and experiences appearing in the table under “Item 1—Directors and Nominees for Election as Directors” are most important to our Company’s strategy and governance, and the Committee seeks candidates with these skill sets.

We believe that our current practices are sufficient to provide for thoughtful and timely Board refreshment.

 

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                           BOARD OF DIRECTORS AND CORPORATE GOVERNANCE     

 

Evaluation

The Corporate Governance and Nominating Committee leads our Board’s annual self-evaluation process. The evaluation process is conducted by soliciting an assessment from each director about the effectiveness of the Board and the committees on which he or she serves. Directors provide feedback about numerous topics including the Board and applicable committee’s structure and composition, interaction with management, and areas of focus, as well as the quality of meetings and materials. Each committee and the full Board then conduct separate discussions regarding the evaluation and assessment topics. Follow-up items are then addressed at subsequent Board and committee meetings.

Diversity

The composition, skills, and needs of the Board change over time and will be considered in establishing the profile of desirable candidates for any specific opening on the Board. The Corporate Governance and Nominating Committee recognizes the benefits of a diverse Board membership reflecting differences in viewpoints, professional experiences, educational background, skills, race, gender, ethnicity, national origin, and age. The Committee is committed to seeking qualified diverse candidates, including diversity of race, gender, and ethnicity, in each independent director search, and instructs any search firm that it engages accordingly. The Committee believes that this process is effective in maintaining the diversity of the Board’s composition.

Environmental, Social, and Governance Oversight and Practices

Sound ESG Oversight

Our Board is committed to overseeing the integration of environmental, social, and governance (“ESG”) principles throughout Whirlpool. Regional business leaders and senior leaders in our product, sourcing, manufacturing, legal, communications, government relations, and technology functions comprise our Sustainability Steering Committee. The committee establishes and oversees our strategic priorities on relevant ESG issues based on results of our ESG Materiality Assessment. In line with our commitment to sound ESG practices, we became a signatory to the UN Global Compact in December 2019. Our approach to sound ESG practices focuses on three core elements: our people, our communities, and our environment.

LOGO     Our People

At Whirlpool, inclusion and diversity is one of our long-standing enduring values. We strive to create an inclusive culture that celebrates and values diversity, and to provide high-quality tools and training for our employees. Some of the highlights of our focus on our people include:

 

   

Gender Equality. In 2018, our Chairman and CEO, Marc Bitzer, made an organizational and personal commitment to the Catalyst® CEO Champions for Change to increase female representation in leadership positions. In 2019, female representation on our Executive Committee, an internal committee comprised of Whirlpool Corporation’s most senior leaders, increased to 30%; in addition, 33% of our non-employee director nominees are women.

 

   

Inclusion and Diversity. In 2019, our focus was on Inclusion, through which we helped employees understand that workplace inclusion results in workforce diversity and better Company performance. As part of this focus, we conducted a workshop for executives on inclusive leadership, launched our new “Inclusion Behaviors” tenets (Welcomed, Respected, Valued, and Heard), implemented employee storytelling on inclusion, and sponsored our first-ever Global Inclusion Week, during which employees engaged in over 25 inclusion-focused events globally. Over 63% of employees attended at least one activity.

 

   

Our Integrity Manual (Global Code of Ethics). We were proud to roll out our refreshed global code of ethics in 2019. Our Integrity Manual defines Whirlpool Corporation’s principles for ethical business conduct, which form the moral compass for everything we do at Whirlpool, and provides a strong foundation for continued enhancement of our culture of integrity. During our roll out, more than 56,000, or 73%, of all employees participated in commitment sessions and identified specific actions consistent with the principles in Our Integrity Manual.

 

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    BOARD OF DIRECTORS AND CORPORATE GOVERNANCE                           

 

   

Performance Management and Engagement. In 2019, Whirlpool implemented a new performance management process titled “Every Day Performance Excellence,” which focuses on both the “what” and the “how” of performance. Employees align objectives with their leaders in each of four performance categories: business performance, strategic/project impact, organization and talent, and Whirlpool leadership and values. Based on their objectives, employees receive formal reviews along with continuous coaching and feedback from people leaders and cross-functional partners. Whirlpool Corporation’s employee engagement scores are consistently in line with “best-in-class” companies. We had record-high results in 2019, with over 95% salaried employee participation and 86% favorable salaried employee engagement.

 

   

Awards. In 2019, our commitment to being an employer of choice earned recognition and awards, including:

 

   

Forbes, “America’s Best Employers for Diversity 2019”

 

   

100% Score — “Disability Equality Index” (3rd consecutive year)

 

   

100% Score — “2019 Corporate Equality Index” (16th consecutive year)

LOGO     Our Communities

Whirlpool is committed to maintaining strong, lasting connections in the communities in which we do business. We utilize a global collective impact model that centers around improving life at home. Our giving focuses in the areas of house and home to create thriving communities.

 

   

House. Our House initiatives focus on shelter and security for individuals and families as the first step in the journey toward a better life in the home. In 2019, we were proud to celebrate our 20th year of collaboration with Habitat for Humanity International. During this period, Whirlpool has committed $107 million, supported Habitat programs in 45 countries, donated and installed approximately 200,000 refrigerators and ranges, served more than 104,000 families in the U.S. and Canada, and sponsored 190 homes globally.

 

   

Home. Our Home initiatives focus on developing resilient, vibrant communities through education and community development. We collaborate with United Way to fund hundreds of non-profit campaigns within our communities that focus on education, income, health and basic needs. The Whirlpool Foundation offers a dollar-for-dollar match on employee contributions to these campaigns. Our Chairman and CEO, Marc Bitzer, is a member of United Way’s Worldwide Board of Trustees, and several employees serve on our local United Way chapter’s Board of Directors.

Since 2002, our Consul brand in Brazil has sponsored Instituto Consulado da Mulher, which supports small business cooperatives designed to develop the entrepreneurial and employment skills of low-income women. To date, more than 35,000 women have benefited from the program.

Whirlpool brand’s Care Counts Laundry Program installs washers and dryers for use in schools to help remove an important barrier to student attendance — access to clean clothes. The Care Counts Laundry Program has grown to support students in need across 18 cities and 82 schools in the United States — providing access to clean clothes for more than 38,000 students.

Whirlpool Europe, Middle East, and Africa (“EMEA”) sponsors an edutainment project designed to raise awareness of the problem of food waste, most recently rolled out to more than one million students, teachers and families in Italy, Poland, and Slovakia. The program previously earned Slovakia’s CSR Practice of the Year, the nation’s most important CSR-related award.

 

   

Awards. In 2019, our community engagement efforts earned recognition and awards, including:

 

   

CR Magazine, “Top Corporate Citizen”

 

   

FORTUNE, “World’s Most Admired Companies” (10th consecutive year)

 

   

Reputation Institute, “Global CR RepTrak 100” ranking (7th consecutive year)

 

   

Forbes and Just Capital, “Just 100 List for 2020”

 

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                           BOARD OF DIRECTORS AND CORPORATE GOVERNANCE     

 

LOGO     Our Environment

We know that an environmentally sustainable Whirlpool is a more competitive Whirlpool — a company better positioned for long-term success. Three elements form the core of our environmental sustainability priorities: sustainable plants, sustainable products, and sustainable practices. We committed in 2019 to the Science-Based Targets Initiative and have set emissions reduction targets in line with the goals of the Paris Agreement. We are fully on track to meet or exceed the reduction targets of the original U.S. commitments to the Paris Agreement. Some of the highlights of our focus on our environment include:

 

   

Sustainable Plants. We strive to reduce water and energy consumption at our plants and are maximizing our renewable energy deployed on-site. Whirlpool is one of the largest producers of on-site wind energy in the U.S. among Fortune 500 companies. We have achieved zero waste-to-landfill status at eight of our global manufacturing sites and we will keep focusing our efforts towards our goal of all manufacturing sites by 2022.

 

   

Sustainable Products. We look at products from a complete lifecycle perspective, and have developed “Design for Environment” tools to deliver energy and water efficient products with more recycled content. Our EMEA region has made the industry’s largest commitment for recycled plastic usage in products by 2025. We also launched a new full materials transparency system in 2019 that will offer insight into substances of concern.

 

   

Sustainable Practices. We recognize that our environmental commitment must be embedded in our business practices everywhere we operate, including how we design, source, manufacture, distribute, market, and manage end-of-life for our products. We have restructured our approach to improve connections within our key internal teams, assigning senior leader owners for each of our key sustainability initiatives.

 

   

Awards. In 2019, our commitment to the environment earned recognition and awards, including:

 

   

“2019 Dow Jones Sustainability North America Index”

 

   

“EPA SmartWay® Excellence Award” (5th consecutive year); “High Performer” in Shippers Category (3rd consecutive year)

 

   

Newsweek, “America’s Most Responsible Companies — Top 100”

Corporate Governance Guidelines and Other Available Information

Whirlpool is committed to the highest standards of corporate governance. On the recommendation of the Corporate Governance and Nominating Committee, the Board adopted a set of Corporate Governance Guidelines for Operation of the Board of Directors.

Our current Corporate Governance Guidelines, Our Integrity Manual, by-laws, and written charters for the Board’s Audit, Corporate Governance and Nominating, Human Resources, and Finance committees are posted on the Whirlpool website: www.whirlpoolcorp.com/policies. Our publicly disclosed financial and non-financial information, including our annual report, quarterly reports, current reports, and Sustainability Report, is located on our website at investors.whirlpoolcorp.com. Stockholders may also request a free copy of these documents by calling or writing: Investor Relations, Whirlpool Corporation, 2000 North M-63, MD 2609, Benton Harbor, Michigan, 49022; (269) 923-2641.

 

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    RELATED PERSON TRANSACTIONS AND HUMAN RESOURCES COMMITTEE INTERLOCKS                           

 

Related Person Transactions

The Board has adopted written procedures relating to the Corporate Governance and Nominating Committee’s review and approval of transactions with related persons that are required to be disclosed in proxy statements by SEC regulations (“related person transactions”). A “related person” is defined under the applicable SEC regulation and includes our directors, executive officers, and owners of 5% or more of our common stock. The Corporate Secretary administers procedures adopted by the Board with respect to related person transactions and the Corporate Governance and Nominating Committee reviews and approves all such transactions. At times, it may be advisable to initiate a transaction before the Corporate Governance and Nominating Committee has evaluated it, or a transaction may begin before discovery of a related person’s participation. In such instances, management consults with the Chairman of the Corporate Governance and Nominating Committee to determine the appropriate course of action. Approval of a related person transaction requires the affirmative vote of the majority of disinterested directors on the Corporate Governance and Nominating Committee. In approving any related person transaction, the Corporate Governance and Nominating Committee must determine that the transaction is fair and reasonable to Whirlpool. The Corporate Governance and Nominating Committee periodically reports on its activities to the Board. The written procedures relating to the Corporate Governance and Nominating Committee’s review and approval of related person transactions is available on our website: www.whirlpoolcorp.com/policies.

Human Resources Committee Interlocks and Insider Participation

During fiscal 2019, Messrs. Allen, Creed, Johnston, Manwani, and Perez, and Ms. Dietz served as members of the Human Resources Committee. No member of the Human Resources Committee was at any time during 2019 an officer or employee of Whirlpool and no member of the Human Resources Committee has formerly been an officer of Whirlpool. In addition, no “compensation committee interlocks” existed during fiscal year 2019.

 

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                           SECURITY OWNERSHIP AND DELINQUENT SECTION 16(A) REPORTS     

 

Security Ownership

The following table presents the ownership on December 31, 2019 of the only persons known by us as of February 14, 2020 to beneficially own more than 5% of our common stock, based upon statements on Schedule 13G filed by such persons with the SEC.

 

       

Schedule 13G
Filed On

   Name and Address of Beneficial Owner    Shares
Beneficially
Owned
     Percent
of
Class
 
2/11/2020   

 

The Vanguard Group Inc.(1)
100 Vanguard Blvd.
Malvern, PA 19355

 

     8,271,449        13.20
2/12/2020   

 

PRIMECAP Management Company(2)
177 E. Colorado Blvd., 11th Floor
Pasadena, CA 91105

 

     7,751,410        12.37
2/6/2020   

 

BlackRock, Inc.(3)
55 East 52nd Street
New York, NY 10055

 

     4,595,615        7.33
2/14/2020   

 

State Street Corporation(4)
One Lincoln Street
Boston, MA 02111

 

 

     3,169,633        5.06

 

(1) 

Based solely on a Schedule 13G/A filed with the SEC by The Vanguard Group Inc. (“Vanguard Group”), a registered investment advisor. Vanguard Group has sole voting power with respect to 92,405 shares, sole dispositive power with respect to 8,163,912 shares, shared voting power with respect to 18,459 shares, and shared dispositive power with respect to 107,537 shares.

 

(2) 

Based solely on a Schedule 13G/A filed with the SEC by PRIMECAP Management Company (“PRIMECAP”), a registered investment advisor. PRIMECAP has sole voting power with respect to 7,460,560 shares and sole dispositive power with respect to 7,751,410 shares.

 

(3) 

Based solely on a Schedule 13G/A filed with the SEC by BlackRock, Inc. (“BlackRock”). BlackRock has sole voting power with respect to 3,918,119 shares and sole dispositive power with respect to 4,595,615 shares.

 

(4) 

Based solely on a Schedule 13G filed with the SEC by State Street Corporation (“State Street”). State Street has shared voting power with respect to 2,820,491 shares and shared dispositive power with respect to 3,166,939 shares.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934 requires Whirlpool Corporation’s directors and executive officers and persons who own more than 10% of Whirlpool’s common stock (each, a “reporting person”) to file with the SEC initial reports of ownership and reports of changes in ownership of Whirlpool’s common stock. Based solely on our review of the copies of such reports furnished to or prepared by Whirlpool and written representations that no other reports were required, Whirlpool believes that all Section 16(a) filing requirements applicable to reporting persons were complied with during the fiscal year ended December 31, 2019, except for the omission, due to an administrative error, of 190 shares of common stock holdings from Gilles Morel’s April 1, 2019 Form 3, for which an amendment was filled on July 18, 2019.

 

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    BENEFICIAL OWNERSHIP                           

 

Beneficial Ownership

The following table reports beneficial ownership of common stock by each director, nominee for director, and the Named Executive Officers (as defined elsewhere in this proxy statement), and all directors and executive officers of Whirlpool as a group, as of February 3, 2020. Beneficial ownership includes, unless otherwise indicated, all shares with respect to which each director or executive officer, directly or indirectly, has or shares the power to vote or to direct the voting of such shares, or to dispose or direct the disposition of such shares. The address of all directors and executive officers named below is c/o Whirlpool Corporation, 2000 North M-63, MD 3602, Benton Harbor, Michigan, 49022.

 

   

Name

   Shares
Beneficially
Owned
(1)
   Deferred Stock
Units
(2)
   Shares Under
Exercisable
Options
(3)
   Total (4)   

Percentage

 (* Less than 1%) 

   

Samuel R. Allen

       14,688                      14,688        *
   

Marc R. Bitzer

       85,895        53,714        251,346        390,955        *
   

João C. Brega

       27,022        1,959        24,613        53,594        *
   

Greg Creed

       2,000        2,822               4,822        *
   

Gary T. DiCamillo

       7,405        20,593        5,077        33,075        *
   

Diane M. Dietz

       9,394                      9,394        *
   

Gerri T. Elliott

       5,767                      5,767        *
   

Michael F. Johnston

       3,705        16,933        2,888        23,526        *
   

Jennifer A. LaClair

                                   *
   

Joseph T. Liotine

       30,597        3,441        34,734        68,772        *
   

John D. Liu

       1,000        9,972               10,972        *
   

James M. Loree

       1,065        1,969               3,034        *
   

Harish Manwani

       6,481                      6,481        *
   

Gilles Morel

       190               2,106        2,296        *
   

William D. Perez

       9,140        3,228        1,357        13,725        *
   

James W. Peters

       23,505        544        42,242        66,291        *
   

Patricia K. Poppe

                                   *
   

Larry O. Spencer

       1,000        2,822               3,822        *
   

Michael D. White

       2,700        16,338               19,038        *
   

All directors and executive officers as a group (19 persons) (5)

       238,170        134,488        371,588        744,246        1.2 %

 

(1) 

Does not include 1,153,957 shares held by the Whirlpool 401(k) Trust (but does include 9,805 shares held for the accounts of executive officers). Includes restricted stock units (“RSU”) and performance stock units (“PSU”) that become payable (assuming that PSUs pay out at target) within 60 days of February 3, 2020, before deferrals and tax liabilities.

 

(2) 

Represents the number of shares of common stock, based on deferrals made into the Deferred Compensation Plan II for Non-employee Directors, one of the executive deferred savings plans, or the terms of deferred stock awards, that we are required to pay to a non-employee director when the director leaves the Board or to an executive officer when the executive officer is no longer an employee. None of these deferred stock units have voting rights.

 

(3) 

Includes shares subject to options that will become exercisable within 60 days of February 3, 2020.

 

(4) 

May include RSUs and option shares which cannot be voted until vesting or exercise, as applicable.

 

(5) 

Total amounts reflect only those directors and officers of Whirlpool as of the date of this proxy statement.

 

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                           NON-EMPLOYEE DIRECTOR COMPENSATION     

 

Non-Employee Director Compensation

We provide competitive compensation to attract and retain qualified directors and support stockholder alignment objectives. Our director compensation program consists of cash and stock retainers. For 2019, each director who served on the Board for the full year received one half of the annual retainer in cash and one half in stock. For 2020, the Corporate Governance and Nominating Committee determined to keep director compensation at the same level as for 2019. Non-employee director compensation is summarized in the table below:

 

   

Non-employee Director Compensation Element

     2019        2020  
   

Annual Cash Retainer

       $145,000          $145,000  
   

Annual Stock Retainer

       $145,000  (1)         $145,000  (1) 
   

Additional Annual Cash Retainer for Committee Chairs:

           
   

Audit Committee

       $  20,000          $  20,000  
   

Human Resources Committee

       $  20,000          $  20,000  
   

All Other Committees

       $  15,000          $  15,000  
   

Additional Annual Cash Retainer for Presiding Director

       $  30,000          $  30,000  

 

(1) 

Reflects stock retainer granted on the date of the annual meeting of stockholders, with the number of shares determined by dividing the annual cash retainer by our closing stock price on the annual meeting date.

Deferral of Annual Retainer and Stock Grants

A non-employee director may elect to defer any portion of the annual cash retainer and annual stock award retainer until he or she ceases to be a director. Under this policy, when the director’s term ends, any deferred annual cash retainer will be paid in a lump sum or in monthly or quarterly installments. In addition, payment of any deferred annual stock grant will be made as soon as is administratively feasible. Annual cash retainers deferred on or before December 31, 2004 accrue interest quarterly at a rate equal to the prime rate in effect from time to time. Cash retainers deferred after December 31, 2004 may be allocated to notional investments that mirror those available to participants in our 401(k) plan, with the exception of the Whirlpool stock fund.

Stock Ownership Guidelines

The Board has established a guideline for non-employee directors to own Whirlpool stock equal in value to five times the annual cash retainer, with five years to achieve the guideline. Each non-employee director’s progress toward meeting the requirement is reviewed annually. As of the end of 2019, all non-employee directors had met, or were on track to meet, this requirement. These guidelines are based on a review of competitive market practice conducted by FW Cook, the Human Resources Committee’s independent compensation consultant.

Other Compensation Elements

For evaluative purposes, Whirlpool permits non-employee directors to test Whirlpool products for home use. Directors are not reimbursed for any income tax they incur as a result of this policy. Directors are reimbursed for business expenses related to attendance at Board and committee meetings and for attendance at qualified third-party director education programs. On rare occasions for personal convenience, a director’s spouse or other family member may accompany a director on a Whirlpool aircraft flight. No additional operating cost is incurred by Whirlpool in such situations and the director is taxed on the value of the benefit. A director’s qualifying charitable contribution of up to $10,000 will be matched by the Whirlpool Foundation annually. Whirlpool also pays the premiums to provide each non-employee director who served on the Board as of January 1, 2011 with (1) term life insurance while serving as a director, equal to one-tenth of the director’s basic annual cash retainer times the director’s months of service, unless the director has opted out of coverage, and (2) travel accident insurance of $1 million when traveling on Whirlpool business.

 

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    NON-EMPLOYEE DIRECTOR COMPENSATION                           

 

2019 Non-employee Director Compensation Table

 

   

Name

  

Fees Earned or

Paid in Cash  (1)
($)

  

Stock Awards (2)

($)

  

All Other

Compensation  (3)
($)

  

Total

($)

   

Samuel R. Allen

       190,000        144,904        1,545        336,449
   

Greg Creed

       145,000        144,904        3,532        293,436
   

Gary T. DiCamillo

       145,000        144,904        14,935        304,839
   

Diane M. Dietz

       145,000        144,904        4,562        294,466
   

Gerri T. Elliott

       145,000        144,904        1,545        291,449
   

Michael F. Johnston

       165,000        144,904        23,532        333,436
   

John D. Liu

       145,000        144,904        20,634        310,538
   

James M. Loree

       145,000        144,904        1,545        291,449
   

Harish Manwani

       145,000        144,904        1,659        291,563
   

William D. Perez

       160,000        144,904        19,905        324,809
   

Patricia K. Poppe

       5,910               3,667        9,577
   

Larry O. Spencer

       145,000        144,904        1,791        291,695
   

Michael D. White

       165,000        144,904        76,877        386,781

 

(1) 

Represents all retainer fees for Board, Committee Chair, or Presiding Director service, before deferrals.

 

(2) 

Reflects value of shares, before deferrals, awarded in 2019. As of December 31, 2019, none of our non-employee directors were deemed to have outstanding stock awards because all stock awards vest immediately.

 

(3) 

The table below presents an itemized account of 2019 non-employee director “All Other Compensation”.

 

   

Name

  

Life Insurance
Premiums
($)

  

Charitable
Program 
(a)
($)

  

 

Whirlpool
Appliances and

Other Benefits
($) (b)

   Total
($)
   

Samuel R. Allen

                     1,545        1,545
   

Greg Creed

                     3,532        3,532
   

Gary T. DiCamillo

              10,000        4,935        14,935
   

Diane M. Dietz

                     4,562        4,562
   

Gerri T. Elliott

                     1,545        1,545
   

Michael F. Johnston

              10,000        13,532        23,532
   

John D. Liu

       4,769        10,000        5,865        20,634
   

James M. Loree

                     1,545        1,545
   

Harish Manwani

                     1,659        1,659
   

William D. Perez

              10,000        9,905        19,905
   

Patricia K. Poppe

                     3,667        3,667
   

Larry O. Spencer

                     1,791        1,791
   

Michael D. White

       26,518        35,129        15,230        76,877

 

  (a) 

Reflects 2019 interest cost related to a charitable program eliminated by the Board, prospectively, as of January 1, 2008. Through 2007, each non-employee director could irrevocably choose to relinquish some or all of their annual cash retainer, which Whirlpool could then, in its discretion, award to as many as three charities upon the director’s death. The maximum amount payable under the Charitable Program upon Mr. White’s death is $1.5 million. Mr. White is the only active director with a benefit under this program. Amounts also reflect matching contributions for director charitable contributions.

 

  (b) 

Includes the cost of Whirlpool products provided for personal use by directors. For Mr. Liu, also includes the cost of tickets to an industry event sponsored by Whirlpool. For Mr. Perez, also includes costs associated with certain family members accompanying Mr. Perez on Whirlpool aircraft for flights to and from one Board meeting.

 

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                           COMPENSATION DISCUSSION AND ANALYSIS     

 

Compensation Discussion and Analysis

In this section, we provide a detailed description of our executive compensation programs, including our pay-for-performance philosophy, the business strategy-driven program design, the individual elements of the programs, the methodology and processes used by the Human Resources Committee (the “Committee”) to make compensation decisions, and the relationship between Whirlpool performance and compensation delivered in fiscal 2019.

 

 

The discussion in this CD&A focuses on our CEO, CFO, and the three most highly compensated executive officers (the “NEOs”) for the year, who were:

 Marc R. Bitzer

   Chairman, President and Chief Executive Officer
   

 James W. Peters

   Executive Vice President and Chief Financial Officer
   

 Joseph T. Liotine

   Executive Vice President and President, Whirlpool North America Region (“NAR”)
   

 João C. Brega

   Executive Vice President and President, Whirlpool Latin America Region (“LAR”)
   

 Gilles Morel (1)

   Executive Vice President and President, Whirlpool Europe, Middle East and Africa (“EMEA”)
 

(1)  Mr. Morel joined Whirlpool Corporation on April 1, 2019

 

 

 I. Executive Summary

 

        

2019 Company Results

 

    

 

Whirlpool delivered strong financial results in 2019, including record earnings, strong cash flow, and significant improvements in our margins. Strong price/mix realization offset the negative impacts of tariff and raw material inflation. We continued our margin improvement in North America. Our EMEA business returned to profitability in the fourth quarter. And we achieved structural improvements to working capital. We continued to focus our business portfolio, as we completed the sale of our Embraco compressor business, and exited underperforming businesses in South Africa and Turkey. We achieved the following results in 2019:

 

   

 Delivered revenue of $20.4 billion, down 2.9% year over year but up 1.6% after adjusting for currency and the divestiture of our Embraco compressors business.(1)

 

   

 Delivered GAAP net earnings of $1.2 billion (5.8% net earnings margin), record earnings per share (“EPS”) of $18.45, and record ongoing (non-GAAP) EPS(1) of $16.00.

 

   

 Delivered ongoing (non-GAAP) EBIT(1) margin of 6.9% for the full year; GAAP and ongoing margins were driven by successful execution of price/mix actions and strong cost discipline, which offset headwinds from raw material cost inflation and tariffs.

 

   

Continued to invest in manufacturing efficiency, product leadership, and innovation, including $532 million in capital expenditures and $541 million in research and development.

 

   

 Generated cash provided by operating activities of $1.2 billion and free cash flow(1) of $912 million, primarily driven by capital spend efficiencies and disciplined working capital management.

 

   

 Repaid the $1 billion term loan associated with the Embraco divestiture, strengthening our balance sheet and making strong progress towards our long-term gross debt-to-EBITDA target of approximately 2x.

 

   

 Continued our focus on leadership development and employee feedback, resulting in an improvement in our salaried employee engagement score to 86 — well above the benchmark of consumer products companies and above “best-in-class” companies across all industries.

 

   

(1) Fora reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, please see Annex A.

 

   

 

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    COMPENSATION DISCUSSION AND ANALYSIS                           

 

2019 Compensation Decisions

Our overall performance for 2019 included strong financial results relative to our short-term incentive metrics. Both our Ongoing EBIT and Free Cash Flow (“FCF”) results were above target, leading to an overall payout for our short-term incentive of 120% of target. However, Cumulative Ongoing EPS and Return on Invested Capital (“ROIC”) improvement results for the 2017 - 2019 performance period fell below the goals set for our long-term incentive at the beginning of the performance period, leading to a payout for our performance-based long-term incentive of 88% of target. Key compensation actions for 2019 are summarized in the table below:

 

   

Pay Element

   2019 Action
   

Base Salary

   2019 salary increases for Named Executive Officers ranged from 2.8% to 25%. See “Base Salary” below for details.
   

Short-term Incentive

   2019 Ongoing EBIT and Free Cash Flow were both above target. Payout was determined to be 120% of target. See “Short-term Incentives” below for details.
   

Long-term Incentive

   2017-2019 Cumulative Ongoing EPS was below target; 2017-2019 Average Annual Improvement in ROIC was above target. Payout was determined to be 88% of target. See “Long-term Incentives” below for details.

Pay-for-Performance Philosophy

Whirlpool is dedicated to achieving global leadership in all of our product categories and to delivering superior stockholder value. To achieve our objectives, we manage to a pay-for-performance philosophy based on the following guiding principles:

 

   

Compensation should be incentive-driven with a focus on both short-term and long-term results;

 

   

A significant portion of pay should be performance-based, with the portion varying in direct relation to an executive’s level of responsibility;

 

   

Components of compensation should be linked to the drivers of sustainable stockholder value over the long term; and

 

   

Compensation should be tied to an evaluation of business results and individual performance.

Stockholder Engagement and 2019 Executive Compensation Program Design

The Committee considers the results of the annual “Say on Pay” vote, among other factors, in making decisions regarding executive compensation programs. We received strong support with approximately 91% of the votes cast for our “Say on Pay” vote at our 2019 annual meeting voting in favor of our 2018 executive compensation programs. The Committee recognizes that market practices and stockholder views on executive compensation practices continue to evolve. In recognition of this, we regularly engage in discussions with our stockholders regarding compensation matters (see “Investor Engagement” under “Board of Directors and Corporate Governance”) and believe that this ongoing stockholder engagement process strengthens our understanding of investor priorities and the issues on which they are focused. The Committee works closely with its independent consultant and the management team to evaluate and make changes to provide executive compensation programs that are designed to effectively link pay with performance, support the creation of sustainable stockholder value over the long term, and consistently apply good governance practices.

After considering the “Say on Pay” results and general support of the compensation philosophy and design received during the stockholder outreach process described earlier, the Committee determined that our executive compensation programs continued to be appropriate. For 2019, the Committee eliminated performance cash units from the long-term incentive program and granted 30% of long-term incentive awards in stock options and the remaining 70% in performance stock units to enhance executive and long-term stockholder alignment.


 

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Executive Compensation Programs Highlights

The following table summarizes executive compensation practices that we have implemented to align pay with performance, as well as practices we avoid because we do not believe they serve the long-term interests of our stockholders.

 

       

    

  What We Do   What We Don’t Do  

    

   
      Pay for performance   LOGO   Allow hedging or pledging of Whirlpool stock by executive officers, employees or directors    
   
      Use an independent compensation consultant that is solely engaged to provide executive compensation services to Whirlpool   LOGO   Provide excise tax gross-ups    
   
      Cap short-term and long-term incentive award payouts at market-competitive levels   LOGO   Enter into employment contracts except as required by local law or prevailing local market practice    
   
      Maintain robust stock ownership guidelines for our executives (7x salary multiple for CEO)   LOGO   Pay dividends or dividend equivalents on grants of any Performance Stock Units (“PSUs”) or Restricted Stock Units (“RSUs”) prior to vesting    
   
      Subject all variable pay to a compensation recovery “claw-back”   LOGO   Reprice or reload stock options    
   
      Have “double-trigger” change-in-control agreements        
   
      Carefully manage risk in our compensation programs to protect against unintended outcomes        
   
      Provide market-competitive perquisites deemed necessary to attract and retain top talent            

 

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 II. What We Pay and Why

The Committee sets target compensation for each executive after careful consideration of several factors, including:

 

   

External competitive market pay levels and practices;

 

   

Internal business needs and strategic priorities;

 

   

Each executive’s role and responsibilities, experience, tenure, contributions, achievements, and past performance;

 

   

Future performance expectations and needs of Whirlpool;

 

   

Compensation history of each executive; and

 

   

Internal equity with other executives.

We have designed the elements of our compensation programs to reflect our pay-for-performance philosophy. The Committee creates a compensation approach for each NEO that contains a mix of compensation elements that it believes best addresses each NEO’s responsibilities and best achieves our overall compensation objectives.

Our compensation programs are designed so that an individual’s target compensation opportunity rises as job responsibility increases, with an increasing portion of performance-based compensation as a percentage of total target compensation. This design seeks to ensure that the most senior executives who are responsible for development and execution of our strategic plan are held most accountable for operational performance results and changes in stockholder value over time. As a result, actual total compensation for an executive is more dependent on performance than for employees at other levels, resulting in larger increases in realized pay when performance results exceed goals, and larger decreases when performance results fall short of expectations.

In addition, the Committee makes distinctions in the mix of cash and equity components in shaping each NEO’s compensation package. Generally, the portion of equity compensation rises with increasing job responsibility to provide further alignment in the interests of executives and our long-term stockholders.

 

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Competitive Market Compensation Analysis

While the Committee considers relevant market pay practices when setting executive compensation, it does not believe it is appropriate to establish compensation levels based solely on market practices. Whirlpool performance and compensation levels relative to similar companies and other market-competitive data is just one of several factors the Committee considers in deciding executive compensation.

For 2019, the Committee utilized the comparator group of companies listed below to provide competitive reference points for executive compensation. This comparator group was recommended based upon advice from FW Cook, and remained the same as the comparator group used to evaluate executive compensation in 2018. The companies in our comparator group meet multiple screening criteria, including revenue, income, assets, market capitalization, number of employees, lines of business, similarity to Whirlpool in global operations, and required management skills. Additionally, companies in the comparator group are recognized for their excellence in the areas of consumer focus and trade customer relations and for possessing highly complex global supply chains and manufacturing footprints.

 

 

2019 Comparator Group

3M Company

Caterpillar, Inc.

Colgate-Palmolive Company

Cummins, Inc.

Danaher Corporation

Deere & Company

Eaton Corporation plc

Emerson Electric Co.

The Goodyear Tire & Rubber Company

Honeywell International, Inc.

  

Illinois Tool Works, Inc.

Ingersoll-Rand plc

Johnson Controls International plc

Kellogg Company

Kimberly-Clark Corporation

Lear Corporation

Newell Brands, Inc.

Parker Hannifin Corporation

Stanley Black & Decker, Inc.

Textron, Inc.

Based on information provided by FW Cook, the median statistics of our comparator group when the Committee determined NEO pay in February 2019 (dollar values in millions) were:

 

     

Measure

   Median of Comparator Group        Whirlpool    
   

Revenue (Trailing 12 Months (“TTM”))

     $ 17,920      $ 21,079
   

Net Income (TTM)

     $ 1,866      $ (621 )
   

Assets (Most Recent Quarter)

     $ 19,691      $ 19,093
   

Market Capitalization (December 31, 2018)

     $ 30,085      $ 7,854
   

Employees (As of December 31, 2018)

       61,300        92,000

Note: Based on data available from S&P Capital IQ as of January 15, 2019, as analyzed by FW Cook.

We supplement the publicly disclosed compensation data from comparator companies with data from proprietary surveys purchased from third-party consulting firms and data vendors. These independently conducted surveys generally include data from numerous organizations across various industry groupings and specific international regions, and also allow for comparisons to be made on the basis of job scope and other measures relevant to Whirlpool. Our compensation analyses provide insight into prevailing market pay levels and leading practices in both compensation program design and governance.

 

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Overview of 2019 Executive Compensation Elements

 

  Element   Form    Characteristics/Purpose   2019 Metrics

Base Salary(1)

  Cash    Fixed component based on responsibility, experience, and individual performance   N/A

Short-term
Incentives
(“PEP”)(1)

  Annual Performance Cash Award    Performance-based variable cash incentive to reward for achieving annual financial and individual performance goals  

Ongoing EBIT— 50%

 

FCF — 50%

 

+/– 25% Modifier for Individual Performance Results

Long-term
Incentives
(“SEP”)(1)

  PSUs    Motivate and reward employees for the achievement of Company financial and strategic performance over a preset three-year period beginning January 1, and promote retention  

Cumulative Ongoing EPS — 50%

 

ROIC — 50%

   

 

Stock
Options

  

 

Provide incentive for long-term stock price appreciation and promote retention

 

 

Stock price appreciation

Other Benefits

  RSUs    Provide incentive for long-term stock price appreciation and promote retention. As of 2019, only granted for special recognition and retention purposes   Stock price
 

 

Health and Welfare Benefits

  

 

NEOs generally participate in the same health and welfare benefit programs available to substantially all salaried employees

 

 

N/A

 

 

Retirement Benefits(2)

  

 

U.S.-based NEOs participate in tax-qualified and non-qualified defined benefit and defined contribution retirement plans designed to provide a market-competitive level of income replacement upon achieving retirement eligibility and enable an orderly succession of talent

 

 

N/A

   

 

Perquisites

  

 

Limited perquisites are designed to support a market-competitive compensation package

 

 

N/A

 

(1)

Target is generally market median for similar positions in the comparator group and compensation survey data

 

(2)

Target is median income replacement ratio for a broad-based group of companies based on survey data provided by outside consultant

Mix of Target Total Compensation

Short-term and long-term incentives constituted 90% of 2019 total target compensation for our CEO, and, on average, 75% of 2019 total target compensation for our other NEOs

 

LOGO

 

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Compensation Programs - Design & Elements

Base Salary

To determine base salary levels for 2019, the Committee considered the competitive market data and recommendations provided by FW Cook and, with respect to the other NEOs, the CEO’s recommendations and our practice for 2019 salary increases. 2019 salaries were adjusted consistent with our compensation philosophy of targeting base salaries at the median of the competitive market. In some cases, base salaries may be higher or lower than median based on factors such as executive performance, experience, tenure, and responsibilities. The 2019 salaries and adjustments (effective March 1) for our NEOs were:

 

       

NEO

 

  

2018 Year-End
Annual Salary

 

     2019 Adjustment     

2019 Year-End
Annual Salary

 

 
  

 

$

 

    

 

%

 

 
   

Marc R. Bitzer

   $ 1,250,000      $ 35,000        2.8    $ 1,285,000  
   

James W. Peters

   $ 650,000      $ 30,000        4.6    $ 680,000  
   

Joseph T. Liotine

   $ 650,000      $ 65,000        10.0    $ 715,000  
   

João C. Brega (1)

   BRL  2,184,000      BRL  546,000        25.0    BRL  2,730,000  
   

Gilles Morel (2)

                        EUR 625,000  

 

(1) 

Mr. Brega’s salary is noted in his home currency, Brazilian Reais. Converting his 2018 and 2019 year-end salaries into U.S. Dollars results in salaries of $553,753 and $692,191, respectively, using 12-month average exchange rates for 2019.

 

(2) 

Mr. Morel joined Whirlpool on April 1, 2019. His 2019 salary was determined by the Committee based upon competitive market data and his experience and expertise. His salary is noted in his home currency, Euros. Converting his 2019 salary into U.S. Dollars results in a salary of $699,888, using 12-month average exchange rates for 2019.

The Committee increased Mr. Liotine’s 2019 salary based upon competitive market data and his increasing scope of responsibility. The Committee increased Mr. Brega’s 2019 salary in consideration of competitive market data, and his leadership of our direct-to-consumer and digital priorities.

Short-term Incentives

Annual awards of variable cash incentives are paid under the terms of the stockholder-approved Executive Performance Excellence Plan, which we commonly refer to as “PEP.” Consistent with our pay-for-performance philosophy, our short-term cash incentive program is designed to focus attention on short-term drivers of stockholder value creation, reflect Company financial and individual performance, and complement the metrics used in our long-term incentive program to create a balanced focus on the key drivers of our multi-year financial and operational strategy. The program is designed so that a significant portion of our NEOs’ short-term cash compensation is variable and directly tied to key performance results.

In 2019, the Committee established short-term incentive target opportunities as a percentage of base salary for each NEO, taking into account competitive market data. Mr. Morel’s initial short-term incentive target upon his hire was based upon external market data and internal equity with other executives. For our continuing NEOs, the Committee did not change 2019 short-term incentive targets (as a percentage of eligible base salary) relative to the targets for 2018. The target award levels are generally set at the median of the comparator group and are as follows:

 

NEO

 

   2019  Short-term Incentive Target Award

 

  

 

(as a % of Eligible Base Salary)

 

 

($)

   

Marc R. Bitzer

       150 %     $ 1,918,750  
   

James W. Peters

       90 %     $ 607,500  
   

Joseph T. Liotine

       100 %     $ 704,167  
   

João C. Brega (1)

       100 %     BRL  2,730,000
   

Gilles Morel(2)

       85 %     EUR 398,438

 

(1) 

Mr. Brega’s target is noted in his home currency, Brazilian Reais. Converting into U.S. Dollars results in a target of $692,191, using 12-month average exchange rates for 2019.

 

(2) 

Mr. Morel joined Whirlpool on April 1, 2019. His 2019 short-term incentive target was pro-rated based upon his start date. Mr. Morel’s target is noted in his home currency, Euros. Converting into U.S. Dollars results in a target of $446,179, using 12-month average exchange rates for 2019.

 

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The Committee determined each NEO’s actual payout by reference to a Company Performance Factor ranging from 0% to 200% and based on performance metrics aligned with our critical objectives for the year. In the event of significant individual accomplishments or shortfalls, the Committee may choose to apply an Individual Performance Factor of up to +/- 25% (or greater or less than this percentage in its discretion, but in no case as would result in an award more than 200% of target). The maximum payout opportunity for each NEO is capped at 200% of target. The 2019 approach is summarized in the illustration below:

 

LOGO

 

*

Ongoing EBIT measure excludes items that may not be indicative of, or are unrelated to, results from our ongoing business operations. Ongoing EBIT consists of GAAP net earnings available to Whirlpool before net earnings (loss) available to non-controlling interests, income tax expense (benefit), and interest expense, and excludes restructuring expense, Brazil indirect tax credit benefits, (gain) loss on sale and disposal of businesses, product warranty and liability expense, sale-leaseback, real estate and receivable adjustments, and a trade customer insolvency claim settlement.

 

**

Free Cash Flow consists of GAAP cash provided by operating activities after capital expenditures, proceeds from the sale of assets/businesses, and changes in restricted cash and repayment of outstanding term loan.

Each NEO had responsibilities focused on the Global Corporate Enterprise in 2019. The Global Corporate Enterprise objectives for 2019 were Ongoing EBIT, weighted 50%, and Free Cash Flow, weighted 50%. These were the same metrics and same weightings as 2018, and are designed to reflect our balanced focus on optimizing cash flow in addition to improving earnings. We chose Ongoing EBIT and Free Cash Flow because they are key drivers of stockholder value used by us to communicate with the investment community and closely tracked by our investors in measuring our financial performance. The goals and ranges established by the Committee and actual 2019 performance, appear in the table below:

 

             

Performance Measure

   Weighting   

Threshold

(0% payout)

  

Target

(100% payout)

  

Maximum

(200% payout)

  

2019 Actual

Result

   Payout  
   

Ongoing EBIT

   50%    $950M    $1,350M    $1,550M    $1,414M    132%
   

Free Cash Flow

   50%    $450M    $850M    $1,250M    $912M    116%

The Committee determined levels of achievement based on our financial results as follows:

 

   

Ongoing EBIT of $1.4 billion was above the target goal of $1.35 billion; and

 

   

Free Cash Flow of $912 million was above the target goal of $850 million.

 

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Whirlpool experienced raw material inflation, tariffs, and currency volatility during the year which unfavorably impacted Ongoing EBIT in 2019. However, we effectively implemented cost-based price increases, and successfully reduced operating costs and improved productivity to overcome the additional external costs. Free Cash Flow was driven by structural improvements to working capital management.

Based on performance results relative to the goals, and after consideration of certain business circumstances, in particular the fact that a portion of Free Cash Flow was attributable to certain net positive one-time events, the Committee determined an overall 2019 Company Performance Factor of 120% for NEO awards.

The Committee determined the actual payout to each NEO by multiplying the NEO’s target award by the applicable Company Performance Factor and using judgment to assess individual performance. Refer to pages 31-32 for a description of individual performance factors considered for each NEO.

Long-term Incentives

The Committee makes annual grants of long-term incentives (“LTI”) to focus executives on longer-term financial and strategic objectives, to align management’s interests with those of our stockholders, and to attract, retain, and motivate the executive talent that Whirlpool requires. These LTI awards, which we commonly refer to as Strategic Excellence Program awards, or “SEP,” were made under the stockholder-approved 2018 Omnibus Stock and Incentive Plan. Grants prior to 2018, including the payout of the 2017-2019 Performance Share Units and Performance Cash Units, were made under the Amended and Restated 2010 Omnibus Stock and Incentive Plan.

The Committee, with the assistance of FW Cook, establishes the LTI target opportunity for each NEO after reviewing competitive market practices, the executive’s level of responsibility, and the executive’s ability to contribute to our long-term success.

LTI awards typically consist of a combination of PSUs and stock options. Prior to 2019, SEP awards may also have included performance cash units (“PCUs”) and RSUs, as was the case for Messrs. Liotine and Brega in 2017 and 2018. Beginning in 2019, 30% of SEP award value for NEOs was granted in the form of stock options, with the remaining 70% granted in the form of PSUs.

Equity Award Grant Practices

Generally, the Committee grants annual equity awards to employees, including NEOs, on a single date at its regularly scheduled meeting in February. This meeting occurs after we release earnings for the prior fiscal year, which permits material information regarding our performance for the prior fiscal year to be disclosed to the public before equity-based grants are made. The actual number of stock units and stock options are awarded based on the closing stock price on the date of grant. A Black-Scholes valuation methodology is used to determine the grant date value for stock options. In the case of Mr. Morel, the Committee granted equity awards to him on April 1, 2019, his first day of employment with Whirlpool.

Performance Stock Units and Performance Cash Units: PSUs and PCUs are tied directly to our financial and strategic performance over a three-year performance period beginning each January 1. Each annual grant rewards for the achievement of specific long-term strategic goals designed to deliver long-term stockholder value. The performance measures and goals are established by the Committee based on our internal operating plan and expectations for the three-year performance period. These awards also promote executive retention as the executive must generally remain employed with Whirlpool through the end of the performance period in order to vest in the award. Beginning in 2019, the Committee discontinued awards of PCUs, such that all long-term incentive awards are granted entirely in equity, in order to further align employee incentives with stockholder interests. PCUs that were granted in 2017 and 2018 for certain NEOs pay out in 2020 and 2021, respectively, subject to achievement of performance goals.

Stock Options: Stock options generally vest over a three-year period in equal annual installments and are exercisable over a ten-year term, promoting a focus on long-term stock value creation, as well as executive retention derived from continued service vesting requirements. Stock options granted by the Committee have a one-year minimum vesting period.

Time-vesting Restricted Stock Units: RSUs provide potential appreciation opportunity as our stock price increases. We also grant RSUs to attract, retain, and provide additional incentive to our executives. RSUs generally vest in equal installments over three to five years of continued employment, as determined by the Committee, which provides a retention benefit over the vesting period. Beginning in 2019, the Committee discontinued awards of time-vesting RSUs to NEOs as part of the SEP award, in order

 

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to increase the focus on performance. However, the Committee may still grant RSUs for retention, promotion or recruiting purposes, such as the 2019 new hire award to Mr. Morel.

2019 SEP Awards

For 2019, the Committee selected a three-year performance period for the achievement of performance goals, with the number of PSUs earned to be determined and vested in February 2022 based on performance results for the period from 2019 through 2021.

The Committee established 2019 LTI target award levels and mix for the NEOs as follows:

 

Named Executive Officer

 

  

2019 SEP Target

Award

 

   Percentage of 2019 SEP  Target Award comprised by:
   PSUs    Stock Options
   

Marc R. Bitzer

     $ 9,059,250        70 %        30 %
   

James W. Peters

     $ 2,040,000        70 %        30 %
   

Joseph T. Liotine

     $ 2,323,750        70 %        30 %
   

João C. Brega

     BRL  3,412,500  (1)         70 %        30 %
   

Gilles Morel

     EUR  625,000  (2)         70 %        30 %

 

(1) 

Mr. Brega’s SEP Target is noted in his home currency, Brazilian Reais. Converting into U.S. Dollars results in a target of $865,238, using 12-month average exchange rates for 2019.

 

(2) 

Mr. Morel’s SEP Target is noted in his home currency, Euros. Converting into U.S. Dollars results in a full-year target of $699,888, using 12-month average exchange rates for 2019.

For the 2019-2021 performance period, the measures for the PSUs are Cumulative Ongoing EPS and average ROIC, each equally weighted at 50%. These measures were chosen because they represent important indicators of Company growth, profitability and capital efficiency, which are key drivers of sustainable stockholder value creation. These two measures, and the 50%/50% weighting of these measures, remained the same as those used for the 2018 grants of PSUs and PCUs.

The Committee established that performance results meeting target goals would result in a payout equal to 100% of the target award, while stronger performance would result in increased award levels up to a maximum payout of 200% of the respective target award. Performance below target goals will result in a payout of less than 100%, and potentially 0%. The Committee established the performance goals for the PSUs to encourage strong, focused performance. Given the economic and market conditions at the time of grant, the goals were designed to be challenging but achievable, while performance levels resulting in maximum payouts were designed to be aggressive, stretch goals.

Special Recognition and Retention Awards

The Committee periodically grants additional “off-cycle” equity awards to key employees, including NEOs, in connection with promotions, recruitment and retention efforts, succession planning, or significant accomplishments or achievements.

In February 2019, the Committee granted a special performance award of 15,000 PSUs to Mr. Brega to incentivize the achievement of two key objectives (each worth 7,500 PSUs): (1) the successful completion of the strategic divestiture of our Embraco business, and (2) cumulative ongoing EBIT for the Latin America Region during the 2019 - 2021 performance period. The award will vest in part or in full on March 1, 2023, subject to achievement of the performance goals.

In April 2019, the Committee granted a special award of 6,000 RSUs to Mr. Morel, in connection with his employment as Executive Vice President and President, Whirlpool EMEA. The award is intended to partially offset compensation Mr. Morel forfeited upon his departure from his prior employer and will vest in equal installments on May 1, 2021 and May 1, 2022, subject to his continued employment through the applicable vesting date.

 

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Performance-based Award Payouts for the 2017-2019 Performance Period

For PSUs and PCUs granted in 2017 (with a 2017-2019 performance period) the performance goals were Cumulative Ongoing EPS (50% weighting) and average annual improvement in ROIC (50% weighting). Average annual improvement in ROIC averages the payout percentage achieved for each year of the three-year performance cycle, based on a target of 0.5% improvement in ROIC each year relative to the prior year’s ROIC performance. The Committee established a payout range from 0% to 200% for performance against each of these measures. These metrics were selected because they represent important measures of profitability, growth and capital efficiency, which are key drivers of sustainable stockholder value creation.

 

LOGO

 

*

For purposes of the Company Performance Factor, the Cumulative Ongoing EPS metric was based on GAAP EPS excluding restructuring expenses, out-of-period adjustment related to our China business, France antitrust settlement, impairment of EMEA goodwill and intangibles, trade customer insolvency, divestiture-related transition costs, Brazil indirect tax credit benefits, (gain) loss on sale and disposal of businesses, product warranty and liability expense, certain sale-leaseback, real estate and receivable adjustments, and a trade customer insolvency claim settlement. We define ROIC as ongoing EBIT (with the same exclusions as Cumulative Ongoing EPS) after taxes divided by total invested capital, defined as total assets less non-interest bearing current liabilities (“NIBCLS”). NIBCLS is defined as current liabilities less current maturities of long-term debt and notes payable. For the 2017-2019 performance period, invested capital excludes Right of Use (“ROU”) assets related to lease accounting standards changes. ROIC calculation utilizes a constant 24% tax rate each year for consistency across the three-year period.

When setting financial goals and evaluating actual results, the Committee determined that the target financial objectives would exclude certain items which were not viewed as reflective of ongoing business performance, including changes in accounting rules that were not anticipated when goals were established.

 

         
           Performance Goals
(Payout % Target)
          
   

Performance Measure

   Weighting   

Threshold

(0%)

  

Target

(100%)

  

Maximum

(200%)

   2017-2019
Actual
   Payout
   

Cumulative Ongoing EPS (1)

   50%    $38.00    $48.00    $56.00    $44.90      74%  
   

3-year Average Annual Improvement in ROIC

   50%    -0.2%    +0.5%    +1.5%    (2)      103%  

 

(1) 

Performance goals and payouts for Cumulative Ongoing EPS do not follow a linear relationship; ongoing EPS for the 2017, 2018, and 2019 fiscal years were $13.74, $15.16, and $16.00, respectively.

 

(2) 

Improvement in ROIC reflects a three-year average improvement, with each year calculated separately, and the resulting annual payouts averaged. Annual Improvement of ROIC was -1.10% in 2017, resulting in a payout of 0% for that year; +1.00% in 2018, resulting in a payout of 158% for that year; and +0.90% in 2019, resulting in a payout of 150% for that year. The average of the 0%, 158% and 150% payouts was 103%.

Over the three-year performance period, Whirlpool delivered solid results with margin expansion in our North America region and took decisive actions to overcome significant challenges around the globe. We successfully implemented cost-based price increases and global fixed cost reduction initiatives to overcome significant raw material, tariff, and currency impacts. Additionally, we took a number of strategic actions to focus our business portfolio including the sale of our Embraco compressor

 

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business and exiting of under-performing businesses in certain countries. We also were successful in returning our EMEA region to profitability in the fourth quarter of 2019.

With respect to the Company Performance Factor, the Committee determined that overall performance was below target, resulting in a Company Performance Factor of 88%.

Performance Assessment and Resulting Awards

 

    

 

Marc R. Bitzer    

Chairman and CEO    

    

 

CEO Pay Mix

 

LOGO

 

 

 

Mr. Bitzer’s total pay in 2019 was $12,640,872. This value is based on his (a) actual base salary received during the year, (b) actual short-term incentive earned for 2019, and (c) the grant date fair value of 2019 equity awards.

 

 

 

     

Compensation

Element

  Value    Rationale
     

 

Salary

 

 

$1,279,167

 

  

Mr. Bitzer’s salary increased by 2.8% over 2018.

 

     
Short-term incentive  

$2,302,500

 

120% Company Performance Factor and no individual performance modifier applied

  

Mr. Bitzer served as Whirlpool Corporation’s Chairman of the Board and CEO during 2019. His 2019 achievements included:

 

 Increased the strength of our executive leadership team, including the onboarding of a new President of EMEA and four new members of the corporate Executive Committee;

 

 Implemented cost-based price increases with limited loss of demand to position the business for success;

 

 Oversaw the successful turnaround of the EMEA business, including a return to profitability in the fourth quarter of 2019; and

 

 Continued to refocus the business portfolio and re-allocate capital, including exits from Turkey and South Africa, and the completion of the divestiture of our Embraco compressor business.

 

Using a Company Performance Factor of 120%, the Committee determined that Mr. Bitzer’s resulting short-term incentive award for 2019 performance was $2,302,500.

 

     
Long-term incentive  

$9,059,205

 

  

Represents the grant date fair value of the target award, with 30% represented by stock options and 70% represented by PSUs, with a 2019-2021 performance period.

 

 


 

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                           COMPENSATION DISCUSSION AND ANALYSIS     

 

Other Named Executive Officers

The CEO’s recommendations for Messrs. Peters, Liotine, Brega, and Morel were based on Company performance and his review of individual performance. The following information provides highlights of specific individual and business performance considered in the pay recommendations for the other NEOs, and the resulting awards under the short-term incentive program.

 

 

 

James W. Peters, Executive Vice President and Chief Financial Officer

 

 

Mr. Peters is responsible for developing and implementing financial and accounting plans and maintaining positive relationships with investors, financial institutions and regulators. His 2019 achievements included:

 

 Oversaw delivery of record EPS and strong cash flow, in part attributable to structural improvements in working capital; and

 

 Implemented a number of deleveraging actions, making significant progress toward long-term gross Debt/EBITDA goal

 

Using a Company Performance Factor of 120%, the Committee determined that Mr. Peters’ resulting short-term incentive award for 2019 performance was $729,000.

 

 

 

Joseph T. Liotine, Executive Vice President and President, Whirlpool North America

 

 

Mr. Liotine leads our operations in the North America region, as well as our global KitchenAid small domestic appliance business. In 2019, he also assumed responsibility for Whirlpool’s Global Information Services organization. His 2019 achievements included:

 

 Very strong operational results for North America, including record EBIT margins of 13.3% in the fourth quarter, in spite of inflationary headwinds from raw material costs and tariffs;

 

 Executed cost-based price increases while maintaining market share, combined with cost takeout and productivity initiatives; and

 

 Initiated a process to globalize the Global Information Services organization to better support our strategic imperatives.

 

Using a Company Performance Factor of 120%, the Committee determined that Mr. Liotine’s resulting short-term incentive award for 2019 performance was $845,000.

 

 

 

João C. Brega, Executive Vice President and President, Whirlpool Latin America

 

 

Mr. Brega leads our operations in the Latin America region. His 2019 achievements included:

 

 Oversaw the closing of the sale of our Embraco compressor business, and continued the integration of the Latin America Region; and

 

 Led strong organic net sales growth of +9.3%, driven by market share gains in Brazil and strong growth in Direct to Consumer sales.

 

Using a Company Performance Factor of 120%, the Committee determined that Mr. Brega’s resulting short-term incentive award for 2019 performance was BRL 3,276,000 ($830,629 using 12-month average exchange rates for 2019).

 

 

 

Gilles Morel, Executive Vice President and President, Whirlpool Europe, Middle East and Africa (EMEA)

 

 

Mr. Morel leads our operations in EMEA. He joined Whirlpool in April 2019. His 2019 achievements included:

 

 Successfully transitioned to leading the EMEA region and led development of the EMEA leadership team; and

 

 Successfully implemented EMEA business turnaround actions, including execution of cost reduction actions, which returned the EMEA region to profitability in the fourth quarter of 2019.

 

Using a Company Performance Factor of 120%, the Committee determined that Mr. Morel’s resulting short-term incentive award for 2019 performance (pro-rated for his April start date) was EUR 478,125 ($535,414 using 12-month average exchange rates for 2019).

 

 

 

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    COMPENSATION DISCUSSION AND ANALYSIS                           

 

Other Elements of Compensation

Benefits and Perquisites

We provide competitive perquisites to executives, including financial planning services (including tax preparation and estate planning), limited use of Whirlpool-owned and leased property, product exchanges and discounts, home security systems, relocation assistance, and comprehensive executive health evaluations. These perquisites are designed to support a market-based competitive total compensation package, which allows us to attract and retain key talent and enhances the productivity of our management team by enabling them to focus their efforts on Whirlpool business. Mr. Brega is eligible to receive Company-provided insurance premiums and the use of a Company-provided car and driver in Brazil for personal security reasons, consistent with prevailing market practices for executives in Latin America. Mr. Morel is eligible for a Company car and driver, consistent with market practice in EMEA. Mr. Morel also received certain relocation and other benefits when he joined Whirlpool, including temporary living, housing allowance, tuition reimbursement for children (through completion of primary school), and household goods moving expenses.

For purposes of personal security, productivity, and immediate availability, Mr. Bitzer was entitled to use Company aircraft for personal use in 2019. Other executives may be granted limited use of the aircraft with the permission of the CEO. The value of this benefit is treated as taxable income, and the executive is responsible for all associated taxes. In 2019, the Committee approved an aircraft timeshare arrangement with Mr. Bitzer, under which Mr. Bitzer reimburses Whirlpool for personal use flights, once personal use cost exceeds $80,000 in one year.

Beginning in 2020, we have discontinued Company-paid financial planning, tax preparation and estate planning services for executive officers.

Retirement

NEOs are eligible for retirement benefits designed to provide, in total, a market-competitive level of income replacement upon retirement through a combination of qualified and non-qualified plans. These plans are designed to attract and retain high-quality executives by providing market-competitive benefit levels, and also support our leadership development objectives by providing senior executives with an opportunity to accumulate sufficient resources to retire from Whirlpool at appropriate times, thereby enabling an orderly succession of talent throughout the organization.

We periodically assess retirement benefits for our senior leaders, including each of the U.S.-based NEOs, against data provided to the Willis Towers Watson Employee Benefits Information Center (“Willis Towers Watson”) by other U.S. companies that provide survey data on executive benefits. In 2015, we last reviewed with Willis Towers Watson comparisons of data obtained from 54 companies with revenue between $10 billion and $45 billion. Accordingly, this survey tool includes data on a much broader base of companies than those included in the executive compensation comparator group.

This review is an important factor used in determining the median retirement income replacement ratio among similarly situated executives at such companies and in setting the target amount of total retirement benefits for our U.S.-based NEOs. As a result of the current mix of our retirement plans, we believe that total retirement benefits for the U.S.-based NEOs are currently at a competitive level when compared to the other companies in the survey.

 

 III. Policies and Practices

Stock Ownership Guidelines

The Committee has established robust stock ownership guidelines. Our guidelines are designed to ensure that our NEOs and other senior leaders have a significant stake in our long-term success and they help to further align the interests of executives with those of our stockholders. These ownership guidelines consider our use of long-term equity incentives as well as a review of competitive market practices. The guidelines are expressed as multiples of base salary and vary based on an individual’s level in the organization. Ownership guidelines are as follows:

 

   

Position / Level

   Ownership Guideline
   

Chairman and Chief Executive Officer

   7 x salary
   

Chief Financial Officer and Regional Presidents

   5 x salary
   

Other Executive Vice Presidents

   4 x salary

 

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                           COMPENSATION DISCUSSION AND ANALYSIS     

 

The guidelines require each executive to achieve their respective level of stock ownership within five years of their hire date or date of most recent promotion. For compliance with these guidelines, ownership includes shares purchased on the open market, shares owned jointly with spouses and children, shares held in the Whirlpool 401(k) Retirement Plan, shares obtained through stock option exercises (but not including unexercised stock options), and shares owned outright (including those in which the executive has deferred distribution). Unvested RSUs and unvested PSUs are not included for purposes of determining compliance with the guidelines.

The Committee annually reviews the progress of each NEO toward achieving the applicable level of ownership. During the Committee’s most recent annual review of executive stock ownership in October 2019, each NEO met his applicable stock ownership guideline, or was on track to meet the guideline and still in his five-year accumulation period.

Compensation Recovery Policy (Clawback)

The short-term incentive and omnibus stock incentive plans include “clawback” provisions under which the repayment of awards may be required under certain circumstances. Under these plans, the Committee may require repayment of an award if the participant is terminated or otherwise leaves employment with Whirlpool within two years following the vesting date of the award and such termination of employment is in any way connected with any misconduct or violation of Whirlpool policy. The plans also contain provisions that allow the Committee to subject awards to the potential clawback of granted cash and equity in the event of a material financial restatement. Moreover, these plans provide that the Committee may require repayment of awards if a participant becomes employed with a competitor within the two-year period following termination of employment, or for any other reason considered by the Committee in its sole discretion to be detrimental to Whirlpool or its interests.

Hedging and Pledging

The Whirlpool Corporation Insider Trading Policy prohibits:

 

   

Hedging (or any transaction with similar effect) by any employee or director.

 

   

Pledging or trading on margin (or any transaction with similar effect) by any executive officer or director.

Non-Competition / Non-Solicitation Agreements

We maintain non-competition and non-solicitation agreements with senior leaders, including each of our U.S.-based NEOs, to protect confidential information and trade secrets from unauthorized use or disclosure. Violation of these agreements may result in clawback or forfeiture of incentive compensation awards.

Post-Employment Provisions

Our U.S.-based NEOs are eligible to receive benefits under a severance policy generally available to U.S. salaried employees. We have also entered into Compensation Benefits and Assurance Agreements with each NEO, to provide benefits in the event of a qualifying termination following a change in control of Whirlpool. These agreements are intended to ensure that our NEOs are not deterred from exploring opportunities that will result in maximum value for stockholders, including actions that may result in a change in their position or standing within Whirlpool, and to promote orderly succession of talent and support our overall attraction and retention objectives. These agreements align our change in control severance program with current best practices in this area by imposing a “double-trigger” requirement under which benefits under these agreements are triggered only upon the occurrence of both a change in control event and the termination of the employment relationship by Whirlpool without cause or by the executive for good reason. The agreements do not provide “golden parachute” excise tax gross-ups.

Employment Contracts

Generally, we have no employment contracts with our employees, unless required or customary based on local law or practice. We do not have employment contracts in place with any of the U.S.-based NEOs. Consistent with local practice, we have employment contracts in place with Mr. Brega and Mr. Morel.

 

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    COMPENSATION DISCUSSION AND ANALYSIS                           

 

 IV. How Compensation Decisions Are Made

Role of the Human Resources Committee

The Committee has overall responsibility for Whirlpool Corporation’s executive compensation programs. In February each year, the Committee:

 

   

Reviews Company performance and individual executive performance for the prior year and approves payouts under our short-term incentive plan for all Executive Committee members, including our CEO and other NEOs.

 

   

Reviews performance results for the prior performance period and approves payouts for our long-term incentive plan.

 

   

Establishes the performance measures, performance goals and payout levels for awards under our short-term and long-term incentive plans for the upcoming performance periods.

 

   

Considers and determines the principal elements and target compensation for each NEO, including our CEO.

At its other meetings throughout the year, the Committee also:

 

   

Evaluates the overall effectiveness of our compensation philosophy and programs in supporting our business strategy and human resources objectives.

 

   

Reviews and approves the Comparator Group used to understand competitive market practices.

 

   

Reviews management’s recommendations regarding hiring, promotion, retention, severance, and compensation for individual executives.

To determine target pay levels, the Committee relies on external competitive market data, internal equity among the executives, individual performance and contributions, and guidance from its independent compensation consultant, FW Cook. To determine the payout of incentive awards, the Committee considers Company performance and management’s assessment of individual performance. While the Committee requests and considers advice and recommendations from its consultant and from management, ultimately the Committee decides these matters in its sole discretion.

Role of the Independent Compensation Consultant

The Committee engages an independent compensation consultant to advise on our executive compensation programs and practices. The Committee has the sole authority and responsibility to select, retain, and terminate any consulting firm assisting in the evaluation of executive compensation, and to approve the compensation consultant’s fees and terms of engagement. The Committee continued to retain FW Cook in 2019 as its independent compensation consultant because of its extensive expertise and its independence from any other business relationship with Whirlpool.

FW Cook did not perform any services for Whirlpool in 2019 other than those requested by the Committee related to executive compensation and board of director compensation. In 2019, FW Cook assisted with and advised the Committee on a variety of ongoing items, including review of materials prepared by management in advance of Committee meetings, review of public disclosures (including this CD&A and the accompanying tables and narrative footnotes), review of the Comparator Group, CEO compensation and analysis and advice to the Committee on typical market practices, emerging trends and best practices.

As part of its ongoing role, FW Cook reviews compensation provided to the NEOs, based on an assessment of the compensation of executives in comparable positions within the Comparator Group (described under “Competitive Market Compensation Analysis”).

The Committee determined that the work of FW Cook did not raise any conflicts of interest in 2019. In making this assessment, the Committee considered the independence factors enumerated under SEC and NYSE rules, including the fact that FW Cook does not provide any other services to Whirlpool, the level of fees received from Whirlpool as a percentage of FW Cook’s total revenue, policies and procedures employed by FW Cook to prevent conflicts of interest, and whether FW Cook or the individual FW Cook advisors to the Committee own any Whirlpool stock or have any business or personal relationships with members of the Committee or our executive officers.

 

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                           COMPENSATION DISCUSSION AND ANALYSIS     

 

Role of Management

Each year, the CEO and Chief Human Resources Officer make recommendations to the Committee regarding the design of the compensation and benefit programs for all executive officers. In addition, the CEO makes recommendations with respect to base salary, target short-term incentive compensation, target LTI compensation, and total compensation levels for the NEOs other than himself, based on his assessment of individual performance and contributions to Whirlpool. The CEO and Chief Human Resources Officer recommend the performance measures and the performance goals for the short-term cash incentive and LTI programs for adoption by the Committee. The Committee has authority to adopt or modify these metrics in its sole discretion. In addition, the CEO assesses the individual performance of the other NEOs to assist the Committee in making determinations regarding incentive program award payouts.

Human Resources Committee Report

The Human Resources Committee of the Board of Directors reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement.

Based upon this review and discussion, the Human Resources Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Whirlpool Corporation’s Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2019.

HUMAN RESOURCES COMMITTEE

 

Michael F. Johnston, Chair

  

Diane M. Dietz

Samuel R. Allen

  

William D. Perez

Harish Manwani

  

Greg Creed

 

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    2019 EXECUTIVE COMPENSATION TABLES                           

 

2019 Summary Compensation Table

The following table presents compensation information for our NEOs during 2019 and, to the extent required to comply with SEC executive compensation disclosure rules, 2018 and 2017 fiscal years.

The table may not reflect the actual compensation received by any NEO for the periods indicated. For example, amounts recorded in the Stock Awards and Option Awards columns reflect the grant date fair value of the awards at the award date and the targeted compensation for certain performance-based equity awards. The actual value of compensation realized by a NEO may vary from the amount reported below due to Company performance relative to pre-established incentive award criteria, the stock price on award distribution dates, and, in the case of stock options, differences between the stock price on the grant date and the stock price at exercise. As a second example, the amounts reported in the Change in Pension Value and Non-qualified Deferred Compensation Earnings column represent an actuarial present value which may significantly increase or decrease reportable compensation in any given year depending on interest rates and other factors.

 

                   

Name and Principal Position

  Year    

Salary

($)

   

Bonus

($)

   

Stock

Awards

($) (3)

   

Option

Awards

($) (4)

   

Non-Equity

Incentive
Plan
Compensation
($) 
(5)

   

Change in

Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings 
($) (6)

   

All Other

Compensation

($) (7)

   

Total

($)

 
   

Marc R. Bitzer
President and Chief
Executive Officer

    2019       1,279,167             6,341,437       2,717,768       2,302,500       1,171,410       187,212       13,999,494  
    2018       1,250,000             4,374,836       4,374,977       1,462,500       178,692       195,270       11,836,275  
    2017       1,091,667             2,099,879       2,100,075       591,798       621,618       241,327       6,746,364  
   

James W. Peters
Executive Vice President
and Chief Financial Officer

    2019       675,000             1,427,883       612,072       729,000       482,013       81,218       4,007,186  
    2018       641,667             812,381       812,463       522,255             102,820       2,891,586  
    2017       588,333             749,868       750,002       230,606       301,653       69,500       2,689,962  
   

Joseph T. Liotine
Executive Vice President
and President, Whirlpool North America

    2019       704,167             1,626,610       697,211       1,161,800       546,778       59,992       4,796,558  
    2018       641,667             812,380       406,212       862,888       1,022       45,910       2,770,079  
    2017       595,000             3,377,596       360,008       371,998       285,394       53,015       5,043,011  
   

João C. Brega
Executive Vice President
and President, Whirlpool Latin America (1)

    2019       670,892             2,734,104       275,937       975,659             198,173       4,854,765  
    2018       589,295             423,460       211,752       583,979             218,113       2,026,599  
    2017       638,130             3,076,372       209,373       309,561             215,327       4,448,763  
   

Gilles Morel
Executive Vice President
and President, EMEA (2)

    2019       524,916       111,982       1,177,823       158,999       535,414             198,892       2,708,026  
                                                                       

 

(1) 

Compensation amounts for Mr. Brega paid in Brazilian Reais have been converted to U.S. Dollars using a monthly average currency conversion rate for the applicable year.

 

(2) 

Mr. Morel joined Whirlpool on April 1, 2019. As part of his compensation, Mr. Morel received a sign-on bonus of 100,000 Euros. Compensation amounts for Mr. Morel paid in Euros have been converted to U.S. Dollars using a monthly average currency conversion rate for the applicable year.

 

(3) 

Reflects grant date fair value of target PSUs, which represents the probable attainment level of these awards at the time of grant, and RSUs. See our “Share-Based Incentive Plans” Note to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the applicable fiscal year for a discussion of the relevant assumptions used to account for these awards. PSUs have a potential payout of 0% to 200% of the target amount. The grant date fair values of the maximum possible payout with respect to the 2019 PSU awards are as follows:

 

   

Name

   2019 ($)  
   

Marc R. Bitzer

     12,682,874  
   

James W. Peters

     2,855,766  
   

Joseph T. Liotine

     3,253,220  
   

João C. Brega

     1,287,408  
   

Gilles Morel

     742,005  

For the actual number of PSUs earned for the 2017-2019 performance period as well as target awards for the 2018-2020 and 2019-2021 performance periods, see the “2019 Outstanding Equity Awards at Fiscal Year-End” table.

 

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                           2019 EXECUTIVE COMPENSATION TABLES     

 

(4) 

Reflects the grant date fair value of stock option awards. See our “Share-Based Incentive Plans” Note to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the applicable fiscal year for a discussion of the relevant assumptions used in calculating these values.

 

(5) 

Represents the cash incentive awards earned in 2019 under our short-term incentive program. For Messrs. Liotine and Brega, the 2019 amount also includes the equivalent of $316,800 and $145,030, respectively, in PCUs earned, which had a performance period from 2017-2019, and were certified by the Committee on February 17, 2020.

 

(6) 

Reflects the change in actuarial present value of these benefits from December 31, 2018 to December 31, 2019. See the “2019 Pension Benefits” table for the actuarial present value of these benefits. None of our NEOs received above-market earnings on their non-qualified deferred compensation accounts.

 

(7) 

The following table presents an itemized account of the amounts shown in the “All Other Compensation” column for each NEO in 2019:

 

   

Name

  

Personal

Use of

Whirlpool

Aircraft  (a)
($)

  

Other

Perquisites  (b)
($)

  

Defined

Contribution

Plan

Contributions  (c)
($)

  

Car &

Driver  (d)
($)

  

Insurance

Premiums  (e)
($)

   Relocation  (f)
($)
  

Total

($)

   

Marc R. Bitzer

       80,500        17,170        89,542                             187,212
   

James W. Peters

       24,027        9,941        47,250                             81,218
   

Joseph T. Liotine

              10,700        49,292                             59,992
   

João C. Brega

              5,360        100,372        45,515        46,926               198,173
   

Gilles Morel

              805               84,414               113,673        198,892

 

  (a) 

Our incremental cost for personal use of Whirlpool aircraft is calculated by multiplying the aircraft’s hourly variable operating cost by a trip’s flight time, which includes any flight time of an empty return flight. Variable operating costs are based on industry standard rates of variable operating costs, including fuel costs, trip-related maintenance, landing/ramp fees, and other miscellaneous variable costs. On certain occasions, a spouse or other family member may accompany one of our NEOs on a flight. No additional operating cost is incurred in such situations under the foregoing methodology. We do not pay our NEOs any amounts in connection with taxes on income imputed to them for personal use of our aircraft.

 

  (b) 

Represents the incremental cost to Whirlpool of: Whirlpool products offered at discounted prices; financial planning and tax services; personal use of property that we own or lease primarily for business purposes; comprehensive health evaluations; and home security.

 

  (c) 

Represents Company contributions to the 401(k) Retirement Plan and the 401(k) Restoration Plan for Messrs. Bitzer, Peters, and Liotine. The amount for Mr. Brega consists of Whirlpool contributions to a defined contribution plan account maintained in Brazil.

 

  (d) 

For Mr. Brega, this amount includes the incremental cost to Whirlpool for providing a car and driver for security reasons and is consistent with local prevailing market practices for company executives in Brazil. This amount reflects the car lease and driver compensation cost. For Mr. Morel, this amount includes the cost of the Company-provided car and driver, consistent with typical market practices for executives in Italy. This amount reflects the car lease and driver compensation cost.

 

  (e) 

Represents Company payments to provide life and health insurance programs to Mr. Brega, consistent with those programs customarily provided to executive-level employees of companies in Brazil.

 

  (f) 

Represents Company paid cost of temporary housing, household goods moving expenses, and other expenses associated with Mr. Morel’s relocation to Italy in conjunction with his joining Whirlpool.

2019 Grants of Plan-Based Awards

The following table provides additional information about plan-based compensation disclosed in the 2019 Summary Compensation Table. In February 2019, we granted short-term cash incentives to our NEOs under PEP, and long-term incentives consisting of PSUs and non-qualified stock options under the Whirlpool Corporation 2018 Omnibus Stock and Incentive Plan. Information regarding the treatment of these awards upon a qualifying termination following a change in control is set forth below and under the “2019 Potential Post-Termination Payments” section later in the proxy statement.

The Committee established both target and maximum award levels of PSUs with actual awards to be determined based on the achievement of specified performance objectives over a three-year performance period (2019 - 2021). Upon completion of the performance period, the Committee will approve award amounts in February 2022, determining the number of PSUs earned based on the level of achievement of the performance objectives. These PSU awards are scheduled to vest on March 1, 2022.

Generally, an executive must be employed by Whirlpool on the last day of the performance period in order to earn the short-term incentive award, and be employed by Whirlpool on the vesting date in order to earn the PSU awards. However, a retirement-eligible NEO who retires during the performance period may receive a prorated portion of the PSU award, once the final award amount is determined by the Committee after the end of the performance period.

 

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With respect to PSU awards, if an NEO dies or becomes disabled during the performance period, the award payout determined by the Committee at the end of the performance period is prorated based on the number of months of service completed over the three-year performance period.

Stock option grants are issued with an exercise price equal to the closing price of Whirlpool common stock as reported on the NYSE on the award date. The option term is ten years and options vest in three substantially equal annual installments, subject to the NEO’s continued employment through the applicable vesting date. If the NEO dies or becomes disabled, the stock options immediately vest and expire three years from the date of the event or the original expiration date (whichever occurs first), provided that some options may allow for a post-termination exercise period of at least one year. If the NEO retires, the stock options immediately vest and expire five years from the retirement date or the original expiration date (whichever occurs first). Options cannot be exercised before the first anniversary of the grant.

 

               
  Name   Grant Date  

Estimated Future Payouts Under

Non-Equity Incentive Plan Awards
($)

 

Estimated Future Payouts Under

Equity Incentive Plan Awards

(#)

  All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
 

All Other
Option
Awards:
Number  of
Securities
Underlying
Options

(#)

 

Exercise
or Base
Price of
Option
Awards

($/Sh)

  Grant Date
Fair Value
of Stock
and
Option
Awards 
(1)
($)
 

Threshold

($)

 

Target

($)

 

Maximum

($)

 

Threshold

(#)

 

Target

(#)

 

Maximum

(#)

   
  Marc R. Bitzer                                              
   
  PEP - Cash (2)             0       1,918,750       3,837,500                                          
   
  PSUs (3)       2/18/2019                         0       45,504       91,008                         6,341,437
   
  Stock Options (4)       2/18/2019                                                 97,202       139.36       2,717,768
   
  James W. Peters                                              
   
  PEP - Cash (2)             0       607,500       1,215,000                                          
   
  PSUs (3)       2/18/2019                         0       10,246       20,492                         1,427,883
   
  Stock Options (4)       2/18/2019                                                 21,891       139.36       612,072
   
  Joseph T. Liotine                                              
   
  PEP - Cash (2)             0       704,167       1,408,334                                          
   
  PSUs (3)       2/18/2019                         0       11,672       23,344                         1,626,610
   
  Stock Options (4)       2/18/2019                                                 24,936       139.36       697,211
   
  João C. Brega                                              
   
  PEP - Cash (2)             0       692,191       1,384,382                                          
   
  PSUs (3)       2/18/2019                         0       4,619       9,238                         643,704
   
  PSUs (5)       2/18/2019                               15,000       15,000                         2,090,400
   
  Stock Options (4)       2/18/2019                                                 9,869       139.36       275,937
   
  Gilles Morel                                              
   
  PEP - Cash (2)             0       446,179       892,358                                          
   
  PSUs (3)       4/1/2019                         0       2,759       5,518                         371,003
   
  Stock Options (4)       4/1/2019                                                 6,312       134.47       158,999
   
  RSUs (6)       4/1/2019                                           6,000                   806,820

 

(1) 

Represents the grant date fair value for the equity awards reported in this table. For the PSUs for each NEO, the amount represents the grant date fair value at the award date based upon the probable outcome of the performance conditions. See our “Share-Based Incentive Plans” Note to the Consolidated Financial Statements included in our 2019 Annual Report on Form 10-K for a discussion of the relevant assumptions used to account for these awards.

 

(2) 

Represents estimated possible payouts of short-term incentive awards for 2019 under PEP. See the column captioned “Non-Equity Incentive Plan Compensation” in the 2019 Summary Compensation Table for the actual payout amounts for 2019.

 

(3) 

Represents PSU grants made in 2019 for the 2019 - 2021 performance period. Final award determination will be made in February 2022 by the Committee based on actual performance during the performance period.

 

(4) 

These stock options were granted as part of the Whirlpool long-term incentive program and vest over a three-year term in equal annual installments on each anniversary of the award date, subject to the NEO’s continued employment through the applicable vesting date.

 

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                           2019 EXECUTIVE COMPENSATION TABLES     

 

(5) 

Represents a special award granted to Mr. Brega in February 2019, subject to the achievement of two performance goals (each worth 7,500 PSUs) based on: (1) the successful completion of the strategic divestiture of our Embraco business, and (2) cumulative ongoing EBIT for the Latin America Region during the 2019 - 2021 performance period. 15,000 PSUs represents the target award; there is no opportunity to earn more than the target number of PSUs. The award will vest in part or in full on March 1, 2023, subject to achievement of the performance goals.

 

(6) 

Represents a special award of 6,000 RSUs to Mr. Morel, in connection with the commencement of his employment as Executive Vice President and President, Whirlpool EMEA. The award is intended to partially offset compensation Mr. Morel forfeited upon his departure from his prior employer and will vest in equal installments on May 1, 2021 and May 1, 2022, subject to his continued employment through the applicable vesting date.

2019 Outstanding Equity Awards at Fiscal Year-End

The table below lists outstanding equity grants for each NEO as of December 31, 2019. The table includes outstanding equity grants from past years, as well as the current year.

 

     

    

  OPTION AWARDS     STOCK AWARDS  
   

Name

 

Number of

Securities

Underlying

Unexercised

Options

(Exercisable)

(#)

   

Number of

Securities

Underlying

Unexercised

Options

(Unexercisable)

(#) (1)

   

Equity

Incentive Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options (#)

   

Option

Exercise

Price ($)

   

Option

Expiration

Date

   

Number of

Shares or

Units of

Stock That

Have Not

Vested (#)

   

Market Value of

Shares or Units

of Stock That

Have Not Vested

($) (2)

   

Equity Incentive

Plan Awards:

Number of

Unearned

Shares, Units, or

Other Rights

That Have Not

Vested (#)

   

Equity Incentive

Plan Awards:

Market or Payout

Value of Unearned

Shares, Units or

Other Rights That

Have Not Vested

($) (2)

 
   

Marc R. Bitzer

                   
   

Stock Options

                   
   

2014

    32,615               138.56       2/17/2024            
   

2015

    22,345               213.23       2/16/2025            
   

2016

    39,836               132.19       2/15/2026            
   

2017

    31,955       15,739         177.19       2/20/2027            
   

2018

    38,798       75,312         172.70       2/19/2028            
   

2019

          97,202         139.36       2/18/2029            
   

PSUs

                   
   

2017

              10,428  (3)      1,538,443        
   

2018

                  25,332  (4)      3,737,230  
   

2019

                  45,504  (5)      6,713,205  
   

RSUs

              30,348  (6)      4,477,240        
   

James W. Peters

 

                 
   

Stock Options

                   
   

2015

    1,536               213.23       2/16/2025            
   

2016

    2,176               132.19       2/15/2026            
   

2017

    11,413       5,620         177.19       2/20/2027            
   

2018

    7,205       13,986         172.70       2/19/2028            
   

2019

          21,891         139.36       2/18/2029            
   

PSUs

                   
   

2017

              3,723  (3)      549,254        
   

2018

                  4,704  (4)      693,981  
   

2019

                  10,246  (5)      1,511,592  
   

RSUs

              5,000  (7)      737,650        
   

Joseph T. Liotine

 

                 
   

Stock Options

                   
   

2015

    4,335               213.23       2/16/2025            
   

2016

    6,810               132.19       2/15/2026            
   

2017

    5,478       2,698         177.19       2/20/2027            
   

2018

    3,603       6,992         172.70       2/19/2028            
   

2019

          24,936         139.36       2/18/2029            
   

PSUs

                   
   

2017

              1,787  (3)      263,636        
   

2018

                  2,352  (4)      346,991  
   

2019

                  11,672  (5)      1,721,970  
   

RSUs

                                            17,221  (8)      2,540,614                  

 

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Table of Contents
    2019 EXECUTIVE COMPENSATION TABLES                           

 

     

Name

  OPTION AWARDS     STOCK AWARDS  
 

Number of

Securities

Underlying

Unexercised

Options

(Exercisable)

(#)

   

Number of

Securities

Underlying

Unexercised

Options

(Unexercisable)

(#) (1)

   

Equity

Incentive Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options (#)

   

Option

Exercise

Price ($)

   

Option

Expiration

Date

   

Number of

Shares or

Units of

Stock That

Have Not

Vested (#)

   

Market Value of

Shares or Units

of Stock That

Have Not Vested

($) (2)

   

Equity Incentive

Plan Awards:

Number of

Unearned

Shares, Units, or

Other Rights

That Have Not

Vested (#)

   

Equity Incentive

Plan Awards:

Market or Payout

Value of Unearned

Shares, Units or

Other Rights That

Have Not Vested

($) (2)

 
   

João C. Brega

 

                 
   

Stock Options

                   
   

2014

    4,952               138.56       2/17/2024            
   

2015

    3,048               213.23       2/16/2025            
   

2016

    4,866               132.19       2/15/2026            
   

2017

    3,186       1,569         177.19       2/20/2027            
   

2018

    1,879       3,644         172.70       2/19/2028            
   

2019

          9,869         139.36       2/18/2029            
   

PSUs

                   
   

2017

              1,039  (3)      153,284        
   

2018

                  1,226  (4)      180,872  
   

2019

                  19,619  (5)      2,894,391  
   

RSUs

              16,197  (9)      2,389,543        
   

Gilles Morel

                   
   

Stock Options

                   
   

2019

          6,312         134.47       4/1/2029            
   

PSUs

                   
   

2019

                  2,759  (5)      407,035  
   

RSUs

                                            6,000  (10)      885,180                  

 

(1) 

As shown in the table above, Messrs. Bitzer, Peters, Liotine and Brega have three awards with remaining unvested stock options listed in this column. These awards represent grants from 2017, 2018, and 2019. Stock options generally vest and become exercisable in equal installments on the first, second, and third anniversaries of the grant date, subject to the NEO’s continued employment through the vesting date. Beginning in 2019, all awards granted in February will vest on March 1 immediately following the first, second and third anniversaries of the grant date. As of the last day of our 2019 fiscal year, (i) the awards granted in 2017 have one vesting date remaining: February 20, 2020; (ii) the awards granted in 2018 have two vesting dates remaining: February 19, 2020 and February 19, 2021, and (iii) the awards granted in 2019 have three vesting dates remaining: March 1, 2020, March 1, 2021, and March 1, 2022. Mr. Morel’s 2019 stock options vest on April 1, 2020, April 1, 2021, and April 1, 2022.

 

(2) 

Represents unvested RSUs or PSUs multiplied by the closing price of our common stock ($147.53) on December 31, 2019, the last trading day of the year. The ultimate value of the awards will depend on the value of our common stock on the actual vesting date, and in the case of PSUs, the extent to which the performance objectives are achieved.

 

(3) 

Represents earned but unvested PSUs granted in 2017 with a performance period from 2017-2019. Share amounts were determined on February 17, 2020, and vested on February 20, 2020. The value of the PSU awards vesting on February 20, 2020 are as follows: Mr. Bitzer, $1,586,724; Mr. Peters, $566,492; Mr. Liotine, $271,910; and Mr. Brega, $158,094.

 

(4) 

Represents PSUs granted in 2018, with a performance period of 2018-2020, reported at the target level of performance. Final award determination will be made after the completion of the 2020 performance year.

 

(5) 

Represents PSUs granted in 2019, with a performance period of 2019-2021, reported at the target level of performance. Final award determination will be made after the completion of the 2021 performance year. For Mr. Brega, please see discussion of special PSUs granted in February 2019 under “Special Recognition and Retention Awards” in the Compensation Discussion and Analysis section.

 

(6) 

For Mr. Bitzer, represents 30,348 unvested RSUs which includes 20,348 stock units that will vest and be distributed in shares of common stock upon a qualified retirement. Units vesting upon retirement are credited with dividend equivalents until distribution. Also included are 10,000 RSUs which vest on June 15, 2020, subject to his continued employment through the vesting date.

 

(7) 

For Mr. Peters, represents 5,000 unvested RSUs that will vest and be distributed in shares of common stock on August 1, 2021, subject to his continued employment through the applicable vesting date.

 

(8) 

For Mr. Liotine, represents 17,221 unvested RSUs that will vest and be distributed in shares of common stock as follows: 776 on February 19, 2020; 8,169 on February 20, 2020; 776 on February 19, 2021; and 7,500 on February 20, 2022, subject to his continued employment through the applicable vesting date.

 

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(9) 

For Mr. Brega, represents 16,197 unvested RSUs that will vest and be distributed in shares of common stock as follows: 404 on February 19, 2020; 7,889 on February 20, 2020; 404 on February 19, 2021; and 7,500 on February 20, 2022, subject to his continued employment through the applicable vesting date.

 

(10) 

For Mr. Morel, represents 6,000 unvested RSUs that will vest and be distributed in shares of common stock equally on May 1, 2021 and May 1, 2022, respectively, subject to his continued employment through the applicable vesting date.

2019 Option Exercises and Stock Vested

The table below summarizes the value received from PSUs and RSUs that vested in 2019. During 2019, none of our NEOs exercised any stock options.