DEF 14A 1 wor-def14a_20190925.htm DEF 14A wor-def14a_20190925.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to Section 240.14a-12

WORTHINGTON INDUSTRIES, INC.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

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Dear Fellow Shareholders:

 

On behalf of the Board of Directors and employees of Worthington Industries, Inc. (the “Company”), I cordially invite you to participate via live webcast in the 2019 Annual Meeting of Shareholders (the “Annual Meeting”) of the Company to be held on Wednesday, September 25, 2019, beginning at 3:00 p.m., Eastern Daylight Time.  This year’s Annual Meeting will be a virtual meeting of shareholders which means that you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/WOR19.  You will not be able to attend the Annual Meeting in person.

Details of the business to be conducted at the Annual Meeting are provided in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement, which you are urged to read carefully.  If you are a registered shareholder participating in the Annual Meeting via the live webcast at www.virtualshareholdermeeting.com/WOR19, you may revoke your proxy and vote during the Annual Meeting, even if you have previously submitted a proxy.

We have elected to take advantage of Securities and Exchange Commission (“SEC”) rules that allow us to furnish proxy materials to certain shareholders on the Internet.  On or about the date of this letter, we began mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to shareholders of record at the close of business on August 1, 2019.  At the same time, we provided those shareholders with access to our online proxy materials and filed our proxy materials with the SEC.  We believe furnishing proxy materials to our shareholders on the Internet will allow us to provide our shareholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting.  If you have received the Notice, you will not receive a printed copy of the proxy materials unless you request it by following the instructions for requesting such materials contained in the Notice.

It is important that your common shares be represented at the Annual Meeting whether or not you are personally able to participate via the live webcast. Accordingly, after reading the accompanying proxy materials, please promptly submit your proxy by telephone, Internet or mail as described in the Proxy Statement or the Notice.

Your continuing interest in our Company is greatly appreciated.

Sincerely,

 

 

JOHN P. McCONNELL

Chairman of the Board and Chief Executive Officer

August 14, 2019

 

 

 

 

 

Notice of Annual Meeting of Shareholders to be Held September 25, 2019

 

Notice is hereby given that the 2019 Annual Meeting of Shareholders (the “Annual Meeting”) of Worthington Industries, Inc. (the “Company”) will be held at 3:00 p.m., Eastern Daylight Time, on Wednesday, September 25, 2019.  This year’s Annual Meeting will be a virtual meeting of shareholders which means that you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/WOR19. You will not be able to attend the Annual Meeting in person.

The Annual Meeting is being held for the following purposes:

(1)

To elect four directors, each to serve for a term of three years to expire at the 2022 Annual Meeting of Shareholders;

(2)

To approve the advisory resolution on executive compensation;

(3)

To approve the Fourth Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan, to authorize 1,500,000 additional common shares; and

(4)

To ratify the selection of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending May 31, 2020.

Only shareholders of record at the close of business on the record date, August 1, 2019, are entitled to notice of, and to vote at, the Annual Meeting.

We began mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) on or about August 14, 2019 to shareholders of record at the close of business on August 1, 2019.  The Notice contains instructions on how to access our Proxy Statement, our 2019 Annual Report to Shareholders and the form of proxy on the Internet, as well as instructions on how to request a paper copy of the proxy materials.

By Order of the Board of Directors,

 

Dale T. Brinkman

 

 

 

Secretary

 

 

 

 

 

 

 

Columbus, Ohio

 

 

August 14, 2019

 

 

Before you vote, access the proxy materials in one of the following ways prior to the Annual Meeting:

To view Online: Have available the information printed in the box marked by the arrow → XXXX XXXX XXXX XXXX provided in your Notice and visit: www.proxyvote.com. You may visit www.proxyvote.com 24 hours a day, seven days a week, prior to 11:59 p.m., Eastern Daylight Time, on September 24, 2019.

If you would like to receive a PAPER or E-MAIL copy:

You must request a paper or e-mail copy of the proxy materials. There is NO charge for requesting a copy. Please choose one of the following methods to make your request:

 

 

 

By Internet:

www.proxyvote.com

 

By Telephone:

1-800-579-1639

 

By E-Mail*:

sendmaterial@proxyvote.com

 

 

*If you request proxy materials by e-mail, please send a blank e-mail including in the subject line the information that is printed in the box marked by the arrow XXXX XXXX XXXX XXXX provided in your Notice. Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before September 11, 2019 to facilitate timely delivery of the proxy materials.

 

 

 

 

 

Table of Contents

 

 

 

 

 

Page

 

 

 

Proxy Statement Summary

 

1

 

 

 

General Information

 

7

 

 

 

Security Ownership of Certain Beneficial Owners and Management

 

11

 

 

 

Corporate Governance

 

14

 

 

 

Proposal 1:  Election of Directors

 

17

 

 

 

Transactions with Certain Related Persons

 

30

 

 

 

Executive Compensation

 

33

 

 

 

Compensation Discussion and Analysis

 

33

 

 

 

Compensation Committee Report

 

51

 

 

 

Fiscal 2019 Summary Compensation Table

 

52

 

 

 

Grants of Plan-Based Awards

 

56

 

 

 

Outstanding Equity Awards at Fiscal 2019
Year-End

 

58

 

 

 

Option Exercises and Stock Vested

 

62

 

 

 

Non-Qualified Deferred Compensation

 

63

 

 

 

Annual Cash Incentive Bonus Awards Granted
For Fiscal 2020

 

65

 

 

 

Long-Term Performance Awards, Option Awards
and Restricted Common Share Awards Granted
in Fiscal 2020

 

66

 

 

Page

 

 

 

Compensation of Directors

 

68

 

 

 

Equity Compensation Plan Information

 

71

 

 

 

Proposal 2:  Advisory Vote to Approve Executive Compensation

 

73

 

 

 

Proposal 3: Approval of Fourth Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan to Authorize 1,500,000 Additional Common Shares

 

76

 

 

 

Proposal 4:  Ratification of the Selection of Independent Registered Public Accounting Firm

 

88

 

 

 

Audit Committee Matters

 

89

 

 

 

Householding of Annual Meeting Materials

 

91

 

 

 

Shareholder Proposals for 2020 Annual Meeting

 

92

 

 

 

Future Electronic Access to Proxy Materials and Annual Report

 

93

 

 

 

Annual Report on Form 10-K

 

93

 

 

 

Other Business

 

93

 

 

 

Companies in Comparator Group

 

I-I

 

 

 

Worthington Industries, Inc. Amended and
Restated 1997 Long-Term Incentive Plan
(including proposed Fourth Amendment)

 

II-1

 

 

 

 

 

 

 

Proxy Statement Summary

 

This summary highlights information about Worthington Industries, Inc. (“Worthington” or the “Company”) and certain information contained elsewhere in this Proxy Statement for the Company’s Annual Meeting of Shareholders (the “Annual Meeting”), which will be held on Wednesday, September 25, 2019, beginning at 3:00 p.m., Eastern Daylight Time (EDT).  This summary does not contain all of the information that you should consider in voting your common shares, and you should read the entire Proxy Statement carefully before voting.  For more complete information regarding the Company’s performance for the fiscal year ended May 31, 2019 (“Fiscal 2019”), please review the Company’s Annual Report on Form 10-K for Fiscal 2019.

Virtual Meeting:  The Annual Meeting will be a virtual meeting, which means that you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting via live webcast, by visiting www.virtualshareholdermeeting.com/WOR19.  You will not be able to attend the Annual Meeting in person.

How to Cast Your Vote:

 

 

 

Even if you plan to attend the Annual Meeting via the webcast, please vote as soon as possible and in any event prior to 11:59 p.m. (EDT) on September 24, 2019. You can vote in one of the following ways prior to the date of the Annual Meeting:

 

 

 

Internet

 

Telephone

 

Mail

 

 

 

Go to www.proxyvote.com: You can use
the Internet 24 hours a day to transmit
your voting instructions. Have your
proxy card or Notice of Internet
Availability of Proxy Materials in hand
when you access the website and
follow the instructions.

 

 

Call 1-800-690-6903: You can use
any touch-tone telephone.
Have your proxy card or Notice of
Internet Availability of Proxy Materials
in hand when you call and
follow the instructions.

 

 

If you received a printed copy of the
proxy materials, you may submit your
vote by completing, signing and dating
your proxy card and returning it
in the prepaid envelope to
Vote Processing, c/o Broadridge,
51 Mercedes Way,
Edgewood, New York 11717.

 

 

 

 

 

 

 

 

 

 

Voting Matters and Board Recommendations

 

Management Proposals

Board Vote

Recommendation

Page Reference

(for more detail)

Proposal 1:

Election of four directors, each to serve for a term of three years to expire at the 2022 Annual Meeting of Shareholders

FOR

each nominee

of the Board

17

Proposal 2:

Approval of advisory resolution on executive compensation

FOR

73

Proposal 3:

Approval of Fourth Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan to authorize 1,500,000 additional common shares

FOR

76

Proposal 4:

Ratification of selection of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending May 31, 2020

FOR

88

 

 

Proxy Statement Summary • 2019 Proxy Statement | Worthington

1

 

 

Director Nominees and Continuing Directors

The following table provides summary information about the four director nominees and the seven continuing directors.  Additional information about each nominee’s and each continuing director’s experience, qualifications, attributes and skills can be found beginning on page 18.

 

Name

Age

 

Director

Since

Occupation

Board Committees (1)

Nominees Standing for Re-Election to the Board at the 2019 Annual Meeting of Shareholders

Kerrii B. Anderson

62

2010

Private Investor and Board Advisor;
Former Chief Executive Officer &
Chief Financial Officer,
Wendy’s International, Inc.

Audit; Comp

David P. Blom

65

2019

Former President and
Chief Executive Officer,
OhioHealth Corporation

No Committees

John P. McConnell

65

1990

Chairman of the Board and
Chief Executive Officer,
Worthington Industries, Inc.

Executive*

Mary Schiavo

63

1998

Member, Motley Rice LLC

Audit; N&G

Directors Whose Terms Continue Until the 2020 Annual Meeting of Shareholders

Michael J. Endres

71

1999

Senior Advisor,
Stonehenge Partners, Inc.

Executive; Comp

Ozey K. Horton, Jr.

68

2011

Independent Advisor and
Director Emeritus,
McKinsey & Company

Comp; N&G

Peter Karmanos, Jr.

76

1997

Retired Executive Chairman
of the Board and
Founder, Compuware

Executive; N&G*

Carl A. Nelson, Jr.

74

2004

Independent Business Consultant

Executive; Audit*

Directors Whose Terms Continue Until the 2021 Annual Meeting of Shareholders

John B. Blystone

66

1997

Retired Chairman of the
Board, President and
Chief Executive Officer,
SPX Corporation

Lead Independent
Director; Executive; Comp*

Mark C. Davis

59

2011

Private Investor and
Chief Executive Officer,
Lank Acquisition Corp.

Audit

Sidney A. Ribeau

71

2000

Professor of Communications and
Former President, Howard University

N&G

 

(1)

Comp: Compensation

N&G: Nominating and Governance

*Denotes Committee Chair

 

2

Worthington | 2019 Proxy Statement • Proxy Statement Summary

 

 

Commitment to Shareholders / Governance

Worthington has long operated under a strong corporate Philosophy rooted in the golden rule with earning money for our shareholders and increasing the value of their investment as the Company’s first corporate goal.  Consistent with this Philosophy and the Company’s culture, Worthington is committed to high ethical standards and sound corporate governance practices. 

 

Strong

Corporate Culture

•

Culture based on long-standing corporate Philosophy rooted in the golden rule

•

First corporate goal is to earn money for our shareholders and increase the value of their investment

•

Comprehensive Corporate Governance Guidelines and Code of Conduct

Returns to

Shareholders

•

Dividends paid every quarter since going public in 1968

•

Stock buy-back program

Board

Independence

•

9 out of 11 directors are independent – our CEO is the only management director

•

Audit, Compensation, and Nominating and Governance Committees are composed exclusively of directors who are independent under NYSE corporate governance standards and applicable SEC rules

Lead Independent

Director

•

John Blystone serves as Lead Independent Director

•

Mr. Blystone serves as liaison between management and the other non-management directors, presides over executive sessions of the non-management directors and has authority to call meetings of the non-management directors

Executive

Sessions

•

The independent directors regularly meet in private without management

•

The Lead Independent Director presides at these executive sessions

Board Oversight of

Risk Management

•

The Board monitors Worthington’s systematic approach to identifying and assessing enterprise risks faced by Worthington and our business units

•

The Audit Committee reviews our overall enterprise risk management policies and practices, financial, reporting and compliance risk exposures and the delegation of risk oversight responsibilities to other Board committees

•

The Compensation Committee oversees compensation risk management

Executive

Compensation

•

Strong pay-for-performance philosophy

•

Executive compensation is more highly leveraged than market median – base salaries are generally below market median and a higher percentage of pay is tied to at-risk incentive compensation

•

Goals and targets for annual and long-term incentive plans are annually reviewed and set by Compensation Committee

•

Compensation Committee advised by independent compensation consultant

•

Annual “say-on-pay” advisory vote

•

Limited perquisites and benefits

•

No defined benefit pension or SERP benefits

•

Change of control equity vesting requires “double trigger” – must also have termination of employment

•

No employment contracts or change in control arrangements for executive officers outside shareholder-approved incentive plans

•

Have never repriced or offered cash buy-outs of underwater options as the plan provisions prohibit repricing without shareholder consent

Stock Ownership

Requirements

•

Non-management directors to hold Worthington common shares valued at five times annual cash retainer

•

CEO to hold Worthington common shares valued at five times annual base salary

•

Members of executive management to hold Worthington common shares valued at a multiple of base salary, depending on position

•

No speculative trading or hedging permitted by directors, officers or other key employees of the Company

 

 

 

Proxy Statement Summary • 2019 Proxy Statement | Worthington

3

 

 

Fiscal 2019 Business Performance and Executive Compensation Program Highlights

 

 

 

•

In Fiscal 2019, the Company posted its third best year in terms of earnings per diluted common share, following strong performances in both Fiscal 2018 and Fiscal 2017.  It also continued to generate strong cash flow.

 

•

Fiscal 2019 was a solid but challenging year driven largely by the steel tariffs enacted in early 2018.  Steel Processing was impacted by fluctuating steel prices, particularly the significant declines later in the year, which led to inventory holding losses compared to inventory holding gains in Fiscal 2018.  Falling steel prices later in the year also created short-term margin pressure and contributed to lower direct shipments in the second half of Fiscal 2019 as customers appeared to delay orders while waiting for prices to drop.  The fluctuating steel prices also resulted in lower scrap prices relative to the cost of steel, and this scrap gap had a negative impact on spreads.  Pressure Cylinders was also hurt as the increased steel prices and other input costs early in the year reduced margins, but this segment was able to improve pricing and margins as the year went on.  In addition, Pressure Cylinders results were negatively impacted by a $13 million charge related to a cylinder replacement program.

 

•

Consistent with the Company’s compensation philosophy, annual incentive compensation earned by Company participants continued to move in the direction of the Company’s performance.  Annual compensation incentive bonuses for Corporate executives were down, paying out at 93% of target, following a payout of 106% of target for Fiscal 2018.  

 

•

Corporate long-term performance awards for the three-fiscal-year period ended Fiscal 2019 were also down significantly, paying out at 48% of target, following a payout of 94% of target for the three-fiscal-year period ended Fiscal 2018.

 

•

The Company has taken action to better position itself for the future. It has and continues to take action to exit non-core, underperforming operations. It remains focused on enhancing growth through transformation, innovation and acquisition. The Company’s transformation playbook has been refocused into a business system that combines standard metrics and performance management, lean tools for optimizing value streams and agile teams to attack recognized opportunities.  Multiple innovation teams are working to develop meaningful new products to separate the Company from competitors and deliver impaired results. The Company has increased the size and experience of its M&A team so that it is ready when the right opportunities arise.  

 

 

4

Worthington | 2019 Proxy Statement • Proxy Statement Summary

 

 

Fiscal 2019 Earned Incentive Compensation

 

The following table lists, for each of Fiscal 2019, Fiscal 2018 and Fiscal 2017, the bonus and incentive compensation earned by the Company’s Chief Executive Officer (“CEO”), the two individuals who served as the Company’s Chief Financial Officer (“CFO”), and the three other most highly compensated executive officers serving in executive officer positions at the end of Fiscal 2019 (collectively, the current “named executive officers” or current “NEOs”) as well as their total cash bonus awards for those fiscal years and their three-fiscal-year cash performance and performance share awards earned for the periods ended with such fiscal years.  Information is not included for fiscal years for which the officer was not an NEO.  See the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement for additional information on compensation of the NEOs, including compensation information for NEOs who were not serving in executive officer positions at the end of Fiscal 2019.  

 

 

 

 

 

 

 

 

 

 

3-Year Performance Share

Award Earned

 

Name and

Principal Position

During Fiscal 2019

Fiscal

Year

Annual Incentive

Bonus Earned

($)

3-Year Cash

Performance Award

Earned ($)

(# of Shares)

 

Value on Date

Distributed

($)(1)

 

John P. McConnell,

2019

 

877,723

 

 

 

484,000

 

 

 

7,260

 

 

292,505

 

Chairman of the Board

2018

 

970,666

 

 

 

935,000

 

 

 

18,700

 

 

801,295

 

and Chief Executive Officer

2017

 

1,015,127

 

 

 

923,000

 

 

 

15,691

 

 

788,002

 

Joseph B. Hayek,

2019

 

291,287

 

 

 

55,909

 

(2)

 

501

 

 

20,185

 

Vice President and

2018

N/A

 

 

N/A

 

 

N/A

 

N/A

 

Chief Financial Officer (3)

2017

N/A

 

 

N/A

 

 

N/A

 

N/A

 

B. Andrew Rose,

2019

 

657,546

 

(4)

 

290,400

 

 

 

3,630

 

 

146,253

 

President and Former

2018

 

632,236

 

 

 

561,000

 

 

 

9,350

 

 

400,648

 

Chief Financial Officer (5) (6)

2017

 

661,127

 

 

 

553,800

 

 

 

6,461

 

 

324,471

 

Geoffrey G. Gilmore,

2019

 

557,265

 

(4)

 

161,700

 

(2)

 

1,513

 

 

60,959

 

Executive Vice President and

2018

 

525,672

 

 

 

149,600

 

 

 

2,493

 

 

106,825

 

Chief Operating Officer (6) (7)

2017

 

480,000

 

(8)

 

143,065

 

 

 

1,431

 

 

71,865

 

Virgil L. Winland,

2019

 

445,896

 

 

 

111,320

 

 

 

1,271

 

 

51,209

 

Senior Vice President,

2018

 

493,164

 

 

 

215,050

 

 

 

3,273

 

 

140,248

 

Manufacturing

2017

 

515,700

 

 

 

212,290

 

 

 

1,846

 

 

92,706

 

Dale T. Brinkman,

2019

 

396,352

 

 

 

96,800

 

 

 

1,271

 

 

51,209

 

Senior Vice President-Administration,

2018

N/A

 

 

N/A

 

 

N/A

 

N/A

 

General Counsel and Secretary (9)

2017

N/A

 

 

N/A

 

 

N/A

 

N/A

 

 

(1)

Number of performance shares earned multiplied by closing common share price on the date the performance shares were distributed.

(2)

These amounts include supplemental bonuses paid to Mr. Hayek of $9,896 and Mr. Gilmore of $61,875 for Fiscal 2019.

(3)

Mr. Hayek served as the General Manager of the Company’s Oil & Gas Equipment business prior to being named Chief Financial Officer on November 1, 2018.

(4)

The increased amounts for Mr. Rose and Mr. Gilmore for Fiscal 2019 reflect an increase in target bonus amounts due to their promotions in August 2018.

(5)

Mr. Rose served as Executive Vice President and Chief Financial Officer prior to being named President on August 22, 2018. He served as interim Chief Financial Officer until November 1, 2018.

(6)

In connection with their promotions, Mr. Rose and Mr. Gilmore each received a special award effective September 26, 2018 (when the closing common share price was $42.50) of performance-based/time-vested restricted common shares, 175,000 shares for Mr. Rose and 50,000 shares for Mr. Gilmore. The term of these awards is five years and the restricted common shares will vest if and when both (a) the closing price of Worthington’s common shares equals or exceeds $65.00 per share for 90 consecutive days during the five-year term; and (b) the NEO remains continuously employed by the Company for five years.

(7)

Mr. Gilmore served as President of Worthington Cylinder Corporation before being named Executive Vice President and Chief Operating Officer on August 22, 2018.  

(8)

This amount includes a discretionary bonus to Mr. Gilmore of $52,320 for Fiscal 2017.

(9)

For Mr. Brinkman, the table includes information only for Fiscal 2019, as that was the only year that he qualified as an NEO under the applicable SEC rules.

 

 

Proxy Statement Summary • 2019 Proxy Statement | Worthington

5

 

 

Overview of Executive Compensation Program

 

 

 

SHORT-TERM CASH

LONG-TERM INCENTIVE

PAY

ELEMENT

 

BASE

SALARY

ANNUAL

INCENTIVE

BONUS

CASH

PERFORMANCE

PERFORMANCE

SHARES

RESTRICTED

COMMON

SHARES

STOCK

OPTIONS

WHO RECEIVES

NEOs and other Senior Executives

AT RISK

✘

FORM OF

PAYMENT

Cash

Equity

TYPE OF

PERFORMANCE

Short-term emphasis

Long-term emphasis

 

PERFORMANCE

PERIOD /

VESTING PERIOD

 

Ongoing

1 year

3-fiscal-year

performance period

3-year

cliff vesting

3-year

incremental vesting

(33% a year)

HOW PAY-OUT

DETERMINED

Set or
approved by
Comp.
Committee

Comp. Committee

sets targets based on metrics (below) and

potential awards. Performance

determines amount earned

 

Comp. Committee

determines size of award. Value

depends on price of common shares

on exercise / vesting date

 

MOST RECENT

PERFORMANCE

METRICS

 

N/A

EVA (BU or Corp.) EOI (BU)

EPS (Corp.)

EVA (Corp.)

EOI (BU)

EPS (Corp.)

Stock Price

Stock Price

Appreciation

VALUE OF

AWARD

EARNED

N/A

Formulaic –

Performance v Targets

Formulaic –

Performance

v Targets /

Market Price of

Common Shares

Market Price x

Common Shares

(Market Price –

Exercise Price) x

Common Shares

 

 

 

 

6

Worthington | 2019 Proxy Statement • Proxy Statement Summary

 

 

WORTHINGTON INDUSTRIES, INC.

200 Old Wilson Bridge Road

Columbus, Ohio 43085

(614) 438-3210

www.worthingtonindustries.com

 

PROXY STATEMENT

Dated:  August 14, 2019

FOR THE ANNUAL MEETING OF SHAREHOLDERS

To Be Held On September 25, 2019

 

General Information

 

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Worthington Industries, Inc., an Ohio corporation (the “Company”), for use at the 2019 Annual Meeting of Shareholders to be held at 3:00 p.m., Eastern Daylight Time, on September 25, 2019 (the “Annual Meeting”).  The Annual Meeting will be a virtual meeting, which means that you will be able to participate in the Annual Meeting, vote and submit your questions during the Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/WOR19.  On or about August 14, 2019, we began mailing to our shareholders of record at the close of business on August 1, 2019, a Notice of Internet Availability of Proxy Materials containing instructions on how to access the Notice of Annual Meeting of Shareholders, this Proxy Statement, the form of proxy and our 2019 Annual Report to Shareholders for the fiscal year ended May 31, 2019 (“Fiscal 2019”).

As used in this Proxy Statement, the “Company” means Worthington Industries, Inc. or, where appropriate, Worthington Industries, Inc. and its subsidiaries.  The term “common shares” means the Company’s common shares, without par value.  Other than the common shares, no voting securities of the Company are outstanding.

Purpose of the Annual Meeting

At the Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual Meeting of Shareholders included with this Proxy Statement. Specifically, the shareholders will be asked to: (1) elect four directors to the Board for three-year terms to expire at the 2022 Annual Meeting of Shareholders; (2) approve an advisory resolution on the Company’s executive compensation; (3) approve the Fourth Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan to authorize 1,500,000 additional common shares; and (4) ratify the selection of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending May 31, 2020 (“Fiscal 2020”).  In addition, following the formal portion of the Annual Meeting, management of the Company will respond to questions from shareholders.

Board’s Recommendations

Subject to revocation, all forms of proxy that are properly completed and timely received will be voted in accordance with the instructions contained therein.  If no instructions are given (except in the case of broker non-votes), the persons named as proxy holders will vote the common shares in accordance with the recommendations of the Board.  The Board’s recommendations are set forth together with the description of each proposal in this Proxy Statement.  In summary, the Board recommends a vote:

•

“FOR” the election of the Board’s nominated slate of directors (see “PROPOSAL 1: ELECTION OF DIRECTORS”);

•

“FOR” the approval of the advisory resolution on executive compensation (see “PROPOSAL 2: ADVISORY VOTE TO APPROVE  EXECUTIVE COMPENSATION”);

 

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•

“FOR” the approval of the Fourth Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan to authorize 1,500,000 additional common shares (see “PROPOSAL 3: APPROVAL OF FOURTH AMENDMENT TO THE WORTHINGTON INDUSTRIES, INC. AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN TO AUTHORIZE 1,500,000 ADDITIONAL COMMON SHARES”); and

•

“FOR” the ratification of the selection of KPMG LLP as the independent registered public accounting firm of the Company for Fiscal 2020 (see “PROPOSAL 4: RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM”).

Shareholder Voting Rights

Only shareholders of record at the close of business on August 1, 2019 (the “Record Date”) or such shareholders’ proxies are entitled to receive notice of, and to vote at, the Annual Meeting.  As of the close of business on the Record Date, there were 56,153,088 common shares outstanding and entitled to vote.  Each shareholder is entitled to one vote on each matter voted upon at the Annual Meeting for each common share held.  Shareholders do not have cumulative voting rights in the election of directors.  All voting at the Annual Meeting will be governed by our Amended Articles of Incorporation, our Code of Regulations and the General Corporation Law of the State of Ohio.

Registered Shareholders and Beneficial Shareholders

If our common shares are registered in your name directly with our transfer agent, EQ Shareowner Services, you are considered, with respect to those common shares, a holder of record (which we also refer to as a “registered shareholder”).  If you hold our common shares in a brokerage account or through a bank or other holder of record, you are considered the beneficial holder or beneficial owner of the common shares, which is often referred to as holding the common shares in “street name”.

Voting of Common Shares Held in “Street Name”

A “broker non-vote” occurs when a shareholder holds our common shares in “street name” through a broker or similar organization, and the shareholder does not provide the broker or organization with instructions within the required timeframe before the Annual Meeting as to how to vote the common shares on “non-routine” matters.  Under the applicable sections of the New York Stock Exchange (“NYSE”) Listed Company Manual (the “NYSE Rules”), your broker cannot vote your common shares on non-routine matters unless your broker receives instructions from you as to how to vote.

The only proposal which is considered “routine” is the ratification of the selection of the Company’s independent registered public accounting firm.  The other proposals are considered “non-routine” where your broker can only vote your common shares if your broker receives instructions from you.

Your broker will send you directions on how to instruct your broker to vote your common shares. If you want your common shares to be voted on the following matters, you must instruct your broker how to vote: (i) for the election of our director nominees; (ii) for the proposal to approve the advisory resolution on executive compensation; and (iii) for the proposal to approve the Fourth Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan to authorize 1,500,000 additional common shares.

Attendance and Participation at the Annual Meeting

We will be hosting the Annual Meeting live via the Internet.  You will not be able to attend the Annual Meeting in person.  Any shareholder can listen to and participate in the Annual Meeting live via the Internet at www.virtualshareholdermeeting.com/WOR19.  The webcast will start at 3:00 p.m., Eastern Daylight Time, on September 25, 2019.  Shareholders may vote and submit questions while connected to the Annual Meeting on the Internet.

Instructions on how to connect and participate in the Annual Meeting, including how to demonstrate proof of ownership of our common shares, are posted at www.virtualshareholdermeeting.com/WOR19.  If you do not have your 16-digit control number that is printed in the box marked by the arrow on your Notice of Internet Availability of Proxy Materials or your proxy card (if you received a printed copy of the proxy materials), you will only be able to listen to the Annual Meeting.

 

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Worthington | 2019 Proxy Statement • General Information

 

 

How to Vote and Voting Deadlines

If you are a registered shareholder, there are several ways for you to vote your common shares:

•

Vote by Internet.
Before the Date of the Annual Meeting:  Go to www.proxyvote.com

You can use the Internet 24 hours a day, seven days a week, to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Daylight Time, on September 24, 2019.  Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you access the website and follow the instructions to obtain your records and create an electronic voting instruction form.

During the Annual Meeting:  Go to www.virtualshareholdermeeting.com/WOR19
You may attend the Annual Meeting via the Internet and vote during the Annual Meeting.  Have the information printed in the box marked by the arrow on your proxy card or Notice of Internet Availability of Proxy Materials available and follow the instructions.

•

Vote By Telephone:  Call 1-800-690-6903.  You can use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Daylight Time, on September 24, 2019.  Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you call and follow the instructions.

•

By Mail:  If you received a printed copy of the proxy materials, you may submit your vote by completing, signing and dating your proxy card and returning it in the prepaid envelope to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717.  Sign your name exactly as it appears on the proxy card.  Proxy cards submitted by mail must be received no later than September 24, 2019 to be voted at the Annual Meeting.

If you vote via the Internet or by telephone, your electronic vote authorizes the named proxy holders in the same manner as if you signed, dated and returned your proxy card.  If you vote via the Internet or by telephone, do not return your proxy card.

If you are a beneficial owner of our common shares, you should have received a notice that directs you to the website where you can access our proxy materials as well as voting instructions from the broker or other nominee holding your common shares.  You should follow the voting instructions provided by your broker or nominee in order to instruct your broker or nominee on how to vote your common shares.  The availability of telephone and Internet voting will depend on the voting process of the broker or nominee.  Common shares held beneficially may not be voted by the beneficial owner during our Annual Meeting.

How to Revoke or Change Your Vote after Submitting Your Proxy

If you are a registered shareholder, you may revoke or change your vote at any time before the final vote at the Annual Meeting by:

•

signing and returning a new proxy card with a later date – only your latest completed, signed and dated proxy card received by September 24, 2019, will be counted;

•

submitting a later-dated vote by telephone or via the Internet – only your latest telephone or Internet voting instructions received by 11:59 p.m., Eastern Daylight Time, on September 24, 2019, will be counted;

•

participating in the Annual Meeting live via the Internet and voting again; or

•

delivering a written revocation to our Secretary at 200 Old Wilson Bridge Road, Columbus, Ohio 43085, to be received no later than September 24, 2019.

If you are a beneficial owner of our common shares, you must contact the broker or other nominee holding your common shares and follow the instructions of the broker or other nominee for revoking or changing your vote.

Notice of Internet Availability of Proxy Materials

In accordance with rules adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each shareholder of record, we are permitted to furnish our proxy materials, including the Notice of Annual Meeting of Shareholders, this Proxy Statement and our 2019 Annual Report to Shareholders, by providing access to such documents on the Internet.  Generally, shareholders will not receive printed copies of the proxy materials unless they request them.

 

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A Notice of Internet Availability of Proxy Materials that provides instructions for accessing our proxy materials on the Internet has been mailed directly to registered shareholders.  The Notice of Internet Availability of Proxy Materials also provides instructions regarding how registered shareholders may vote their common shares on the Internet.  Registered shareholders who prefer to receive a paper or e-mail copy of our proxy materials must follow the instructions provided in the Notice of Internet Availability of Proxy Materials for requesting such proxy materials.

The Notice of Internet Availability of Proxy Materials only identifies the items to be voted on at the Annual Meeting.  You cannot vote by marking the Notice of Internet Availability of Proxy Materials and returning it.  The Notice of Internet Availability of Proxy Materials provides instructions on how to cast your vote.

A notice that directs beneficial owners of our common shares to the website where they can access our proxy materials should be forwarded to each beneficial owner by the broker, bank or other holder of record who is considered the registered shareholder with respect to the common shares of the beneficial owner.  Such broker, bank or other holder of record should also provide each beneficial owner of our common shares with instructions on how the beneficial owner may request a paper or e-mail copy of our proxy materials.  Beneficial owners have the right to direct their broker, bank or other holder of record on how to vote their common shares by following the voting instructions they receive from their broker, bank or other holder of record.

To enroll in the electronic delivery service for future shareholder meetings, use your Notice of Internet Availability of Proxy Materials (or proxy card, if you received a printed copy of the proxy materials) to register online at www.proxyvote.com and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years.

Quorum and Tabulation of Voting Results

Tabulation of the votes cast at the Annual Meeting will be performed by Broadridge Financial Services, and such tabulation will be inspected by the inspector of election appointed by the Board for the Annual Meeting.  The presence, in person or by proxy, of the holders of one-third of the outstanding common shares entitled to vote at the Annual Meeting will constitute a quorum, permitting us to conduct our business at the Annual Meeting.  If you are a registered shareholder and submit a proxy, your common shares will be counted to determine whether we have a quorum even if you abstain or fail to provide voting instructions on any of the proposals described in this Proxy Statement and listed on the form of proxy.  If your common shares are held in the name of your broker or other nominee, and you do not instruct your broker or other nominee how to vote your common shares, these common shares will still be counted for purposes of determining the presence or absence of a quorum for the transaction of business if your broker or other nominee submits a proxy.

Proxy Solicitation Costs

This solicitation of proxies is made by and on behalf of the Board.  In addition to mailing the Notice of Internet Availability of Proxy Materials (or, if applicable, paper copies of this Proxy Statement, the Notice of Annual Meeting of Shareholders, the proxy card and our 2019 Annual Report to Shareholders) to registered shareholders as of the close of business on the Record Date, the brokers, banks and other nominees holding our common shares for beneficial owners must provide a notice as to where they can access our proxy materials to persons for whom they hold our common shares in order that such common shares may be voted.  Solicitation may also be made by our directors, officers and select other Company employees telephonically, electronically or by other means of communication.  Directors, officers and employees who help us in the solicitation will not be specially compensated for those services, but they may be reimbursed for their out-of-pocket expenses incurred in connection with the solicitation.  In addition, the Company has retained Broadridge Financial Solutions to aid in the solicitation of proxies with respect to common shares held by broker/dealers, financial institutions and other custodians, fiduciaries and nominees, for a fee of approximately $17,000, plus out-of-pocket expenses.

The Company will reimburse Broadridge Financial Solutions, as well as broker/dealers, financial institutions and other custodians, fiduciaries and nominees, who are record holders of common shares not beneficially owned by them, for their reasonable costs in sending proxy materials to the beneficial owners of the common shares entitled to vote at the Annual Meeting.  The Company will bear the costs incurred in connection with the solicitation of proxies on behalf of the Board, other than the Internet access or telephone usage fees which may be charged to shareholders.

 

 

 

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Worthington | 2019 Proxy Statement • General Information

 

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table furnishes as of the Record Date (unless otherwise noted below), with respect to each person known to the Company to be the beneficial owner of more than 5% of the outstanding common shares of the Company, the name and address of such owner and the number and percentage of outstanding common shares beneficially owned (as determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).

 

Name and Address of Beneficial Owner

 

Amount and Nature of

Beneficial Ownership (1)

Percent of

Outstanding

Common Shares (2)

 

John P. McConnell

 

 

 

 

 

 

 

 

200 Old Wilson Bridge Road, Columbus, OH  43085

 

 

17,542,966

 

(3)

30.8%

 

BlackRock, Inc.

 

 

 

 

 

 

 

 

55 East 52nd Street, New York, NY  10055

 

 

4,744,159

 

(4)

8.3%

 

The Vanguard Group, Inc.

 

 

 

 

 

 

 

 

100 Vanguard Blvd., Malvern, PA  19355

 

 

3,926,244

 

(5)

6.9%

 

 

(1)

Except as otherwise indicated by footnote, each named beneficial owner has sole voting power and sole dispositive power over the listed common shares.

(2)

The “Percent of Outstanding Common Shares” is based on the sum of 56,153,088 common shares outstanding on the Record Date and the number of common shares, if any, as to which the named beneficial owner has the right to acquire beneficial ownership upon the exercise of options which are currently exercisable or which will first become exercisable within 60 days after the Record Date (collectively, “Currently Exercisable Options”).

(3)

Includes 12,415,982 common shares held of record by JMAC, Inc. (“JMAC”), a private investment company substantially owned, directly or indirectly, by Mr. McConnell and members of his family.  The directors of JMAC have granted Mr. McConnell sole voting and dispositive power with respect to these 12,415,982 common shares.  JMAC has the right to receive the dividends from and the proceeds from the sale of such 12,415,982 common shares.  Includes 2,428,312 common shares held of record by an independent corporate trustee in trust for the benefit of Mr. McConnell and his sister.  The trustee has voting and dispositive power; however, the trustee’s investment decisions are subject to the prior approval or disapproval of Mr. McConnell and, accordingly, Mr. McConnell may be deemed to “share” dispositive power with the trustee.  Mr. McConnell has the right to change the trustee; however, any successor trustee appointed by Mr. McConnell must be an independent corporate trustee.  Includes 7,548 common shares held by Mr. McConnell as custodian for the benefit of his son.  Includes 6,718 common shares held by Mr. McConnell’s wife as custodian for the benefit of her son.  Includes 123,000 common shares held by The McConnell Educational Foundation for the benefit of third parties, of which Mr. McConnell is one of three trustees and shares voting and dispositive power.  Mr. McConnell disclaims beneficial ownership of these 123,000 common shares.  Includes 118,000 common shares held by The McConnell Family Trust of which Mr. McConnell is co-trustee and has sole voting and dispositive power.  Includes 255,875 common shares held by the Margaret R. McConnell Trust, f/b/o Margaret Kollis of which Mr. McConnell is trustee and has sole voting and dispositive power.  Also includes 412,501 common shares subject to Currently Exercisable Options and 62,500 restricted common shares which are subject to forfeiture restrictions.  See footnote (22) to the following table for more information on the restricted common shares.  As of August 1, 2019, an aggregate of 9,415,773 common shares held by JMAC and by Mr. McConnell had been pledged as security to various financial institutions, in connection with both investment and personal loans.

(4)

Information is based on Amendment No. 9 to Schedule 13G, dated February 6, 2019, and filed with the SEC on February 6, 2019, by BlackRock, Inc. (together with its subsidiaries, “BlackRock”).  BlackRock reported sole voting power as to 4,642,794 of the common shares and sole dispositive power as to 4,744,159 of the common shares reported to be beneficially owned by BlackRock, through its subsidiaries, at December 31, 2018. BlackRock Fund Advisors, a subsidiary of BlackRock, was reported to beneficially own 5% or more of the outstanding common shares.

(5)

Information is based on Amendment No. 3 to Schedule 13G, dated February 11, 2019 and filed with the SEC on February 11, 2019, by The Vanguard Group, Inc. (together with its subsidiaries, “Vanguard”).  Vanguard reported sole voting power as to 82,329 of the common shares, shared voting power as to 4,790 of the common shares, sole dispositive power as to 3,843,035 of the common shares and shared dispositive power as to 83,209 of the common shares reported to be beneficially owned by Vanguard, through its subsidiaries, at December 31, 2018.

 

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The following table furnishes the number and percentage of outstanding common shares beneficially owned (as determined in accordance with Rule 13d-3 under the Exchange Act) by: (a) each current director of the Company; (b) each of the Company’s director nominees; (c) each individual named in the “Fiscal 2019 Summary Compensation Table”; and (d) all current directors and executive officers of the Company as a group, in each case as of the Record Date.  

 

 

AMOUNT AND NATURE OF

BENEFICIAL OWNERSHIP (1)

 

 

 

 

Name of Beneficial Owner

 

Number of Common Shares

Presently Held and Which Can

Be Acquired Upon Exercise of

Currently Exercisable Options

Percent of

Outstanding

Common

Shares (2)

Theoretical Common

Shares Credited to

Bookkeeping Accounts

in the Company's

Deferred Compensation

Plans (3)

 

Kerrii B. Anderson

 

 

63,493

 

(4) (5)

*

4,853

 

David P. Blom

 

—

 

 

*

—

 

John B. Blystone

 

 

189,370

 

(4)

*

—

 

Dale T. Brinkman (6)

 

 

73,343

 

(7)

*

—

 

Mark C. Davis

 

 

36,180

 

(4)

*

—

 

Michael J. Endres

 

 

190,140

 

(4) (8)

*

67,747

 

Geoffrey G. Gilmore (6)

 

 

225,273

 

(7) (9)

*

 

7,379

 

Joseph B. Hayek (6)

 

 

28,155

 

(7)(10)

*

 

1,055

 

Ozey K. Horton, Jr.

 

 

36,323

 

(4) (11)

*

—

 

Peter Karmanos, Jr.

 

 

68,540

 

(4) (12)

*

 

90,314

 

John G. Lamprinakos (6)

 

 

95,199

 

(7) (13)

*

—

 

John P. McConnell (6)

 

 

17,542,966

 

(7) (14)

30.8%

—

 

Carl A. Nelson, Jr.

 

 

86,473

 

(4) (15)

*

—

 

Sidney A. Ribeau

 

 

68,369

 

(4) (16)

*

17,009

 

B. Andrew Rose (6)

 

 

738,412

 

(7) (17)

*

—

 

Mark A. Russell (6)

 

 

21,834

 

(7) (18)

*

—

 

Mary Schiavo

 

 

71,172

 

(4) (19)

*

5,345

 

Virgil L. Winland (6)

 

 

195,711

 

(7) (20)

*

—

 

All Current Directors and Executive

   Officers as a Group (20 people)

 

 

19,851,267

 

(21) (22)

34.8%

 

205,693

 

 

*

Denotes ownership of less than 1% of the outstanding common shares.

(1)

Except as otherwise indicated by footnote, each named beneficial owner has sole voting power and sole dispositive power over the listed common shares or shares such power with his or her spouse.

(2)

The “Percent of Outstanding Common Shares” is based on the sum of (a) 56,153,088 common shares outstanding on the Record Date, and (b) the number of common shares, if any, as to which the named person or group has the right to acquire beneficial ownership upon the exercise of Currently Exercisable Options.

(3)

This column lists the theoretical common shares credited to the bookkeeping accounts of the directors or executive officers participating in the Company’s deferred compensation plans.  These theoretical common shares are not included in the beneficial ownership totals.  While the participants have an economic interest in these theoretical common shares, these are not actual common shares which can be voted or disposed of.  Each participant’s only right with respect to the theoretical common shares is to receive a distribution, at the time provided by the applicable plan, of common shares equal to the number of theoretical common shares credited to his or her bookkeeping account(s).  For further information concerning the Employee Deferral Plans, please see the discussion in the section captioned “EXECUTIVE COMPENSATION –– Compensation Discussion and Analysis –– Compensation Components –– Non-Qualified Deferred Compensation” beginning on page 48 of this Proxy Statement and for further information concerning the Director Deferral Plans, please see the discussion in the section captioned “COMPENSATION OF DIRECTORS –– Director Deferral Plans” beginning on page 69 of this Proxy Statement.

(4)

Includes for each of Ms. Anderson, Mr. Davis, Mr. Endres, Mr. Horton, Mr. Karmanos, Mr. Nelson, Dr. Ribeau, and Ms. Schiavo 2,700 restricted common shares, and for Mr. Blystone 4,050 restricted common shares, which will vest on September 25, 2019.  For further information concerning the terms of the restricted common shares granted to non-employee directors, see footnote (22) below.

(5)

Includes 436 common shares held by Ms. Anderson’s spouse, who has sole voting power and sole dispositive power as to the 436 common shares.  Beneficial ownership of these 436 common shares is disclaimed by Ms. Anderson.

(6)

Named executive officer (NEO) listed in the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement.

(7)

Includes 39,001 common shares subject to Currently Exercisable Options.  Also includes 10,300 restricted common shares which will vest over time based on continued employment with the Company.  See footnote (22) below for more information on the restricted common shares.

(8)

Includes 172,440 common shares held by Mr. Endres as trustee for a living trust.

 

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Worthington | 2019 Proxy Statement • Security Ownership of Certain Beneficial Owners and Management

 

 

(9)

Includes 34,401 common shares subject to Currently Exercisable Options.  Also includes (i) 96,500 restricted common shares which will vest over time based on continued employment with the Company; (ii) 25,000 restricted common shares which will vest only if and when both (a) the closing price of the Company’s common shares equals or exceeds $60.00 per share for 30 consecutive days during the six-year period ending on June 24, 2020, and (b) Mr. Gilmore has continuously remained an employee of the Company through June 24, 2020; and (iii) 50,000 restricted common shares which will vest only if and when both (a) the closing price of the Company’s common shares equals or exceeds $65.00 per share for 90 consecutive days during the five-year period ending on September 26, 2023, and (b) Mr. Gilmore has continuously remained an employee of the Company through September 26, 2023.  See footnote (22) below for more information on the restricted common shares.  

(10)

Includes 6,200 common shares subject to Currently Exercisable Options.  Also includes 16,800 restricted common shares which will vest over time based on continued employment with the Company.  See footnote (22) below for more information on the restricted common shares.

(11)

Includes 8,000 common shares subject to Currently Exercisable Options.

(12)

Includes 65,840 common shares held by Mr. Karmanos as trustee for a living trust.

(13)

Information is based on amount and nature of beneficial ownership provided by the individual and includes 73,241 common shares subject to Currently Exercisable Options.

(14)

See footnote (3) to preceding table.

(15)

Includes 58,023 common shares held by Mr. Nelson as trustee for a living trust.  Includes 25,750 common shares subject to Currently Exercisable Options.

(16)

Includes 25,750 common shares subject to Currently Exercisable Options.

(17)

Includes 1,187 common shares held by Mr. Rose’s wife, who has sole voting power and sole dispositive power as to the 1,187 common shares.  Beneficial ownership of these 1,187 common shares is disclaimed by Mr. Rose.  Includes 21,330 common shares held by Mr. Rose as custodian for his two children.  Also includes 140,001 common shares subject to Currently Exercisable Options.  Also includes (i) 32,000 restricted common shares which will vest over time based on continued employment with the Company; and (ii) 175,000 restricted common shares which will vest only if and when both (a) the closing price of the Company’s common shares equals or exceeds $65.00 per share for 90 consecutive days during the five-year period ending on September 26, 2023, and (b) Mr. Rose has continuously remained an employee of the Company through September 26, 2023.  See footnote (22) below for more information on the restricted common shares.

(18)

Information is based on amount and nature of beneficial ownership provided by the individual and includes 21,834 common shares subject to Currently Exercisable Options.  

(19)

Includes 16,000 common shares subject to Currently Exercisable Options.

(20)

Includes 73,000 common shares subject to Currently Exercisable Options.  Also includes 10,300 restricted common shares which will vest over time based on continued employment with the Company.  See footnote (22) below for more information on the restricted common shares.

(21)

The number of common shares shown as beneficially owned by the Company’s current directors and executive officers as a group includes 885,805 common shares subject to Currently Exercisable Options and 537,750 restricted common shares.  See footnote (22) below for more information on the restricted common shares.  The number shown does not include any common shares issuable in connection with the performance shares awarded to NEOs and other executive officers, as to which the performance period has not ended and the applicable vesting dates have not yet occurred.  The number of common shares shown for all current directors and executive officers as a group includes the common shares beneficially owned by five executive officers not individually identified.

(22)

The restricted common shares granted to executive officers and non-employee directors of the Company are held in escrow by the Company and may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the restrictions thereon have lapsed.  Each holder of restricted common shares may exercise any voting rights associated with the restricted common shares during the restriction period.  In addition, any dividends or distributions paid with respect to the common shares underlying the restricted common shares will be held by the Company in escrow during the restriction period and, at the end of the restriction period, will be distributed or forfeited in the same manner as the restricted common shares with respect to which they were paid.  For further information concerning the terms of the restricted common shares granted to non-employee directors, please see the discussion in the section captioned “COMPENSATION OF DIRECTORS –– Equity Grants” beginning on page 69 of this Proxy Statement.  For further information concerning the terms of the restricted common shares granted to executive officers, please see the discussion in the sections captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Annual Restricted Common Share Awards to Executives”, “EXECUTIVE COMPENSATION -– Compensation Discussion and Analysis -– Long-Term Incentive Compensation -– Other Restricted Common Share Awards to NEOs”, “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Special Performance-Based/Time-Vested Restricted Common Share Awards”, “EXECUTIVE COMPENSATION — Grants of Plan-Based Awards”, “EXECUTIVE COMPENSATION — Outstanding Equity Awards at Fiscal 2019 Year-End” and “EXECUTIVE COMPENSATION — Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2020” beginning on page 45, page 45, page 46, page 56, page 58 and page 66, respectively, of this Proxy Statement.  Restricted common shares held by executive officers not named in this table are not listed individually.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires that the Company’s directors and executive officers and greater-than-10% beneficial owners of the Company’s outstanding common shares file reports with the SEC reporting their initial beneficial ownership of common shares and any subsequent changes in their beneficial ownership.  Specific due dates for such reports have been established by the SEC and the Company is required to disclose in this Proxy Statement any late report or known failure to file a required report.  To the Company’s knowledge, based solely on a review of the copies of the reports filed electronically with the SEC and written representations that no other reports were required, the Company believes that during Fiscal 2019, all Section 16(a) filing requirements applicable to the Company’s directors and executive officers and greater-than-10% beneficial owners of the Company’s outstanding common shares were complied with, with the exception of one Form 4 reporting two transactions for John P. McConnell, which was one day late in reporting a stock option award and a restricted share award due to an error in the type of filing initially submitted (test filing was submitted instead of live filing and was caught and corrected the following day).

 

 

Security Ownership of Certain Beneficial Owners and Management • 2019 Proxy Statement | Worthington

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Corporate Governance

 

Corporate Governance Guidelines

Upon the recommendation of the Nominating and Governance Committee, in accordance with applicable NYSE Rules, the Board has adopted the Corporate Governance Guidelines to promote the effective functioning of the Board and its committees and to reflect the Company’s commitment to high standards of corporate governance.  The Board, with the assistance of the Nominating and Governance Committee, periodically reviews the Corporate Governance Guidelines to ensure they comply with all applicable requirements.

The Corporate Governance Guidelines are available on the “Corporate Governance” page of the “Investor Center” section of the Company’s website located at www.worthingtonindustries.com.

Code of Conduct

In accordance with applicable NYSE Rules and the applicable rules and regulations of the SEC (the “SEC Rules”), the Board adopted the Worthington Industries, Inc. Code of Conduct (the “Code of Conduct”).  The Code of Conduct is available on the “Corporate Governance” page of the “Investor Center” section of the Company’s website located at www.worthingtonindustries.com.

Director Independence

Pursuant to the Corporate Governance Guidelines, a director is determined to be an independent director if he or she is independent of management and has no material relationship with the Company, either directly or indirectly as a partner, shareholder or officer of an entity that has such a relationship with the Company, as affirmatively determined by the Board.  The Board observes all additional criteria for independence established by NYSE or required under SEC Rules or other applicable laws and regulations.

The Board has been advised of the nature and extent of any direct or indirect personal and business relationships between the Company and Kerrii Anderson, John Blystone, Mark Davis, Michael Endres, Ozey Horton, Jr., Peter Karmanos, Jr., Carl Nelson, Jr., Sidney Ribeau or Mary Schiavo, individually (each, an “Independent Director” and collectively, the “Independent Directors”), or any entities for which any Independent Director is a partner, officer, employee or shareholder.  The Board has reviewed, considered and discussed such relationships, and the compensation which each Independent Director has received, directly or indirectly, from the Company, in order to determine whether each Independent Director meets the independence requirements of the Corporate Governance Guidelines, the applicable NYSE Rules and the applicable SEC Rules.  The Board has affirmatively determined that (a) none of the Independent Directors has any relationship with the Company, either directly or indirectly, including, without limitation, any commercial, industrial, banking, consulting, legal, accounting, charitable or familial relationship, which: (i) interfered, interferes, or may interfere, with his or her independence from management and the Company or the exercise of his or her independent judgment, (ii) would be inconsistent with a determination of independence under applicable NYSE Rules and SEC Rules, or (iii) would impair his or her independence under the Corporate Governance Guidelines; and (b) each of the Independent Directors qualifies as an “Independent Director” under the Corporate Governance Guidelines.  As required by applicable NYSE Rules, the Independent Directors represent a majority of the Company’s directors.  John P. McConnell does not qualify as independent under applicable NYSE Rules or SEC Rules or the Corporate Governance Guidelines because he is an executive officer of the Company.  David Blom does not qualify as independent under applicable NYSE Rules or SEC Rules or the Corporate Governance Guidelines because John P. McConnell served as a member of the compensation committee of OhioHealth Corporation while Mr. Blom was an executive officer of OhioHealth Corporation.

Barring any unusual circumstances, the Board has determined that a director’s independence would not be impaired if: (a) the director is an executive officer or an employee (or his or her immediate family member is an executive officer or employee) of a company that makes payments to, or receives payments from, the Company for property or services performed in the ordinary course of business in an amount which, in any single fiscal year, does not exceed the greater of $1,000,000 or 2% of such other company’s consolidated gross revenues; (b) the Company makes contributions to a scholastic

 

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or charitable tax-exempt organization for which the director (or his or her immediate family member) serves as either a member of the board of directors (or similar governing body) or an officer if the contributions, in any single fiscal year, do not exceed the greater of $500,000 or 1% of the total contributions received by that tax-exempt organization during such fiscal year; or (c) the Company uses facilities (dining facilities, clubs, etc.) in which the director is a greater than 5% owner if charges to the Company are consistent with charges paid by unrelated third parties and are fair, reasonable and consistent with those for similar services available at similar facilities, as long as the charges do not reach other thresholds under the NYSE Rules which would disqualify a director from being independent.

The Board specifically considered a number of circumstances in the course of reaching the conclusion that the current Independent Directors qualify as independent under the Corporate Governance Guidelines as well as applicable NYSE Rules and SEC Rules, including the relevant relationships described below in the section captioned “TRANSACTIONS WITH CERTAIN RELATED PERSONS” beginning on page 30 of this Proxy Statement.

Nominating Procedures

The Board’s Nominating and Governance Committee has responsibility for providing oversight on a broad range of issues surrounding the composition and operation of the Board, including identifying candidates qualified to become directors and recommending director nominees to the Board.

When considering candidates for the Board, the Nominating and Governance Committee evaluates the entirety of each candidate’s credentials but does not have specific eligibility requirements or minimum qualifications which must be met by a Nominating and Governance Committee-recommended nominee and has not adopted a formal policy with regard to the consideration of diversity in identifying director nominees.  The Nominating and Governance Committee considers those factors it deems appropriate, including, but not limited to, independence, judgment, skill, diversity, strength of character, ethics and integrity, experience with businesses or organizations of comparable size or scope, experience as an executive of or adviser to public and private companies, experience and skill relative to other Board members, specialized knowledge or expertise, and the desirability of the candidate’s membership on the Board and any committees of the Board.  Depending on the current needs of the Board, the Nominating and Governance Committee may weigh certain factors more or less heavily.  The Nominating and Governance Committee does, however, believe that all members of the Board should have strong character and integrity, a reputation for working constructively with others, sufficient time to devote to Board matters, and no conflict of interest that would interfere with his or her performance as a director.

While the Board and the Nominating and Governance Committee do not have specific eligibility requirements and do not, as a matter of course, weigh any of the factors they deem appropriate more heavily than others, both the Board and the Nominating and Governance Committee believe that, as a group, the directors should have diverse backgrounds and qualifications.  The Company believes that the members of the Board, as a group, have such backgrounds and qualifications.

The Nominating and Governance Committee considers candidates for the Board from any reasonable source, including shareholder recommendations, but does not evaluate candidates differently based on the source of the recommendation.  The process for seeking and vetting additional director candidates is ongoing and is not dependent upon the existence of a vacancy on the Board.  Accordingly, the Board believes that this ongoing identification of qualified candidates functions as an appropriate director succession plan.  Pursuant to its charter, the Nominating and Governance Committee has the authority to retain consultants and search firms to assist with the process of identifying and evaluating director candidates and to approve the fees and other retention terms for any such consultant or search firm.  The Nominating and Governance Committee has never used a consultant or search firm for such purpose, and, accordingly, the Company has paid no such fees.

Shareholders may recommend director candidates for consideration by the Nominating and Governance Committee by sending the recommendation to the Chair of the Nominating and Governance Committee, in care of the Company, to the Company’s executive offices at 200 Old Wilson Bridge Road, Columbus, Ohio  43085.  The recommendation must include the candidate’s name, age, business address, residence address and principal occupation.  The recommendation must also describe the qualifications, attributes, skills or other qualities possessed by the recommended director candidate.  A written statement from the candidate consenting to serve as a director, if elected, and a commitment by the candidate to meet personally with Nominating and Governance Committee members must accompany any such recommendation.

 

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The Board, taking into account the recommendations of the Nominating and Governance Committee, selects nominees for election as directors at each Annual Meeting.  In addition, shareholders wishing to nominate directors may do so, provided they comply with the nomination procedures set forth in the Company’s Code of Regulations and applicable SEC Rules.  In order to nominate an individual for election as a director at a meeting, a shareholder must give written notice of the shareholder’s intention to make such nomination.  The notice must be sent to the Company’s Secretary, either delivered in person to, or mailed to and received at, the Company’s principal executive offices at 200 Old Wilson Bridge Road, Columbus, Ohio 43085 not less than 14 days or more than 50 days prior to any meeting called for the election of directors.  However, if notice or public disclosure of the date of the meeting is given or made less than 21 days prior to the meeting, the shareholder notice must be received by the Company’s Secretary not later than the close of business on the seventh day following the day on which notice of the date of the meeting was mailed or publicly disclosed.  The Company’s Secretary will deliver any shareholder notice received in a timely manner to the Nominating and Governance Committee for review.  Each shareholder notice must include the following information as to each individual the shareholder proposes to nominate for election or re-election as a director: (a) the name, age, business address and, if known, residence address of the proposed nominee; (b) the principal occupation or employment of the proposed nominee; (c) the number of common shares of the Company beneficially owned by the proposed nominee; and (d) any other information relating to the proposed nominee that is required to be disclosed concerning nominees in proxy solicitations under applicable SEC Rules, including the individual’s written consent to be named in the proxy statement as a nominee and to serve as a director, if elected.  The nominating shareholder must also provide (i) the name and address of the nominating shareholder; and (ii) the number of common shares of the Company beneficially owned by the nominating shareholder.  No individual may be elected as a director unless he or she has been nominated by a shareholder in the manner described above or by the Board or the Nominating and Governance Committee.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Board (the “Compensation Committee”) is currently comprised of John Blystone (Chair), Kerrii Anderson, Michael Endres and Ozey Horton, Jr.  No member of the Compensation Committee is a present or past employee or officer of the Company.  During Fiscal 2019 and through the date of this Proxy Statement, none of the Company’s executive officers has served on the board of directors or compensation committee (or other committee performing equivalent functions) of any other entity, one of whose executive officers served on the Company’s Board or Compensation Committee, other than John P. McConnell, who served as a member of the compensation committee of OhioHealth Corporation while David Blom was an executive officer of OhioHealth Corporation.

Communications with the Board

The Board believes it is important for shareholders and other interested persons to have a process by which to send communications to the Board and its individual members, including the Lead Independent Director.  Accordingly, shareholders and other interested persons who wish to communicate with the Board, the non-management directors as a group, the Independent Directors, as defined by the Corporate Governance Guidelines and applicable NYSE Rules as a group, the Lead Independent Director or any other individual director may do so by addressing such correspondence to the name(s) of the specific director(s), to the “Non-Management Directors” as a whole, to the “Independent Directors” as a whole or to the “Board of Directors” as a whole, and sending it in care of the Company, to the Company’s executive offices at 200 Old Wilson Bridge Road, Columbus, Ohio  43085.  The mailing envelope must contain a clear notation indicating that the enclosed correspondence is a “Shareholder/Interested Person – Non-Management Director Communication”, “Shareholder/Interested Person – Independent Director Communication”,  “Shareholder/Interested Person – Board Communication”, “Shareholder/Interested Person – Lead Independent Director Communication”, or “Shareholder/Interested Person – Director Communication”, as appropriate.  All such correspondence must identify the author as a shareholder or other interested person (identifying such interest) and clearly indicate whether the communication is directed to all members of the Board, to the “Non-Management Directors” as a whole, to the “Independent Directors” as a whole or to a certain specified individual director(s).  Copies of all such correspondence will be circulated to the appropriate director(s).  Correspondence marked “personal and confidential” will be delivered to the intended recipient(s) without opening.  There is no screening process in respect of communications from shareholders or other interested persons.  The process for forwarding communications to the appropriate Board member(s) has been approved by the Company’s Independent Directors.

Questions, complaints and concerns may also be submitted to Company directors through our Worthington Industries EthicsLine Reporting website at www.Worthington.EthicsPoint.com or by calling 877-263-9893 inside the United States and Canada.

 

 

 

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Proposal 1:  Election of Directors

 

There are currently 11 directors – four in the class whose terms expire at the Annual Meeting and who are proposed to be re-elected for terms expiring at the Annual Meeting of Shareholders in 2022; three in the class whose terms expire at the Annual Meeting of Shareholders in 2020; and four in the class whose terms expire at the Annual Meeting of Shareholders in 2021.  On June 26, 2019, the Board, upon the unanimous recommendation of the Nominating and Governance Committee, increased the authorized number of directors of the Company to 11, and unanimously appointed David P. Blom as a director of the Company in the class whose terms expires at this Annual Meeting of Shareholders.

The Board proposes that the four director nominees named in the summary below, each of whom was unanimously recommended by the Nominating and Governance Committee, be re-elected as directors at the Annual Meeting.  Each individual elected as a director at the Annual Meeting will hold office for a three-year term, expiring at the Annual Meeting of Shareholders in 2022, and until his/her successor is duly elected and qualified, or until his/her earlier death, resignation or removal from office.  The individuals named as proxy holders in the form of proxy solicited by the Board intend to vote the common shares represented by the proxies received under this solicitation for the Board’s nominees, unless otherwise instructed on the form of proxy.  If any nominee becomes unable to serve or for good cause will not serve as a candidate for election as a director, the individuals designated to vote the proxies will have full discretion to vote the common shares represented by the proxies they hold for the election of the remaining nominees and for the election of any substitute nominee designated by the Board.  The Board has no reason to believe that any of the Board’s nominees will be unable to serve or for good cause will not serve as a director of the Company if elected.

Information Concerning Nominees and Directors

The information set forth below, concerning the age, principal occupation, other affiliations and business experience of each director has been furnished to the Company by such director as of August 1, 2019.  Except where otherwise indicated, each director has had the same principal occupation for the last five years.  There are no family relationships among any of the current directors, director nominees and executive officers of the Company.

 

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Nominees Standing for Re-Election to the Board at the 2019 Annual Meeting

 

 

 

Kerrii B. Anderson

 

Age 62

Director since 2010

 

 

Kerrii B. Anderson has served continuously as a director of the Company since September 2010 and is a member of the Audit Committee and the Compensation Committee.  Ms. Anderson has been a private investor and board advisor since September 2008.  Prior to that time, she served as Chief Executive Officer and President of Wendy’s International, Inc. (now known as The Wendy’s Company), a restaurant operating and franchising company, from November 2006 until September 2008 when that company merged with a subsidiary of Triarc Companies, Inc. to form Wendy’s/Arby’s Group, Inc.  She served as a director of Wendy’s International, Inc. from 2001 until September 2008, and as Wendy’s Interim Chief Executive Officer and President from April to November 2006 and as its Executive Vice President and Chief Financial Officer from 2000 to April 2006.  Previously, Ms. Anderson served as Senior Vice President and Chief Financial Officer of M/I Schottenstein Homes, Inc. (now known as M/I Homes, Inc.), a builder of single-family homes, from 1987 to 2000. Ms. Anderson has served as a member of the Board of Directors of Laboratory Corporation of America Holdings since May 2006, where she is Chair of its Audit Committee and a member of its Nominating and Governance Committee.  She joined the Board of Directors of Abercrombie & Fitch Co. in February 2018 and is the Chair of its Audit Committee.  She also joined the Board of Directors of The Sherwin-Williams Company in April 2019 and serves on its Compensation Committee.  Previously, she served as a member of the Board of Directors of Chiquita Brands International, Inc. from 2009 to January 2015, including service as Chairwoman of the Board from October 2012 to January 2015, as Chair of its Nominating and Governance Committee and as a member of its Audit Committee until January 2015 when Chiquita was acquired by Cavendish Global Limited and became a private company; and as a member of the Board of Directors of P. F. Chang’s China Bistro, Inc. from 2009 until July 2012 when P.F. Chang’s was acquired by Wok Acquisition Corp.  Ms. Anderson serves on the Finance Committee of The Columbus Foundation and as a member of the Board of Directors of OhioHealth Corporation, where she is Chair of its Finance Committee.  Ms. Anderson has a strong record of leadership in operations and strategy. She is a Certified Public Accountant and qualifies as an “audit committee financial expert”, as defined by applicable SEC Rules, given her experience as Chief Executive Officer and Chief Financial Officer of Wendy’s and Chief Financial Officer of M/I Schottenstein Homes. Ms. Anderson received a B.A. from Elon University and a Masters of Business Administration from the Duke University Fuqua School of Business. She has extensive corporate governance experience through her service on other public company boards.  Her extensive experience in accounting and financial reporting and analysis and prior experience as a chief executive officer of a public company and chief financial officer of several public companies, in addition to other public company board service, make Ms. Anderson a valuable asset to the Board and its various committees, and well qualified to continue to serve on the Board.

 

 

 

 

 

 

 

David P. Blom

 

Age 65

Director since 2019

 

 

David P. Blom has served continuously as a director of the Company since June 26, 2019, but does not currently serve as a member of any Board committees.  Mr. Blom was recommended to the Nominating and Governance Committee, and the Board, by the Company’s Chairman of the Board and Chief Executive Officer.  Mr. Blom served as President and CEO of OhioHealth Corporation, a not-for-profit, healthcare system in central Ohio, from March 2002 until his retirement in June 2019. Mr. Blom previously served as President of OhioHealth’s central Ohio hospitals – Grant Medical Center, Riverside Methodist Hospital and Doctors Hospital – while also serving as Executive Vice President and Chief Operating Officer of OhioHealth.  Mr. Blom currently serves as a member of the Board of Directors for several organizations, including SOC Telemed since 2018; Healthy Roster since 2017; Vizient Inc. since 2011; the Columbus Downtown Development Corporation since 2010; the Columbus Partnership since 2008; and Kimball Midwest Advisory Council since 2015. Mr. Blom previously served on the Board of Directors of The Columbus Foundation from 2011 to 2017 and Dominion Homes, Inc. from 2006 to 2009.  Mr. Blom holds an M.H.S.A in Healthcare Administration from George Washington University, and a Bachelor of Arts in Business Administration from The Ohio State University. Mr. Blom has a track record of achievement and a solid understanding of complex issues, particularly those facing healthcare delivery.  He has expertise in leading strategic initiatives, managing and developing human capital, improving profitability, and improving quality of care and customer experience, which enables him to bring a unique and valuable perspective to the Board, and makes him well qualified to continue to serve on the Board.

 

 

 

 

 

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John P. McConnell

 

Age 65

Director since 1993

 

 

John P. McConnell has served as the Company’s Chief Executive Officer since June 1993, as a director of the Company continuously since 1990, and as Chairman of the Board of the Company since September 1996.  He served in various positions with Worthington Industries from 1975 to June 1993.  Mr. McConnell also serves as the Chair of the Executive Committee.  He currently serves as Vice Chairman and has been a director of OhioHealth Corporation since 2014.  Mr. McConnell brings solid public company and overall management and operations experience as Chief Executive Officer and Chairman of the Board.  In addition, in his more than 40 years of service to the Company, Mr. McConnell has served in various roles with the Company spanning not only executive management, but prior to that, time in production, sales, human resources and management at plant, business unit and corporate levels, making him well qualified to continue to serve on the Board.

 

 

 

 

 

 

Mary Schiavo

 

Age 63

Director since 1998

 

 

Mary Schiavo has served continuously as a director of the Company since 1998 and is a member of the Audit Committee and the Nominating and Governance Committee.  Ms. Schiavo has been a member of the law firm of Motley Rice LLC, since October 2003.  Ms. Schiavo has been employed by CNN as an analyst and on air commentator since calendar year 2014.  Ms. Schiavo was an attorney with a law firm in Los Angeles, California, from 2001 to October 2003.  Ms. Schiavo served as a professor at The Ohio State University, College of Engineering, Department of Aerospace Engineering and Aviation and School of Public Policy and Management and also as a Consultant for NBC News from 1997 to 2002. Ms. Schiavo served as Inspector General for the U.S. Department of Transportation for six years, where she had auditing and oversight responsibility over a multi-billion dollar government agency; Assistant Secretary of Labor of the U.S. for one year; a White House Fellow for one year; and was an attorney with the U.S. Department of Justice for seven years.  Ms. Schiavo has gained in-depth knowledge of the Company’s business and structure from her more than 20 years of service as a director.  Ms. Schiavo received a B.A. from Harvard University, a Masters of Arts degree from The Ohio State University, and a Juris Doctorate degree from New York University. She was previously an elected director of the Harvard University Alumni Association and a member of the President’s Council on Integrity and Efficiency and the President’s Commission on White House Fellowships.  Ms. Schiavo’s legal and governmental experience enable her to bring a unique and valuable perspective to the Board, and make her well qualified to continue to serve on the Board.

 

 

 

 

 

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Directors Whose Terms Continue Until the 2020 Annual Meeting of Shareholders

 

 

Michael J. Endres

 

Age 71

Director since 1999

 

 

Michael J. Endres has served continuously as a director of the Company since 1999 and is a member of the Executive Committee and the Compensation Committee.  Mr. Endres serves as a Senior Advisor to Stonehenge Partners, Inc., a private equity investment firm he co-founded in August 1999.  His duties include, among other things, providing advice related to specific company financial characteristics, balance sheet and income statement analysis, as well as industry growth rates and trends, and managing the acquisition and disposition of the firm’s investments.  Mr. Endres served as a director of Huntington Bancshares Incorporated from April 2003 to April 2018.  Mr. Endres served as a director of W.W.Williams Company, a privately-held company, from October 2011 to 2016, and currently serves as a director of TRI-W Group (successor to W.W. Williams Company).  He has been a director and Chairman of Conterra AG, a privately-held company, since 2014; and Calibre Group LLC, a privately-held company, since 2015.  Mr. Endres served as a director of Tim Hortons Inc. from 2006 until December 2014 (when it was acquired by Restaurant Brands International), where he was Chair of its Audit Committee and a member of its Executive Committee.  Mr. Endres received a B.S. from Miami University. Mr. Endres has a depth of experience in equity investing, business development, strategic initiatives and acquisitions, financial analysis, leadership and management, and is a director of various companies.  This experience, along with his financial expertise and his history as a director with the Company, make him well suited to serve on the Board.

 

 

 

 

 

 

Ozey K. Horton, Jr.

 

Age 68

Director since 2011

 

 

Ozey K. Horton, Jr. has served continuously as a director of the Company since 2011 and is a member of the Compensation Committee and the Nominating and Governance Committee.  He is an independent advisor and serves as Director Emeritus of McKinsey & Company, a management consulting firm, from which he retired in February 2011.  Prior to that time, Mr. Horton served as a Director in the Atlanta office of McKinsey & Company from 1981 through February 2011.  Over the years, Mr. Horton led numerous corporate growth, strategic, mergers and acquisitions, and performance improvement initiatives at global clients across a range of industries — especially in the basic industrials space (such as metals and mining; pulp, paper and packaging; chemicals; and energy). He has also led several practices within McKinsey & Company: as founder of the global pulp, paper, and packaging practice; co-leader of the global basic materials practice; and leader of the global operations practice within the energy and materials sector.  Prior to his service with McKinsey & Company, Mr. Horton had early career experiences in manufacturing, corporate development and project engineering.  Mr. Horton has served as a director of Louisiana-Pacific Corporation, a global leader in engineered wood products, since September 2016 where he currently serves as a member of its Finance & Audit Committee and previously served on its Nominating and Corporate Governance Committee from September 2016 to May 2017.  In 2018, he became a director of Rubicon Limited, which produces genetic tree seedling products. Mr. Horton serves on the Metso Corporation Board and the Dabbagh Group Holding Co. Ltd. Board.  He also serves as a member of the Spoleto Festival, U.S.A. Board of Directors, the MUSC Hollings Cancer Center Advisory Board, and the Liberty Fellows Senior Advisor Group.  He formerly served as a member of The Board of Visitors of the Pratt School of Engineering/Duke University and of the Gaillard Performance Hall Capital Campaign Cabinet.  Mr. Horton has extensive experience working in Europe, South America, India and Asia.  Mr. Horton has a BSE in civil and environmental engineering from Duke University and a Masters of Business Administration from the Harvard Business School. Mr. Horton’s wide-ranging experience working with manufacturing and other companies, both domestically and globally, provides unique expertise to the Board, and all of these attributes make him well suited to serve on the Board.

 

 

 

 

 

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Peter Karmanos, Jr.

 

Age 76

Director since 1997

 

 

Peter Karmanos, Jr. has served continuously as a director of the Company since 1997, is Chair of the Nominating and Governance Committee and is a member of the Executive Committee.  Mr. Karmanos founded Compuware, a software development company, in 1973.  He served as Chairman of the Board, Chief Executive Officer and a director of Compuware from its founding until June 2011.  He continued to serve as Executive Chairman of the Board and a director until March 2013, when he resigned from that board.  Mr. Karmanos has the entrepreneurial spirit that built a billion dollar company from a start-up and the business acumen of the Chairman and Chief Executive Officer of an S&P 500 corporation.  Mr. Karmanos is a Partner in MadDog Technology, LLC, a company that specializes in advanced technology and mobile device development.  Mr. Karmanos also served as a director for Taubman Centers, Inc. from 2000 and was a member of its Compensation Committee until January 2018 when he resigned from the board.  He serves as a director for the Barbara Ann Karmanos Cancer Institute, Detroit Renaissance, and New Detroit Coalition, and on the Board of Governors for the National Hockey League. Mr. Karmanos has a wealth of public company management and information technology experience.  This includes extensive skill and background dealing with the growth, operation and management of a large public company as its co-founder and Chairman. In addition, his skills and expertise in information technology bring valuable insight to the Board.  All of these attributes make him well qualified to serve on the Board.

 

 

 

 

 

 

Carl A. Nelson, Jr.

 

Age 74

Director since 2004

 

 

Carl A. Nelson, Jr. has served continuously as a director of the Company since 2004, is the Chair of the Audit Committee and is a member of the Executive Committee.  Mr. Nelson was a partner with Arthur Andersen, LLP and retired in February 2002 after 31 years of service.  Mr. Nelson had served as Managing Partner of the Arthur Andersen Columbus, Ohio office, and was the leader of the firm’s consulting services for the products industry in the United States.  Currently, Mr. Nelson serves on the Board of Directors of Advanced Drainage Systems, Inc., a $1 billion public company, where he is chairman of its Compensation Committee.  Mr. Nelson is a Certified Public Accountant (retired) and a member of The Ohio Society of Certified Public Accountants and the American Institute of Certified Public Accountants.  Mr. Nelson received his B.S. in Accounting from The Ohio State University and a Masters of Business Administration from the University of Wisconsin.  Mr. Nelson has taught in the MBA and executive education programs at The Ohio State University and is a member of the Dean’s Advisory Council for the Fisher College of Business at The Ohio State University.  Mr. Nelson has significant public company accounting and financial expertise. Mr. Nelson has vast experience as a business consultant on a variety of projects involving areas such as large scale technology implementation, defining strategic initiatives, strategic planning and projects with significant change requirements.  As an “audit committee financial expert”, as defined by applicable SEC Rules, Mr. Nelson has served the Board well as the Chair of the Audit Committee since 2004.  All of these attributes make Mr. Nelson well suited to serve on the Board.

 

 

 

 

 

 

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Directors Whose Terms Continue Until the 2021 Annual Meeting of Shareholders

 

 

John B. Blystone

 

Age 66

Director since 1997

 

 

John B. Blystone has served continuously as a director of the Company since 1997 and as the Lead Independent Director of the Company since January 2007.  He is the Chair of the Compensation Committee and a member of the Executive Committee.  Mr. Blystone served as Chairman of the Board, President and Chief Executive Officer of SPX Corporation, a global provider of technical products and systems, industrial products and services, flow technology, cooling technologies and services and service solutions, from December 1995 to December 2004, when he retired.  From 1991 to 1995, Mr. Blystone served in various managerial and operating roles with General Electric Company.  Mr. Blystone served as Chairman of the Board of Freedom Group, Inc., which manufactures and markets firearms, ammunition and related products, from August 2010 to March 2012.  Mr. Blystone serves as a director for Blystone Consulting, LLC and as General Partner of Blystone Capital Partners.  Mr. Blystone graduated from the University of Pittsburgh. Mr. Blystone has extensive business experience in managing and operating both domestic and international operations, including as a chief executive officer of a large public company.  He has expertise in acquisitions, financial and business analysis, and in generally managing issues that face a large public company.  Mr. Blystone’s business acumen, his long service on our Board, and his collegial style and leadership resulted in his election as the Lead Independent Director of the Company and make him well qualified to serve on the Board.

 

 

 

 

 

 

Mark C. Davis

 

Age 59

Director since 2011

 

 

Mark C. Davis has served continuously as a director of the Company since March 2011 and is a member of the Audit Committee.  Mr. Davis is a private investor and Chief Executive Officer of Lank Acquisition Corp. which invests in minority and majority positions in public and private companies.  Prior to forming Lank Acquisition Corp. in 2007, Mr. Davis spent 20 years in a variety of senior investment banking positions.  From 1996 to 2003, Mr. Davis was a senior executive at JPMorgan Chase where he began as Head of the Merger and Acquisition Group.  He became Head of General Industry Investment Banking in 2000 and was also Co-Head of Investment Banking Coverage which comprised all of JPMorgan Chase’s corporate clients, and was named Vice Chairman of Investment Banking in 2002.  Mr. Davis holds a Masters in Business Administration from the Tuck School of Business and a B.A. from Dartmouth College. Mr. Davis’ financial knowledge and depth of experience in equity investing, strategic matters, acquisitions, financial analysis and investment banking make him well qualified to serve on the Board, and qualify him as an “audit committee financial expert”, as defined by applicable SEC Rules.

 

 

 

 

 

 

Sidney A. Ribeau

 

Age 71

Director since 2000

 

 

Sidney A. Ribeau has served continuously as a director of the Company since 2000 and is a member of the Nominating and Governance Committee.  Since October 2013, Dr. Ribeau has served as Professor of Communications for Howard University, and he also served as President of Howard University from August 2008 to October 2013.  Dr. Ribeau served as President of Bowling Green State University for more than 13 years prior to that time.  Dr. Ribeau serves on the Board of Trustees of Teachers Insurance and Annuity Association (TIAA).  He is a member of TIAA’s Human Resources Committee, Nominating and Governance Committee and Corporate Governance and Social Responsibility Committee.  Dr. Ribeau has previously served on the Boards of Directors of Convergys Corporation from 2001 through 2008 and The Andersons, Inc. from 1997 through 2008.  Dr. Ribeau received his B.A. from Wayne State University and his Masters and Doctorate from the University of Illinois. Dr. Ribeau brings extensive experience in managing the issues that face large public institutions.  His background as the leader of a billion dollar public institution and as an educator and administrator enables him to provide insight relative to management, educational, financial, human resources and public policy matters and make him well qualified to serve on the Board.

 

 

 

 

 

 

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Required Vote and Board’s Recommendation

Under Ohio law and the Company’s Code of Regulations, the four nominees for election to the Board receiving the greatest number of votes “FOR” their election will be elected as directors of the Company.

Except in the case of broker non-votes, common shares represented by properly completed and timely received forms of proxy will be voted “FOR” the election of the Board’s nominees, unless authority to vote for one or more of the nominees is withheld.  Common shares as to which the authority to vote is withheld will not be counted toward the election of directors or the election of the individual nominees specified on the form of proxy.  Proxies may not be voted for more than four nominees.

THE BOARD UNANIMOUSLY RECOMMENDS THAT THE

SHAREHOLDERS OF THE COMPANY VOTE “FOR” THE

ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.

Meetings of the Board

The Board held four meetings during Fiscal 2019, all of which were regularly scheduled meetings.  During Fiscal 2019, each incumbent director who was then serving attended at least 75% of the aggregate of (a) the total number of meetings held by the Board, and (b) the total number of meetings held by all committees of the Board on which such director served.

The Board and management of the Company are committed to effective corporate governance practices. The Corporate Governance Guidelines describe the governance principles and procedures by which the Board functions. The Board annually reviews and updates, as appropriate, the Corporate Governance Guidelines and the charters of the various committees of the Board in response to corporate governance developments, including changes in the applicable NYSE Rules and SEC Rules, and recommendations by directors in connection with Board and Board committee evaluations.  In accordance with the Corporate Governance Guidelines and applicable NYSE Rules, non-management directors of the Company, who, with the exception of David Blom, are “Independent” Directors, as defined by the Corporate Governance Guidelines and applicable NYSE Rules, meet (without management present) at regularly scheduled executive sessions at least twice per year and at such other times as the directors deem necessary or appropriate.  These executive sessions are typically held in conjunction with regularly scheduled Board meetings and are led by the Lead Independent Director, and appropriate feedback from these sessions is given to the Chief Executive Officer.  The non-management and the independent directors met in executive session after three of the four regularly scheduled Board meetings held in Fiscal 2019.

Board Member Attendance at Annual Meetings of the Shareholders

The Company does not have a formal policy with respect to attendance by our directors at the annual meetings of the shareholders.  The Board generally schedules its quarterly meetings to fall in March, June, September and December.  Four of the ten then-incumbent directors attended the Company’s 2018 Annual Meeting of Shareholders: Mr. Blystone, Mr. McConnell, Mr. Nelson and Ms. Schiavo.

Board Leadership Structure

The Company is led by John P. McConnell, who has served as Chief Executive Officer since June 1993, as a director of the Company since 1990, and as Chairman of the Board of the Company since September 1996.  The Company's Board is currently comprised of Mr. McConnell and ten non-management directors.  John Blystone is the Company’s Lead Independent Director.

The Board has four standing committees: Audit, Compensation, Executive, and Nominating and Governance.  Each of the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee is chaired by a separate Independent Director and is comprised solely of Independent Directors.  Detailed information on each Board committee is contained in the section captioned “PROPOSAL 1: ELECTION OF DIRECTORS — Committees of the Board” beginning on page 25 of this Proxy Statement.

 

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The Company does not have a fixed policy regarding whether the offices of Chairman of the Board and Chief Executive Officer should be vested in the same person or two different people.  The Board has determined that the most effective leadership structure at the present time is for the Chief Executive Officer to also serve as the Chairman of the Board, coupled with a Lead Independent Director, independent chairs for our Audit Committee, our Compensation Committee, and our Nominating and Governance Committee, and regularly scheduled executive sessions of the non-management and independent directors.

The Board believes that the currently combined role of Chairman of the Board and Chief Executive Officer promotes the development and execution of our business strategy and facilitates information flow between management and the Board, which are essential to effective governance.  The Board believes that its strong governance practices, including its supermajority of Independent Directors, the combination of the Chairman of the Board and Chief Executive Officer roles, and its clearly-defined Lead Independent Director responsibilities, provide an appropriate balance among strategy development, operational execution and independent oversight of the Company.

The Board periodically reviews our leadership structure and retains the authority to modify the structure, as and when appropriate, to address our then current circumstances.

Lead Independent Director

In January 2007, the Company established a Lead Independent Director position and appointed John Blystone as the Lead Independent Director.

A copy of the Company's Lead Independent Director Charter is available on the “Corporate Governance” page of the “Investor Center” section of the Company’s website located at www.worthingtonindustries.com.  In addition to the other duties more fully described in the Company’s Lead Independent Director Charter, the Lead Independent Director is responsible for:

•

advising the Chairman of the Board and Chief Executive Officer regarding the information, agenda and meeting schedules for the Board and Board committees, and as to the quality, quantity and timeliness of the information submitted to the Board by the Company’s management that is necessary or appropriate for the non-employee directors to effectively and responsibly perform their duties;

•

recommending to the Chairman of the Board and Chief Executive Officer the retention of advisers and consultants who report directly to the Board;

•

assisting the Board, the Nominating and Governance Committee and the officers of the Company in ensuring compliance with and implementation of the Corporate Governance Guidelines;

•

calling meetings of the non-employee directors, developing the agenda for and serving as chairman of the executive sessions of the non-employee directors, and serving as principal liaison between the non-employee directors and the Chairman of the Board and Chief Executive Officer on sensitive issues;

•

working with the Nominating and Governance Committee and the Chairman of the Board and Chief Executive Officer to recommend the membership of the various Board committees, as well as the selection of committee chairs;

•

serving as chair of meetings of the Board when the Chairman of the Board is not present;

•

being available for consultation and direct communications with the Company’s shareholders, if requested and appropriate; and

•

performing such other duties as the Board may determine.

 

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Committees of the Board

 

The Board has four standing committees: the Executive Committee, the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee.  The charter for each committee has been reviewed and approved by the Board and is available on the “Corporate Governance” page of the “Investor Center” section of the Company’s website located at www.worthingtonindustries.com.

Committees of the Board

 

 Chairperson

 Member

Audit Committee Financial Expert

 

Executive

Audit

Compensation

Nominating and

Governance

Kerrii B. Anderson*

 

 

 

David P. Blom

 

 

 

 

John B. Blystone*

 

 

Mark C. Davis*

 

 

 

 

Michael J. Endres*

 

 

Ozey K. Horton, Jr.*

 

 

Peter Karmanos, Jr.*

 

 

John P. McConnell

 

 

 

Carl A. Nelson, Jr.*

 

 

 

Sidney A. Ribeau*

 

 

 

Mary Schiavo*

 

 

 

*

Independent director under NYSE Rules

Executive Committee

The Executive Committee acts in place of, and on behalf of, the Board in the intervals between meetings of the Board.  The Executive Committee has all of the authority of the Board, other than the authority (a) to fill vacancies on the Board or on any committee of the Board, (b) to amend the Company’s Code of Regulations, (c) that has been delegated by the Board exclusively to other committees of the Board, and (d) that applicable law or the Company’s governing documents do not permit to be delegated to a committee of the Board.

Audit Committee

The Board has determined that each member of the Audit Committee qualifies as an Independent Director under the applicable NYSE Rules and under SEC Rule 10A-3.  The Board believes each member of the Audit Committee is qualified to discharge his or her duties on behalf of the Company and satisfies the financial literacy requirement of the NYSE Rules.  The Board has also determined that each of Ms. Anderson, Mr. Davis and Mr. Nelson qualifies as an “audit committee financial expert” as that term is defined in Item 407(d)(5) of SEC Regulation S-K by virtue of their respective experience, including that described on pages 18, 22 and 21, respectively, of this Proxy Statement.  No member of the Audit Committee serves on the audit committee of more than two other public companies.

At least annually, the Audit Committee evaluates its performance, reviewing and assessing the adequacy of its charter and recommending any proposed changes to the full Board, as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.

 

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The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act.  The Audit Committee is organized and conducts its business pursuant to a written charter.  The primary responsibility of the Audit Committee is to assist the Board in the oversight of the financial and accounting functions, controls, reporting processes and audits of the Company.  Specifically, the Audit Committee appoints and evaluates the Company’s independent registered public accounting firm and approves the audit engagement, including fees and terms, and non-audit engagements, if any, of such firm.  The Audit Committee, on behalf of the Board, reviews, monitors and evaluates: (a) the Company’s consolidated financial statements and the related disclosures, including the integrity and quality of the consolidated financial statements; (b) the Company’s compliance with legal and regulatory requirements, including the financial reporting process; (c) the Company’s systems of disclosure controls and procedures and internal control over financial reporting and its accounting and financial controls; (d) the performance, qualifications and independence of the Company’s independent registered public accounting firm, including the performance and rotation of the lead and concurring partners of that firm; (e) the performance of the Company’s internal audit function; (f) the annual independent audit of the Company’s consolidated financial statements; and (g) financial, reporting and compliance risk management.  The Audit Committee also prepares the report that the SEC Rules require be included in the Company’s annual proxy statement.

Additional duties and responsibilities set forth in the Audit Committee’s charter include:

•

reviewing, with the Company’s financial management, internal auditors and independent registered public accounting firm, the Company’s accounting procedures and policies and audit plans, including staffing, professional services to be provided, audit procedures to be used, and fees to be charged by the Company’s independent registered public accounting firm and reviewing the activities of and the results of audits conducted by the Company’s internal auditors and independent registered public accounting firm;

•

reviewing, with the Company’s independent registered public accounting firm, the audit report of the Company’s independent registered public accounting firm on the effectiveness of the Company’s internal control over financial reporting filed with the Company’s Annual Report on Form 10‑K;

•

establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, as well as the confidential, anonymous submissions by employees of the Company of concerns regarding questionable accounting or auditing matters;

•

setting and maintaining hiring policies for employees or former employees of the Company’s independent registered public accounting firm;

•

receiving reports concerning any non-compliance with the Company’s Code of Conduct by any officers or directors of the Company and approving, if appropriate, any waivers therefrom;

•

administering the Company’s Related Person Transaction Policy and approving, if appropriate, any “related person” transactions with respect to the Company’s directors or executive officers;

•

reviewing with senior management the Company’s major financial risk exposures and the steps being taken to monitor and control them as well as the Company’s guidelines and policies with respect to risk assessment and risk management and overall antifraud programs and controls;

•

directing and supervising any special investigations into matters which may come within the scope of the Audit Committee’s duties; and

•

other matters required by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the Public Company Accounting Oversight Board, the SEC, NYSE and other similar bodies or agencies which could have an effect on the Company's consolidated financial statements.

Pursuant to its charter, the Audit Committee has the authority to engage and terminate such legal counsel and other consultants and advisors as it deems appropriate to carry out its functions, including the sole authority to approve the fees and other terms of retention of such legal counsel and other consultants and advisors.

The Audit Committee met four times during Fiscal 2019.  The Audit Committee’s report relating to Fiscal 2019 begins on page 89 of this Proxy Statement.

 

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Compensation Committee

The Board has determined that each member of the Compensation Committee qualifies as an Independent Director under the applicable NYSE Rules.  The Board has also determined that each member of the Compensation Committee satisfies the additional independence standards for members of a compensation committee under the applicable NYSE Rules.  All members of the Compensation Committee also qualify as “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and as “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act.

The Compensation Committee periodically reviews and reassesses the adequacy of its charter and recommends any proposed changes to the full Board, as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.  The Compensation Committee evaluates its performance at least annually.

The Compensation Committee’s charter sets forth the duties and responsibilities of the Compensation Committee, which include:

•

discharging the Board’s responsibilities relating to compensation of the Company’s Chief Executive Officer and executive management, including reviewing and approving the compensation philosophy, policies, objectives and guidelines for the Company’s executive management;

•

reviewing and approving, if it has been deemed appropriate, the Company’s peer group companies and data sources for purposes of evaluating the Company’s compensation competitiveness and establishing the appropriate competitive positioning of the levels and mix of compensation elements;

•

reviewing and approving corporate goals and objectives, including performance goals, relevant to Chief Executive Officer and executive management compensation and evaluating the performance of the Chief Executive Officer and executive management in light of the approved corporate goals and objectives;

•

reviewing and approving the metrics to be used for the determination of payouts under cash-based and equity-based incentive programs;

•

setting the compensation of the Chief Executive Officer and other executive officers, including the amount and types of compensation;

•

preparing, producing, reviewing and/or discussing with the Company’s management, as appropriate, such reports and other information required by applicable laws, rules, regulations or other standards with respect to executive and director compensation, including those required for inclusion in the Company’s proxy statement and/or Annual Report on Form 10-K;

•

providing recommendations to the Board on Company-sponsored compensation-related proposals to be considered at the Company’s annual shareholder meetings, including Say-on-Pay and Say-on-Frequency proposals, and reviewing and considering the results of such votes;

•

reviewing, and advising the Board with respect to, Board compensation;

•

administering the Company’s equity-based incentive compensation plans, our other executive incentive compensation programs, and any other plans and programs which the Board designates;

•

reviewing and discussing with the Company’s management, the Company’s compensation risk management disclosures required by SEC Rules relating thereto;

•

in consultation with the Nominating and Governance Committee, reviewing, evaluating and making recommendations to the Board concerning shareholder proposals relating to executive and/or director compensation issues and the Company’s responses thereto; and

•

carrying out such other roles and responsibilities as the Board may designate or delegate to the Compensation Committee.

 

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The Compensation Committee’s processes and procedures to determine executive compensation, including the use of compensation consultants and the role of executive officers in the executive compensation decision-making process, are described in the sections captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Role of the Compensation Committee” and “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Executive Compensation Philosophy and Objectives” beginning on page 33 and page 35 respectively, of this Proxy Statement.

Pursuant to its charter, the Compensation Committee has sole authority to retain and terminate any compensation consultant, legal counsel or other advisor, as the Compensation Committee deems appropriate to assist the Committee in the performance of its duties, including the sole authority to approve the fees and other terms and conditions of retention.  Prior to any such retention, the Compensation Committee assesses any factors relevant to such consultant’s, legal counsel’s or advisor’s independence from management, including the factors specified in NYSE’s Corporate Governance Standards or other listing rules, to evaluate whether the services to be performed will raise any conflict of interest or compromise the independence of such consultant, legal counsel or advisor.

The Compensation Committee met three times during Fiscal 2019.  The Compensation Discussion and Analysis regarding executive compensation for our NEOs begins on page 33 of this Proxy Statement, and the Compensation Committee Report for Fiscal 2019 is on page 51 of this Proxy Statement.

Nominating and Governance Committee

The Board has determined that each member of the Nominating and Governance Committee qualifies as an Independent Director under the applicable NYSE Rules.  The Nominating and Governance Committee periodically reviews and assesses the adequacy of its charter and recommends any proposed changes to the full Board, as necessary to reflect changes in regulatory requirements, authoritative guidance and evolving practices.  The Nominating and Governance Committee evaluates its performance at least annually.

Under the terms of its charter, the Nominating and Governance Committee is to:

•

develop and periodically review principles of corporate governance and recommend them to the Board for its approval;

•

review the Amended Articles of Incorporation, the Code of Regulations and the Corporate Governance Guidelines of the Company and recommend to the Board any changes deemed appropriate;

•

review the procedures and communication plans for shareholder meetings and ensure that required information regarding the Company is adequately presented;

•

review and make recommendations to the Board regarding (a) the composition and size of the Board in order to ensure that the Board has the proper expertise and its membership consists of persons with sufficiently diverse backgrounds, (b) the criteria for the selection of Board members and Board committee members, and (c) Board policies on age and term limits for Board members;

•

plan for continuity on the Board as existing Board members leave the Board;

•

with the participation of the Chairman of the Board, identify and recruit candidates for Board membership, evaluate Board candidates recommended by shareholders and arrange for appropriate interviews and inquiries into the qualifications of the candidates;

•

identify and recommend individuals to be nominated for election as directors by the shareholders and to fill vacancies on the Board;

•

with the Compensation Committee, provide for a review of succession plans for the Chairman of the Board and Chief Executive Officer in the case of his resignation, retirement or death;

•

evaluate the performance of current Board members proposed for re-election, and recommend to the Board whether such members of the Board should stand for re-election; oversee an annual evaluation of the Board as a whole; conduct an annual evaluation of the Nominating and Governance Committee; and oversee the evaluation of the other Board committees and of management; and

•

with the Chairman of the Board, periodically review the charter and composition of each Board committee and make recommendations to the Board as to changes in charters, the creation of additional committees or, with the Chairman of

 

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the Board, recommend to the Board individuals to be chairs and members of Board committees; so that each Board committee is comprised of members with the appropriate qualities, skills and experience for the tasks of the committee.

To the extent not otherwise delegated to the Audit Committee, the Nominating and Governance Committee is also to:

•

review the relationships between the Company and each director, whether direct or as a partner, officer or equity owner of an organization that has a relationship with the Company, for conflicts of interest (all members of the Board are required to report any such relationships to the Company’s General Counsel);

•

address actual and potential conflicts of interest a Board member may have and issue to the Board member having an actual or potential conflict of interest instructions on how to conduct himself/herself in matters before the Board which may pertain to such an actual or potential conflict of interest; and

•

make appropriate recommendations to the Board concerning determinations necessary to find a director to be an Independent Director.

The Nominating and Governance Committee met one time during Fiscal 2019.

Board’s Role in Risk Oversight

Our management is principally responsible for defining, identifying and assessing the various risks facing our Company, formulating enterprise risk management policies and procedures and managing our risk exposures on a day-to-day basis.  A risk committee, comprised of senior executives, directs this process.  Management provides an annual risk assessment to the Board, with quarterly updates.  The Board’s responsibility is to oversee our risk management processes by understanding and evaluating management’s identification, assessment and management of the Company’s critical risks.

The Board as a whole has responsibility for this risk oversight, assisted by the Audit Committee and the Compensation Committee.  Areas of focus include strategic, operational, liquidity, market, financial, reporting, succession, compensation, compliance and other risks.  The Audit Committee is tasked with oversight of financial, reporting and compliance risk management, the Compensation Committee is tasked with oversight of compensation risk management, and the Board as a whole oversees all other risk management.

 

 

 

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Transactions With Certain Related Persons

 

Review, Approval or Ratification of Transactions with Related Persons

The Company’s policy with respect to related person transactions is addressed in the Company’s written Related Person Transaction Policy (the “Policy”), which supplements the Company’s written Code of Conduct provisions addressing “conflicts of interest”.  As described in the Code of Conduct, conflicts of interest can arise when an employee’s or a director’s personal or family relationships, financial affairs or an outside business involvement may adversely influence the judgment or loyalty required for performance of his or her duties to the Company.  In cases where there is an actual or even the appearance of a conflict of interest, the individual involved is required to notify his or her supervisor or the Company’s Ethics Officer.  The supervisor will then consult with management and the Ethics Officer, as appropriate.  The Code of Conduct provides that any action or transaction in which the personal interest of an executive officer or a director may be in conflict with those of the Company is to be reported to the Audit Committee.  The Audit Committee must investigate and, if it is determined that such action or transaction would constitute a violation of the Code of Conduct, the Audit Committee is authorized to take any action it deems appropriate.

The Policy was adopted by the Board and is administered by the Audit Committee and the Company’s General Counsel.  The Policy applies to any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which: the Company participates, directly or indirectly; the amount involved exceeds or is expected to exceed $120,000; and a “related person” has, had or will have a direct or indirect material interest.  Under the Policy, a “related person” is any person:

•

who is or was an executive officer, a director or a director nominee of the Company, or an immediate family member of any such individual; or

•

who is or was the beneficial owner of more than 5% of the Company’s outstanding common shares, or an immediate family member of any such individual.

All related person transactions are to be brought to the attention of the Company’s management who will then refer each matter to the Company’s General Counsel and the Audit Committee.  Each director, director nominee or executive officer of the Company must notify the Company’s General Counsel in writing of any interest that such individual or an immediate family member of such individual has, had or may have, in a related person transaction.  In addition, any related person transaction proposed to be entered into by the Company must be reported to the Company’s General Counsel by the employee of the Company who has authority over the transaction.  On an annual basis, each director, director nominee and executive officer of the Company must complete a questionnaire designed to elicit information about existing and potential related person transactions.  Any potential related person transaction that is raised will be analyzed by the Company’s General Counsel, in consultation with management and with outside counsel, as appropriate, to determine whether the transaction, arrangement or relationship does, in fact, qualify as a related person transaction requiring review by the Audit Committee under the Policy.

Under the Policy, all related person transactions (other than those deemed to be pre-approved or ratified under the terms of the Policy) will be referred to the Audit Committee for approval (or disapproval), ratification, revision or termination.  Whenever practicable, a related person transaction is to be reviewed and approved or disapproved by the Audit Committee prior to the effectiveness or consummation of the transaction.  If the Company’s General Counsel determines that advance consideration of a related person transaction is not practicable, the Audit Committee will review and, in its discretion, may ratify the transaction at the Audit Committee’s next meeting.  However, the Company’s General Counsel may present a related person transaction arising between meetings of the Audit Committee to the Chair of the Audit Committee who may review and approve (or disapprove) the transaction, subject to ratification by the Audit Committee at its next meeting if appropriate.  If the Company becomes aware of a related person transaction not previously approved under the Policy, the Audit Committee will review the transaction, including the relevant facts and circumstances, at its next meeting and evaluate all options available to the Company, including ratification, revision, termination or rescission of the transaction, and take the course of action the Audit Committee deems appropriate under the circumstances.

 

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No director may participate in any approval or ratification of a related person transaction in which the director or an immediate family member of the director is involved.  The Audit Committee may only approve or ratify those transactions the Audit Committee determines to be in the Company’s best interest.  In making this determination, the Audit Committee will review and consider all relevant information available to it, including:

•

the terms (including the amount involved) of the transaction and the related person’s interest in the transaction and the amount of that interest;

•

the business reasons for the transaction and its potential benefits to the Company, and whether the transaction was undertaken in the ordinary course of the Company’s business;

•

whether the terms of the transaction are fair to the Company and no less favorable to the Company than terms that could be reached with an unrelated third party;

•

the impact of the transaction on the related person’s independence; and

•

whether the transaction would present an improper conflict of interest for any director, director nominee or executive officer of the Company, taking into account the size of the transaction, the overall financial position of the related person, the direct or indirect nature of the related person’s interest in the transaction and the ongoing nature of any proposed relationship and any other factors the Audit Committee deems relevant.

Any related person transaction previously approved or ratified by the Audit Committee or otherwise already existing that is ongoing in nature is to be reviewed by the Audit Committee annually.

Under the terms of the Policy, the following related person transactions are deemed to be pre-approved or ratified (as appropriate) by the Audit Committee even if the aggregate amount involved would exceed $120,000:

•

interests arising solely from ownership of the Company’s common shares if all shareholders receive the same benefit on a pro rata basis (i.e., dividends);

•

compensation to an executive officer of the Company, as long as the executive officer is not an immediate family member of another executive officer or a director of the Company and the compensation has been approved by the Compensation Committee or is generally available to the Company’s employees;

•

compensation to a director for services as a director if the compensation is required to be reported in the Company’s proxy statements;

•

interests deriving solely from a related person’s position as a director of another entity that is a party to the transaction;

•

interests deriving solely from the related person’s direct or indirect ownership of less than 10% of the equity interest (other than a general partnership interest) in another person which is a party to the transaction; and

•

transactions involving competitive bids.

In addition, the Audit Committee will presume that the following transactions do not involve a material interest:

•

transactions in the ordinary course of business with an entity for which a related person serves as an executive officer, provided (i) the affected related person did not participate in the decision of the Company to enter into the transaction, and (ii) the aggregate amount involved in any related category of transactions in a 12-month period is not greater than the least of (a) $1,000,000, or (b) 2% of the other entity’s consolidated gross revenues for such other entity’s most recently completed fiscal year, or (c) 2% of the Company’s consolidated gross revenues for the Company’s most recently completed fiscal year;

•

donations, grants or membership payments to non-profit organizations, provided (a) the affected related person did not participate in the decision of the Company to make such payments, and (b) the aggregate amount in a 12-month period does not exceed the lesser of $500,000 or 1% of the non-profit organization’s consolidated gross revenues for its most recently completed fiscal year; and

•

Company use of facilities (such as dining facilities and clubs) if the charges for such use are consistent with charges paid by unrelated third parties and are fair, reasonable and consistent with similar services available for similar facilities.

 

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Transactions with Related Persons

The Company is a party to certain agreements relating to the rental of aircraft to and from JMAC, Inc., a private investment company (“JMAC”), which is owned by John P. McConnell, Chairman of the Board and Chief Executive Officer of the Company, and members of his family.  JMAC Air, LLC (“JMAC Air”) is owned by JMAC. Under the agreement with JMAC Air, the Company may lease aircraft owned by JMAC as needed for a rental fee per flight; and under the agreement with the Company, JMAC is allowed to lease aircraft operated by the Company, on a per-flight basis, when the Company is not using the aircraft.  The Company also makes its pilots available for a per-day charge, to JMAC Air.  The rental fees paid to the Company under the per-flight rental agreements are set based on Federal Aviation Administration (“FAA”) regulations.  The Company believes the rental fees set in accordance with such FAA regulations for Fiscal 2019 exceeded the direct operating costs of the aircraft for such flights.  Also, based on quotes for similar services provided by unrelated third parties, the Company believes that the rental rates paid to JMAC are no less favorable to the Company than those that could be obtained from unrelated third parties.

For Fiscal 2019, the Company paid an aggregate amount of $125,296 under the JMAC Air lease agreement and received $71,653 for airplane rental and pilot services.

During Fiscal 2019, the Company, either directly or through business expense reimbursement, paid approximately $333,047 to Double Eagle Club, a private golf club owned by the McConnell family (the “Club”).  The Company uses the Club’s facilities for Company functions and meetings, and for meetings and entertainment for customers, suppliers and other business associates.  Amounts charged by the Club to the Company are no less favorable than those that are charged to unrelated members of the Club for the same type of use.

During Fiscal 2019, the Company, either directly or indirectly, paid approximately $190,330 to the Columbus Blue Jackets (“CBJ”), a National Hockey League team of which John P. McConnell is the majority owner, for suite expenses, game tickets and special event tickets, often used in connection with meetings and entertainment for customers, suppliers and other business associates, at prices no less favorable than those charged to third parties.  

 

 

 

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Executive Compensation

 

Compensation Discussion and Analysis

Role of the Compensation Committee

The Compensation Committee reviews and administers the compensation for the Chief Executive Officer (the “CEO”) and other members of executive management of the Company, including the named executive officers (the “NEOs”) identified in the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement.  The Compensation Committee also oversees the Company’s annual incentive plan for executives, long-term incentive program, restricted common share awards, stock option plans, and non-qualified deferred compensation plans.  A more detailed discussion of the duties of the Compensation Committee is set forth in the section captioned “PROPOSAL 1: ELECTION OF DIRECTORS – Committees of the Board – Compensation Committee” starting on page 27.

The Compensation Committee is comprised of four directors, each of whom qualifies as an “Independent Director” under the applicable NYSE Rules, and is free from any relationship (including disallowed consulting, advisory or other compensatory arrangements) prohibited by applicable laws, rules or regulations or that, in the opinion of the Board, is material to his or her ability to be independent from management of the Company in connection with the duties of a member of the Compensation Committee or to make independent judgments about the Company’s executive compensation.  Each member also qualifies as an “outside director” for purposes of Section 162(m) of the Internal Revenue Code and as a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act.

The Compensation Committee has sole authority to retain and terminate such compensation consultants, legal counsel and other advisors, as the Compensation Committee deems appropriate to fulfill its responsibilities, including sole authority to approve the fees and other terms of retention.  The Compensation Committee has retained an independent compensation consultant, Willis Towers Watson, for the purpose of assisting the Compensation Committee in fulfilling its responsibilities, including providing advice on the amount and form of executive and director compensation.  Fees paid related to executive compensation matters were $58,000 in Fiscal 2019.  Management also periodically retains Willis Towers Watson to provide additional services to the Company, including advising on other compensation matters.  Fees for these additional services were $128,000 in Fiscal 2019, primarily related to assisting the Company with its broad-based compensation structure.  The Compensation Committee has conducted an assessment, which included the consideration of the six factors specified in the NYSE Corporate Governance Standards and SEC Rule 10C-1(b)(4), to evaluate whether the services performed by Willis Towers Watson raise a conflict of interest or compromise the independence of Willis Towers Watson.  Based upon this assessment, the Compensation Committee determined that Willis Towers Watson qualifies as an independent compensation consultant and its work does not raise any conflict of interest.

While the Compensation Committee retains Willis Towers Watson, in carrying out assignments for the Compensation Committee, Willis Towers Watson may interact with the Company’s management including the Senior Vice President and Chief Human Resources Officer, the Senior Vice President-Administration, General Counsel and the  Vice President and Chief Financial Officer and their respective staffs in order to obtain information.  In addition, Willis Towers Watson may, in its discretion, seek input and feedback from management regarding its work product prior to presentation to the Compensation Committee in order to confirm information is accurate or address certain issues.

The agendas for the Compensation Committee’s meetings are determined by the Compensation Committee’s Chair with assistance from the CEO, the Senior Vice President and Chief Human Resources Officer and the Senior Vice President-Administration, General Counsel.  These individuals, with input from the Compensation Committee’s compensation consultant, make compensation recommendations for the NEOs and other executive officers.  However, decisions regarding the compensation of the NEOs are made solely by the Compensation Committee.

 

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After each regularly scheduled meeting, the Compensation Committee may meet in executive session.  When meeting in executive session, the Compensation Committee may have a session with the CEO only, a session with the compensation consultant only, and a session with Compensation Committee members only.  The Compensation Committee Chair reports on Compensation Committee actions to the full Board at the following Board meeting.

Stock Ownership Guidelines

In order to further emphasize the stake that the Company’s directors and senior executives have in fulfilling the goal of building and increasing shareholder value, and to deepen the resolve of executive leadership to fulfill that goal, the Company has established stock ownership guidelines for directors and senior executives.

 

Stock Ownership Guidelines

Covered Person(s)

 

Multiple of base salary or

annual cash retainer, as

applicable

 

Chief Executive Officer

 

5 times

 

Directors

 

5 times

 

Chief Financial Officer

 

3.5 times

 

Chief Operating Officer

 

3.5 times

 

Senior Vice Presidents and Business Unit Presidents

 

2.5 times

 

Other Senior Executives

 

1.25 times

 

 

For purposes of these guidelines, stock ownership includes common shares held directly or indirectly, common shares held in an executive’s 401(k) plan account(s) and theoretical common shares credited to the bookkeeping account of an executive or a director in one of the Company’s non-qualified deferred compensation plans.  

Under the stock ownership guidelines, once an executive or a director reaches the target ownership level, and so long as those common shares are retained and the individual remains subject to the same guideline level, there is no obligation to purchase additional common shares as a result of fluctuations in the price of the Company’s common shares.

Each covered executive or director is expected to attain the target level of stock ownership within five years from the date he or she is appointed or elected to the position.  All directors and executive officers have met their target ownership levels, with the exception of two executive officers who were appointed to their current positions in the last 12 months, and Mr. Blom, who became a director in June 2019.

Anti-Hedging Policy

The Company prohibits directors, officers (including the NEOs) and other key employees of the Company from engaging in hedging transactions with respect to common shares of the Company.

Company Compensation Philosophy

A basic philosophy of the Company has long been that employees should have a meaningful portion of their total compensation tied to performance and that the Company should use incentives which are intended to drive and reward performance.  In furtherance of this philosophy, there is broad-based participation among full-time, non-union employees of the Company in some form of incentive compensation program.  These programs include cash profit sharing programs, which compute payouts based on a fixed percentage of profits, and annual incentive bonus programs that primarily tie bonuses to the operating results of the Company or the applicable business unit.

The Company has also made broad-based grants of equity awards periodically to a number of salaried employees below the executive level.

 

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Executive Compensation Philosophy and Objectives

The Company’s objectives with respect to executive compensation are to attract and retain highly-qualified executives, to align the interests of management with the interests of shareholders and to provide incentives, based primarily on Company performance, for reaching established Company goals and objectives.  To achieve these objectives, the Compensation Committee has determined that total compensation for executives will exhibit the following characteristics:

•

It will be competitive in the aggregate, using broad-based business comparators to gauge the competitive market;

•

It will be performance-oriented and highly-leveraged, with a substantial portion of the total compensation tied to performance, primarily that of the Company and/or that of the applicable business unit;

•

It will align the interests of management and the interests of shareholders; and

•

It will promote long-term careers at the Company.

The Company’s practice has long been that executive compensation be highly leveraged.  The Company’s compensation program emphasizes performance-based compensation (pay-at-risk) that promotes the achievement of short-term and long-term Company objectives.  The Company believes it is appropriate to provide a balance between incentives for short-term performance and incentives for long-term profitability of the Company.  The Company’s executive compensation program, therefore, includes both an annual cash incentive bonus program and a long-term incentive compensation program.  The Company also believes it is appropriate for long-term incentives to have a cash compensation component and an equity-based compensation component, which incentivize executives to drive Company performance and align their interests with those of the Company’s shareholders.  The individual components of executive compensation are discussed below.

In fulfilling its responsibilities, the Compensation Committee annually reviews certain market compensation information with the assistance of its independent compensation consultant, Willis Towers Watson, who is directly engaged by the Compensation Committee to prepare the information.  This includes information regarding compensation paid to officers with similar responsibilities from a broad-based group of more than 500 companies (the “comparator group”).  A list of the entities in the comparator group is set forth on Appendix I to this Proxy Statement.

The comparator group is comprised largely of manufacturing companies, maintained in the executive compensation database of Willis Towers Watson at the time the study is conducted, with median revenues of $5.3 billion.  Changes in the comparator group occur as companies begin or cease participation in the database, due to a sale, merger or acquisition of the companies included or for other reasons.  The Compensation Committee neither selects nor specifically considers the individual companies which are in the comparator group.  For comparison purposes, due to variances in the size of the companies in the comparator group, regression analysis, which is an objective analytical tool used to determine the relationship between data, is used to adjust data.  The Compensation Committee believes that using this broad-based comparator group minimizes the effects of changes to the group due to changes in data base participation, lessens the impact a single entity can have on the overall data, provides more consistent results and better reflects the market in which the Company competes for executive talent.

During its review process, the Compensation Committee meets directly with its compensation consultant and reviews comparator group information with respect to base salaries, annual cash incentive bonuses and long-term incentive compensation programs.  The Compensation Committee considers comparator group information provided by the compensation consultant as an important factor in determining the appropriate levels and mix of executive compensation.

In the past, the Compensation Committee had Willis Towers Watson prepare and review information on a more focused group of companies to assure that compensation information from this group was not significantly different than the information obtained from the broad-based comparator group discussed above.  After reviewing this information, the Compensation Committee determined that the results of the two groups were not significantly different.  The Compensation Committee continues to believe that the use of a broad-based comparator group provides more consistent information and is preferable for the reasons described above.

 

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Base salaries of the NEOs and other executives generally fall below market median comparables developed from the comparator group, although the actual base salaries of the NEOs and other executives vary from individual to individual and from position to position due to factors such as time in the position, performance, experience, internal equity and other factors the Compensation Committee deems appropriate.  Annual cash incentive bonus opportunities to be paid to the NEOs and other executives for achieving targeted levels of performance are generally above what the compensation consultant considers market median for annual bonuses because base salaries are intentionally set below market median comparables.  In setting normal annual long-term incentive compensation opportunities of the NEOs and other executives, the Compensation Committee generally starts with the market median developed by the compensation consultant, and then makes adjustments the Compensation Committee deems appropriate.

While comparator group information is a factor considered in setting compensation, where a specific NEO’s or other executive’s annual cash incentive bonus and long-term incentive compensation fall relative to the market median developed from the comparator group will vary based upon internal equity and other factors listed in the preceding paragraph.  Annual cash incentive bonuses and long-term incentive compensation actually paid may vary significantly depending on Company and/or business unit performance during the applicable year(s).

The Compensation Committee uses tally sheets as a tool to assist in its review of executive compensation.  These tally sheets contain the components of the CEO’s and other NEOs’ current and historical compensation, including base salary, annual cash incentive bonuses and long-term incentive compensation.  These tally sheets and other information provided to the Compensation Committee also show the estimated compensation that would be received by the CEO and other NEOs under certain scenarios, including in connection with a change in control of the Company.

While prior compensation or amounts realized or realizable from prior awards are given some consideration, the Compensation Committee believes that the current and future performance of the Company, its business units and the individual executive officers should be the most significant factors in setting the compensation for the Company’s executive officers.

The CEO’s performance is annually evaluated by the Compensation Committee and/or the full Board.  The criteria considered include: overall Company performance; overall leadership; the CEO’s performance in light of, and his development and stewardship of, the Company’s philosophy and its current and long-term strategic plans, goals and objectives; development of an effective senior management team; appropriate positioning of the Company for future success; and effective communications with the Board and stakeholders.  At the request of Mr. McConnell, his base salary and overall compensation have been well below market median levels.  The Compensation Committee also evaluates the performance of the other NEOs when annually reviewing and setting executive compensation levels.  The criteria considered for the other NEOs are similar to those for the CEO, adjusted to reflect each NEO’s position, with a focus on the applicable business unit for any NEO who is a business unit President.

Compensation Risk Analysis

The Company’s executive compensation programs are designed to be balanced, with a focus on both achieving consistent, solid year-over-year financial results and growing shareholder value over the long term.  The highest amount of compensation can be attained under these programs, taken as a whole, through consistently strong performance over sustained periods of time.  This provides strong incentives for achieving success over the long term and avoiding excessive risk-taking in the short term.

The Company has long believed that compensation incentives, based primarily upon Company earnings or similar performance measures, have played a vital role in the success of the Company.  Making profit sharing, bonuses and/or other incentive payments broadly available to all levels of non-union employees has fostered an ownership mentality throughout the workforce which has resulted in long-term employment and a desire to drive consistent financial performance.  The Company’s culture, aided by this ownership mentality, is focused on striving to continually improve performance and achieve long-term success without engaging in excessive risk-taking.

We do not believe that our compensation incentives encourage excessive risk-taking for the following reasons:

•

Base salaries are a sufficient component of total compensation, minimizing the need for excessive risk-taking.

•

The performance goals under the annual cash incentive bonus plan are based upon realistic earnings per share (“EPS”), business unit operating income (“EOI”) and economic value added (“EVA”) levels, reviewed and approved by the

 

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Compensation Committee, that the Compensation Committee believes can be attained without taking inappropriate risks or materially deviating from normal operations, expected continuous improvement or approved strategy.

•

The long-term cash performance awards and performance share awards are based upon performance over three-fiscal-year periods which mitigates the taking of short-term risk.

•

In setting targets for annual cash incentive bonuses and long-term incentive compensation, restructuring charges and non-recurring items are eliminated and results are adjusted to eliminate inventory holding gains or losses (where appropriate for the Company or the business unit under consideration), which limit rewards for risky behavior outside the ordinary course of business.

•

Stock options generally contain a three-year incremental vesting schedule and provide rewards based on the long-term performance of our common shares.

•

Restricted common share awards generally have a cliff vesting period of three years and further link executive compensation to the long-term value of Worthington’s common shares.

The Company’s stock ownership guidelines and anti-hedging policy also drive stock ownership among executives, again aligning their interests with the interests of Worthington’s shareholders and the long-term growth in the value of Worthington’s common shares.  This is most evident in the shareholdings of CEO, John P. McConnell, who is by far Worthington’s largest shareholder.  His potential financial reward for long-term growth in the value of Worthington’s common shares far outweighs any short-term compensation he may receive as a result of any excessive short-term risk-taking.

The Compensation Committee has granted special performance-based/time-vested restricted common share awards to select NEOs in recent years.  These awards are viewed as particularly appropriate as they are earned by top management only when the Worthington common share price increases significantly and, thus, Worthington’s shareholders are also significantly benefited.  The target price was set at more than 42% above the then all-time high average closing price of Worthington’s common shares for any consecutive thirty- or ninety-day period (as applicable) prior to the applicable grant date.  While these awards do require a significant increase in the price of Worthington’s common shares to vest, the Compensation Committee believes that the common share price targets for these awards are reasonable targets which can be met with steady consistent growth in the Company’s performance without the need for any undue risk-taking.  The time-based vesting and holding period requirements mitigate the incentive for risky behavior intended to drive only a short-term common share price increase, and instead encourage activity that would lead to steady increases in financial results and a common share price which can be maintained.

Cash Compensation Earned in Fiscal 2019 and Company Performance

Short-term cash compensation includes base salary and the annual cash incentive bonus paid to the Company’s executives, including the CEO and the other NEOs.  Effective September 2018, base salaries for the NEOs generally increased 3%, with Mr. Rose and Mr. Gilmore receiving larger increases in base salaries effective October 2018 and incentive bonus targeted compensation due to their promotions.  Effective November 2018, Mr. Hayek also received an increase in base salary and incentive bonus targeted compensation due to his promotion.  Consistent with the Company’s philosophy, base salaries in Fiscal 2019 were generally below market median levels for the comparator group.  

The Compensation Committee believes the Company has performed well in recent years. Although financial results were down in Fiscal 2019, the Company still posted the third best EPS in the Company’s history.  This followed strong results in Fiscal 2018 and Fiscal 2017, the two better EPS years.  Fiscal 2019 was a solid but challenging year driven largely by the steel tariffs enacted in early 2018.  Steel Processing was impacted by the fluctuating steel prices, particularly the significant declines later in the year, which led to inventory holding losses, created short-term margin pressure and contributed to lower direct shipments in the second half of Fiscal 2019 as customers appeared to delay orders.  The fluctuating steel prices also resulted in lower scrap prices in Fiscal 2019 relative to the cost of steel, and this scrap gap had a negative impact on spreads.  Pressure Cylinders was also hurt as the increased steel prices and other input costs early in the year reduced margins, but this segment was able to improve pricing and margins as the year went on. In addition, Pressure Cylinders results were negatively impacted by a $13 million charge related to a cylinder replacement program.   Management has taken action to better position the Company for the future. It has and continues to take action to exit non-core, underperforming operations. It remains focused on enhancing growth through transformation, acquisition and innovation, and has taken steps to strengthen each of these areas.

 

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Financial results for Fiscal 2019 were down from the strong results of Fiscal 2018 and Fiscal 2017, but Fiscal 2019 was still the third best earnings per share year in the Company’s history. Due to weaker results, annual cash incentive bonuses for Fiscal 2019 were down as a percentage of targeted bonuses from Fiscal 2018.  For Fiscal 2019, Corporate, Steel Processing and Pressure Cylinders annual cash incentive bonuses were paid at  93%, 89% and 82% of target,  respectively, after being paid at 106%, 103%, and 104% of target, respectively, for Fiscal 2018.  

For Fiscal 2019, the annual cash incentive bonuses earned were calculated by treating the $13 million charge for the cylinders replacement program as a non-recurring expense which was excluded in the calculation of Pressure Cylinders operating income and Corporate EPS.

Long-term cash awards earned for the three-fiscal-year period ended Fiscal 2019 were down significantly. Long-term cash and equity payouts for the three-fiscal-year period ended Fiscal 2019 were earned at 48% of target at Corporate, 24% at Steel Processing and 24% at Pressure Cylinders after being paid out at 94% of target at Corporate, 47% at Steel Processing and 47% at Pressure Cylinders for the three-fiscal-year period ended Fiscal 2018.  

The direct relationship of annual cash compensation earned by the Company’s NEOs to the Company’s performance has been exemplified by the amount of cash bonuses earned by the NEOs not only in Fiscal 2019 but also in the prior years.  The following table summarizes results for the last five fiscal years.

 

Fiscal

Year

Performance

Annual Cash Bonuses

2015

Weaker performance caused largely by challenging conditions in certain key markets

Annual cash bonuses of executives were earned at 63% - 77% of target levels and were down on average 29% from Fiscal 2014

2016

Improved results, with then record EPS, despite continued challenges in certain markets

Annual cash bonuses of the Corporate and Steel Processing executives were earned at approximately 100% of target levels and were up from Fiscal 2015

2017

Continued improved results, with record EPS despite continued challenges in certain markets

Annual cash bonuses of executives were up again, with Corporate payouts reaching 115%, Steel Processing 130%, and Pressure Cylinders 89% of target levels

2018

Solid year, with the second best annual EPS results

Annual cash bonuses of executives were 106% of target levels at Corporate, 103% at Steel Processing and 104% at Pressure Cylinders

2019

Third best annual EPS but weaker year-over-year results

Annual cash bonuses of executives were paid at 93% of target levels at Corporate, 89% at Steel Processing and 82% at Pressure Cylinders

 

 

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The relationship of incentive compensation earned to Company results is also reflected in payments which have been earned under the long-term cash performance and performance share awards. No long-term performance awards were paid for any of the three-fiscal-year performance periods ended with Fiscal 2009, 2010 or 2011.  Long-term performance awards were granted for each of the eight three-fiscal-year performance periods since that time.  Results for the last five completed performance periods are summarized below.

 

Performance

Period

(Fiscal Years)

Performance

Results

2013-2015

Weaker results in Fiscal 2015

Corporate and Steel Processing payouts fell below target levels, with payouts at 88% and 89% of target levels, respectively

2014-2016

Record Fiscal 2016, but Fiscal 2015 performance hurt results for the 3-fiscal-year period

Corporate and Steel Processing payouts fell between target and threshold, paying out at 70% and 78%, respectively, of target levels, as performance targets were higher

2015-2017

Despite another record year in Fiscal 2017, the weak results in Fiscal 2015 kept payouts below target levels

Long-term cash and performance share incentive compensation was earned at 92% of target levels for Corporate executives, and 46% of target levels for Steel Processing and Pressure Cylinders executives

2016-2018

Solid year in Fiscal 2018 (second best annual EPS) following record years in Fiscal 2017 and Fiscal 2016

Long-term cash and performance share incentive compensation was earned at 94% of target levels for Corporate executives, and 47% of target levels for Steel Processing and Pressure Cylinders executives

2017-2019

Weaker results in Fiscal 2019 following strong years in Fiscal 2018 and Fiscal 2017

Long-term cash and performance share incentive compensation was earned at 48% of target levels for Corporate executives, and 24% of target levels for Steel Processing and Pressure Cylinders executives

 

The Company’s financial position continues to strengthen as the Company has continued to generate a significant amount of cash from operations in recent years.  The Company was able to pay most of the purchase price for the AMTROL acquisition, approximately $291.9 million after closing adjustments, out of Company cash generated in Fiscal 2017.  The Company’s capital structure is also in a sound position.  The Company has in place $200 million of long-term senior notes maturing 2032, $250 million of senior notes maturing 2026, $150 million of senior notes due 2024, and $150 million of senior notes due 2020.  The Company also has a $500 million revolving credit facility, through February 2023, which was undrawn as of May 31, 2019.  

The Company has also been able to reward its shareholders by steadily increasing its quarterly dividend from $0.13 per share for Fiscal 2013, to $0.15 per share for Fiscal 2014, to $0.18 per share for Fiscal 2015, to $0.19 per share for Fiscal 2016, to $0.20 per share for Fiscal 2017, to $0.21 for Fiscal 2018, to $0.23 for Fiscal 2019, and to $0.24 for the first quarter of Fiscal 2020.  In addition, the Company has also continued its stock buy-back program, repurchasing a total of 4,100,000 common shares during Fiscal 2019.

Say-on-Pay Consideration

At the Company’s 2018 Annual Meeting of Shareholders, the Company’s shareholders approved the executive compensation as disclosed in the proxy statement for that Annual Meeting, with close to 87%  of the common shares represented by those shareholders present in person or represented by proxy at the 2018 Annual Meeting voting for approval.  The vote for approval was over 97%, excluding broker non-votes.  The Compensation Committee evaluated the results of this strongly supportive advisory vote, together with the other factors and data discussed in this Compensation Discussion and Analysis, in determining executive compensation policies and making executive compensation decisions.

 

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Compensation Components

Base Salaries

Base salaries for the NEOs and other executive officers are set to reflect the duties and responsibilities inherent in each position, individual levels of experience, performance, market compensation information, internal equity among positions in the Company, and the Compensation Committee’s judgment.  The Compensation Committee annually reviews information regarding compensation paid by the comparator group to executive officers with similar responsibilities.  It is the Compensation Committee’s intent, in general, to set base salaries below market median levels, with consideration given to the factors listed above, and have total annual cash compensation driven by bonuses.

In June 2019, the Compensation Committee approved a 3% increase in the base salaries of the currently employed NEOs, which will become effective in September 2019.

Annual Bonus Compensation

The NEOs and certain other key employees of the Company participate in the Company’s annual cash incentive bonus program under which annual bonus awards are tied to attainment of target results.  These awards are generally tied to achieving specified levels (threshold, target and maximum) of corporate and/or business unit performance for the applicable 12-month performance period.  The type of performance measured and the weighting of those measurements is shown below.  Restructuring charges and non-recurring gains and losses are excluded from all calculations, and the impact of inventory holding gains or losses are factored out in calculating corporate EPS and Steel Processing business unit EOI.

•

For Corporate executives, the goals are tied to corporate performance.

 

•

Payouts are generally tied to achieving specified levels (threshold, target and maximum) of corporate EVA and corporate EPS (adjusted as noted above), with each performance measure carrying a 50% weighting.

•

For Business Unit executives, the goals are tied to both corporate performance and the performance of their respective business units.

 

•

Payouts are generally tied to achieving specified levels (threshold, target and maximum) of adjusted corporate EPS, 20% weighting; business unit EOI (adjusted as noted above), 30% weighting; and business unit EVA, 50% weighting.

For performance falling between threshold and target or between target and maximum, the award is linearly pro-rated.  If threshold levels are not reached for any performance measure, no bonus will be paid under that performance metric.

The Compensation Committee has also awarded supplemental bonuses at times and for reasons it deems appropriate.

Annual incentive bonuses are paid within a reasonable time following the end of the performance period in cash, unless the Board specifically provides for a different form of payment.  In the event of a change in control of the Company, followed by the actual or constructive termination of a participant’s employment during the relevant performance period, the annual incentive bonus award of the participant would be considered to be earned at the target level and payable as of the date of actual or constructive termination of employment.

For Fiscal 2019, the annual cash incentive bonuses were calculated by treating the $13 million charge for the cylinder replacement program as a non-recurring expense and thus excluded in the calculation of Pressure Cylinders operating income and Corporate EPS.

The annual cash incentive bonuses for the NEOs for Fiscal 2019 were down from Fiscal 2018.  Annual cash incentive bonuses for Fiscal 2019 results were paid at 93% of target levels for Corporate executives, 89% for Steel Processing executives and 82% for Pressure Cylinder executives.  The bonuses for Fiscal 2018 were paid at 106% of target levels for Corporate executives, 103% for Steel Processing executives and 104% for Pressure Cylinders executives.

Annual incentive bonuses earned by the NEOs for Fiscal 2019, Fiscal 2018 and Fiscal 2017, are shown in the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement in the “Annual Incentive Bonus Award” column within “Non-Equity Incentive Plan Compensation”.  

 

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On June 25, 2019, the Compensation Committee granted annual incentive bonus awards to the NEOs for Fiscal 2020.  These annual cash incentive bonus awards are shown in the “Annual Cash Incentive Bonus Awards Granted for Fiscal 2020” table beginning on page 65 of this Proxy Statement.

Long-Term Incentive Compensation

The Compensation Committee has implemented a long-term incentive compensation program for the NEOs and other executives, which consists of:

•

Stock option grants;

•

Long-term performance share awards based on achieving measurable financial results over a three-fiscal-year period;

•

Long-term cash performance awards based on achieving measurable financial results over a three- fiscal-year period; and

•

Restricted common share awards.

Long-term performance share awards, long-term cash performance awards, and restricted common share awards are made under the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “1997 LTIP”).  Stock options are generally granted out of one of the Company’s stock option plans or under the 1997 LTIP.  All of these plans have been approved by the Company’s shareholders.

The Compensation Committee added awards of restricted common shares to the long-term incentive program beginning in Fiscal 2012, and somewhat reduced the size of the other long-term incentive awards.  Beginning with awards for Fiscal 2014, the Compensation Committee increased the portion of long-term incentive awards made in the form of restricted common shares and correspondingly reduced the portion provided through stock options.

In setting the size of the overall normal long-term incentive compensation awards, the Compensation Committee generally begins by looking at market median values for the comparator group, and then making adjustments for the individual for items such as the executive officer’s time in the position, internal equity, performance and such other factors as the Compensation Committee deems appropriate.  The percentage of the long-term compensation provided by each type of award (long-term cash performance awards, long-term performance share awards, stock options and restricted common shares) is determined by the Compensation Committee.  The value given to stock options for purposes of these awards is determined by the Compensation Committee based on input from its compensation consultant taking into account the anticipated grant date fair value calculated under applicable accounting rules and the stock option values used for recent annual grants.  The same is true for restricted common shares, the value of which is generally based on a recent market price of the common shares.  Likewise, the value of the long-term performance share awards is generally based upon the number of common shares that can be earned at target, multiplied by a recent common share price.  The value used for long-term cash performance awards is generally the amount that can be earned at target.  The amount of each type of award granted to an executive officer is determined consistent with the above factors, with the specific amount determined by the Compensation Committee on a subjective basis combining all of the factors considered.

The Compensation Committee believes that using a blend of restricted common share awards, stock option awards, long-term performance share awards and long-term cash performance awards represents a particularly appropriate and balanced method of motivating and rewarding senior executives.  Restricted common share awards and stock option awards align the interests of employee recipients with those of shareholders by providing value tied to appreciation in Worthington’s common share price.  Long-term cash performance awards motivate long-term results because their value is tied to sustained financial achievement over a multiple-year period.  Long-term performance share awards blend both of these features because the number of performance shares received is tied to sustained financial achievement over a multiple-year period, and the value of those performance shares is tied to the price of Worthington’s common shares.  The Compensation Committee believes the combination of these forms of incentive compensation is superior to reliance upon only one form and is consistent with the Company’s compensation philosophy and objectives.

 

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The Compensation Committee generally approves annual restricted common share awards, annual stock option grants and long-term performance share and long-term cash performance awards at its June meeting.  The stock option grants and restricted common share awards are generally made effective following the meeting and after the Company has reported its earnings for the just-completed fiscal year.  Long-term performance share awards and long-term cash performance awards have been based on performance over a three-fiscal-year period beginning with the first day of the first fiscal year in that period.  An explanation of the calculation of the compensation expense relative to the equity-based long-term incentive compensation is set forth in the section captioned “Equity-Based Long-Term Incentive Compensation Accounting” beginning on page 47 of this Proxy Statement.

Neither the Company nor the Compensation Committee has backdated stock option grants to provide for lower exercise prices, nor have they repriced or offered buy-outs of underwater stock options.  Current plan provisions prohibit such repricing without shareholder consent.

Stock Options

Stock options are generally awarded annually to the NEOs and a select group of executive officers.  In practice, the number of common shares covered by an option award generally depends upon the employee’s position and external market data.  

As noted above, starting in Fiscal 2014, the Compensation Committee decreased the portion of long-term incentive awards made to the executive group in the form of stock options and increased the portion provided through awards of restricted common shares.  The Compensation Committee also authorized grants of restricted common shares to a broader group of key employees, rather than providing stock options.  The Compensation Committee made this change to restricted common shares in lieu of stock options based on a number of factors, including that restricted common share awards are less dilutive than stock options having the same grant date fair value and are generally better understood and appreciated by employees.

The following describes the Compensation Committee’s general practice in granting stock options, excluding grants tailored to meet specific circumstances.

Nearly all stock options granted to employees since June 1, 2011 have been non-qualified stock options which vest at a rate of 33% per year and fully vest at the end of three years.  In the event an optionee’s employment terminates as a result of retirement, death or total disability, any unexercised stock options outstanding and exercisable on that date will remain exercisable by the optionee or, in the event of death, by the optionee’s beneficiary, until the earlier of either the fixed expiration date, as stated in the applicable stock option award agreement, or 36 months after the last day of employment due to retirement, death or total disability.  Should termination occur for any reason other than retirement, death or disability, unexercised stock options are generally forfeited.  In the event of a change in control of the Company (as defined in the respective stock option plans or award agreements), followed by an actual or constructive termination of employment, stock options then outstanding will become fully vested and exercisable.  The Compensation Committee may allow an optionee to elect, during the 60-day period following a change in control, to surrender a stock option or a portion thereof in exchange for a cash payment equal to the excess of the change in control price per share over the exercise price per share.

Effective June 28, 2018, the Company made awards of non-qualified stock options to 29 employees to purchase an aggregate of 87,300 common shares, with an exercise price equal to $42.91, the fair market value of the common shares on the grant date.  Of those stock options, an aggregate of 62,900 common shares were covered by stock options awarded to the current NEOs. Effective November 1, 2018, the Company made an award of non-qualified stock options to Mr. Hayek, an NEO, to purchase an aggregate of 4,200 common shares, with an exercise price equal to $42.10, the fair market value of the common shares on the grant date.  This grant was made in connection to his promotion to CFO.

The stock option grants to the NEOs in Fiscal 2019 are detailed in the “Grants of Plan-Based Awards for Fiscal 2019” table on page 56 of this Proxy Statement.  For purposes of the “Grants of Plan-Based Awards for Fiscal 2019” table, stock options are valued based on a grant date fair value and calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”).  This value for stock options is also reported in the “Option Awards” column of the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement.

Information on options granted, effective June 27, 2019, to NEOs for Fiscal 2020 is set forth in the section captioned “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2020”, beginning on page 66.

 

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Long-Term Performance Awards – General

Since Fiscal 2006, the Company has awarded a select group of key executives, including the NEOs, long-term cash performance awards and long-term performance share awards which are earned based upon results over a prospective three-fiscal-year performance period.

These long-term performance awards are intended to reward executives for achieving pre-established financial goals over a three-fiscal-year period.  Restructuring charges and non-recurring items are excluded from all calculations and corporate EPS and Steel Processing business unit EOI results are adjusted for inventory holding gains or losses.

•

For Corporate executives, the goals are tied to corporate performance.

 

•

Payouts are generally tied to achieving specified levels (threshold, target and maximum) of cumulative corporate EVA and growth in corporate EPS (adjusted as noted above) over the performance period, with each performance measure carrying a 50% weighting.

•

For Business Unit executives, the goals are tied to both corporate performance and the performance of their respective business units.

 

•

Cumulative corporate EVA and adjusted corporate EPS growth measures together carry a 50% weighting, and business unit EOI targets (adjusted as noted above) are weighted 50%.

If the performance level falls between threshold and target or between target and maximum, the award is linearly pro-rated.  Payouts, if any, would generally be made in the quarter following the end of the applicable performance period.  Calculation of Company results and attainment of performance measures are made solely by the Compensation Committee based upon the Company’s consolidated financial statements.

The Compensation Committee determines the appropriate changes and adjustments and may make adjustments for other unusual or non-recurring events, including, without limitation, changes in tax and accounting rules and regulations, extraordinary gains and losses, mergers and acquisitions, and purchases or sales of substantial assets, provided that, if Section 162(m) of the Internal Revenue Code would be applicable to the payout of the award, any such change or adjustment, if not provided for when the targets are set, must be permissible under Section 162(m).

These performance measurements have been chosen because the Compensation Committee believes that:

•

The corporate EPS growth metric strongly correlates with the Company’s growth in equity value;

•

EOI at a business unit ties directly into Company EPS growth; and

•

The cumulative corporate EVA target, which is driven by net operating profit in excess of the cost of capital employed, keeps management focused on the most effective use of existing assets and pursuing only those growth opportunities which provide returns in excess of the cost of capital.

The Company has used these, or similar performance measures, since long-term cash performance awards were first granted for the performance period ended May 31, 1998.

The Compensation Committee periodically considers whether to change the performance measures used under the incentive awards and reviews the types of measures used by other companies and other relevant information provided by its compensation consultant.  The Compensation Committee has determined to continue to use the performance measures set forth above, for the reasons discussed.

Payouts have been made based on the achievement of corporate and business unit three-fiscal-year performance targets in each of the last eight years.  No payments of these awards for corporate performance were made in the three-fiscal-year periods ended Fiscal 2009, Fiscal 2010 or Fiscal 2011, as targets for those three-fiscal-year periods were set prior to the recession which adversely affected results in those three-fiscal-year periods.

 

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The Company posted solid results in Fiscal 2019, the third best EPS results in the Company’s history, but results were down from the strong results in Fiscal 2018 and Fiscal 2017.  Payouts made to the executive officers with respect to both long-term cash and long-term performance share awards fell below 100% of target for the three-fiscal-year period ended with Fiscal 2019.  Awards were paid at 48% of target levels for Corporate executives, 24% for Steel Processing executives and 24% for Pressure Cylinders executives.

Long-Term Cash Performance Awards

Long-term cash performance awards have been part of the long-term performance awards granted to key members of management since they were first awarded in 1998.  They are intended to reward executives for achieving pre-established financial goals over a three-fiscal-year period.  These long-term cash performance awards may be paid in cash, common shares or any combination thereof, as determined by the Compensation Committee at the time of payment.  To date, earned long-term cash performance awards have been paid in cash.  If the performance criteria are met, payouts are generally made in the quarter following the end of the performance period.  Nothing is paid under the long-term cash performance awards if none of the three-fiscal-year financial thresholds are met.

Treatment of awards on a change in control or a termination of employment, including termination due to death, disability or retirement, is discussed below in the section captioned “Long-Term Performance Awards – Impact of Termination/Change in Control”.  The performance measures for the long-term cash performance awards are discussed above in the section captioned “Long-Term Performance Awards – General”.

Long-term cash performance awards earned for the three-fiscal-year performance period ended May 31, 2019 are described above in the section captioned “Long-Term Performance Awards – General”.  The amount of the awards earned by the NEOs for this period is shown in the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of the Proxy Statement under the “3-year Cash Performance Award” column within “Non-Equity Incentive Plan Compensation”.  The long-term cash performance awards earned were paid in cash.

Long-term cash performance awards granted in Fiscal 2019 for the three-fiscal-year performance period ending May 31, 2021 are reported in the “Grants of Plan-Based Awards for Fiscal 2019” table on page 56 of this Proxy Statement.

Information on long-term cash performance awards granted in Fiscal 2020 for the three-fiscal-year performance period ending May 31, 2022 is shown in the “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2020” table beginning on page 66 of this Proxy Statement.

Long-Term Performance Share Awards

Performance share awards have constituted a portion of the long-term performance awards granted to key members of management since June 2006.  They are intended to reward executives for both achieving pre-established financial goals over the three-fiscal-year period and increasing the common share price.  The long-term performance share awards are paid in common shares and the value is determined not only by the number of common shares earned, but also by the value of the common shares at the time the awards are earned and the common shares are paid out.  If the performance criteria are met, payouts are generally made in the quarter following the end of the performance period.  Nothing is paid under the performance share awards if none of the three-fiscal-year financial threshold measures are met.

Treatment of awards on a change in control or a termination of employment, including termination due to death, disability or retirement, is discussed below in the section captioned “Long-Term Performance Awards – Impact of Termination/Change in Control”.  The performance measures for the long-term performance share awards are discussed above in the section captioned “Long-Term Performance Awards – General”.  

Long-term performance share awards earned for the three-fiscal-year performance period ended May 31, 2019, are described above in the section captioned “Long-Term Performance Awards – General”.  The long-term performance share awards earned were paid in common shares.

 

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Long-term performance share awards granted in Fiscal 2019 for the three-fiscal-year performance period ending May 31, 2021 are reported in the “Grants of Plan-Based Awards for Fiscal 2019” table on page 56 of this Proxy Statement.  An explanation of the calculation of the compensation expense relative to those awards is set forth in the section captioned “Equity-Based Long-Term Incentive Compensation Accounting” beginning on page 47 of this Proxy Statement.  If the performance criteria are met, the performance shares earned would generally be issued in the quarter following the end of the performance period.

Information on long-term performance share awards granted in Fiscal 2020 for the three-fiscal-year performance period ending May 31, 2022 is shown in the “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2020” table beginning on page 66 of this Proxy Statement.

Long-Term Performance Awards – Impact of Termination/Change in Control

In general, termination of employment results in termination of long-term cash performance awards and long-term performance share awards.  However, if termination is due to death, disability or retirement, a pro rata payout will be made for performance periods ending 24 months or less after termination of employment based on the number of months of employment completed by the participant during the performance period before the effective date of termination, provided that the applicable performance goals are achieved.  No payout will be made for performance periods ending more than 24 months after termination of employment.  Unless the Compensation Committee specifically provides otherwise at the time of grant, in the event of a change in control of the Company followed by an actual or constructive termination of employment, all long-term cash performance awards and long-term performance share awards would be considered to be earned and payable in full at the maximum level, and immediately settled or distributed.

Annual Restricted Common Share Awards to Executives

Effective June 28, 2018, the Compensation Committee granted annual restricted common share awards to 41 employees covering an aggregate of 100,275 restricted common shares, which will cliff vest on the third anniversary of the grant date.  Of those awards, an aggregate of 59,400 restricted common shares were awarded to the NEOs.  Restricted common share awards are intended to reward and incent executives by directly aligning the interests of management with the interests of shareholders.  The vesting provision of the restricted common shares also serves as a management retention incentive.  For further details with respect to the restricted common share awards granted to the NEOs effective June 28, 2018, see the “Stock Awards” column of the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement.

Restricted common share awards to the NEOs in Fiscal 2019 are detailed in the “Grants of Plan-Based Awards for Fiscal 2019” table on page 56 of this Proxy Statement.  For purposes of the “Grants of Plan-Based Awards for Fiscal 2019” table, restricted common share awards are valued based on grant date fair value and calculated in accordance with ASC 718.  This value for restricted common share awards is also reported in the “Stock Awards” column of the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement.

For further details with respect to the restricted common share awards granted to the NEOs effective June 27, 2019, see the “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2020” table beginning on page 66 of this Proxy Statement.

Other Restricted Common Share Awards to NEOs

The Compensation Committee made awards to Mr. Gilmore on September 26, 2018 of 20,000 restricted common shares which will cliff vest on the third anniversary of the grant date and of 30,000 restricted common shares which will cliff vest on the fifth anniversary of the grant date.  These awards were made in connection with his promotion to Executive Vice President and Chief Operating Officer (“COO”) of the Company.

In connection with his promotion to Vice President and Chief Financial Officer (“CFO”), the Compensation Committee also made an award of 3,500 restricted common shares to Mr. Hayek on November 1, 2018 which will cliff vest on the third anniversary of the date of grant.

 

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Other Restricted Common Share Awards to non NEOs

It has been the practice of the Company to award restricted common shares to a broader group of employees every two or three years, and to grant restricted common shares at other times to select employees such as when their employment began or they received a promotion.  Such awards provide employees with the opportunity to participate in increases in shareholder value as a result of common share price appreciation, and further the Company’s objective of aligning the interests of management with the interests of shareholders.

Between August 30, 2018 and April 30, 2019, the Company made awards to 197 employees covering an aggregate of  159,500 restricted common shares, which will cliff vest on the third anniversary of the grant date.  None of these awards were made to an NEO.

Special Performance-Based/Time-Vested Restricted Common Share Award

The Compensation Committee has at times granted special “one-off” performance-based/time-vested restricted common share awards to select NEOs, with vesting tied to the price of Worthington’s common shares attaining certain levels.  These awards are viewed as particularly appropriate as they are earned by top management only when the Worthington common share price increases significantly and, thus, Worthington’s shareholders are also significantly benefited.  When granted, the target price was set at more than 42% above the then all-time high average closing price of Worthington’s common shares for any consecutive thirty- or ninety-day period (as applicable) prior to the applicable grant date.  While these awards do require a significant increase in the price of Worthington’s common shares to vest, the Compensation Committee believes that the common share price targets for these awards are reasonable targets which can be met with steady consistent growth in the Company’s performance without the need for any undue risk-taking.  The time-based vesting and holding period requirements mitigate the incentive for risky behavior intended to drive only a short-term common share price increase, and instead encourage activity that would lead to steady increases in financial results and a common share price which can be maintained.

In connection with the naming of Mr. Rose as President and Mr. Gilmore as COO, the Compensation Committee made special awards, effective September 26, 2018, of 175,000 performance-based/time-vested restricted common shares to Mr. Rose and of 50,000 performance-based/time-vested restricted common shares to Mr. Gilmore.  The term of these restricted common share awards is five years and the restricted common shares will vest if and when both of the following conditions are met:  (a) the closing price of the Company’s common shares equals or exceeds $65.00 per share for 90 consecutive days during the five-year term; and (b) the executive officer has remained continuously employed by the Company for five years (i.e., through September 26, 2023). The restricted common shares will be forfeited five years from the effective date of the award (i.e., September 26, 2023) if the performance-based vesting condition is not met by that date, or as of the date of termination if the executive officer’s employment is terminated (with certain exceptions discussed below) before September 26, 2023.  If the NEO’s employment is terminated by the Company without “cause” or if the NEO dies or becomes permanently disabled after the performance condition has been met but before the time-based vesting condition has been met, the restricted common shares will be fully vested as of the date of termination.  In the case of death or disability, the Compensation Committee may elect, in its sole discretion, to accelerate the vesting of all or a portion of these restricted common shares.  In the event of a change in control followed by an actual or constructive termination of employment (as defined by the Compensation Committee), these restricted common shares will vest, subject to any Internal Revenue Code Section 280G limitation imposed by the Compensation Committee.  For further details on these restricted common share awards granted on September 26, 2018, see the “Grants of Plan-Based Awards for Fiscal 2019” table beginning on page 56 of this Proxy Statement.

Each of Mr. Rose and Mr. Gilmore has been a key player in driving the Company’s efforts and financial results, as well as in strategic actions taken by the Company in recent years.  The CEO and the Board have identified Mr. Rose and Mr. Gilmore as key executives who have key roles and responsibilities in leading the Company forward.  The Compensation Committee believes these special restricted common share awards serve as a strong retention mechanism that provides a unique incentive to these identified leaders to further enhance the Company’s success, and directly ties their compensation to the Company’s first corporate goal of increasing the value of our shareholders’ investment.

 

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The Compensation Committee believes the $65.00 per share closing price for 90 consecutive days condition to be an appropriate performance target, as its achievement will not only reward Messrs. Rose and Gilmore, but also Worthington’s shareholders in general, as the $65.00 stock price would be more than 42% above the all-time high closing price of Worthington’s common shares for any consecutive 90-day period prior to September 26, 2018.  The Compensation Committee believes this to be reasonable target which can be reached by steady, consistent growth in the Company’s performance, without the need for any undue risk-taking.

The Compensation Committee made a special incentive award, effective June 24, 2014, of 25,000 performance-based/time-vested restricted common shares to Mr. Gilmore. The term of this award was five years and the restricted common shares would vest if both: (a) the closing price of Worthington’s common shares equals or exceeds $60.00 per share for 30 consecutive days during the five-year period ending June 24, 2019, and (b) Mr. Gilmore has remained continuously employed by the Company for five years (i.e., through June 24, 2019).  In connection with his promotion, on September 25, 2018, the Committee extended the term of the award and employment period requirement to June 24, 2020.  The other terms are similar to the awards described above.

Clawback Policy

The Company does not have a specific clawback policy.  If the Company is required to restate its earnings as a result of material non-compliance with a financial reporting requirement due to misconduct, under Section 304 of the Sarbanes-Oxley Act of 2002 (“SOX”), the CEO and the CFO would be required to reimburse the Company for any bonus or other incentive-based or equity-based compensation received by them from the Company during the 12-month period following the first filing with the SEC of the financial document that embodied the financial reporting requirement, and any profits realized from the sale of common shares of the Company during that 12-month period, to the extent required by SOX.

On July 1, 2015, the SEC issued proposed rules relating to clawback policies.  Once the proposed SEC rules have been adopted and NYSE has, in turn, adopted new listing standards addressing the clawback policy requirements, the Company will adopt a clawback policy which satisfies the final rules.

Equity-Based Long-Term Incentive Compensation Accounting

The accounting treatment for equity-based long-term incentive compensation is governed by ASC 718.  Options are valued using the Black-Scholes pricing model based upon the grant date closing price per common share underlying the option award, the expected life of the option, the risk-free interest rate, the dividend yield, and the expected volatility.  Further information concerning the valuation of options and the assumptions used in that valuation is contained in “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note K – Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for Fiscal 2019 filed on July 30, 2019 (the “2019 Form 10-K”).

Long-term performance share awards payable in common shares are initially valued using the grant date closing price per common share based on the target award, and compensation expense is recorded prospectively over the performance period on a straight-line basis.  This amount is then adjusted on a quarterly basis based upon an estimate of the performance level anticipated to be achieved for the performance period in light of actual and forecasted results.

Long-term cash performance awards are initially valued at the target level, and compensation expense is recorded prospectively over the performance period on a straight-line basis.  This amount is then adjusted on a quarterly basis based on an estimate of the performance level anticipated to be achieved for the performance period in light of actual and forecasted results.

Restricted common shares are valued at fair value as of the date of grant and the calculated compensation expense is recognized on a straight-line basis over their respective vesting periods.  For restricted common shares with only time-based vesting, fair value is generally equal to the closing price of the common shares at the respective grant date.  If the vesting is subject to other conditions, such as the special performance-based/time-vested restricted common share awards, the value is generally calculated under a Monte Carlo simulation model.  Further information concerning the valuation of restricted common shares and the assumptions used in that valuation is contained in “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note K – Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the Company’s 2019 Form 10-K.

 

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Deferred Profit Sharing Plan

The NEOs participate in the Worthington Industries, Inc. Deferred Profit Sharing Plan (the “DPSP”), together with most other full-time, non-union employees of the Company.  The DPSP is a 401(k) plan and is the Company’s primary retirement plan.  Contributions made by the Company to participants’ accounts under the DPSP are generally based on 3% of eligible compensation which includes base salary, profit sharing, bonus and annual cash incentive bonus payments, overtime and commissions, up to the maximum limit set by the Internal Revenue Service (“IRS”) from year to year ($280,000 for calendar 2019).  In addition, the NEOs and other participants in the DPSP may elect to make voluntary contributions up to prescribed IRS limits.  These voluntary contributions are generally matched by Company contributions of 50% of the first 4% of eligible compensation contributed by the participant.  Distributions under the DPSP are generally deferred until retirement, death or total and permanent disability.

Non-Qualified Deferred Compensation

The NEOs and other highly-compensated employees are eligible to participate in the Worthington Industries, Inc. Amended and Restated 2005 Non-Qualified Deferred Compensation Plan (as amended, the “2005 NQ Plan”).  The 2005 NQ Plan is a voluntary, non-tax qualified, unfunded deferred compensation plan available only to select highly-compensated employees for the purpose of providing deferred compensation, and thus potential tax benefits, to these employees.

Under the 2005 NQ Plan, executive officers of the Company may defer the payment of up to 50% of their base salary and up to 100% of their bonus and/or annual cash incentive bonus awards.  Amounts deferred are credited to the participants’ bookkeeping accounts under the 2005 NQ Plan at the time the base salary and/or bonus/annual cash incentive bonus awards would have otherwise been paid.  In addition, the Company may make discretionary employer contributions to the participants’ bookkeeping accounts in the 2005 NQ Plan.  In recent years, the Company has made employer contributions in order to provide the same percentage of retirement-related deferred compensation to executive officers compared to other employees that would have been made but for the IRS limits on annual compensation that may be considered under the DPSP.  For the 2019, 2018 and 2017 calendar years, the Company made contributions to the 2005 NQ Plan for participants equal to (i) 3% of an executive’s annual compensation (base salary plus bonus/annual cash incentive bonus award) in excess of the IRS maximum; and (ii) a matching contribution of 50% of the first 4% of annual compensation contributed by the executive to the DPSP to the extent not matched by the Company under the DPSP.  Participants in the 2005 NQ Plan may elect to have their bookkeeping accounts treated as invested (a) with a rate of return reflecting: (i) the returns on those investment options available under the DPSP; or (ii) a fixed interest rate set annually by the Compensation Committee (2.48% for Fiscal 2019), or (b) in theoretical common shares reflecting increases or decreases in the fair market value of Worthington’s common shares with dividends deemed reinvested.  Any portion of a participant’s bookkeeping account credited to theoretical common shares must remain credited to theoretical common shares until distributed.  Otherwise, participants in the 2005 NQ Plan may change the investment options for their bookkeeping accounts as of the time permitted under the DPSP for the same or a similar investment option.

Employees’ bookkeeping accounts in the 2005 NQ Plan are fully vested.  Payouts of amounts credited to theoretical common shares are made in whole common shares and cash in lieu of fractional shares.  Payouts of amounts credited to all other investment options are made in cash.  Payments will be made as of a specified date selected by the participant or, subject to the timing requirements of Section 409A of the Internal Revenue Code, when the participant is no longer employed by the Company.  Payments are made either in a lump sum or in installment payments, all as chosen by the participant at the time the deferral is elected.  The Compensation Committee may permit hardship withdrawals from a participant’s account under defined guidelines.

Contributions or deferrals for the period before January 1, 2005, are maintained under the Worthington Industries, Inc. Non-Qualified Deferred Compensation Plan, effective March 1, 2000 (as amended, the “2000 NQ Plan”).  Contributions and deferrals for periods on or after January 1, 2005 are maintained under the 2005 NQ Plan, which was adopted to replace the 2000 NQ Plan in order to comply with the provisions of the then newly-adopted Section 409A of the Internal Revenue Code applicable to non-qualified deferred compensation plans.  Among other things, the provisions of Section 409A generally are more restrictive with respect to the timing of deferral elections and the ability of participants to change the time and manner in which accounts will be paid.  The 2005 NQ Plan and the 2000 NQ Plan are collectively referred to as the “Employee Deferral Plans”.

 

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Perquisites

The Company makes club memberships available to NEOs and certain other executives because it believes that such memberships can be useful for business entertainment purposes.  In 2007, the Company elected to no longer provide executives with leased Company vehicles and generally eliminated leased Company vehicles for all employees unless a substantial portion of their business time involves travel, as is the case with those individuals in outside sales.

For security reasons, the NEOs occasionally use Company airplanes for personal travel.  In such cases, the NEOs who use Company airplanes for personal use are charged an amount equal to the SIFL rate set forth in the regulations promulgated by the United States Department of the Treasury (“Treasury Regulations”), which is generally less than the Company’s incremental costs.

Other Company Benefits

The Company provides employees, including the NEOs, with a variety of other employee welfare benefits including medical benefits, disability benefits, life insurance, and accidental death and dismemberment insurance, which are generally provided to employees on a Company-wide basis.

Change in Control

The Company has no formal employment contracts or other stand-alone change in control provisions relative to the NEOs or other top executives.  It does have certain change in control provisions in its various compensation plans, as described below.

The Company’s stock option plans generally provide that, unless the Board or the Compensation Committee provides otherwise, upon a change in control of the Company followed by an actual or constructive termination of employment, all stock options then outstanding will become fully vested and exercisable.  In addition, the Compensation Committee may allow the optionee to elect, during the 60-day period from and after the change in control, to surrender the stock options or a portion thereof in exchange for a cash payment equal to the excess of the change in control price per share over the exercise price per share.

For purposes of the Company’s stock option plans (the 1997 LTIP, the Amended and Restated 2003 Stock Option Plan (the “2003 Stock Option Plan”) and the 2010 Stock Option Plan), a change in control will be deemed to have occurred when any person, alone or together with its affiliates or associates, has acquired or obtained the right to acquire the beneficial ownership of 25% or more of the Company’s outstanding common shares, unless such person is: (a) the Company; (b) any employee benefit plan of the Company or a trustee of or fiduciary with respect to any such plan when acting in that capacity; or (c) any person who, on the date the applicable plan became effective, was an affiliate of the Company owning in excess of 10% of Worthington’s outstanding common shares and the respective successors, executors, legal representatives, heirs and legal assigns of such person (an “Acquiring Person Event”).  In addition, in the case of stock options granted under the 2003 Stock Option Plan and the 2010 Stock Option Plan, a change in control will also be deemed to have occurred if there is a change in the composition of the Board with the effect that a majority of the directors are not “continuing directors” (as defined in each plan).

If a change in control followed by an actual or constructive termination of employment had occurred as of May 31, 2019, there would have been no then-current value associated with the unvested stock options which would have vested upon the change in control (based upon (a) the difference, if any, between (i) the closing market price of Worthington’s common shares on May 31, 2019 ($34.14), and (ii) the per share exercise price of each such stock option, multiplied by (b) the number of common shares subject to the unvested portion of each such option), because, in each case, the per share exercise price exceeded $34.14.

Long-term cash performance awards and long-term performance share awards generally provide that, unless the Board or the Compensation Committee provides otherwise, upon a change in control of the Company followed by an actual or constructive termination of employment, all such awards would be considered earned and payable in full at the maximum amounts and would be immediately settled or distributed.  For purposes of the 1997 LTIP (under which the long-term cash performance awards and long-term performance share awards have been granted), a change in control will be deemed to have occurred when there is an Acquiring Person Event as defined above.

 

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If a change in control followed by an actual or constructive termination of employment had occurred as of May 31, 2019, the aggregate value of the long-term cash performance awards and the number of common shares underlying long-term performance share awards, which would have been distributed to each of the NEOs would have totaled:

 

NEO

Long-Term

Cash Performance

Awards

 

 

Long-Term

Performance

Share Awards

 

John P. McConnell

 

$

6,000,000

 

 

 

78,000

 

Joseph B. Hayek

 

$

1,156,110

 

 

 

12,532

 

B. Andrew Rose

 

$

3,600,000

 

 

 

41,000

 

Geoffrey G. Gilmore

 

$

1,980,000

 

 

 

27,600

 

Virgil L. Winland

 

$

1,380,000

 

 

 

14,050

 

Dale T. Brinkman

 

$

1,200,000

 

 

 

14,050

 

Mark A. Russell

 

$

1,333,332

 

 

 

15,890

 

John G. Lamprinakos

 

$

672,222

 

 

 

9,822

 

 

Each of the NEOs received time-vested restricted common share awards granted effective June 28, 2018, June 29, 2017, and June 30, 2016.  All of these restricted common share awards provide that upon a change in control followed by an actual or constructive termination of employment, the restricted common shares will vest and the restrictions will lapse.  If a change in control followed by an actual or constructive termination of employment had occurred as of May 31, 2019, the number of time-vested restricted common shares (and accrued dividends on those common shares) that would have vested and been distributable to each of the NEOs as of such date are set forth below. The closing price of the common shares on May 31, 2019, was $34.14.

 

NEO

 

# of Restricted

Common Shares

 

 

Accrued Dividends

 

John P. McConnell

 

 

62,500

 

 

$

96,825

 

Joseph B. Hayek

 

 

12,700

 

 

$

17,118

 

B. Andrew Rose

 

 

32,000

 

 

$

50,160

 

Geoffrey G. Gilmore

 

 

96,000

 

 

$

94,320

 

Virgil L. Winland

 

 

10,400

 

 

$

16,180

 

Dale T. Brinkman

 

 

10,400

 

 

$

16,180

 

Mark A. Russell

 

 

0

 

 

$

0

 

John G. Lamprinakos

 

 

0

 

 

$

0

 

 

The special performance-based/time-vested restricted common share awards granted to Mr. Rose on September 26, 2018 and to Mr. Gilmore on June 24, 2014 and September 26, 2018 also provide that upon a change in control followed by an actual or constructive termination of employment, the restricted common shares will vest and the restrictions will lapse.  If a change in control followed by an actual or constructive termination of employment had occurred as of May 31, 2019, the number of restricted common shares, and accrued dividends on those common shares, that would have vested and been distributable as of such date are set forth below. The closing price of the common shares on May 31, 2019, was $34.14

 

NEO

 

# of Restricted

Common Shares

 

 

Accrued

Dividends

 

B. Andrew Rose

 

 

175,000

 

 

$

80,500

 

Geoffrey G. Gilmore

 

 

75,000

 

 

$

118,250

 

 

 

50

Worthington | 2019 Proxy Statement • Executive Compensation

 

 

Annual cash incentive bonus awards provide that if during a performance period, (a) a change in control of the Company (as defined in the plan) occurs and (b) the participant’s employment with the Company terminates on or after the change in control, the participant’s award would be considered earned and payable as of the date of the participant’s actual or constructive termination of employment in the amount designated as target for such award and would be settled or distributed following the date of the participant’s actual or constructive termination of employment.  The target amounts for annual cash incentive bonus awards granted to the NEOs for the 12-month performance period ended May 31, 2019, are shown in the “Grants of Plan-Based Awards for Fiscal 2019” table on page 56 of this Proxy Statement.

Under the Employee Deferral Plans, participants’ bookkeeping accounts will generally be paid out as of the date of the change in control.  See the “Non-Qualified Deferred Compensation for Fiscal 2019” table on page 64 of this Proxy Statement for further information.

The Compensation Committee believes that these change in control provisions are appropriate and well within market norms, particularly because the Company has no formal employment contracts or other formal stand-alone change in control provisions relative to the NEOs or other executives.

Tax Deductibility

Section 162(m) of the Internal Revenue Code generally limits the deduction that the Company may take for certain remuneration paid in excess of $1,000,000 to any “covered employee” of the Company in any one taxable year.  Before January 1, 2018, Section 162(m) of the Internal Revenue Code only applied to the Company’s CEO as well as the three other most highly compensated officers of the Company (not including the Company’s CFO).  Beginning January 1, 2018, Section 162(m) of the Internal Revenue Code now also applies to the CFO and any person who has been the CEO, CFO, or one of the other three most highly compensated officers of the Company in any year beginning after December 31, 2016. Prior to January 1, 2018, compensation which qualified as “qualified performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code and the related Treasury Regulations was not taken into account in determining whether this $1,000,000 deduction limitation has been exceeded.  Subject to certain grandfathering provisions, there will no longer be an exclusion for “qualified performance-based compensation”. Awards granted under the Company’s stock option plans generally qualified as “qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code and restricted common shares with vesting tied to performance measures also generally qualified.  The Compensation Committee tailored the long-term incentive compensation awards granted under the 1997 LTIP (except for restricted common share awards which do not have a performance-based vesting requirement) and the awards granted to executive officers under the Company’s annual cash incentive bonus program to qualify as incentive-based compensation. This qualification will not be relevant for awards granted after January 1, 2018.  

The Compensation Committee intends to continue to examine the best method to pay incentive compensation to executive officers, which will include consideration of the changes to Section 162(m) of the Internal Revenue Code. In all cases, whether or not some portion of a covered employee’s compensation is tax deductible, the Compensation Committee will continue to carefully consider the net cost and value to the Company of its compensation policies.

Compensation Committee Report

The Compensation Committee has reviewed the Compensation Discussion and Analysis (the “CD&A”) contained in this Proxy Statement and discussed the CD&A with management.  Based upon such review and discussion, the Compensation Committee recommended to the full Board, and the full Board approved, that the CD&A be included in this Proxy Statement and incorporated by reference into the 2019 Form 10-K.

The foregoing report is provided by the Compensation Committee of the Board.

 

 

 

Compensation Committee

 

 

 

 

 

John B. Blystone, Chair

 

 

Kerrii B. Anderson

 

 

Michael J. Endres

 

 

Ozey K. Horton, Jr.

 

 

Executive Compensation • 2019 Proxy Statement | Worthington

51

 

 

Fiscal 2019 Summary Compensation Table

 

The following table lists, for each of Fiscal 2019, Fiscal 2018 and Fiscal 2017, the compensation of the Company’s CEO, the two individuals who served as the Company’s CFO at any time during Fiscal 2019, and the Company’s three other most highly compensated executive officers serving in executive officer positions at the end of Fiscal 2019, as well as two individuals who served as executive officers during Fiscal 2019 but retired and were no longer serving in executive officer positions at the end of Fiscal 2019 (collectively, all such individuals are referred to as the “NEOs").

Fiscal 2019 Summary Compensation Table

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity Incentive Plan

Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-Term / Long-Term

 

 

 

 

 

 

 

 

 

 

 

 

Name and Principal

Positions During

Fiscal 2019

Fiscal Year

 

Salary

($) (1)

 

Discretionary

Bonuses ($) (1)

 

Stock

Awards

($) (2)

 

Option

Awards

($) (3)

 

Annual

Incentive

Bonus

Award

($) (1)

 

3-year Cash

Performance

Award ($) (4)

 

All Other

Compensation

($) (5)

 

Total ($)

John P. McConnell,

 

2019

 

 

 

 

667,780

 

 

 

 

 

 

 

 

 

 

 

1,373,120

 

 

 

 

 

276,100

 

 

 

 

 

877,722

 

 

 

 

 

484,000

 

 

 

 

 

60,111

 

 

 

 

 

3,738,834

 

 

Chairman of the Board

 

2018

 

 

 

 

661,008

 

 

 

 

 

 

 

 

 

 

 

1,471,080

 

 

 

 

 

329,780

 

 

 

 

 

970,766

 

 

 

 

 

935,000

 

 

 

 

 

60,608

 

 

 

 

 

4,428,241

 

 

and Chief Executive Officer

 

2017

 

 

 

 

646,226

 

 

 

 

 

 

 

 

 

 

 

1,625,400

 

 

 

 

 

307,400

 

 

 

 

 

1,015,127

 

 

 

 

 

923,000

 

 

 

 

 

67,465

 

 

 

 

 

4,584,618

 

 

Joseph B. Hayek,

 

2019

 

 

 

 

298,727

 

 

 

 

 

 

 

 

 

 

 

329,838

 

 

 

 

 

67,224

 

 

 

 

 

291,288

 

 

 

 

 

55,909

 

(7)

 

 

 

38,822

 

 

 

 

 

1,081,878

 

 

Vice President and

 

2018

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

Chief Financial Officer (6)

 

2017

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

B. Andrew Rose,

 

2019

 

 

 

 

527,103

 

 

 

 

 

 

 

 

 

 

 

4,799,515

 

 

 

 

 

144,325

 

 

 

 

 

657,547

 

 

 

 

 

290,400

 

 

 

 

 

80,533

 

 

 

 

 

6,499,422

 

 

President and Former

 

2018

 

 

 

 

502,212

 

 

 

 

 

 

 

 

 

 

 

757,035

 

 

 

 

 

172,385

 

 

 

 

 

632,236

 

 

 

 

 

561,000

 

 

 

 

 

73,608

 

 

 

 

 

2,698,476

 

 

Chief Financial Officer (8)

 

2017

 

 

 

 

488,655

 

 

 

 

 

 

 

 

 

 

 

844,425

 

 

 

 

 

156,600

 

 

 

 

 

661,127

 

 

 

 

 

553,800

 

 

 

 

 

51,165

 

 

 

 

 

2,755,772

 

 

Geoffrey G. Gilmore,

 

2019

 

 

 

 

520,837

 

 

 

 

 

 

 

 

 

 

 

4,022,219

 

 

 

 

 

80,320

 

 

 

 

 

557,266

 

 

 

 

 

161,700

 

(7)

 

 

 

52,740

 

 

 

 

 

5,395,081

 

 

Executive Vice President

 

2018

 

 

 

 

500,125

 

 

 

 

 

 

 

 

 

 

 

1,693,596

 

 

 

 

 

95,936

 

 

 

 

 

525,672

 

 

 

 

 

149,600

 

 

 

 

 

39,942

 

 

 

 

 

3,004,962

 

 

and Chief Operating Officer (9)

 

2017

 

 

 

 

481,212

 

 

 

 

 

52,320

 

 

 

 

 

562,950

 

 

 

 

 

87,000

 

 

 

 

 

427,680

 

 

 

 

 

143,065

 

 

 

 

 

38,771

 

 

 

 

 

1,792,998

 

 

Virgil L. Winland,

 

2019

 

 

 

 

378,595

 

 

 

 

 

 

 

 

 

 

 

236,005

 

 

 

 

 

37,650

 

 

 

 

 

445,896

 

 

 

 

 

111,320

 

 

 

 

 

47,243

 

 

 

 

 

1,256,709

 

 

Senior Vice President,

 

2018

 

 

 

 

374,755

 

 

 

 

 

 

 

 

 

 

 

252,186

 

 

 

 

 

44,970

 

 

 

 

 

493,164

 

 

 

 

 

215,050

 

 

 

 

 

37,166

 

 

 

 

 

1,417,291

 

 

Manufacturing

 

2017

 

 

 

 

366,607

 

 

 

 

 

 

 

 

 

 

 

278,629

 

 

 

 

 

46,400

 

 

 

 

 

515,700

 

 

 

 

 

212,290

 

 

 

 

 

33,595

 

 

 

 

 

1,453,220

 

 

Dale T. Brinkman,

 

2019

 

 

 

 

396,731

 

 

 

 

 

 

 

 

 

 

 

236,005

 

 

 

 

 

31,375

 

 

 

 

 

396,352

 

 

 

 

 

96,800

 

 

 

 

 

35,991

 

 

 

 

 

1,193,254

 

 

Senior Vice President-Administration,

 

2018

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

General Counsel and

Secretary (10)

 

2017

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

N/A

 

 

Mark A. Russell,

 

2019

 

 

 

130,759

 

 

 

 

 

 

 

 

 

 

 

708,015

 

 

 

 

 

144,325

 

 

 

 

 

—

 

 

 

 

 

209,733

 

 

 

 

 

1,169,885

 

 

 

 

 

2,362,717

 

 

Former President and

 

2018

 

 

 

 

555,606

 

 

 

 

 

 

 

 

 

 

 

757,035

 

 

 

 

 

172,385

 

 

 

 

 

767,144

 

 

 

 

 

561,000

 

 

 

 

 

69,137

 

 

 

 

 

2,882,307

 

 

Chief Operating Officer (11)

 

2017

 

 

 

 

540,613

 

 

 

 

 

 

 

 

 

 

 

844,525

 

 

 

 

 

156,000

 

 

 

 

 

802,200

 

 

 

 

 

553,800

 

 

 

 

 

60,432

 

 

 

 

 

2,958,070

 

 

John G. Lamprinakos,

 

2019

 

 

 

 

132,548

 

 

 

 

 

 

 

 

 

 

 

377,608

 

 

 

 

 

60,240

 

 

 

 

 

 

 

 

 

 

 

51,761

 

 

 

 

 

888,601

 

 

 

 

 

1,510,758

 

 

Former President, The

 

2018

 

 

 

 

363,327

 

 

 

 

 

 

 

 

 

 

 

402,639

 

 

 

 

 

71,952

 

 

 

 

 

386,625

 

 

 

 

 

124,667

 

 

 

 

 

40,175

 

 

 

 

 

1,389,384

 

 

Worthington Steel Company (12)

 

2017

 

 

 

 

320,642

 

 

 

 

 

 

 

 

 

 

 

873,882

 

 

 

 

 

66,120

 

 

 

 

 

415,040

 

 

 

 

 

119,221

 

 

 

 

 

25,737

 

 

 

 

 

1,820,642

 

 

 

(1)

The amounts shown in these columns include that portion of salaries, discretionary bonuses and annual incentive bonus awards the NEOs elected to defer pursuant to the DPSP or the 2005 NQ Plan.  Amounts deferred pursuant to the 2005 NQ Plan in Fiscal 2019 are separately shown in the “Non-Qualified Deferred Compensation for Fiscal 2019” table on page 64 of this Proxy Statement.

 

52

Worthington | 2019 Proxy Statement • Executive Compensation

 

 

(2)

The amounts shown in this column include the aggregate grant date fair values of: (a) the performance share awards granted to the NEOs under the 1997 LTIP in Fiscal 2019, Fiscal 2018 and Fiscal 2017; (b) the annual time-vested restricted share awards granted to the NEOs in Fiscal 2019, Fiscal 2018 and Fiscal 2017; (c) the special time-vested restricted share awards granted to Mr. Gilmore in Fiscal 2019 and Fiscal 2018 and to Mr. Hayek in Fiscal 2019; (d) the special performance-based/time-vested restricted share awards granted to Mr. Rose and to Mr. Gilmore in Fiscal 2019; and (e) the modification in Fiscal 2019 of a  special performance-based/time-vested restricted share award granted to Mr. Gilmore in Fiscal 2015.  The following table shows separately the aggregate grant date fair values of these awards.

 

 

 

Fiscal 2019

 

Fiscal 2018

 

Fiscal 2017

John P. McConnell:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term performance share award (a)

 

$

514,920

 

 

 

 

$

515,880

 

 

 

 

$

673,650

 

 

Annual time-vested restricted share award (b)

 

$

858,200

 

 

 

 

$

955,200

 

 

 

 

$

951,750

 

 

Joseph B. Hayek:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term performance share award (a)

 

$

130,996

 

 

 

 

N/A

 

 

 

 

N/A

 

 

Annual time-vested restricted share award (b)

 

$

51,492

 

 

 

 

N/A

 

 

 

 

N/A

 

 

Special time-vested restricted share award (c)

 

$

147,350

 

 

 

 

N/A

 

 

 

 

N/A

 

 

B. Andrew Rose:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term performance share award (a)

 

$

278,915

 

 

 

 

$

279,435

 

 

 

 

$

336,825

 

 

Annual time-vested restricted share award (b)

 

$

429,100

 

 

 

 

$

477,600

 

 

 

 

$

507,600

 

 

Special performance-based/restricted share award (d)

 

$

4,091,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Geoffrey G. Gilmore:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term performance share award (a)

 

$

188,804

 

 

 

 

$

189,156

 

 

 

 

$

224,500

 

 

Annual time-vested restricted share award (b)

 

$

278,915

 

 

 

 

$

310,440

 

 

 

 

$

338,400

 

 

Special time-vested restricted share award (c)

 

$

2,125,000

 

 

 

 

$

1,194,000

 

 

 

 

 

 

 

 

Special performance-based/restricted share award (d)

 

$

1,169,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Modified performance-based restricted share award (e)

 

$

260,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Virgil L. Winland:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term performance share award (a)

 

$

94,402

 

 

 

 

$

94,578

 

 

 

 

$

117,889

 

 

Annual time-vested restricted share award (b)

 

$

141,603

 

 

 

 

$

157,608

 

 

 

 

$

160,740

 

 

Dale T. Brinkman:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term performance share award (a)

 

$

94,402

 

 

 

 

N/A

 

 

 

 

N/A

 

 

Annual time-vested restricted share award (b)

 

$

141,603

 

 

 

 

N/A

 

 

 

 

N/A

 

 

Mark A. Russell:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term performance share award (a)

 

$

278,915

 

 

 

 

$

279,435

 

 

 

 

$

336,825

 

 

Annual time-vested restricted share award (b)

 

$

429,100

 

 

 

 

$

477,600

 

 

 

 

$

507,600

 

 

John G. Lamprinakos:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term performance share award (a)

 

$

158,767

 

 

 

 

$

159,063

 

 

 

 

$

188,622

 

 

Annual time-vested restricted share award (b)

 

$

218,841

 

 

 

 

$

243,576

 

 

 

 

$

685,260

 

 

 

 

(a)

The amounts for the long-term performance share awards are computed in accordance with ASC 718 as of the date the long-term performance share awards were granted.  These grant date fair values were calculated based upon the “target” award and the closing price of Worthington’s common shares on the date of the grant which was: $42.91 for the Fiscal 2019 awards; $42.99 for the Fiscal 2018 awards; and $44.91 for the Fiscal 2017 awards.  The aggregate grant date fair values included for the long-term performance share awards would have been (i) double the amounts shown above for each fiscal year if the “maximum” award had been used instead of the “target” award and (ii) half of the amounts shown above for each fiscal year if the “threshold” award had been used.  The performance measures associated with the long-term performance share awards are described in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis — Compensation Components — Long-Term Performance Awards — General” beginning on page 43 of this Proxy Statement.  The “Grants of Plan-Based Awards for Fiscal 2019” table on page 56 of this Proxy Statement provides information on the long-term performance share awards granted in Fiscal 2019. In connection with the retirements of Mr. Russell and Mr. Lamprinakos, their awards granted in Fiscal 2019 were terminated and their awards granted in Fiscal 2018 and Fiscal 2018 have been or will be pro-rated based on the number of  months served in the performance period.

 

(b)

The amounts for the annual time-vested restricted common share awards are computed in accordance with ASC 718 as of the date the awards were granted.  These amounts were calculated by multiplying the number of restricted common shares granted by the closing price of the common shares on the date of the grant which for Fiscal 2019 was $42.91, for Fiscal 2018 was $47.76, and for Fiscal 2017 was $42.30.  The annual time-vested restricted common share awards are described in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis — Compensation Components — Annual Restricted Common Share Awards to Executives” beginning on page 45 of this Proxy Statement.  The “Grants of Plan-Based Awards for Fiscal 2019” table on page 56 of this Proxy Statement provides information on the annual time-vested restricted common share awards granted in Fiscal 2019.  In connection with their retirements, those awards for Mr. Russell and Mr. Lamprinakos vested on a pro-rated basis based on the number of months served during the vesting period.

 

(c)

Mr. Gilmore received two special time-vested restricted common share awards effective September 26, 2018:  (i) one for 20,000 restricted common shares with a three-year cliff vesting period; and (ii) one for 30,000 restricted common shares with a five-year cliff vesting period. The terms of these awards are otherwise substantially the same as those of the annual time-vested restricted common share awards described in footnote (b) above.  The amount shown was calculated as described in footnote (b) with a $42.50 closing share price on the date of the grant.  

Mr. Gilmore also received a special time-vested 25,000 restricted common share award effective June 29, 2017.  The terms of this award are substantially the same as those of the annual time-vested restricted common share awards described in footnote (b) above, but these restricted common shares will cliff vest on the fourth anniversary of the grant date.  The amount shown was calculated as described in footnote (b), with a $47.76 closing share price of Worthington’s common shares on the date of the grant.

 

Executive Compensation • 2019 Proxy Statement | Worthington

53

 

 

Mr. Hayek received a special time-vested 3,500 restricted common share award effective November 1, 2018 with a three-year cliff vesting period. The terms of this award are otherwise substantially the same as those of the annual time-vested restricted common share awards described in footnote (b) above.  The amount shown was calculated as described in footnote (b) with a $42.10 closing price on the date of the grant.  

The special time-vested restricted common share awards granted in Fiscal 2019 are described in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis —Compensation Components — Other Restricted Common Share Awards to NEOs” on page 45 of this Proxy Statement.  The “Grants of Plan-Based Awards for Fiscal 2019” table on page 56 of this Proxy Statement provides information on the special time-vested restricted common shares granted in Fiscal 2019.

 

(d)

For the special performance-based/time-vested restricted common share awards granted to Messrs. Rose and Gilmore in Fiscal 2019, the grant date fair value was $23.38 per share, determined using the Monte Carlo simulation model.  The performance-based/time-vested restricted common share awards for Fiscal 2019 are described in the section captioned “EXECUTIVE COMPENSATION —Compensation Discussion and Analysis — Compensation Components — Special Performance-Based/Time-Vested Restricted Common Share Awards” beginning on page 46 of this Proxy Statement.

 

(e)

On September 26, 2018, a special performance-based/time-vested 25,000 common share award granted to Mr. Gilmore in Fiscal 2015 was modified to extend the vesting period and the continuous employment requirement by one year to June 24, 2020.  The incremental fair value of the modification of $10.42 per share was determined using the Monte Carlo simulation model.

(3)

The amounts shown in this column represent the aggregate grant date fair values of the option awards granted to the NEOs in Fiscal 2019 ($12.55 per share), in Fiscal 2018 ($14.99 per share), and in Fiscal 2017 ($11.60 per share), computed in accordance with ASC 718.  The amounts shown in this column exclude the impact of estimated forfeitures, as required by applicable SEC Rules.  See “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note K – Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the Company’s 2019 Form 10-K for the assumptions used and additional information regarding the options.  The “Grants of Plan-Based Awards for Fiscal 2019” table on page 56 of this Proxy Statement provides further information on option awards granted in Fiscal 2019.

(4)

The amounts shown in this column reflect the long-term cash performance awards earned by the NEOs for the three-fiscal-year performance periods ended May 31, 2019 (for Fiscal 2019).

(5)

The following table describes each component of the “All Other Compensation” column for each of Fiscal 2019, Fiscal 2018 and Fiscal 2017:

All Other Compensation Table

Name

 

Fiscal

Year

 

Company

Contributions to

DPSP (the Company’s

401(k) Plan) ($) (a)

 

Company

Contributions to

2005 NQ Plan

($) (b)

 

Group Term Life

Insurance Premium

Paid ($) (c)

 

Perquisites

($) (d)

Other ($) (e)

 

 

2019

 

 

 

14,000

 

 

 

 

44,698

 

 

 

 

1,413

 

 

 

 

 

N/A

 

 

N/A

John P. McConnell

 

2018

 

 

 

13,750

 

 

 

 

45,445

 

 

 

 

 

1,413

 

 

 

 

 

N/A

 

 

N/A

 

 

2017

 

 

 

13,500

 

 

 

 

41,876

 

 

 

 

 

1,429

 

 

 

 

 

10,661

 

 

N/A

 

 

2019

 

 

 

14,368

 

 

 

 

12,876

 

 

 

 

 

1,413

 

 

 

 

 

 

10,165

 

 

N/A

Joseph B. Hayek

 

2018

 

 

N/A

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

 

N/A

 

 

N/A

 

 

2017

 

 

N/A

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

 

N/A

 

 

N/A

 

 

2019

 

 

 

14,728

 

 

 

 

43,582

 

 

 

 

 

1,413

 

 

 

 

 

 

20,810

 

 

N/A

B. Andrew Rose

 

2018

 

 

 

13,810

 

 

 

 

44,237

 

 

 

 

 

1,413

 

 

 

 

 

14,148

 

 

N/A

 

 

2017

 

 

 

13,453

 

 

 

 

36,283

 

 

 

 

 

1,429

 

 

 

 

 

N/A

 

 

N/A

 

 

2019

 

 

 

14,512

 

 

 

 

26,650

 

 

 

 

1,413

 

 

 

 

 

 

10,165

 

 

N/A

Geoffrey G. Gilmore

 

2018

 

 

 

14,008

 

 

 

 

24,522

 

 

 

 

 

1,413

 

 

 

 

 

N/A

 

 

N/A

 

 

2017

 

 

 

14,414

 

 

 

 

22,929

 

 

 

 

 

1,429

 

 

 

 

 

N/A

 

 

N/A

 

 

2019

 

 

 

13,989

 

 

 

 

21,677

 

 

 

 

1,413

 

 

 

 

 

 

10,165

 

 

N/A

Virgil L. Winland

 

2018

 

 

 

13,732

 

 

 

 

22,021

 

 

 

 

 

1,413

 

 

 

 

 

N/A

 

 

N/A

 

 

2017

 

 

 

13,475

 

 

 

 

18,691

 

 

 

 

 

1,429

 

 

 

 

 

N/A

 

 

N/A

 

 

2019

 

 

 

14,000

 

 

 

 

20,578

 

 

 

 

 

1,413

 

 

 

 

 

N/A

 

 

N/A

Dale T. Brinkman

 

2018

 

 

N/A

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

 

N/A

 

 

N/A

 

 

2017

 

 

N/A

 

 

 

N/A

 

 

 

 

N/A

 

 

 

 

 

N/A

 

 

N/A

 

 

2019

 

 

 

3,139

 

 

 

 

-

 

 

 

 

1,413

 

 

 

 

 

N/A

 

 

1,165,333

Mark A. Russell

 

2018

 

 

 

13,809

 

 

 

 

53,915

 

 

 

 

 

1,413

 

 

 

 

 

N/A

 

 

N/A

 

 

2017

 

 

 

13,452

 

 

 

 

45,552

 

 

 

 

 

1,429

 

 

 

 

 

N/A

 

 

N/A

 

 

2019

 

 

 

5,817

 

 

 

0

 

 

 

 

 

1,413

 

 

 

 

 

N/A

 

 

881,371

John G. Lamprinakos

 

2018

 

 

 

14,663

 

 

 

 

24,098

 

 

 

 

 

1,413

 

 

 

 

 

N/A

 

 

N/A

 

 

2017

 

 

 

14,329

 

 

 

 

9,979

 

 

 

 

 

1,429

 

 

 

 

 

N/A

 

 

N/A

 

 

 

 

(a)

Include Company contributions and matching Company contributions made under the DPSP which is described in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Deferred Profit Sharing Plan” beginning on page 48 of this Proxy Statement.

 

(b)

Include Company contributions and matching Company contributions made under the 2005 NQ Plan to the bookkeeping accounts of the NEOs.  See the “Non-Qualified Deferred Compensation for Fiscal 2019” table on page 64 of this Proxy Statement for more information concerning the contributions made by the Company under the 2005 NQ Plan for Fiscal 2019.

 

(c)

The amounts in this column represent the dollar value of the group term life insurance premiums paid by the Company on behalf of the NEOs.

 

(d)

The column shows “N/A” when the aggregate value of the perquisites and other personal benefits received by the NEO for the applicable fiscal year was less than $10,000.  Perquisites generally include dues and similar fees paid by the Company for club memberships used by the NEOs for both

 

54

Worthington | 2019 Proxy Statement • Executive Compensation

 

 

 

business and personal use. Such membership dues and similar fees amounted to $10,165 for each of Mr. Hayek, Mr. Rose, Mr. Gilmore and Mr. Winland for Fiscal 2019 and $8,774 for Mr. Rose for Fiscal 2018. Perquisites also include the aggregate incremental cost of the personal use of Company aircraft, which amounted to $4,959 for Fiscal 2019 and $10,661 for Fiscal 2017 for Mr. McConnell and $10,645 for Fiscal 2019 and $5,374 for Fiscal 2018 for Mr. Rose.  The reported aggregate incremental cost of the personal use of Company aircraft is based on the direct costs associated with operating a flight, including fuel, landing fees, pilot and flight attendant fees, on-board catering and trip-related hangar costs and excluding the value of the disallowed corporate income tax deductions associated with the personal use of the aircraft.  Since the Company aircraft is used primarily for business travel, the reported aggregate incremental cost excludes fixed costs which do not change based on usage, including depreciation and monthly management fees.

 

(e)

The amounts in this column represent compensation paid to Mr. Russell and Mr. Lamprinakos in connection with their retirements.

(6)

Effective November 1, 2018, Mr. Hayek became Vice President and Chief Financial Officer of the Company, as well as an executive officer of the Company.  He served as Vice President and General Manager of the Company’s Oil and Gas Equipment business from March 2017 to November 2018 and as Vice President – Mergers and Acquisitions and Corporate Development of the Company from April 2014 to March 2017.  Since Mr. Hayek did not qualify as an NEO under applicable SEC rules until Fiscal 2019, this table shows information for him for Fiscal 2019 only.

(7)

These amounts include supplemental bonuses paid to Mr. Hayek of $9,896 and Mr. Gilmore of $61,875 for Fiscal 2019.

(8)

Effective August 22, 2018, Mr. Rose became President of the Company and continued to serve as Chief Financial Officer in an interim capacity from August 22, 2018 to November 1, 2018.  Mr. Rose served as Executive Vice President and Chief Financial Officer of the Company from July 2014 to August 22, 2018.

(9)

Effective August 22, 2018, Mr. Gilmore became Executive Vice President and Chief Operating Officer of the Company.  He served as President of Worthington Cylinder Corporation from June 2016 to August 2018.

(10)

For Mr. Brinkman, the table includes information only for Fiscal 2019, as that was the only year that he qualified as an NEO under the applicable SEC rules.

(11)

Mr. Russell retired as President and Chief Operating Officer of the Company effective August 22, 2018.  He had served as President and Chief Operating Officer of the Company since August 2012.

(12)

Mr. Lamprinakos retired as President of The Worthington Steel Company effective October 5, 2018.  He had served as President of The Worthington Steel Company since June 2016.

 

Executive Compensation • 2019 Proxy Statement | Worthington

55

 

 

Grants of Plan-Based Awards

 

The following table provides information about the equity and non-equity awards granted to the NEOs in Fiscal 2019:

Grants of Plan-Based Awards for Fiscal 2019

 

 

 

 

Estimated Future Payouts Under

Non-Equity Incentive Plan Awards

 

 

Estimated Future Payouts Under

Equity Incentive Plan Awards (8)

 

All Other

Stock

Awards:

All Other

Option

Awards:

Number of

Exercise

or Base

Grant Date

Name

Grant

Date

Compensation

Committee

Approval Date

Threshold

($)

Target

($)

Maximum

($)

Threshold

(# of

Common

Shares)

Target

(# of

Common

Shares)

Maximum

(# of Common

Shares)

Number

of Shares

of Stock

or Units

Common

Shares

Underlying

Options (9)

Price of

Option

Awards

($/Share)

Fair Value

of Stock and

Option

Awards ($)

 

6/01/2018

6/26/2018

(1)

 

469,873

 

 

 

939,746

 

 

 

1,879,492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/01/2018

6/26/2018

(2)

 

500,000

 

 

 

1,000,000

 

 

 

2,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John P. McConnell

6/01/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

6,000

 

12,000

 

24,000

 

 

 

 

 

 

 

 

 

 

514,920

 

 

 

6/28/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,000

 

42.91

 

 

276,100

 

 

 

6/28/2018

6/26/2018

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,000

 

 

 

 

 

 

 

858,200

 

 

 

6/01/2018

6/26/2018

(1)

 

162,247

 

 

324.493

 

 

 

648,986

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/01/2018

6/26/2018

(2)

 

37,500

 

 

 

75,000

 

 

 

150,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11/01/2018

11/01/2018

(2)

 

102,500

 

 

 

205,000

 

 

 

410,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph B. Hayek

6/01/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

300

 

600

 

1,200

 

 

 

 

 

 

 

 

 

 

25,746

 

 

 

11/01/2018

11/01/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

1,250

 

2,500

 

5,000

 

 

 

 

 

 

 

 

 

 

105,250

 

 

 

6/28/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,200

 

42.91

 

 

15,060

 

 

 

11/01/2018

11/01/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,200

 

42.10

 

 

52,164

 

 

 

6/28/2018

6/26/2018

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,200

 

 

 

 

 

 

 

51,492

 

 

 

11/01/2018

11/01/2018

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,500

 

 

 

 

 

 

 

147,350

 

 

 

6/01/2018

6/26/2018

(1)

 

352,006

 

 

 

704,011

 

 

 

1,408,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/01/2018

6/26/2018

(2)

 

300,000

 

 

 

600,000

 

 

 

1,200,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B. Andrew Rose

6/01/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

3,250

 

6,500

 

13,000

 

 

 

 

 

 

 

 

 

 

278,915

 

 

 

6/28/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,500

 

42.91

 

 

144,325

 

 

 

6/28/2018

6/26/2018

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

 

 

 

 

 

429,100

 

 

 

9/26/2018

9/25/2018

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

175,000

 

 

 

 

 

 

 

4,091,500

 

 

 

6/01/2018

6/26/2018

(1)

 

306,250

 

 

 

613,040

 

 

 

1,226,080

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/01/2018

6/26/2018

(2)

 

215,417

 

 

 

430,833

 

 

 

861,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/01/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

2,200

 

4,400

 

8,800

 

 

 

 

 

 

 

 

 

 

188,804

 

 

Geoffrey G. Gilmore

6/28/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,400

 

42.91

 

 

80,320

 

 

 

6/28/2018

6/26/2018

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,500

 

 

 

 

 

 

 

278,915

 

 

 

9/26/2018

9/25/2018

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

 

 

 

 

 

1,169,000

 

 

 

9/26/2018

9/25/2018

(6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

 

 

 

 

 

2,125,000

 

 

 

 

 

(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,000

 

 

 

 

 

 

 

260,500

 

 

 

6/01/2018

6/26/2018

(1)

 

238,702

 

 

 

477,405

 

 

 

954,809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/01/2018

6/26/2018

(2)

 

115,000

 

 

 

230,000

 

 

 

460,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Virgil L. Winland

6/01/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

1,100

 

2,200

 

4,400

 

 

 

 

 

 

 

 

 

 

94,402

 

 

 

6/28/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,000

 

42.91

 

 

37,650

 

 

 

6/28/2018

6/26/2018

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,300

 

 

 

 

 

 

 

141,603

 

 

 

6/01/2018

6/26/2018

(1)

 

212,180

 

 

 

424,360

 

 

 

848,720

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/01/2018

6/26/2018

(2)

 

100,000

 

 

 

200,000

 

 

 

400,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dale T. Brinkman

6/01/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

1,100

 

2,200

 

4,400

 

 

 

 

 

 

 

 

 

 

94,402

 

 

 

6/28/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,500

 

42.91

 

 

31,375

 

 

 

6/28/2018

6/26/2018

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,300

 

 

 

 

 

 

 

141,603

 

 

 

6/01/2018

6/26/2018

(1)

360,500

 

 

 

721,000

 

 

 

1,442,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/01/2018

6/26/2018

(2)

300,000

 

 

 

600,000

 

 

 

1,200,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark A. Russell

6/01/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

3,250

 

6,500

 

13,000

 

 

 

 

 

 

 

 

 

 

278,915

 

 

 

6/28/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,500

 

42.91

 

 

144,325

 

 

 

6/28/2018

6/26/2018

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

 

 

 

 

 

429,100

 

 

 

6/01/2018

6/26/2018

(1)

 

193,125

 

 

 

386,250

 

 

 

772,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/01/2018

6/26/2018

(2)

 

137,500

 

 

 

275,000

 

 

 

550,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John G. Lamprinakos

6/01/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

1,850

 

3,700

 

7,400

 

 

 

 

 

 

 

 

 

 

158,767

 

 

 

6/28/2018

6/26/2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,800

 

42.91

 

 

60,240

 

 

 

6/28/2018

6/26/2018

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,100

 

 

 

 

 

 

 

218,841

 

 

 

(1)

These rows show the potential payouts which could have been earned under annual cash incentive bonus awards granted under the Annual Incentive Plan for Executives, based on achievement of specified levels of performance for the twelve months ended May 31, 2019.  The types of performance measured and the weighting of those measurements are described in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis — Compensation Components — Annual Bonus Compensation” beginning on page 40 of this Proxy Statement.  For Fiscal 2019, the NEOs earned the amounts shown in the “2019” rows of the “Annual Incentive Bonus Award” column of the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement.  Please also see the discussion in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Cash Compensation Earned in Fiscal 2019 and Company Performance” beginning on page 37 of this Proxy Statement for more information about these awards.

 

56

Worthington | 2019 Proxy Statement • Executive Compensation

 

 

(2)

These rows show the potential payouts under long-term cash performance awards granted to the NEOs under the 1997 LTIP for the three-fiscal-year performance period from June 1, 2018 to May 31, 2021.  The types of performance measured and the weighting of those measurements are described in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Long-Term Performance Awards — General” beginning on page 43 of this Proxy Statement.  For further information on the terms of the long-term cash performance awards, see the discussion in the sections captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis — Compensation Components — Long-Term Performance Awards — General”, “— Long-Term Cash Performance Awards”, and “— Long-Term Performance Awards — Impact of Termination/Change in Control” beginning on page 43, page 44, and page 45 respectively, of this Proxy Statement.  For additional information about the effect of a change in control, also see the discussion in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis — Change in Control” beginning on page 49.

(3)

These rows show the number of annual time-vested restricted common shares awarded effective June 28, 2018 under the 1997 LTIP, which will generally cliff vest three years after the grant date.  The restricted common shares granted to the NEOs are held in escrow by the Company and may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the restrictions thereon have lapsed.  Each holder of a restricted common share award may exercise any voting rights associated with the restricted common shares during the restriction period.  In addition, any dividends or distributions paid with respect to the common shares underlying the restricted common shares will be held by the Company in escrow during the restriction period and, at the end of the restriction period, will be distributed or forfeited in the same manner as the restricted common shares with respect to which they were paid.

These annual time-vested restricted common shares are generally forfeited in the event of termination of an NEO’s employment before vesting, except that (i) the restricted common shares will fully vest if the NEO dies or becomes disabled, (ii) a pro-rated portion of the restricted common shares will vest on retirement, and (iii) the Compensation Committee, in its discretion, may elect to vest all or a portion of the restricted common shares upon retirement.  For information on the effect of a change in control, see the discussion in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis – Change in Control” beginning on page 49 of this Proxy Statement.

The grant date fair value for the annual time-vested restricted common shares, computed in accordance with ASC 718, was calculated by multiplying the number of annual time-vested restricted common shares granted by the $42.91 closing price of the common shares on the grant date.  See “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note K – Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the 2019 Form 10-K for additional information regarding the awards.

(4)

This row shows the 3,500 special time-vested restricted common shares awarded to Mr. Hayek effective November 1, 2018 under the 1997 Plan, which will cliff vest three years after the grant date. The terms of the award and the calculation of fair value are the same as those of the annual time-vested restricted common shares described in footnote (3) above, with the exception of the vesting date.

(5)

These rows show the 175,000 and 50,000 special performance-based/time-vested restricted common shares awarded effective September 26, 2018 to Mr. Rose and Mr. Gilmore, respectively, under the 1997 LTIP.  The term of these special performance-based/time-vested restricted common share awards is five years and these will vest when both (i) the closing price of the Company’s common shares equals or exceeds $65.00 per share for 90 consecutive calendar days during the five-year term; and (ii) the NEO has remained continuously employed for the five-year term.  See the first paragraph of footnote (3) for more information concerning restricted common shares generally. The grant date fair value for the special performance-based/time-vested restricted common shares, computed in accordance with ASC 718 using the Monte Carlo simulation model, was $23.38 per share.  See “Note A – Summary of Significant Accounting Policies – Stock-based Compensation” and “Note K – Stock-based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the 2019 Form 10-K for assumptions used and additional information regarding the method for calculating the grant date fair value of the special performance-based/time vested restricted common share awards and additional information regarding the awards.

(6)

This row shows the special time-vested restricted common shares awarded to Mr. Gilmore effective September 26, 2018 under the 1997 Plan, of which 20,000 will cliff vest three years after the grant date and 30,000 will cliff vest five years after the grant date. The terms of these awards and the calculation of fair value are the same as those of the annual time-vested restricted common shares described in footnote (3) above, with the exception of the vesting dates.

(7)

This row shows the performance-based/time-vested restricted common shares awarded to Mr. Gilmore in Fiscal 2015 which was modified to extend the term of the award and employment period requirement by one year to June 24, 2020.  The other terms are similar to the awards described in footnote (2) above.  The modification date fair value for this modification computed in accordance with ASC 718 using the Monte Carlo simulation model was $10.42 per share.  The term of this restricted common share award is now six years and the restricted common shares would vest if both (a) the closing price of the Company’s common shares equals or exceeds $60.00 per share for 30 consecutive days during the six-year period ending June 24, 2020, and (b) Mr. Gilmore has remained continuously employed by the Company for six years (i.e., through June 24, 2020).

(8)

These columns show the potential payouts under long-term performance share awards granted to the NEOs under the 1997 LTIP for the three-fiscal-year performance period from June 1, 2018 to May 31, 2021.  The types of performance measured and the weighting of those measurements are described in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Long-Term Performance Awards — General” beginning on page 43 of this Proxy Statement.  For further information on the terms of the long-term performance share awards, including those applicable to a change in control, see the discussion in the sections captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Change in Control” beginning on page 49 of this Proxy Statement and “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Long-Term Performance Awards — General,” “— Long-Term Performance Share Awards” and “Long-Term Performance Awards — Impact of Termination/Change in Control” beginning on page 43, page 44, and page 45, respectively, of this Proxy Statement.

The grant date fair value for the long-term performance share awards, computed in accordance with ASC 718, was calculated based upon the “target” award and the $42.91 closing price of the common shares on the date of grant.

(9)

These options were granted as of June 28, 2018 (or November 1, 2018 for the 4,200 share option grant to Mr. Hayek) under the 2010 Stock Option Plan with exercise prices equal to the fair market value of the underlying common shares on the date of grant.  The options become exercisable in increments of 33% per year on each of the first through third anniversaries of their grant date.  For further information on the terms of the options, see the discussion in the section captioned “EXECUTIVE COMPENSATION —Compensation Discussion and Analysis — Compensation Components — Stock Options” beginning on page 42 of this Proxy Statement.  For information on the effect of a change in control, see the discussion in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis —Change in Control” beginning on page 49 of this Proxy Statement.

The grant date fair value of the option awards was $12.55 per share ($12.41 per share in the case of Mr. Hayek’s option award on November 1, 2018), computed in accordance with ASC 718.  Generally, the grant date fair value of the options is the aggregate amount the Company would include as a compensation expense in its consolidated financial statements over each award’s three-year vesting schedule.  See “Note A — Summary of Significant Accounting Policies — Stock-Based Compensation” and “Note K — Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. — Financial Statements and Supplementary Data” of the 2019 Form 10-K for the method (Black-Scholes) used in calculating the fair value of the option awards and additional information regarding the awards.

 

Executive Compensation • 2019 Proxy Statement | Worthington

57

 

 

Outstanding Equity Awards at Fiscal 2019 Year-End

 

The following table summarizes the outstanding option awards, restricted common share awards and long-term performance share awards held by the NEOs as of May 31, 2019.  For additional information about these equity awards, see the discussion in the sections captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Stock Options”, “— Long-Term Performance Awards – General”, “— Long-Term Performance Share Awards,” “— Annual Restricted Common Share Awards to Executives”, “— Other Restricted Common Share Awards to NEOs” and “— Special Performance-Based/Time-Vested Restricted Common Share Awards” beginning on page 42, page 43, page 44, page 45, page 45 and page 46, respectively, of this Proxy Statement.

 

Outstanding Equity Awards at Fiscal 2019 Year-End

Option Awards (1)

 

 

 

Stock Awards

 

Name

No. of Common

Shares

Underlying

Unexercised

Options (#)

Exercisable

 

No. of

Common

Shares

Underlying

Unexercised

Options (#)

Unexercisable

 

Option

Exercise

Price

 

Option

Expiration

Date

 

No. of Shares

or Units of

Stock that

Have Not

Vested

(#) (2)

 

Market Value

of Shares or

Units of Stock

That Have Not

Vested

($) (3)

Equity Incentive

Plan Awards:

No. of Unearned

Shares, Units or

Other Rights That

Have Not Vested

(#) (4)

Equity Incentive

Plan Awards:

Market or Payout

Value of Unearned

Shares, Units or

Other Rights That

Have Not Vested

($) (4)

 

Equity Incentive

Plan Awards:

Performance

Period Ending

Date

John P. McConnell

 

135,000

 

 

 

 

0

 

 

 

 

 

$12.05

 

 

 

 

07/02/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80,000

 

 

 

 

0

 

 

 

 

 

$23.10

 

 

 

 

06/30/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80,000

 

 

 

 

0

 

 

 

 

 

$20.47

 

 

 

 

06/29/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,000

 

 

 

 

0

 

 

 

 

 

$31.71

 

 

 

 

06/28/23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,000

 

 

 

 

0

 

 

 

 

 

$43.04

 

 

 

 

06/30/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35,000

 

 

 

 

0

 

 

 

 

 

$30.92

 

 

 

 

06/26/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,667

 

 

 

 

 

8,833

 

(5)

 

 

 

$42.30

 

 

 

 

06/30/26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,334

 

 

 

 

 

14,666

 

(6)

 

 

 

$47.76

 

 

 

 

06/29/27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

22,000

 

(7)

 

 

 

$42.91

 

 

 

 

06/28/28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,500

 

 

 

 

 

768,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,000

 

 

 

 

 

682,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10)

 

 

 

 

 

 

 

 

 

 

 

 

 

20,000

 

 

 

 

 

682,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,000

 

 

 

 

 

409,680

 

 

 

 

05/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,000

 

 

 

 

 

409,680

 

 

 

 

05/31/21

 

Joseph B. Hayek

 

 

1,500

 

 

 

 

0

 

 

 

 

 

$

43.04

 

 

 

 

06/30/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,000

 

 

 

 

0

 

 

 

 

 

$

30.92

 

 

 

 

06/26/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,000

 

 

 

 

500

 

(5)

 

 

 

$

42.30

 

 

 

 

06/30/26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400

 

 

 

 

800

 

(6)

 

 

 

$

47.76

 

 

 

 

06/29/27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

 

1,200

 

(7)

 

 

 

$

42.91

 

 

 

 

06/28/28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

 

4,200

 

(11)

 

 

 

$

42.10

 

 

 

 

11/01/28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,300

 

 

 

 

 

44,382

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,500

 

 

 

 

 

119,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,200

 

 

 

 

 

109,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,200

 

 

 

 

 

40,968

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,500

 

 

 

 

 

119,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,919

 

 

 

 

 

65,515

 

 

 

 

05/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,100

 

 

 

 

 

105,834

 

 

 

 

05/31/21

 

 

58

Worthington | 2019 Proxy Statement • Executive Compensation

 

 

Option Awards (1)

 

 

 

Stock Awards

 

Name

No. of Common

Shares

Underlying

Unexercised

Options (#)

Exercisable

 

No. of

Common

Shares

Underlying

Unexercised

Options (#)

Unexercisable

 

Option

Exercise

Price

 

Option

Expiration

Date

 

No. of Shares

or Units of

Stock that

Have Not

Vested

(#) (2)

 

Market Value

of Shares or

Units of Stock

That Have Not

Vested

($) (3)

Equity Incentive

Plan Awards:

No. of Unearned

Shares, Units or

Other Rights That

Have Not Vested

(#) (4)

Equity Incentive

Plan Awards:

Market or Payout

Value of Unearned

Shares, Units or

Other Rights That

Have Not Vested

($) (4)

 

Equity Incentive

Plan Awards:

Performance

Period Ending

Date

B. Andrew Rose

 

30,000

 

 

 

 

0

 

 

 

 

 

$23.10

 

 

 

 

06/30/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

 

 

0

 

 

 

 

 

$20.47

 

 

 

 

06/29/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,000

 

 

 

 

0

 

 

 

 

 

$31.71

 

 

 

 

06/28/23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,000

 

 

 

 

0

 

 

 

 

 

$43.04

 

 

 

 

06/30/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,000

 

 

 

 

 

—

 

 

 

 

 

$30.92

 

 

 

 

06/26/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,000

 

 

 

 

 

4,500

 

(5)

 

 

 

$42.30

 

 

 

 

06/30/26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,834

 

 

 

 

 

7,666

 

(6)

 

 

 

$47.76

 

 

 

 

06/29/27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

11,500

 

(7)

 

 

 

$42.91

 

 

 

 

06/28/28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,000

 

 

 

 

 

409,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

 

 

 

341,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10)

 

 

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

 

 

341,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14)

 

 

 

 

 

 

 

 

 

 

 

 

 

175,000

 

 

 

 

5,974,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,500

 

 

 

 

221,910

 

 

 

 

05/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,500

 

 

 

 

221,910

 

 

 

 

05/31/21

 

Geoffrey G. Gilmore

 

6,000

 

 

 

 

0

 

 

 

 

 

$31.71

 

 

 

 

06/28/23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,000

 

 

 

 

0

 

 

 

 

 

$43.04

 

 

 

 

06/30/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,500

 

 

 

 

0

 

 

 

 

 

$30.92

 

 

 

 

06/26/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,000

 

 

 

 

 

2,500

 

(5)

 

 

 

$42.30

 

 

 

 

06/30/26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,134

 

 

 

 

 

4,266

 

(6)

 

 

 

$47.76

 

 

 

 

06/29/27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

6,400

 

(7)

 

 

 

$42.91

 

 

 

 

06/28/28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,000

 

 

 

 

 

273,120

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,500

 

 

 

 

 

221,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,000

 

 

 

 

 

853,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,500

 

 

 

 

 

221,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,000

 

 

 

 

853,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17)

 

 

 

 

 

 

 

 

 

 

 

 

 

20,000

 

 

 

 

682,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18)

 

 

 

 

 

 

 

 

 

 

 

 

 

30,000

 

 

 

 

1,024,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14)

 

 

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

 

 

1,707,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,400

 

 

 

 

 

150,216

 

 

 

 

05/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,400

 

 

 

 

 

150,216

 

 

 

 

05/31/21

 

Virgil L. Winland

 

23,000

 

 

 

 

0

 

 

 

 

 

$12.05

 

 

 

 

07/02/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,000

 

 

 

 

0

 

 

 

 

 

$23.10

 

 

 

 

06/30/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,000

 

 

 

 

0

 

 

 

 

 

$20.47

 

 

 

 

06/29/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,000

 

 

 

 

0

 

 

 

 

 

$31.71

 

 

 

 

06/28/23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,000

 

 

 

 

0

 

 

 

 

 

$43.04

 

 

 

 

06/30/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,000

 

 

 

 

0

 

 

 

 

 

$30.92

 

 

 

 

06/26/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,667

 

 

 

 

 

1,333

 

(5)

 

 

 

$42.30

 

 

 

 

06/30/26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,000

 

 

 

 

 

2,000

 

(6)

 

 

 

$47.76

 

 

 

 

06/27/17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

3,000

 

(7)

 

 

 

$42.91

 

 

 

 

06/28/28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,800

 

 

 

 

 

129,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,300

 

 

 

 

 

112,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10)

 

 

 

 

 

 

 

 

 

 

 

 

 

3,300

 

 

 

 

112,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,200

 

 

 

 

 

75,108

 

 

 

 

05/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,200

 

 

 

 

 

75,108

 

 

 

 

05/31/21

 

Dale T. Brinkman

 

 

13,000

 

 

 

 

0

 

 

 

 

 

$23.10

 

 

 

 

06/30/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,000

 

 

 

 

0

 

 

 

 

 

$20.47

 

 

 

 

06/29/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,000

 

 

 

 

0

 

 

 

 

 

$31.71

 

 

 

 

06/28/23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,000

 

 

 

 

0

 

 

 

 

 

$43.04

 

 

 

 

06/30/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,500

 

 

 

 

0

 

 

 

 

 

$30.92

 

 

 

 

06/26/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,000

 

 

 

 

 

1,000

 

(5)

 

 

 

$42.30

 

 

 

 

06/30/26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

834

 

 

 

 

 

1,666

 

(6)

 

 

 

$47.76

 

 

 

 

06/27/17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

 

2,500

 

(7)

 

 

 

$42.91

 

 

 

 

06/28/28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,800

 

 

 

 

 

129,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,300

 

 

 

 

 

112,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,300

 

 

 

 

 

112,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,200

 

 

 

 

 

75,108

 

 

 

 

05/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,200

 

 

 

 

 

75,108

 

 

 

 

05/31/21

 

 

Executive Compensation • 2019 Proxy Statement | Worthington

59

 

 

Option Awards (1)

 

 

 

Stock Awards

 

Name

No. of Common

Shares

Underlying

Unexercised

Options (#)

Exercisable

 

No. of

Common

Shares

Underlying

Unexercised

Options (#)

Unexercisable

 

Option

Exercise

Price

 

Option

Expiration

Date

 

No. of Shares

or Units of

Stock that

Have Not

Vested

(#) (2)

 

Market Value

of Shares or

Units of Stock

That Have Not

Vested

($) (3)

Equity Incentive

Plan Awards:

No. of Unearned

Shares, Units or

Other Rights That

Have Not Vested

(#) (4)

Equity Incentive

Plan Awards:

Market or Payout

Value of Unearned

Shares, Units or

Other Rights That

Have Not Vested

($) (4)

 

Equity Incentive

Plan Awards:

Performance

Period Ending

Date

Mark A. Russell

 

9,000

 

 

 

 

0

 

 

 

 

 

$43.04

 

 

 

 

8/22/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,000

 

 

 

 

0

 

 

 

 

 

$42.30

 

 

 

 

8/22/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,834

 

 

 

 

0

 

 

 

 

 

$47.76

 

 

 

 

8/22/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,528

 

 

 

 

 

86,306

 

 

 

 

05/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

0

 

 

 

 

05/31/21

 

John G. Lamprinakos

 

 

3,831

 

 

 

 

0

 

 

 

 

 

$12.05

 

 

 

 

07/02/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,000

 

 

 

 

0

 

 

 

 

 

$23.10

 

 

 

 

06/30/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,000

 

 

 

 

0

 

 

 

 

 

$20.47

 

 

 

 

10/05/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,000

 

 

 

 

0

 

 

 

 

 

$31.71

 

 

 

 

10/05/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,000

 

 

 

 

0

 

 

 

 

 

$43.04

 

 

 

 

10/05/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,000

 

 

 

 

0

 

 

 

 

 

$30.92

 

 

 

 

10/05/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,800

 

 

 

 

0

 

 

 

 

 

$42.30

 

 

 

 

10/05/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,600

 

 

 

 

0

 

 

 

 

 

$47.76

 

 

 

 

10/05/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

 

0

 

 

 

 

05/31/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

 

0

 

 

 

 

05/31/21

 

 

(1)

All options outstanding as of May 31, 2019 were granted under the 1997 LTIP, the 2003 Stock Option Plan, or the 2010 Stock Option Plan with exercise prices equal to the fair market value of the underlying common shares on the date of grant.  All unvested options become exercisable in increments of 33% per year on each anniversary of their grant date for the first three anniversaries, subject to continued employment of the NEO and the terms of each option award.  See the discussion in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis — Compensation Components — Stock Options” beginning on page 42 of this Proxy Statement. The dates listed for vesting of the options in the footnotes below are subject to continued employment of the NEO and the terms of the applicable options awards.

(2)

See footnotes (3), (4) and (6) to the “Grants of Plan-Based Awards for Fiscal 2019” table beginning on page 56 of this Proxy Statement for detailed information on the annual time-vested restricted common share awards, the special time-vested restricted common shares awarded to Mr. Hayek and the special time-vested restricted common shares awarded to Mr. Gilmore, in each case during Fiscal 2019. The restricted common shares granted to executive officers and non-employee directors of the Company are held in escrow by the Company and may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the restrictions thereon have lapsed.  Each holder of restricted common shares may exercise any voting rights associated with the restricted common shares during the restriction period.  In addition, any dividends or distributions paid with respect to the common shares underlying the restricted common shares will be held by the Company in escrow during the restriction period and, at the end of the restriction period, will be distributed or forfeited in the same manner as the restricted common shares with respect to which they were paid.  For further information concerning the terms of the restricted common shares granted to executive officers, please see the discussion in the sections captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Annual Restricted Common Share Awards to Executives”, “EXECUTIVE COMPENSATION -– Compensation Discussion and Analysis — Compensation Components -– Other Restricted Common Share Awards to NEOs”, “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components— Special Performance-Based/Time-Vested Restricted Common Share Awards” and “EXECUTIVE COMPENSATION — Grants of Plan-Based Awards” beginning on page 45, page 45, page 46, and page 56, respectively, of this Proxy Statement.  Restricted common shares held by executive officers not named in this table are not listed individually.

(3)

Each market value shown in this column is calculated by multiplying the number of restricted common shares by the $34.14 closing price of Worthington’s common shares on May 31, 2019, the last business day of Fiscal 2019, without any discount for restrictions.

(4)

The amounts shown in this column assume that the long-term performance share awards granted for each of the three-fiscal-year periods ending May 31, 2020 and May 31, 2021 will be earned at the “target” amount based upon achieving those specified performance levels and multiplying such amount by the $34.14 closing price of Worthington’s common shares on May 31, 2019.  See the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns of the “Grants of Plan-Based Awards for Fiscal 2019” table beginning on page 56 of this Proxy Statement for the threshold, target and maximum number of performance shares that may be received for the performance period ending May 31, 2021.

(5)

Unexercisable options vested on June 30, 2019.

(6)

Unexercisable options vested 50% on June 29, 2019 and will vest 50% on June 29, 2020, subject to continued employment and the terms of the option award.

(7)

Unexercisable options vested 33% on June 28, 2019 and will vest 33% on June 28, 2020 and 33% on June 28, 2021, subject to continued employment and the terms of the option award.

(8)

These time-vested restricted common share awards were granted effective June 30, 2016 under the 1997 LTIP and became fully vested on June 30, 2019.  

(9)

These time-vested restricted common share awards were granted effective June 29, 2017 under the 1997 LTIP, and will become fully vested on the third anniversary of the date of grant, subject to continued employment and the terms of the award.  

 

60

Worthington | 2019 Proxy Statement • Executive Compensation

 

 

(10)

These time-vested restricted common share awards were granted effective June 28, 2018 under the 1997 LTIP, and will become fully vested on the third anniversary of the date of grant, subject to continued employment and the terms of the award.  

(11)

Unexercisable options will vest at 33% on November 1, 2019, 33% on November 1, 2020 and 33% on November 1, 2021, subject to continued employment and the terms of the option award.

(12)

This time-vested restricted common share award was granted effective December 27, 2016 under the 1997 LTIP, and will become fully vested on December 27, 2019, subject to continued employment and the terms of the award.  

(13)

This time-vested restricted common share award was granted effective November 1, 2018 under the 1997 LTIP, and will become fully vested on November 1, 2021, subject to continued employment and the terms of the award,

(14)

Effective September 26, 2018, the NEO received a special performance-based/time-vested restricted common share award which will vest if both: (a) the closing price of the Company’s common shares equals or exceeds $65.00 per share for 90 consecutive days during the five-year period ending on September 26, 2023; and (b) the NEO has continuously remained an employee of the Company through September 26, 2023.  Further information on this award is set forth in the section captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis — Compensation Components — Special Performance-Based/Time-Vested Restricted Common Share Awards” beginning on page 46 of this Proxy Statement.  For the general terms of the restricted common shares, see footnote (22) to the “Beneficial Ownership” table beginning on page 13 of this Proxy Statement.

(15)

This time-vested restricted common share award was granted effective June 29, 2017 under the 1997 LTIP, and will become fully vested on the fourth anniversary of the date of grant, subject to continued employment and the terms of the award.  

(16)

Effective June 24, 2014, Mr. Gilmore received a special performance-based/time-vested restricted common share award covering 25,000 common shares which, as amended effective September 26, 2018, will vest if both: (a) the closing price of the Company’s common shares equals or exceeds $60.00 per share for 30 consecutive days during the six-year period ending on June 24, 2020; and (b) Mr. Gilmore has continuously remained an employee of the Company through June 24, 2020.  Further information on this award is set forth in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Special Performance-Based/Time-Vested Restricted Common Share Awards” beginning on page 46 of this Proxy Statement.  

(17)

This time-vested restricted common share award was granted effective September 26, 2018 under the 1997 LTIP, and will become fully vested on September 26, 2021, subject to continued employment and the terms of the award.  

(18)

This time-vested restricted common share award was granted effective September 26, 2018 under the 1997 LTIP, and will become fully vested on September 26, 2023, subject to the terms of the restricted common share award, subject to continued employment and the terms of the award.  

 

Executive Compensation • 2019 Proxy Statement | Worthington

61

 

 

Option Exercises and Stock Vested

 

The following table sets forth information about (i) non-qualified stock options exercised by NEOs in Fiscal 2019; (ii) long-term performance share awards earned by NEOs for the three-fiscal-year period ended May 31, 2019; and (iii) time-vested restricted common shares held by NEOs which vested in Fiscal 2019:

Option Exercises and Stock Vested During Fiscal 2019

 

 

 

Option Awards

 

 

 

 

Stock Awards

Name

 

Number of Common

Shares Acquired on

Exercise (#)

 

Value Realized on

Exercise ($)

 

Number of Common

Shares Acquired on

Vesting (#)

 

Value Realized on

Vesting ($)

John P. McConnell

 

 

 

100,000

 

 

 

 

$

2,176,000

 

 

 

 

 

7,260

 

(1)

 

 

 

 

292,505

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,000

 

(2)

 

 

 

 

1,419,300

 

(2)

 

Joseph B. Hayek

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

501

 

(1)

 

 

 

 

20,185

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,700

 

(2)

 

 

 

 

80,427

 

(2)

 

B. Andrew Rose

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,630

 

(1)

 

 

 

 

146,253

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,000

 

(2)

 

 

 

 

756,960

 

(2)

 

Geoffrey G. Gilmore

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,513

 

(1)

 

 

 

 

60,958

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,500

 

(2)

 

 

 

 

402,135

 

(2)

 

Virgil L. Winland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,271

 

(1)

 

 

 

 

51,209

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,000

 

(2)

 

 

 

 

236,550

 

(2)

 

Dale T. Brinkman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,271

 

(1)

 

 

 

 

51,209

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,000

 

(2)

 

 

 

 

236,550

 

(2)

 

Mark A. Russell

 

 

 

212,000

 

 

 

 

$

5,455,457

 

 

 

 

 

2,622

 

(1)

 

 

 

 

105,640

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,000

 

(2)

 

 

 

 

756,960

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,222

 

(3)

 

 

 

 

563,800

 

(3)

 

John G. Lamprinakos

 

 

 

61,159

 

 

 

 

$

1,738,992

 

 

 

 

 

791

 

(1)

 

 

 

 

31,869

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,500

 

(2)

 

 

 

 

307,515

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19,700

 

(3)

 

 

 

 

852,060

 

(3)

 

 

(1)

The number of common shares acquired on vesting relates to long-term performance share awards granted in July 2016 and represents the common shares earned with respect to the three-fiscal-year period ended May 31, 2019.  The value realized on vesting represents the number of common shares earned multiplied by the closing market price of Worthington’s common shares on July 1, 2019 release date ($40.29 per share).  The number of common shares actually received by the NEOs was reduced in each case by the withholding of common shares to pay income taxes associated with the value realized upon vesting, with the net number of common shares received by each of the NEOs as follows:  Mr. McConnell – 3,786; Mr. Hayek – 265; Mr. Rose – 1,929; Mr. Gilmore – 803; Mr. Winland – 856; Mr. Brinkman – 675; Mr. Russell – 1,393; and Mr. Lamprinakos – 420.

(2)

The number of common shares acquired on vesting relates to restricted common share awards granted on June 26, 2015 which vested on June 26, 2018.  The value realized on vesting represents the number of common shares vested multiplied by the closing market price of the common shares on June 26, 2018 ($47.31 per common share).  The number of common shares actually received by each NEO was reduced by the withholding of common shares to pay income taxes associated with the value realized upon vesting, with the net number of common shares received by each of the NEOs as follows:  Mr. McConnell – 15,645; Mr. Hayek – 1,170; Mr. Rose – 8,504; Mr. Gilmore – 4,517; Mr. Winland – 3,370; Mr. Brinkman – 2,657; Mr. Russell – 8,504; and Mr. Lamprinakos – 3,454.

(3)

The number of common shares acquired on vesting relates to restricted common share awards paid out with vesting determined on a pro-rated basis, due to the NEOs’ retirement.  The value realized on vesting represents the number of common shares vested multiplied by the closing market price on date of the payout.  The number of common shares actually received by each NEO was reduced by the withholding of common shares to pay the income taxes associated with the value realized upon vesting, with the net number of common shares received by each of the NEOs as follows:  Mr. Russell – 6,494; and Mr. Lamprinakos – 10,468.

 

62

Worthington | 2019 Proxy Statement • Executive Compensation

 

 

Non-Qualified Deferred Compensation

 

The Company maintains two Employee Deferral Plans which provide for the deferral of compensation on a basis that is not tax-qualified – the 2000 NQ Plan and the 2005 NQ Plan.  Contributions and deferrals for the period from March 1, 2000 through December 31, 2004 are maintained under the 2000 NQ Plan.  Contributions and deferrals for periods on or after January 1, 2005 are maintained under the 2005 NQ Plan, which was adopted to replace the 2000 NQ Plan in order to comply with the provisions of Section 409A of the Internal Revenue Code.  The terms of the 2005 NQ Plan, which are discussed below, are similar to those of the 2000 NQ Plan but are more restrictive with respect to the timing of deferral elections and the ability of participants to change the time and manner in which accounts will be paid.  The Employee Deferral Plans are intended to supplement the 401(k) plans sponsored by the Company. For further information on the terms of the Employee Deferral Plans, see the discussion in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Non-Qualified Deferred Compensation” beginning on page 48 of this Proxy Statement.

Only select highly-compensated employees of the Company, including the NEOs, are eligible to participate in the Employee Deferral Plans.  As of August 1, 2019, approximately 119 employees of the Company were eligible to participate in the 2005 NQ Plan and 11 employees of the Company had accounts in the 2000 NQ Plan.

Under the 2005 NQ Plan, participants may defer the payment of up to 50% of their base salary and up to 100% of their bonus and/or annual cash incentive bonus awards.  Deferred amounts are credited to the participants’ bookkeeping accounts under the 2005 NQ Plan at the time the base salaries and/or bonus/annual cash incentive bonus awards would have otherwise been paid.  In addition, the Company may make discretionary employer contributions to participants’ bookkeeping accounts in the 2005 NQ Plan.  For the 2019, 2018 and 2017 calendar years, in order to provide the same percentage of retirement-related deferred compensation contributions to participants compared to other employees that would have been made but for the IRS limits on annual compensation that may be considered under tax-qualified plans, the Company made contributions to participants’ bookkeeping accounts under the 2005 NQ Plan equal to (i) 3% of a participant’s annual compensation (base salary plus bonus/annual cash incentive bonus award) in excess of the IRS maximum; and (ii) a matching contribution of 50% of the first 4% of annual compensation contributed by the participant to the DPSP to the extent not matched by the Company under the DPSP.

Participants in the 2005 NQ Plan may elect to have their bookkeeping accounts treated as invested (a) with a rate of return reflecting (i) a fixed interest rate which is set annually by the Compensation Committee (2.48% for Fiscal 2019); or (ii) the returns on those investment options available under the DPSP, or (b) in theoretical common shares reflecting increases or decreases in the value of Worthington’s` common shares with dividends deemed reinvested.  Any portion of a participant’s bookkeeping account credited to theoretical common shares must remain credited to theoretical common shares until distributed.  Otherwise, participants in the 2005 NQ Plan may change the investment options for their bookkeeping accounts as of the time permitted under the DPSP for the same or a similar investment option.

Bookkeeping accounts of employees are fully vested under the 2005 NQ Plan.  Theoretical common shares are paid in whole common shares and cash in lieu of fractional shares and all other amounts are paid in cash.  Payouts are made as of a specified date selected by the participant or, subject to the timing requirements of Section 409A of the Internal Revenue Code, when the participant is no longer employed by the Company.  Payouts are made in a lump sum or in installment payments, as chosen by the participant at the time the deferral election is made.  The Compensation Committee may permit hardship withdrawals from a participant’s bookkeeping account under the 2005 NQ Plan in accordance with defined guidelines.  In the event of a defined change in control, the participants’ bookkeeping accounts under the 2005 NQ Plan will generally be paid out as of the date of the change in control.

 

Executive Compensation • 2019 Proxy Statement | Worthington

63

 

 

The following table provides information concerning the participation by the NEOs in the Employee Deferral Plans for Fiscal 2019:

Non-Qualified Deferred Compensation for Fiscal 2019

Name

Name of Plan

Executive

Contributions in Fiscal

2019 ($) (1)

Company

Contributions in Fiscal

2019 ($) (2)

Aggregate

Earnings (Loss) in Fiscal

2019 ($) (3)

Aggregate

Withdrawals/

Distributions ($) (4)

 

 

Aggregate

Balance at

May 31,

2019 ($) (5)

 

John P. McConnell

2000 NQ Plan

 

0

 

 

0

 

 

 

8,693

 

 

0

 

 

 

356,394

 

 

2005 NQ Plan

 

0

 

 

 

44698

 

 

 

13,663

 

 

0

 

 

 

596,226

 

Joseph B. Hayek

2000 NQ Plan

 

0

 

 

 

0

 

 

0

 

 

 

0

 

 

 

0

 

 

2005 NQ Plan

 

 

38,813

 

 

 

12876

 

 

 

(10,995

)

 

 

0

 

 

 

188,143

 

B. Andrew Rose

2000 NQ Plan

 

0

 

 

0

 

 

0

 

 

0

 

 

 

0

 

 

2005 NQ Plan

 

 

158,059

 

 

 

43582

 

 

 

29,077

 

 

0

 

 

 

1,806,542

 

Geoffrey G. Gilmore

2000 NQ Plan

 

0

 

 

0

 

 

0

 

 

0

 

 

 

0

 

 

2005 NQ Plan

 

0

 

 

 

26650

 

 

 

(86,491

)

 

0

 

 

 

251,142

 

Virgil L. Winland

2000 NQ Plan

 

 

0

 

 

 

0

 

 

 

3,141

 

 

0

 

 

 

128,761

 

 

2005 NQ Plan

 

0

 

 

 

21677

 

 

 

6,214

 

 

0

 

 

 

272,263

 

Dale T. Brinkman

2000 NQ Plan

 

0

 

 

 

0

 

 

 

6,020

 

 

 

0

 

 

 

246,798

 

 

2005 NQ Plan

 

0

 

 

20578

 

 

 

18,931

 

 

 

0

 

 

 

792,743

 

Mark A. Russell

2000 NQ Plan

 

0

 

 

0

 

 

 

0

 

 

0

 

 

 

0

 

 

2005 NQ Plan

 

 

15,055

 

 

 

0

 

 

 

(1,934,517

)

 

 

(9,557,372

)

 

 

0

 

John G. Lamprinakos

2000 NQ Plan

 

0

 

 

 

0

 

 

 

259

 

 

 

(28,326

)

 

 

0

 

 

2005 NQ Plan

 

 

77,325

 

 

 

0

 

 

 

13,041

 

 

 

(370,727

)

 

 

113,416

 

 

(1)

The amounts in this column reflect contributions to the 2005 NQ Plan during Fiscal 2019 as a result of deferrals of base salary and/or bonus/annual cash incentive bonus awards which would otherwise have been paid to the NEOs.  These amounts are also included in the “Salary”, “Discretionary Bonuses” or “Annual Incentive Bonus Award” columns, respectively, for Fiscal 2019 in the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement.

(2)

These contributions are included in the “All Other Compensation” column in the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement.

(3)

The amounts represent the aggregate earnings (loss) accrued during Fiscal 2019. Since the earnings on compensation that has been deferred under the Employee Deferral Plans by the NEOs do not represent “above-market” earnings for purposes of the applicable SEC Rules, none of the amounts included in this column have been reported in the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement.

(4)

The accounts for Mr. Russell and Mr. Lamprinakos were distributed following their retirement.

(5)

The amounts included in the “Aggregate Balance at May 31, 2019” column represent contributions by the Company or the NEOs and credited to the respective NEOs’ bookkeeping accounts under the 2000 NQ Plan or the 2005 NQ Plan, and earnings on the amounts credited to those accounts.  The total amount of the Company and NEO contributions to the Employee Deferral Plans, which are included in this column are as follows: (a) Mr. McConnell – $711,834; (b) Mr. Hayek – $173,136; (c) Mr. Rose – $1,354,225; (d) Mr. Gilmore – $198,232; (e) Mr. Winland – $302,353; and (f) Mr. Brinkman – $784,149.

 

64

Worthington | 2019 Proxy Statement • Executive Compensation

 

 

Annual Cash Incentive Bonus Awards Granted for Fiscal 2020

 

The following supplemental table sets forth the annual cash incentive bonus awards granted to the NEOs under the Annual Incentive Plan for Executives for Fiscal 2020 as of the date of this Proxy Statement:

Annual Cash Incentive Bonus Awards Granted for Fiscal 2020

 

 

Annual Cash Incentive Bonus Awards for

Twelve-Month Performance Period Ending

May 31, 2020 (1)

 

Name

 

Threshold ($)

 

Target ($)

 

Maximum ($)

 

John P. McConnell

 

 

483,969

 

 

 

 

967,938

 

 

 

 

1,935,876

 

Joseph B. Hayek

 

 

198,275

 

 

 

 

396,550

 

 

 

 

793,100

 

B. Andrew Rose

 

 

386,250

 

 

 

 

772,500

 

 

 

 

1,545,000

 

Geoffrey G. Gilmore

 

 

339,900

 

 

 

 

679,800

 

 

 

 

1,359,600

 

Virgil L. Winland

 

 

245,864

 

 

 

 

491,727

 

 

 

 

983,454

 

Dale T. Brinkman

 

 

218,546

 

 

 

 

437,091

 

 

 

 

874,182

 

Mark A. Russell

 

N/A

 

 

 

N/A

 

 

 

N/A

 

John G. Lamprinakos

 

N/A

 

 

 

N/A

 

 

 

N/A

 

 

(1)

Payouts which can be earned under these annual cash incentive bonus awards are generally tied to achieving specified levels (threshold, target and maximum) of corporate EVA and EPS for the twelve-month performance period with each performance measure carrying a 50% weighting.  For all calculations, restructuring charges and non-recurring items are to be excluded and EPS and the Steel Processing business unit EOI results are to be adjusted to eliminate the impact of inventory holding gains and losses.  If the performance level falls between threshold and target or between target and maximum, the award is linearly pro-rated.  If threshold levels are not reached for any performance measure, no annual cash incentive bonus will be paid for that measure.  Annual cash incentive bonus award payouts earned will be made within a reasonable time following the end of the performance period.  In the event of a change in control of the Company (followed by actual or constructive termination of an NEO’s employment during the performance period), the annual cash incentive bonus award would be considered to be earned at “target” and payable as of the date of termination of employment.

 

Executive Compensation • 2019 Proxy Statement | Worthington

65

 

 

Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2020

 

The following supplemental table sets forth the long-term performance awards (consisting of long-term cash performance awards and long-term performance share awards) for the three-fiscal-year period ending May 31, 2022, and the option awards and the restricted common share awards granted to the NEOs, as well as the “Executive Group”, the “Non-Executive Director Group” and the “Non-Executive Officer Employee Group” (as each term is defined on page 82 of this Proxy Statement) in Fiscal 2020 through the date of this Proxy Statement.

Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2020

 

 

Long-Term Cash Performance Awards for

Three-Fiscal-Year Period Ending

May 31, 2022 (1)

 

Long-Term Performance Share Awards

for Three-Fiscal-Year Period Ending

May 31, 2022 (1)

 

Option

Awards:

Number of

Exercise

or Base

Price of

 

Name

 

Threshold

($)

Target

($)

Maximum

($)

Threshold

(# of

Common

Shares)

Target

(# of

Common

Shares)

Maximum

(# of

Common

Shares)

Common

Shares

Underlying

Options (2)

Option

Awards

($/Share)

(2)

Restricted

Common

Share

Awards

John P. McConnell

 

500,000

 

1,000,000

 

2,000,000

 

7,500

 

15,000

 

30,000

 

27,000

 

38.91

 

22,500 (3)

Joseph B. Hayek

 

140,000

 

280,000

 

560,000

 

1,800

 

3,600

 

7,200

 

6,800

 

38.91

 

5,400 (3)

B. Andrew Rose

 

300,000

 

600,000

 

1,200,000

 

3,750

 

7,500

 

15,000

 

14,000

 

38.91

 

12,000 (3)

Geoffrey G. Gilmore

 

220,000

 

440,000

 

880,000

 

2,850

 

5,700

 

11,400

 

10,000

 

38.91

 

8,500 (3)

Virgil L. Winland

 

115,000

 

230,000

 

460,000

 

1,250

 

2,500

 

5,000

 

4,300

 

38.91

 

3,700 (3)

Dale T. Brinkman

 

100,000

 

200,000

 

400,000

 

1,250

 

2,500

 

5,000

 

4,300

 

38.91

 

3,700 (3)

Mark A. Russell

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

John G. Lamprinakos

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

N/A

Executive Group (3)

 

129,000

 

258,000

 

516,000

 

1,650

 

3,300

 

6,600

 

5,900

 

38.91

 

5,000 (3)

Non-Executive Director Group

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

Non-Executive Officer

Employee Group (3)

 

1,045,000

 

2,090,000

 

4,180,000

 

7,700

 

15,400

 

30,800

 

28,400

 

38.91

 

43,000 (3)

 

(1)

These columns show the potential payouts under the long-term cash performance awards and the long-term performance share awards granted to (a) each of the NEOs, (b) the Executive Group (in the aggregate) and (c) the Non-Executive Officer Employee Group (in the aggregate) under the 1997 LTIP for the three-fiscal-year performance period from June 1, 2019 to May 31, 2022.  Payouts of long-term cash performance awards and long-term performance share awards for Corporate executives are tied to achieving specified levels (threshold, target and maximum) of cumulative corporate EVA for the three-fiscal-year performance period and EPS growth over that performance period, with each performance measure carrying a 50% weighting. In all calculations, restructuring charges and non-recurring items are to be excluded, and EPS and Steel Processing business unit EOI results are to be adjusted to eliminate the impact of inventory holding gains or losses.  No awards are paid or distributed if none of the three-fiscal-year threshold financial measures are met.  If the performance levels fall between threshold and target or between target and maximum, the award is linearly pro-rated.  For further information on the terms of the long-term cash performance awards and the long-term performance share awards, see the discussion in the sections captioned “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis — Compensation Components — Long-Term Performance Awards — General”, “— Long-Term Performance Share Awards”, “— Long-Term Cash Performance Awards” and “— Long-Term Performance Awards — Impact of Termination/Change in Control” beginning on page 43, page 44, page 44 and page 45, respectively, of this Proxy Statement.  For information on the effect of a change in control, also see the discussion in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Change in Control” beginning on page 49 of this Proxy Statement.

(2)

Effective June 27, 2019, the NEOs, as well as members of the Executive Group and the Non-Executive Officer Employee Group, were granted non-qualified stock options under the 2010 Stock Option Plan with respect to the number of common shares shown, with an exercise price equal to $38.91, the fair market value of the underlying common shares on the date of grant.  The options become exercisable over three years in increments of 33% per year on each anniversary of their grant date.  For further information on the terms of the options, see the discussion in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Compensation Components — Stock Options” beginning on page 42 of this Proxy Statement.  For information on the effect of a change in control, see the discussion in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis — Change in Control” beginning on page 49 of this Proxy Statement.

(3)

These annual time-vested restricted common share awards were granted effective June 27, 2019 under the 1997 LTIP and will generally cliff vest three years after the grant date.  These restricted common shares are held in escrow by the Company and may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the restrictions thereon have lapsed.  Each holder of a restricted common share award may exercise any voting rights associated with the common shares underlying the restricted common shares during the restriction period.  In addition, any dividends or distributions paid with respect to the common shares underlying the restricted common shares will be held by the Company in escrow during the restriction period and, at the end of the restriction period, will be distributed or forfeited in the same manner as the restricted common shares with respect to which they were paid.

These annual time-vested restricted common shares are generally forfeited in the event of termination of the holder’s employment before vesting, except that (i) the restricted common shares will fully vest if the holder dies or becomes disabled, (ii) a pro-rated portion of the restricted common shares will vest on retirement, and (iii) the Compensation Committee, in its discretion, may elect to vest all or a portion of the restricted common shares upon retirement.  For information on the effect of a change in control, see the discussion in the section captioned “EXECUTIVE COMPENSATION -- Compensation Discussion and Analysis – Change in Control” beginning on page 49 of this Proxy Statement.

 

66

Worthington | 2019 Proxy Statement • Executive Compensation

 

 

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of SEC Regulation S-K, we are providing the following information about the relationship of the median of the annual total compensation of our employees and the annual total compensation of John P. McConnell, our CEO:

For Fiscal 2019, our last completed fiscal year:

(1)

The annual total compensation of the employee identified at the median of our Company (other than our CEO), was $64,725 (comprised of a base salary of $38,036, plus overtime, estimated profit sharing and/or bonus payments, shift pay, employer contributions to the 401(k) plan and group term life insurance premiums).

(2)

The annual total compensation of the CEO for purposes of determining the CEO Pay Ratio was $3,738,834.

Based on this information, for Fiscal 2019, the ratio of the annual total compensation of Mr. McConnell, our CEO, to the median of the annual total compensation of all employees was estimated at 58 to 1.

In order to identify the median of the annual total compensation of all active employees of the Company and its consolidated joint ventures and subsidiaries as of May 31, 2018 (including any full-time, part-time, temporary or seasonal employees, but excluding our CEO), we used current base salary plus estimated profit sharing and/or bonus payments from our payroll records for Fiscal 2019.  In making this determination, we annualized compensation for any full-time or part-time permanent employees who were employed on May 31, 2018 but did not work for us the entire year, and also estimated total compensation for such employees using profit sharing factors and bonus payout percentages applicable to the business unit and/or location. We did not make any full-time equivalent adjustments for part-time or seasonal employees. We also applied a foreign currency exchange rate, based upon the U.S. Department of Treasury’s Treasury Reporting Rates of Exchange as of May 31, 2018, to all compensation elements paid in currencies other than U.S. dollars. We consistently applied this compensation measure and methodology to all of our employees included in the calculation.

After identifying our median employee, we determined the median employee’s annual total compensation in the same manner that we determine the total compensation of our named executive officers for purposes of the Fiscal 2019 Summary Compensation Table set forth on page 52 of this Proxy Statement. With respect to the annual total compensation of our CEO, we used the amount for Fiscal 2019 reported in the “Total” column of the Fiscal 2019 Summary Compensation Table.

This information is being provided for compliance purposes. Neither the Compensation Committee nor management of the Company used the CEO pay ratio measure in making compensation decisions.

 

 

 

Executive Compensation • 2019 Proxy Statement | Worthington

67

 

 

Compensation of Directors

 

The Compensation Committee annually reviews, with the assistance of Willis Towers Watson, certain market information provided by Willis Towers Watson concerning compensation (both cash and non-cash) paid to directors.  Based upon such information, the Company’s past practices concerning directors’ compensation and such other information as the Compensation Committee deems appropriate, the Compensation Committee makes recommendations to the Board with respect to directors’ compensation.  Following consideration of such recommendations, the compensation payable to the directors is set by the entire Board.

 

Compensation for Fiscal 2019

At its June 2018 meeting, based upon the recommendation of the Compensation Committee, the Board determined to leave directors’ fees unchanged from Fiscal 2018.  Accordingly, cash compensation was paid pursuant to the following table.

 

Annual Retainer

 

 

$

85,000

 

Lead Independent Director Supplemental Annual Retainer

 

 

$

25,000

 

Audit Committee Chair Supplemental Annual Retainer

 

 

$

15,000

 

Compensation Committee Chair Supplemental Annual Retainer

 

 

$

12,000

 

Nominating and Governance Committee Chair Supplemental Annual Retainer

 

 

$

10,000

 

Also, consistent with this decision, the Compensation Committee recommended leaving the directors’ targeted annual equity grant unchanged. Based on this recommendation, the Board approved making an annual restricted common share award to each non-employee director having a targeted value of approximately $120,000 ($180,000 for Mr. Blystone as Lead Independent Director), with the actual number of common shares granted  determined based upon the price of Worthington’s common shares at or shortly before the date of the 2018 Annual Meeting of Shareholders. Accordingly, each non-employee director received a restricted common share award covering 2,700 common shares (4,050 common shares for Mr. Blystone), as of September 26, 2018, the date of the 2018 Annual Meeting of Shareholders.  

Compensation for Fiscal 2020

At its June 2019 meeting, the Compensation Committee received a report from Willis Towers Watson, its compensation consultant, on directors’ compensation, including information on the amount of directors’ fees being paid by comparative companies, which showed that both the cash and the equity portion of the Company’s director compensation were below market median levels.  Based on the recommendation from the compensation consultant, the Compensation Committee recommended and the Board approved, increasing both the cash directors’ fees and the targeted value of the directors’ annual equity grant.  

The cash retainer fees for non-employee directors to be paid, effective as of the 2019 Annual Meeting, are set forth in the following table:

 

Annual Retainer

 

 

$

95,000

 

Lead Independent Director Supplemental Annual Retainer

 

 

$

30,000

 

Audit Committee Chair Supplemental Annual Retainer

 

 

$

20,000

 

Compensation Committee Chair Supplemental Annual Retainer

 

 

$

15,000

 

Nominating and Governance Committee Chair Supplemental Annual Retainer

 

 

$

10,000

 

The targeted value of the annual equity grant was increased to approximately $130,000 ($195,000 for Mr. Blystone as the Lead Independent Director), with the actual number of restricted common shares granted to be determined based upon the price of Worthington’s common shares at or shortly before the date of the 2019 Annual Meeting, with reasonable rounding.  

 

68

Worthington | 2019 Proxy Statement • Compensation of Directors

 

 

Director Deferral Plans

The Company maintains two Director Deferral Plans which provide for deferral of directors’ fees on a basis that is not tax-qualified.  The Worthington Industries, Inc. Deferred Compensation Plan for Directors, as Amended and Restated effective June 1, 2000 (as amended, the “Directors 2000 NQ Plan”) governs deferrals prior to January 1, 2005.  Deferrals with respect to the period on or after January 1, 2005 are governed by the Worthington Industries, Inc. Amended and Restated 2005 Deferred Compensation Plan for Directors (Restatement effective as of December 2008) (as amended, the “Directors 2005 NQ Plan”) which was adopted in order to comply with the provisions of Section 409A of the Internal Revenue Code applicable to non-qualified deferred compensation plans.  The terms of the Directors 2005 NQ Plan, which are discussed below are similar to those of the Directors 2000 NQ Plan, but are generally more restrictive with respect to the timing of deferral elections and the ability of participants to change the time and manner in which accounts will be paid.

Under the Directors 2005 NQ Plan, non-employee directors are able to defer payment of all or a portion of their cash annual retainers until a specified date or until they are no longer associated with the Company.  Any cash retainers deferred are credited to each participating director’s bookkeeping account under the Directors 2005 NQ Plan at the time the cash retainers would have otherwise been paid.  Participants in the Directors 2005 NQ Plan may elect to have their bookkeeping accounts treated as invested (a) with a rate of return reflecting (i) a fixed interest rate (2.48% for Fiscal 2019) which is set annually by the Compensation Committee; or (ii) the rates of return on those investment options available under the DPSP; or (b) in theoretical common shares reflecting increases or decreases in the value of Worthington’s common shares with dividends deemed reinvested.  Any portion of a participant’s bookkeeping account credited to theoretical common shares will remain credited to theoretical common shares until distributed.  Otherwise, participants in the Directors 2005 NQ Plan may change the investment options for their bookkeeping accounts at the time permitted by the DPSP for the same investment option.  The Directors 2005 NQ Plan, as well as the Directors 2000 NQ Plan, are administered by the Compensation Committee.  All bookkeeping accounts are fully vested.  Payouts under the Directors 2005 NQ Plan are made in cash or, in the case of amounts credited to theoretical common shares, whole common shares and cash in lieu of fractional shares.  The Compensation Committee may permit hardship withdrawals from a participant’s bookkeeping account under the Directors 2005 NQ Plan under defined guidelines.  In the event of a defined change in control, participants’ bookkeeping accounts under the Directors 2005 NQ Plan will generally be paid out as of the date of change in control.

Equity Grants

Under the Worthington Industries, Inc. Amended and Restated 2006 Equity Incentive Plan for Non-Employee Directors (as amended, the “2006 Directors Equity Plan”), the Board may grant non-qualified stock options, restricted common shares, restricted stock units, stock appreciation rights and whole common shares to non-employee directors of the Company.  Awards under the 2006 Directors Equity Plan are made by the Board in its discretion.

On September 26, 2018, each individual then serving as a non-employee director (including each non-employee director nominee elected at the 2018 Annual Meeting) immediately following the 2018 Annual Meeting received an award of 2,700 restricted common shares (4,050 for Mr. Blystone as Lead Independent Director). These restricted common shares will vest on September 25, 2019.

On September 25, 2019, each individual then serving as a non-employee director (including each non-employee director nominee elected at the 2019 Annual Meeting) immediately following the 2019 Annual Meeting will receive a restricted common share award having a value of approximately $130,000 ($195,000 for Mr. Blystone as Lead Independent Director), with the number of restricted common shares awarded based on the then market price of Worthington’s common shares on or shortly before that date.  Each of these restricted common share awards will vest on the first to occur of the first anniversary of the date of grant or the date of the 2020 Annual Meeting of Shareholders.

Upon a business combination or change in control, all restricted common shares will become fully vested.  In the case of death, total disability or retirement, all restricted common shares will also immediately become fully vested.  If a non-employee director’s service on the Board terminates for any other reason, unvested restricted common shares will be forfeited.  During the time between the grant date and the vesting date, a non-employee director may exercise full voting rights in respect of the common shares underlying the restricted common shares and will be credited with any dividends paid on the common shares underlying the restricted common shares (which dividends will be distributed with the common shares underlying the restricted common shares if they vest, or forfeited if the restricted common shares are forfeited).

 

Compensation of Directors • 2019 Proxy Statement | Worthington

69

 

 

Director Compensation for Fiscal 2019

 

The following table sets forth information concerning the compensation earned by the Company’s non-employee directors during Fiscal 2019:

Director Compensation for Fiscal 2019 (1)(2)(3)

Name

Fees Earned or

Paid in Cash

($) (4)

Stock Awards

($) (5)

 

Option Awards

($) (6)

 

Total

($)

 

Kerrii B. Anderson

 

85,000

 

 

 

114,750

 

 

—

 

 

199,750

 

John B. Blystone (7)

 

122,000

 

 

 

172,125

 

 

—

 

 

294,125

 

Mark C. Davis

 

85,000

 

 

 

114,750

 

 

—

 

 

199,750

 

Michael J. Endres

 

85,000

 

 

 

114,750

 

 

—

 

 

199,750

 

Ozey K. Horton, Jr.

 

85,000

 

 

 

114,750

 

 

—

 

 

199,750

 

Peter Karmanos, Jr.

 

95,000

 

 

 

114,750

 

 

—

 

 

209,750

 

Carl A. Nelson, Jr.

 

100,000

 

 

 

114,750

 

 

—

 

 

214,750

 

Sidney A. Ribeau

 

85,000

 

 

 

114,750

 

 

—

 

 

199,750

 

Mary Schiavo

 

85,000

 

 

 

114,750

 

 

—

 

 

199,750

 

 

(1)

Mr. Blom is not included in the table because he did not serve as a director of the Company during Fiscal 2019, having been appointed as a director on June 26, 2019.

(2)

Mr. McConnell, the Company’s Chairman of the Board and CEO, is not included in this table because he was an employee of the Company during Fiscal 2019 and received no additional compensation for his services as a director.  The compensation received by Mr. McConnell as an employee of the Company is shown in the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement and the accompanying tables.

(3)

Since the earnings on compensation that has been deferred under the Director Deferral Plans by the Company’s non-employee directors do not represent “above-market” earnings for purposes of the applicable SEC Rules, no amount with respect to such earnings has been reported in this table.

(4)

Represents cash earned in Fiscal 2019 for annual retainer fees in accordance with the cash compensation program discussed in the section captioned “COMPENSATION OF DIRECTORS — Compensation for Fiscal 2019” beginning on page 68 of this Proxy Statement.

(5)

The amounts shown in this column represent the grant date fair value of the restricted common share awards granted to the non-employee directors in Fiscal 2019, as computed in accordance with ASC 718.  These amounts exclude the impact of estimated forfeitures, as required by SEC Rules.  See “Note A – Summary of Significant Accounting Policies – Stock-Based Compensation” and “Note K– Stock-Based Compensation” of the Notes to Consolidated Financial Statements in “Item 8. – Financial Statements and Supplementary Data” of the Company’s 2019 Form 10-K for assumptions used and additional information regarding the restricted common share awards.  The awards granted to the then non-employee directors on September 26, 2018 covering 2,700 restricted common shares (4,050 restricted common shares for Mr. Blystone) had a grant date fair value of $42.50 per share (the closing price of Worthington’s common shares on that date).  The restricted common shares described above were the only restricted common share awards granted to directors during, and outstanding at the end of, Fiscal 2019.

(6)

No stock options were granted to the individuals named in this table during Fiscal 2019 and, accordingly, no dollar amount is required to be reported in respect of option awards. The aggregate number of common shares of the Company underlying stock options outstanding at May 31, 2019, for each individual named in the table were: (a) Ms. Anderson – 0 common shares; (b) Mr. Blystone – 0 common shares; (c) Mr. Davis – 0 common shares; (d) Mr. Endres – 0 common shares; (f) Mr. Horton – 18,438 common shares; (f) Mr. Karmanos – 0 common shares; (g) Mr. Nelson – 25,750 common shares; (h) Dr. Ribeau – 25,750 common shares; and (i) Ms. Schiavo – 16,000 common shares.

(7)

Mr. Blystone is the Company’s Lead Independent Director.

 

 

 

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Worthington | 2019 Proxy Statement • Compensation of Directors

 

 

Equity Compensation Plan Information

 

The Company maintains four equity compensation plans (the “Equity Plans”) under which common shares are authorized for issuance to eligible directors, officers and employees:  (a) the 1997 LTIP; (b) the 2003 Stock Option Plan; (c) the 2006 Directors Equity Plan; and (d) the 2010 Stock Option Plan.  Each Equity Plan has been approved by the shareholders of the Company.  In addition, the Company also maintains four non-qualified deferred compensation plans and participants in these plans have had the opportunity to elect to have their bookkeeping accounts treated as invested in theoretical common shares reflecting increases or decreases in the fair market value of Worthington’s common shares with dividends deemed reinvested.  Payouts of amounts credited to theoretical common shares are made in whole common shares and cash in lieu of fractional shares.  For information about the Employee Deferral Plans, please see the discussion in the section captioned “EXECUTIVE COMPENSATION –– Compensation Discussion and Analysis –– Compensation Components –– Non-Qualified Deferred Compensation” beginning on page 48 of this Proxy Statement and for further information concerning the Director Deferral Plans, please see the discussion in the section captioned “COMPENSATION OF DIRECTORS –– Director Deferral Plans” beginning on page 69 of this Proxy Statement.

The following table shows for the Equity Plans, as a group, the number of common shares issuable upon the exercise of outstanding stock options and upon payout of outstanding long-term performance share awards, the weighted-average exercise price of outstanding stock options, and the number of common shares remaining available for future issuance, excluding common shares issuable upon exercise of outstanding stock options or upon payout of outstanding long-term performance share awards, in each case as of May 31, 2019.  The following table also shows for the Employee Deferral Plans and the Director Deferral Plans, as a group, the number of whole common shares issuable upon payout of amounts credited to theoretical common shares in the accounts of participants in the Employee Deferral Plans and the Director Deferral Plans, as of May 31, 2019.

Equity Compensation Plan Information

Plan Category

Number Of Common

Shares To Be Issued

Upon Exercise Of

Outstanding Options,

Warrants And Rights

Weighted-Average

Exercise Price Of

Outstanding Options,

Warrants And Rights

Number Of Common

Shares Remaining

Available For Future

Issuance Under Equity

Compensation Plans

[Excluding Common

Shares Reflected In

Column (a)]

 

(a)

(b)

(c)

Equity compensation plans

   approved by shareholders

 

1,982,189

 

(1)

$24.01

 

(2)

 

2,675,247

 

(3)

Equity compensation plans not

   approved by shareholders

 

220,163

 

(4)

 

—

 

(4)

—

 

(5)

TOTAL

 

2,202,352

 

(1)(4)

$24.01

 

(2)(4)

 

2,675,247

 

(3)(5)

 

(1)

Includes 336,941 common shares issuable upon exercise of outstanding stock options granted under the 1997 LTIP, 258,530 common shares issuable upon exercise of outstanding stock options granted under the 2003 Stock Option Plan, 85,938 common shares issuable upon exercise of outstanding stock options granted under the 2006 Directors Equity Plan, and 1,004,202 common shares issuable upon exercise of outstanding stock options granted under the 2010 Stock Option Plan.  Also includes 296,578 common shares which represent the maximum number of common shares which may be paid out in respect of outstanding long-term performance share awards granted under the 1997 LTIP.

Does not include 857,596 common shares which represent the maximum number of common shares which may be paid out in respect of long-term cash performance awards granted under the 1997 LTIP which were outstanding as of May 31, 2019, because to date all such awards have been paid in cash.  If all long-term cash performance awards granted under the 1997 LTIP which were outstanding as of May 31, 2019, were paid out at their maximum amount and the Compensation Committee were to elect to make all payments in the form of common shares, then, based on the $34.14 closing price on May 31, 2019, the last business day of Fiscal 2019, the number of common shares which would be issued upon payout of the long-term cash performance awards would be 857,596 common shares.  The number of common shares, if any, actually issued with respect to long-term cash performance awards granted under the 1997 LTIP would be based on (a) the percentage of the long-term cash performance awards determined by the Compensation Committee to be paid in common shares rather than cash, (b) the actual performance level (i.e., threshold, target or maximum) used to determine the payout in respect of each long-term cash performance award and (c) the price of Worthington’s common shares at the time of payout.  

(2)

Represents the weighted-average exercise price of stock options outstanding under the Equity Plans as of May 31, 2019.  Also see note (1) above with respect to long-term performance share awards and long-term cash performance awards granted under the 1997 LTIP.  The weighted-average exercise price does not take these two types of awards into account.

 

Equity Compensation Plan Information • 2019 Proxy Statement | Worthington

71

 

 

(3)

Includes 685,814 common shares available under the 1997 LTIP, 357,401 common shares available under the 2006 Directors Equity Plan, and 1,632,032 common shares available under the 2010 Stock Option Plan.  The number shown in this column excludes 296,578 common shares representing the maximum number of common shares which may be paid out in respect of outstanding long-term performance share awards granted under the 1997 LTIP as described in the first paragraph of footnote (1) above.  If less than the maximum number of common shares were paid out in respect of any outstanding long-term performance share awards, the number of common shares available under the 1997 LTIP would increase by an amount equal to that difference.  In addition to stock options, long-term performance share awards and long-term cash performance awards, the 1997 LTIP authorizes the Compensation Committee to grant awards in the form of stock appreciation rights, restricted common shares, performance units, dividend equivalents, and other stock unit awards that are valued in whole or in part by reference to, or are otherwise based on, the Company’s common shares or other property.  In addition to stock options, the 2006 Directors Equity Plan authorizes the Board to grant awards in the form of restricted common shares, restricted stock units, stock appreciation rights and whole common shares.

(4)

Includes 35,947 common shares issuable upon payout of amounts credited to theoretical common shares in the accounts of participants in the Employee Deferral Plans and 184,216 common shares issuable upon payment of amounts credited to theoretical common shares in the accounts of participants in the Director Deferral Plans.  The theoretical common shares are not taken into account for purposes of the “Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights” column.

(5)

Neither the Employee Deferral Plans nor the Director Deferral Plans provide for a specified limit on the number of common shares which may be issued upon payout of amounts credited to theoretical common shares in the accounts of participants in those plans.

 

 

 

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Worthington | 2019 Proxy Statement • Equity Compensation Plan Information

 

 

Proposal 2:  Advisory Vote to Approve Executive Compensation

 

We are asking shareholders to approve an advisory resolution to approve the Company’s executive compensation as reported in this Proxy Statement.  As described in detail in the section captioned “EXECUTIVE COMPENSATION — Compensation Discussion and Analysis” beginning on page 33 of this Proxy Statement and in the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement and the accompanying tables and narrative, our executive compensation programs are reviewed annually by our Compensation Committee, with advice from its independent compensation consultant and consideration given to executive compensation paid by other comparator companies.  Our compensation programs are designed to foster the alignment of the interests of executive management with the interests of shareholders and to provide incentives, based primarily on Company and business unit performance, for reaching established Company and business unit goals and objectives.  Shareholders are urged to read the “Compensation Discussion and Analysis” which describes in detail how the Company’s executive compensation policies and procedures achieve our compensation objectives.

The direct relationship of the compensation earned by the Company’s NEOs to the Company’s performance continues to be shown by the amounts of incentive compensation earned by the Company’s NEOs for Fiscal 2019, Fiscal 2018 and Fiscal 2017.  

Annual incentive bonuses paid to Corporate NEOs for Fiscal 2019, as a percent of targeted levels, were down 11.3% from Fiscal 2018. Payout levels for Fiscal 2019 were 93% of target at Corporate, 89% of target at Steel Processing, and 82% at Pressure Cylinders.

Annual incentive bonuses paid to the Corporate NEOs for Fiscal 2018 as a percent of target levels were down 8.7%% from Fiscal 2017, as Fiscal 2018 was the second best EPS year in the Company’s history, trailing only the record Fiscal 2017.  Payouts for Fiscal 2018 were 106% of target for Corporate, 103% of target for Steel Processing, and 104% of target for Pressure Cylinders.

Annual incentive bonuses paid to the NEOs for Fiscal 2017 were up from Fiscal 2016, as the Company achieved record annual EPS, with payouts being earned at 115% of target for Corporate, 130% of target for Steel Processing and 89% of target for Pressure Cylinders.

Long-term cash performance and performance share awards were down significantly for the three-fiscal-year period ended Fiscal 2019, paying out at only 48% of target, following a payout of 92% of target for the three-fiscal-year period ended Fiscal 2018.  Corporate long-term cash performance and performance share awards earned for the three-fiscal-year period ended Fiscal 2017 were paid out at 92% of target.

 

Proposal 2:  Advisory Vote to Approve Executive Compensation • 2019 Proxy Statement | Worthington

73

 

 

Earned Incentive Compensation

The following table lists, for each of Fiscal 2019, Fiscal 2018 and Fiscal 2017, the bonus and incentive compensation earned by the NEOs under their total cash bonus awards for those fiscal years and their three-fiscal-year cash performance and performance share awards for the three-fiscal-year periods ended with such fiscal years.  See the “Fiscal 2019 Summary Compensation Table” beginning on page 52 for additional information on compensation of the NEOs.

Earned Incentive Compensation

 

 

 

 

 

 

 

 

 

 

3-Year Performance Share

Award Earned

 

Name and

Principal Position

During Fiscal 2019

Fiscal

Year

Annual Incentive

Bonus Earned

($)

3-Year Cash

Performance Award

Earned ($)

(# of Shares)

Value on Date

Distributed

($)(1)

 

John P. McConnell,

2019

 

877,723

 

 

 

484,000

 

 

 

7,260

 

 

 

292,505

 

Chairman of the Board

2018

 

970,666

 

 

 

935,000

 

 

 

18,700

 

 

 

801,295

 

and Chief Executive Officer

2017

 

1,015,127

 

 

 

923,000

 

 

 

15,691

 

 

 

788,002

 

Joseph B. Hayek,

2019

 

291,287

 

 

 

55,909

 

(2)

 

501

 

 

 

20,185

 

Vice President and

2018

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

Chief Financial Officer (3)

2017

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

B. Andrew Rose,

2019

 

657,546

 

(4)

 

290,400

 

 

 

3,630

 

 

 

146,253

 

President and Former

2018

 

632,236

 

 

 

561,000

 

 

 

9,350

 

 

 

400,648

 

Chief Financial Officer (5) (6)

2017

 

661,127

 

 

 

553,800

 

 

 

6,461

 

 

 

324,471

 

Geoffrey G. Gilmore,

2019

 

557,265

 

(4)

 

161,700

 

(2)

 

1,513

 

 

 

60,959

 

Executive Vice President and

2018

 

525,672

 

 

 

149,600

 

 

 

2,493

 

 

 

106,825

 

Chief Operating Officer (6) (7)

2017

 

480,000

 

(8)

 

143,065

 

 

 

1,431

 

 

 

71,865

 

Virgil L. Winland,

2019

 

445,896

 

 

 

111,320

 

 

 

1,271

 

 

 

51,209

 

Senior Vice President,

2018

 

493,164

 

 

 

215,050

 

 

 

3,273

 

 

 

140,248

 

Manufacturing

2017

 

515,700

 

 

 

212,290

 

 

 

1,846

 

 

 

92,706

 

Dale T. Brinkman,

2019

 

396,352

 

 

 

96,800

 

 

 

1,271

 

 

 

51,209

 

Senior Vice President-Administration,

2018

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

General Counsel and Secretary (9)

2017

N/A

 

 

N/A

 

 

N/A

 

 

N/A

 

Mark A. Russell, Former

2019

 

0

 

 

 

209,733

 

 

 

2,622

 

 

 

105,640

 

President and Chief

2018

 

767,144

 

 

 

561,000

 

 

 

9,350

 

 

 

400,648

 

Operating Officer (10)

2017

 

802,200

 

 

 

553,800

 

 

 

6,461

 

 

 

324,471

 

John G. Lamprinakos,

2019

 

0

 

 

 

51,761

 

 

 

791

 

 

 

31,869

 

Former President, The

2018

 

386,625

 

 

 

124,667

 

 

 

2,244

 

 

 

96,155

 

Worthington Steel Company (11)

2017

 

415,040

 

 

 

119,221

 

 

 

1,192

 

 

 

59,862

 

 

(1)

Number of performance shares earned multiplied by closing common share price on the date the performance shares were distributed.

(2)

These amounts include supplemental bonuses paid to Mr. Hayek of $9,896 and Mr. Gilmore of $61,875 for Fiscal 2019.

(3)

Mr. Hayek served as the General Manager of the Company’s Oil & Gas Equipment business prior to being named Chief Financial Officer on November 1, 2018. He qualified as an NEO only for Fiscal 2019.

(4)

The increased amounts for Mr. Rose and Mr. Gilmore for Fiscal 2019 reflect an increase in target bonus amounts due to their promotions in August 2018.

(5)

Mr. Rose served as Executive Vice President and CFO prior to being named President on August 22, 2018. He served as interim CFO until November 1, 2018.

(6)

In connection with their promotions, Mr. Rose and Mr. Gilmore each received a special award effective September 26, 2018 (when the closing common share price was $42.50) of performance-based/time-vested restricted common shares, 175,000 shares for Mr. Rose and 50,000 shares for Mr. Gilmore. The term of these awards is five years and the restricted common shares will vest if and when both (a) the closing price of Worthington’s common shares equals or exceeds $65.00 per share for 90 consecutive days during the five-year term; and (b) the NEO remains continuously employed by the Company for five years.

(7)

Mr. Gilmore served as President of Worthington Cylinder Corporation before being named Executive Vice President and Chief Operating Officer on August 22, 2018.

(8)

This amount includes a discretionary bonus to Mr. Gilmore of $52,320 for Fiscal 2017.

(9)

For Mr. Brinkman, the table includes information only for Fiscal 2019, as that was the only year that he qualified as an NEO under the applicable SEC Rules.

(10)

Mr. Russell retired as President and Chief Operating Officer of the Company effective August 22, 2018, after having served in that position since August 2012.

(11)

Mr. Lamprinakos retired as President of The Worthington Steel Company effective October 5, 2018, after having served in that position since June 2016.

 

74

Worthington | 2019 Proxy Statement • Proposal 2:  Advisory Vote to Approve Executive Compensation

 

 

Performance and payments earned from Fiscal 2015 to Fiscal 2019 are discussed in the section captioned “EXECUTIVE COMPENSATION — Compensation and Disclosure Analysis — Cash Compensation Earned in Fiscal 2019 and Company Performance” beginning on page 37 of this Proxy Statement.

The Company has been fairly conservative in providing severance benefits and perquisites to its executives. For example, it eliminated Company-provided automobiles for top executives in 2007.  The Company generally has not entered into separate severance agreements with its executive officers and has provided change in control benefits only in connection with its incentive awards.  The Compensation Committee has required a “double trigger” for accelerated vesting for awards granted in Fiscal 2013 and later.  In the event of a change in control, these incentive awards will also require an actual or constructive termination of employment within a specified period of time after the change in control in order for the acceleration of vesting to occur.

The vote on the advisory resolution relates to the compensation of our NEOs as a whole. The vote is advisory, which means that the vote is not binding on the Company, the Board or the Compensation Committee.  To the extent there is any significant vote against the NEOs’ compensation for Fiscal 2019 as reported, the Compensation Committee will evaluate whether any actions are necessary to address the concerns of shareholders.

In accordance with the Exchange Act Rule 14a-21(a), the Company is asking shareholders to approve the following advisory resolution at the Annual Meeting:

RESOLVED, that the shareholders of Worthington Industries, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company's named executive officers as disclosed in the Company's proxy statement for its 2019 Annual Meeting of Shareholders pursuant to the executive compensation disclosure rules in Item 402 of SEC Regulation S-K (including the Compensation Discussion and Analysis, the Fiscal 2019 Summary Compensation Table and the related executive compensation tables, notes and narratives).

The Board’s current policy is to include an advisory resolution regarding approval of the compensation of our NEOs annually.  Accordingly, unless the Board modifies its policy on the frequency of future votes, the next advisory vote to approve our executive compensation will occur at the 2020 Annual Meeting of Shareholders.  

Required Vote and Board’s Recommendation

The affirmative vote of the holders of a majority of the votes entitled to be cast by the holders of the outstanding common shares, present in person or by proxy, and entitled to vote on the proposal, is required to approve the advisory resolution on NEO compensation.  Abstentions will be counted in determining the required vote and will have the effect of votes “AGAINST” the advisory resolution.  Broker non-votes will not be counted in determining the required vote.

THE COMPENSATION COMMITTEE AND THE BOARD UNANIMOUSLY

RECOMMEND THAT THE SHAREHOLDERS OF THE COMPANY VOTE“FOR” THE APPROVAL

OF THE ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.

 

 

 

 

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Proposal 3:  Approval of Fourth Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan to Authorize 1,500,000 Additional Common Shares

 

Introduction

The Worthington Industries, Inc. 1997 Long-Term Incentive Plan became effective on September 18, 1997, when it was approved by Worthington’s shareholders.  The 1997 Long-Term Incentive Plan was amended and restated by the Board effective as of November 1, 2008, for purposes of complying with the requirements of Section 409A of the Internal Revenue Code, and to make other administrative changes.  On June 25, 2013, the Board approved the First Amendment to the Amended and Restated 1997 Long-Term Incentive Plan which changed and clarified the performance goals under the Plan upon which the granting or vesting of awards may be based, and on September 26, 2013, Worthington’s shareholders approved the material terms of the performance goals in the First Amendment.  In addition, on September 26, 2013, Worthington’s shareholders approved the Second Amendment to the Amended and Restated 1997 Long-Term Incentive Plan to increase the number of common shares available for settlement of awards, modify the method for counting common shares subject to non-qualified stock options and stock appreciation rights against the total number of common shares available for awards, and modify certain other provisions to reflect current market standards.  On June 28, 2017, the Board approved the Third Amendment to the Amended and Restated 1997 Long-Term Incentive Plan in order to clarify the authority of the Company and the Compensation Committee with respect to withholding for taxes.  The Amended and Restated 1997 Long-Term Incentive Plan, as amended by the First Amendment, the Second Amendment, and the Third Amendment, is referred to in this Proxy Statement as the “1997 LTIP”.

Additional common shares are needed under the 1997 LTIP to continue to make grants to employees consistent with historic grant practices.  On June 26, 2019, based on the recommendation of the Compensation Committee, the Board approved the Fourth Amendment to the 1997 LTIP, subject to approval by Worthington’s shareholders.  The Fourth Amendment would increase the maximum number of common shares available for settlement of awards under the 1997 LTIP to 8,000,000, an increase of 1,500,000 common shares.

Summary of Proposed Fourth Amendment

The following summary of the amendment to the 1997 LTIP encompassed in the Fourth Amendment is qualified in its entirety by reference to the full text of the Fourth Amendment, a copy of which is attached to this Proxy Statement within Appendix II.  

Increase in Authorized Common Shares

As currently in effect, the 1997 LTIP provides that, subject to adjustment as described under the caption “Common Shares Subject to 1997 LTIP” beginning on page 81 of this Proxy Statement, the maximum number of common shares available for settlement of awards under the 1997 LTIP is 6,500,000 common shares.  As of August 1, 2019, 738,310 common shares remained available for future awards under the 1997 LTIP (which number excludes 276,700 common shares representing the maximum number of common shares which may be paid out in respect of outstanding performance share awards granted under the 1997 LTIP, and excludes common shares subject to outstanding options and restricted common shares).

 

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Worthington | 2019 Proxy Statement • Proposal 3: Approval of Fourth Amendment to the 1997 LTIP

 

 

The purpose of the Fourth Amendment is to increase the maximum number of common shares available for award under the 1997 LTIP.  The additional 1,500,000 common shares which would be authorized upon approval of the Fourth Amendment would allow the Company to continue to provide under the 1997 LTIP long-term, equity-based incentives to eligible employees, which we believe is in the best interests of our shareholders.

Currently, the 1997 LTIP is the only Company equity compensation plan under which equity grants, other than stock options, may be made to employees.  As of August 1, 2019, there were 738,310 common shares available for future awards under the 1997 LTIP.  Under expected practices, the Company anticipates that the common shares available for settlement of awards under the 1997 LTIP if the Fourth Amendment is approved to be sufficient to satisfy the equity grants, in the form of performance shares and restricted common shares, expected to be made over the next four to six years.  This period of expected award coverage will be impacted by the number of restricted common shares forfeited and the levels at which performance shares are earned over the period.

The number of common shares available for settlement of awards under the 1997 LTIP was last increased six years ago in 2013, when the number available was increased by 2,000,000 common shares.

Summary of 1997 LTIP

Set forth below is a brief summary of the material features of the 1997 LTIP, as proposed to be amended by the Fourth Amendment.  This summary is qualified in its entirety by reference to the full text of the 1997 LTIP, as proposed to be amended by the Fourth Amendment.  Copies of the 1997 LTIP and the Fourth Amendment are included within Appendix II to this Proxy Statement.  All capitalized terms which are not defined in this summary are defined in the 1997 LTIP, as proposed to be amended by the Fourth Amendment.

Purpose of 1997 LTIP

The purpose of the 1997 LTIP is to enhance the value of the Company for the benefit of Worthington’s shareholders by generating an increased incentive to key employees of the Company to encourage selected key employees of the Company to acquire a proprietary and vested interest in the growth and performance of the Company, to generate an increased incentive to contribute to the Company’s future success and prosperity, thus enhancing the value of the Company for the benefit of Worthington’s shareholders, and to enhance the ability of the Company to attract and retain talented individuals upon whom the sustained progress, growth and profitability of the Company depends.  The 1997 LTIP will remain in effect until terminated by the Board.

Administration

The 1997 LTIP is administered by the Compensation Committee. The Compensation Committee has the authority to select the employees to whom awards are granted, to determine the type of awards granted and the number of common shares covered by such awards, to set the terms, conditions and provisions of such awards and to cancel or suspend awards, in each case in a manner not inconsistent with the 1997 LTIP. The Compensation Committee is authorized to interpret the 1997 LTIP and to establish, amend and rescind any rules and regulations relating to the 1997 LTIP, to determine the terms and provisions of any agreements entered into with participants in the 1997 LTIP, and to make all other determinations which may be necessary or advisable for the administration of the 1997 LTIP. Any determination made by the Compensation Committee will be final and conclusive.

Eligibility

Any common law employee of the Company, a 50%-owned direct or indirect subsidiary of the Company, or any other entity in which the Company has a 20% or greater direct or indirect equity interest and which is designated as a “subsidiary” by the Compensation Committee for purposes of the 1997 LTIP, is eligible to be selected by the Compensation Committee to receive an award under the 1997 LTIP.   No entity in which the Company has less than a 50% equity interest has been designated as a “subsidiary” for purposes of the 1997 LTIP.

As of the date of this Proxy Statement, the Company, together with its 50%-owned subsidiaries, had approximately 1,400 employees eligible for awards under the 1997 LTIP. Because the granting of awards under the 1997 LTIP is discretionary, the number of employees granted awards under the 1997 LTIP and the number of common shares subject to awards granted to each participant has varied and will continue to vary from year to year.

 

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Types of Awards

Under the 1997 LTIP, the Compensation Committee may grant the following types of awards: (a) non-qualified stock options (“NSOs”); (b) stock appreciation rights (“SARs”), in tandem with NSOs or free-standing; (c) restricted common shares (also referred to as “restricted stock”); (d) performance awards (in the form of performance shares or performance units) subject to the achievement of performance goals during a specified performance period; and (e) other awards of common shares or awards valued in whole or in part by reference to, or otherwise based upon, common shares or other property. Although the 1997 LTIP permitted the granting of incentive stock options prior to August 7, 2007, no incentive stock options were granted under the 1997 LTIP.

NSOs

The Compensation Committee may grant NSOs either alone or in addition to other awards.  As of August 1, 2019, NSOs covering an aggregate of 199,991 common shares were outstanding under the 1997 LTIP and NSOs covering an aggregate of 2,545,409 common shares granted under the 1997 LTIP had been exercised since the 1997 LTIP’s adoption in 1997.  No NSOs have been granted under the 1997 LTIP since 2010. The exercise price (sometimes also referred to as the “option price”) of any NSO granted is to be determined by the Compensation Committee, but may not be less than 100% of fair market value of Worthington’s common shares on the date of the grant of the NSO.  For purposes of the 1997 LTIP, the fair market value of a Worthington common share on a particular date has been and will continue to be the closing sale price as reported on NYSE (or such other principal exchange on which the common shares may then be traded). The closing sale price of Worthington’s common shares as reported on NYSE on August 1, 2019 was $39.24.  The term of any NSO granted is to be fixed by the Compensation Committee and may not exceed ten years after the grant date.  NSOs become exercisable at such time or times as determined by the Compensation Committee and may be exercised by payment in full of the exercise price, either in cash or, in whole or in part, in common shares or other consideration (including, if permitted by applicable law, outstanding vested and exercisable awards) having a fair market value on the date the NSO is exercised equal to the exercise price.

SARs

The Compensation Committee may grant SARs which are either free-standing or granted in tandem with NSOs (either at the time of or after the grant of the related NSO but prior to the exercise, termination or expiration of the related NSO). No SARs have been granted under the 1997 LTIP to date. Upon exercise of any SAR that is granted, the holder will be entitled to receive the excess of the fair market value of the common shares for which the SAR is exercised as of the exercise date over the grant price of the SAR. The grant price (which may not be less than the fair market value of Worthington’s common shares on the date of grant) and other terms of any SAR granted will be determined by the Compensation Committee. The term of any SAR granted will be limited to ten years after the grant date.  Payment by the Company upon the exercise of any SAR granted will be made in cash, common shares, other property or any combination thereof, as the Compensation Committee determines. Any SAR related to an NSO will terminate and no longer be exercisable upon the exercise or termination of the related NSO and any NSO related to an SAR will terminate and no longer be exercisable upon the exercise or termination of the related SAR.

Restricted Stock

The Compensation Committee may grant restricted stock awards either alone or in addition to other awards.  As of August 1, 2019, restricted stock awards covering an aggregate of 1,080,625 common shares were outstanding but unvested under the 1997 LTIP and restricted stock awards granted under the 1997 LTIP covering 1,102,894 common shares had vested.  Restricted stock may not be transferred by the recipient until the restrictions established by the Compensation Committee lapse. Unless otherwise determined by the Compensation Committee, recipients of restricted stock awards are not required to provide consideration other than the rendering of services or the payment of any minimum amount required by law. Each recipient of a restricted stock award will have all of the rights of a Worthington shareholder, including the right to vote the underlying common shares and the right to receive any cash dividends related to the underlying common shares, unless the Compensation Committee otherwise determines. If a participant’s employment terminates during the restriction period, the participant will forfeit all restricted stock and any related dividends still subject to restriction, unless otherwise authorized by the Compensation Committee.

 

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Performance Awards

The Compensation Committee may grant performance awards either alone or in addition to other awards.  The Compensation Committee has granted performance awards to certain employees of the Company each year since the 1997 LTIP became effective. The Compensation Committee granted performance share awards for the first time beginning with the three-fiscal-year period beginning June 1, 2006. The Compensation Committee has selected and anticipates that it will continue to select primarily multiple-year performance periods during which performance goals determined by the Compensation Committee are measured for the purpose of determining the extent to which a performance award has been earned. The performance periods associated with the performance awards granted under the 1997 LTIP have generally covered three fiscal years, although the Compensation Committee has also periodically selected six-month and quarterly performance awards. The performance levels to be achieved for each performance period and the amount of the performance award to be distributed are determined by the Compensation Committee. Performance awards may be paid in cash, common shares or a combination thereof, as the Compensation Committee determines.

The Compensation Committee will specify in the award agreement the impact of a participant’s termination of employment upon the outstanding performance awards held by the participant. The outstanding performance award agreements generally provide that upon termination of employment, a participant’s performance awards are forfeited.  However, if termination of employment is due to death, disability or retirement, a pro-rata payout will be made for performance periods ending within 24 months after termination based on the number of months of employment completed by the participant during the performance period before the effective date of termination, provided that the applicable performance goals are achieved.  No payout is to be made for performance periods ending more than 24 months after termination of employment.

The Compensation Committee anticipates continued consideration of grants of long-term performance share awards and cash performance awards under the 1997 LTIP, in each case to be based on achieving measurable financial results over a multiple-year period. Unless otherwise determined by the Compensation Committee, recipients of performance awards are not required to provide consideration other than the rendering of services or the payment of any minimum amount required by law.

Other Stock Unit Awards

To enable the Company and the Compensation Committee to respond quickly to significant developments in applicable tax and other legislation and regulations and interpretations thereof, and to trends in executive compensation practices, the Compensation Committee is also authorized to grant to participants, either alone or in addition to other awards granted under the 1997 LTIP, awards of common shares and other awards that are valued in whole or in part by reference to, or are otherwise based on, common shares or other property (“other stock unit awards”). Other stock unit awards may be issued for no cash consideration or for such minimum consideration as may be required by applicable law or for such other consideration as determined by the Compensation Committee and may be settled in common shares, cash or any other form of property in the discretion of the Compensation Committee. Common shares (including securities convertible into common shares) purchased pursuant to purchase rights granted under other stock unit awards may be purchased for such consideration as the Compensation Committee determines, which price may not be less than the fair market value of such common shares or other securities on the date of grant.

Performance Goals

The 1997 LTIP provides that if the Compensation Committee determines at the time a restricted stock award, a performance award or an other stock unit award is granted to a participant that the participant is or is likely to be a “covered employee” at the time the participant recognizes income for federal income tax purposes in connection with the award, then the Compensation Committee may provide as to such award that the lapsing of restrictions thereon and the distribution of cash or common shares pursuant thereto, as applicable, will be subject to the achievement of one or more objective performance goals established by the Compensation Committee. These performance goals may be based on the achievement levels of one or any combination of the following:

•

Income or earnings (before or after interest, taxes, depreciation, amortization and/or other items);

•

Earnings per common share;

•

Economic value added;

 

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•

Sales or revenues;

•

Growth;

•

Operating income;

•

Return measures (including, but not limited to, return on assets, capital, invested capital, equity or revenue);

•

Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity or cash flow return on investment);

•

Gross, operating or other margins;

•

Productivity ratios or other productivity measures;

•

Common share price (including, but not limited to, growth measures and total shareholder return);

•

Expense reduction, expense targets or cost control;

•

Operating or other efficiencies;

•

Market share;

•

Developing new markets, new products and/or new lines of revenue; or

•

Identifying and completing acquisitions.

Different performance criteria may be used for performance awards granted to individual participants or to groups of participants.  Performance criteria may be applied solely with reference to the Company or an affiliate, business unit or division of the Company or relatively between the Company or an affiliate, business unit or division of the Company and one or more unrelated entities, business units or indices and may state performance objectives in absolute terms or relative to comparison entities, indices or other measures to be achieved during a performance period.

The Compensation Committee may provide in any performance award that the evaluation of performance may include or exclude the impact of specific items related to the performance period including the following:  (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) changes in or the effects of tax laws, accounting principles (or interpretations thereof), accounting methods (including the differences between LIFO and FIFO accounting methods), or other laws or provisions affecting reported results; (d) any reorganization or restructuring program or restructuring costs;  (e) unusual or infrequently occurring items; (f)  acquisitions or divestitures; and (g) foreign exchange gains and losses.

To the extent inclusions or exclusions affect performance awards to covered employees, they will be prescribed in a form that meets the requirements of Section 162(m), to the extent applicable.  Additionally, the Compensation Committee will, to the extent permitted under Section 162(m), make appropriate adjustments to the performance criteria and/or performance objectives to reflect any stock dividend, stock split, recapitalization, merger, consolidation, combination, spin-off, distribution of assets to shareholders, exchange of shares or similar corporate change.

Limitations on Number and Amount of Awards

Under the 1997 LTIP, no participant may be granted awards in any one calendar year with respect to more than 200,000 common shares. In addition, the maximum value of the property, including cash, that may be paid or distributed to any participant pursuant to a grant of performance awards valued by reference to a designated amount of property other than common shares (“performance units”) made in any one calendar year is $2,500,000.

 

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Common Shares Subject to 1997 LTIP

Subject to adjustment as described below, the 1997 LTIP currently provides that the maximum number of common shares available for settlement of awards over the life of the 1997 LTIP is 6,500,000 common shares.   As of August 1, 2019:

•

With respect to NSO awards, 199,991 common shares were subject to outstanding NSOs which had not yet been exercised, all of which were granted before September 26, 2013;

•

With respect to restricted common share awards:  (a) 1,080,625 restricted common shares were outstanding and had not yet vested; and (b) 1,102,894 common shares had been delivered upon the vesting of restricted common shares;

•

With respect to performance share awards: (a) 276,700 common shares represented the maximum number of common shares which may be paid out in respect of outstanding performance share awards as to which the applicable performance periods had not ended; and (b) 1,492,692 common shares were earned and issued, based upon the performance levels which had been attained in respect of completed performance periods, since the 1997 LTIP’s adoption in 1997.

As of August 1, 2019, a total of 738,310 common shares were available for future awards under the 1997 LTIP.  The Fourth Amendment to the 1997 LTIP, if approved by the shareholders of the Company, will increase the maximum number of common shares available for settlement of awards under the 1997 LTIP by 1,500,000 to 8,000,000 common shares.

Except as described below, if any common shares subject to any award under the 1997 LTIP are forfeited or withheld for taxes, any award terminates or expires unexercised or any award is settled for cash or other property or exchanged for other awards, the common shares subject to such award will again be available for grant pursuant to the 1997 LTIP. The number of common shares available for awards under the 1997 LTIP will be increased by the number of common shares withheld by or tendered to the Company in connection with the payment of the exercise price of an NSO granted before September 26, 2013 under the 1997 LTIP.  Common shares which are the subject of NSOs or SARs granted on or after September 26, 2013 are not available for future awards under the 1997 LTIP, even if such NSO or SAR is forfeited, terminated, expires unexercised, settled in cash or property other than common shares or exchanged for another award or the common shares subject to such NSO or SAR can otherwise no longer be issued.  

The common shares deliverable under the 1997 LTIP may consist in whole or in part of either authorized and unissued common shares or issued common shares which have been reacquired by the Company. No fractional common shares will be issued under the 1997 Plan.

In the event of any stock dividend, stock split, recapitalization, reorganization, merger, consolidation, spin-off, reverse stock split, exchange of shares or similar transaction, or other change in corporate structure or capitalization affecting the common shares or the price thereof, the Compensation Committee will make such substitution or adjustment in the aggregate number or class of shares which may be delivered under the 1997 LTIP, in the aggregate or to any one participant and in the number, class and option price or exercise price of shares subject to the outstanding awards granted under the 1997 LTIP (including the substitution of similar options to purchase the shares of, or other awards denominated in the shares of, another company) as the Compensation Committee deems to be appropriate to maintain the purpose of the original grant.  Any such adjustment will be made consistent with the requirements of Section 409A of the Internal Revenue Code, to the extent applicable.

The Compensation Committee, without obtaining shareholder approval and except for the adjustments made as described in the immediately preceding paragraph, may not (i) amend the terms of an outstanding award to reduce the option price of an outstanding NSO or the grant price of an outstanding SAR; (ii) cancel an outstanding NSO or SAR in exchange for NSOs or SARs with an option price or grant price, as applicable, that is less than the option price or grant price of the original NSO or SAR; (iii) cancel an outstanding NSO or SAR with an option price or grant price, as applicable, which is above the current fair market value of the common shares underlying the NSO or SAR in exchange for another award, cash or other securities; (iv) take any other action that is treated as a “repricing” under generally accepted accounting principles; or (v) take any other action that has the effect of “repricing” an award, as defined under the applicable NYSE Rules (or the rules of any other securities exchange on which the common shares are then listed or traded).

 

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The Compensation Committee is authorized to make adjustments in performance award goals or in the terms and conditions of other awards in recognition of unusual or infrequently occurring events affecting the Company or its financial statements or changes in applicable laws, regulations or accounting principles. However, with respect to any award subject to performance goals intended to comply with Section 162(m), the Compensation Committee may not adjust upwards the amount payable under the award, nor may the Compensation Committee waive the achievement of the applicable performance goals except in the case of the death or disability of the participant. The Compensation Committee may correct any defect, supply any omission, or reconcile any inconsistency in the 1997 LTIP or any award in the manner and to the extent the Compensation Committee deems desirable to carry the applicable grant into effect.

Awards to Foreign Nationals

Awards may be granted to employees of the Company who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those specified in the 1997 LTIP as may be necessary or desirable, in the judgment of the Compensation Committee, to recognize differences in local law or tax policy.  

Benefits Under the 1997 LTIP

The Compensation Committee has discretionary authority to grant awards under the 1997 LTIP. The 1997 LTIP does not contain any provisions for automatic grants. As a result, the future awards, benefits or amounts that may be received by any individual participant or group of participants are not determinable.

For information regarding the restricted stock awards, cash performance awards and performance share awards made under the 1997 LTIP for Fiscal 2020 to: (i) each NEO; (ii) all current executive officers as a group, including the NEOs  (the “Executive Group”); and (iii) all employees, including all current officers who are not executive officers, as a group (the “Non-Executive Officer Employee Group”), see the table captioned “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2020” beginning on page 66 of this Proxy Statement.  All of the awards were granted for compensatory purposes.

Because future grants of awards under the 1997 LTIP will be made to employees by the Compensation Committee based on a subjective determination of the relative current and future contribution that each employee has made and may make to the long-term welfare of the Company, past grants may not be reflective of future grants under the 1997 LTIP. The Compensation Committee may, in its discretion, continue to grant cash performance awards and/or performance share awards with payouts tied to the same performance goals used for past grants or select other performance goals from among those described under “Performance Goals” above.

Stock Options Granted under the 1997 LTIP

Since 2010, the Compensation Committee has made stock option awards to NEOs and other employees under one of the Company’s stock option plans.  Some stock options were granted under the 1997 LTIP in 2010 and before.  The table below summarizes NSOs that have been awarded under the 1997 LTIP since its inception:

 

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Name of Individual or Identity of Group

 

Common Shares

Underlying NSO

Awards (#)

 

John P. McConnell

 

 

848,000

 

Joseph B. Hayek

 

0

 

B. Andrew Rose

 

 

40,000

 

Geoffrey G. Gilmore

 

 

5,000

 

Virgil L. Winland

 

 

240,000

 

Dale T. Brinkman

 

 

214,000

 

Mark A. Russell

 

 

36,000

 

John G. Lamprinakos

 

 

95,000

 

Executive Group

 

 

1,393,000

 

Non-Executive Director Group (1)

 

0

 

Non-Executive Officer Employee Group

 

 

2,249,000

 

 

(1)

No current director who is not an executive officer of the Company (“Non-Executive Director Group”) has been granted any NSOs or other awards under the 1997 LTIP.  

For information regarding NSOs and restricted stock awards granted to the NEOs in Fiscal 2019, see the “Grants of Plan-Based Awards for Fiscal 2019” table beginning on page 56 of this Proxy Statement.  For information regarding cash performance awards earned by NEOs for the three-fiscal-year performance periods ended May 31, 2019, May 31, 2018 and May 31, 2017, see the “Fiscal 2019 Summary Compensation Table” beginning on page 52 of this Proxy Statement.  For information regarding the common shares earned with respect to performance share awards granted to the NEOs for the three-fiscal-year performance period ended May 31, 2019, see the “Option Exercises and Stock Vested for Fiscal 2019” table beginning on page 62 of this Proxy Statement.  For information regarding unexercised NSOs, unvested restricted stock awards and unvested performance share awards held by each of the NEOs as of May 31, 2019, see the “Outstanding Equity Awards at Fiscal 2019 Year-End” table beginning on page 58 of this Proxy Statement.  For information regarding NSOs, restricted stock awards, cash performance awards and performance share awards granted to the NEOs in Fiscal 2020 through the date of this Proxy Statement, see the “Long-Term Performance Awards, Option Awards and Restricted Common Share Awards Granted in Fiscal 2020” table beginning on page 66 of this Proxy Statement.

Nonassignability of Awards

Unless the Compensation Committee determines otherwise at the time an award is granted, no award granted under the 1997 LTIP may be sold, assigned, transferred, pledged or otherwise encumbered by a participant, otherwise than by will, by designation of a beneficiary to exercise the participant’s rights with respect to the award after the participant’s death, or by the laws of descent and distribution. Each award is exercisable, during a participant’s lifetime, only by the participant or, if permissible under applicable law, by the participant’s guardian or legal representative.


 

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Amendment and Termination

The Board may amend, alter or discontinue the 1997 LTIP, provided that no such action may impair the rights of a participant under an outstanding award without the participant’s consent. In addition, without shareholder approval, no amendment may be made which would (i) increase the total number of common shares reserved for delivery under the 1997 LTIP, (ii) change the class of employees eligible to participate in the 1997 LTIP, or (iii) otherwise require shareholder approval under applicable law or to satisfy applicable requirements imposed by Section 162(m) or the rules of any securities exchange on which Worthington’s securities are listed or traded. The Compensation Committee may amend the terms of any outstanding award, prospectively or retroactively, but no such amendment may impair the rights of any participant without the participant’s consent.

Change in Control

To maintain the participants’ rights, unless the Compensation Committee determines otherwise at the time of grant with respect to a particular award, in the event of a “change in control” of the Company followed by an actual or constructive termination of employment (a “Change in Control Termination”):

•

any NSOs and SARs outstanding as of the date of a Change in Control Termination, and which are not then exercisable and vested, will become fully exercisable and vested to the full extent of the original grant; however, if an SAR is held by a participant who is subject to Section 16(b) of the Exchange Act (a “Section 16(b) participant”), the SAR will not become fully vested and exercisable unless the SAR has been outstanding for at least six months;

•

the restrictions applicable to any restricted stock award will lapse, and the underlying common shares will become free of all restrictions and become fully vested and transferable to the full extent of the original grant;

•

all performance awards will be considered to be earned and payable in full, and any other restriction will lapse and the performance awards will be immediately settled or distributed; and

•

the restrictions and other conditions applicable to any other stock unit awards or any other awards will lapse, and the other stock unit awards or other awards will become free of all restrictions or conditions and become fully vested and transferable to the full extent of the original grant.

In addition, the Compensation Committee may allow participants holding NSOs to elect, during the 60-day period following the change in control, to surrender the NSOs (or any portion thereof) which have not been exercised in exchange for a cash payment equal to the change in control price per share (as defined in the 1997 LTIP) over the exercise price per share.

For purposes of the 1997 LTIP, a change in control of the Company will be deemed to have occurred when any person, alone or together with its affiliates or associates, has acquired or obtained the right to acquire the beneficial ownership of 25% or more of Worthington’s outstanding common shares, unless such person is:

•

the Company;

•

any employee benefit plan of the Company or a trustee of or fiduciary with respect to any such plan when acting in that capacity; or

•

any person who, on September 18, 1997, was an affiliate of the Company owning in excess of 10% of the Company’s outstanding common shares and the respective successors, executors, legal representatives, heirs and legal assigns of such person.

Cancellations and Forfeitures

The Compensation Committee has the power to determine whether, to what extent, and under what circumstances, any award is to be cancelled or suspended.  In particular, but without limitation, all outstanding awards to any participant will be cancelled if the participant, without the consent of the Compensation Committee, while employed by the Company or after termination of such employment, becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Compensation Committee), any business that is in competition with the Company or with any business in which the Company has a substantial interest as determined by the Compensation Committee.  

 

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In the event a participant terminates the participant’s employment with the Company for any reason whatsoever, and within 18 months after the date thereof becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Compensation Committee), any business that is in competition with the Company or with any business in which the Company has a substantial interest as determined by the Compensation Committee, the Compensation Committee, in its sole discretion, may require such participant to return to the Company the economic value of any award which is realized or obtained (measured at the date of exercise or payment) by such participant at any time during the period beginning on that date which is six months prior to the date of such participant’s termination of employment with the Company.  

Withholding for Taxes

The Company is authorized to withhold from any award granted or payment due under the 1997 LTIP the amount of withholding taxes due and to take such other action as may be necessary, in the opinion of the Company, to satisfy all obligations for the payment of such taxes.  The Compensation Committee is authorized to establish procedures for election by participants to satisfy their respective withholding taxes by delivery of, or directing the Company to retain, common shares, unless otherwise specified by the Compensation Committee in the applicable award agreement.  The authority described in this paragraph includes the authority to determine the amounts to be withheld (including common shares or other portions of awards) in satisfaction of a participant’s or former participant’s withholding obligations, or in satisfaction of other tax obligations, either on a mandatory or elective basis, as permitted in the discretion of the Compensation Committee.  

U.S. Federal Income Tax Consequences

The following is a brief summary of the general U.S. federal income tax consequences relating to awards granted or which may be granted under the 1997 LTIP. This summary is based on U.S. federal tax laws and Treasury Regulations in effect on the date of this Proxy Statement and does not purport to be a complete description of the U.S. federal income tax laws. In addition, this summary is not intended to be exhaustive, does not constitute tax advice, and does not describe state, local or foreign tax consequences. Each participant should consult with his or her tax advisor concerning the tax consequences of participating in the 1997 LTIP.

NSOs

A participant will not recognize taxable income when an NSO is granted, and the Company will not receive a deduction at that time, assuming the NSO does not have a readily ascertainable fair market value at the time it is granted. When an NSO is exercised, a participant will recognize ordinary income equal to the excess, if any, of the fair market value of the underlying common shares on the date of exercise over the aggregate exercise price, and the Company will be entitled to a corresponding deduction. Additionally, the same amount will be subject to employment taxes, including social security and Medicare taxes. If a participant pays the exercise price, in whole or in part, with previously acquired common shares, the participant will recognize ordinary income equal to the value of the excess of the number of common shares that the participant receives upon exercise over the number of the common shares the participant surrenders, less any cash used to pay the exercise price.

SARs

A participant will not recognize taxable income when an SAR is granted, and the Company will not receive a deduction at that time. When an SAR is exercised, a participant will recognize ordinary income equal to the excess of the cash and/or the fair market value of the common shares the participant receives over the aggregate grant price of the SAR, if any, and the Company will be entitled to a corresponding deduction. Additionally, the same amount will be subject to employment taxes, including social security and Medicare taxes.

Restricted Stock

Generally, a participant who has been granted a restricted stock award will not recognize taxable income at the time of grant, and the Company will not be entitled to a deduction at that time, assuming that the restrictions create a “substantial risk of forfeiture” for federal income tax purposes and the participant does not make an election under Section 83(b) of the Internal Revenue Code. Generally, upon the lapse of the substantial risk of forfeiture, the participant will recognize ordinary income equal to the then fair market value of the underlying common shares, less any consideration paid for such common shares,

 

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and the Company will be entitled to a corresponding deduction. Additionally, the same amount will be subject to employment taxes, including social security and Medicare taxes.

A participant may elect pursuant to Section 83(b) of the Internal Revenue Code to recognize ordinary income on the date of grant of a restricted stock award equal to the fair market value of the common shares underlying the award on the grant date (less any amount paid by the participant for the common shares underlying the award) and to have the applicable capital gain holding period commence as of that date. If a participant makes this election, the same amount will be subject to employment taxes, including social security and Medicare taxes, and the Company will be entitled to a corresponding deduction in the year of grant. If the restrictions on the restricted stock ultimately do not lapse, the participant may not take a tax deduction in connection with the forfeiture of the restricted stock subject to the election under Section 83(b) of the Internal Revenue Code.

Performance Shares and Performance Units

A participant will not recognize taxable income when performance shares or performance units are granted, and the Company will not receive a deduction at that time. In general, the participant will recognize ordinary income when the performance shares or performance units are settled equal to the cash or the fair market value of the common shares the participant receives upon settlement, less any consideration paid, and the Company will be entitled to a corresponding deduction. Additionally, the same amount will be subject to employment taxes, including social security and Medicare taxes.

Other Stock Unit Awards

A participant will not recognize taxable income when an other stock unit award is granted, and the Company will not receive a deduction at that time. In general, the participant will recognize ordinary income when the other stock unit award is settled equal to the cash or the fair market value of the common shares the participant receives upon settlement, less any consideration paid, and the Company will be entitled to a corresponding deduction. Additionally, the same amount will be subject to employment taxes, including social security and Medicare taxes.

Miscellaneous

When a participant sells the common shares received pursuant to the exercise or settlement of an award under the 1997 LTIP, the participant will generally recognize long-term capital gain or loss if, at the time of the sale, the participant has held the common shares for more than one year (or, in the case of a restricted stock award, more than one year from the date of the lapse of the substantial risk of forfeiture unless the participant made an election pursuant to Section 83(b) of the Internal Revenue Code as described above). If the participant held the common shares for one year or less, the gain or loss will be a short-term capital gain or loss.

Section 162(m)

Historically, certain awards granted under the 1997 LTIP had been designed to qualify as “performance-based compensation” for purposes of Section 162(m) so that any compensation expense related to such awards would be fully deductible by the Company. As described above, Section 162(m) generally limits the deduction that the Company may take for certain remuneration paid in excess of $1,000,000 to any “covered employee” of the Company in any one taxable year.  Effective December 22, 2017, when the Tax Cuts and Jobs Act was signed into law, the performance-based compensation exception was generally eliminated with respect to future compensatory awards. There is an exception for remuneration provided pursuant to a written binding contract in effect on November 2, 2017 that is not modified in any respect after that date. Because of the ambiguities and uncertainties as to the application and interpretation of this transition relief, no assurance can be given that historic awards under the 1997 LTIP will avoid the deduction limit. The Company expects that a portion of the compensation expense related to future awards under the 1997 LTIP will not be deductible, even if performance-based.

Sections 280G and 4999 of the Internal Revenue Code

Sections 280G and 4999 of the Internal Revenue Code impose penalties on “excess parachute payments”. A parachute payment occurs when the “value” of all amounts paid to a “disqualified individual”, “in connection with a change in control”, each as defined under Section 280G of the Internal Revenue Code, is equal to or greater than three times the disqualified individual’s taxable compensation averaged over the five calendar years ending before the change in control (or over the disqualified individual’s entire period of service if that period is less than five calendar years). This average is called the

 

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“Base Amount”. An excess parachute payment is the amount equal to the excess of any parachute payments over 100% of the Base Amount.

Under Section 4999 of the Internal Revenue Code, if a disqualified individual receives an excess parachute payment, the disqualified individual is subject to an excise tax equal to 20% of such excess parachute payment. This tax is due in addition to other federal, state and local income, wage and employment taxes. Also, under Section 280G of the Internal Revenue Code, the Company would not be able to deduct the amount of any disqualified individual’s excess parachute payment.

Recommendation and Vote Required to Approve the Fourth Amendment to the 1997 LTIP

The Board believes that the 1997 LTIP and the ability of the Compensation Committee to grant awards thereunder are important to keep the compensation and incentive plans of the Company competitive with those being offered by other comparable companies, thus enhancing the ability of the Company to attract and retain key employees having the experience and abilities necessary to manage the Company’s business.

The proposal being presented to Worthington’s shareholders for consideration as Proposal 3 would approve the Fourth Amendment to the 1997 LTIP.  The proposal will be submitted to the Company’s shareholders in the form of the following resolution:

RESOLVED, that the Fourth Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan as included in the Company’s Proxy Statement for the Annual Meeting of Shareholders held on September 25, 2019, be, and the same hereby is, approved by the shareholders.

Shareholder approval of the Fourth Amendment to the 1997 LTIP will require the affirmative vote of the holders of a majority of the votes entitled to be cast by the holders of outstanding common shares, present in person or by proxy, and entitled to vote on the proposal. The effect of an abstention is the same as a vote “AGAINST” the proposal. Broker non-votes will not be counted in determining the number of common shares necessary for approval.

THE COMPENSATION COMMITTEE AND THE BOARD RECOMMEND THAT THE SHAREHOLDERS OF THE COMPANY VOTE “FOR” THE PROPOSAL TO APPROVE THE FOURTH AMENDMENT TO THE WORTHINGTON INDUSTRIES, INC. AMENDED AND RESTATED 1997 LONG-TERM INCENTIVE PLAN.

 

 

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Proposal 4:  Ratification of the Selection of Independent Registered Public Accounting Firm

 

The selection of the Company’s independent registered public accounting firm is made annually by the Audit Committee after consulting with management and carefully considering that firm’s qualifications and independence.  As a result, the Audit Committee has selected KPMG LLP (“KPMG”) to serve as the Company’s independent registered public accounting firm for Fiscal 2020, and recommends that the shareholders of the Company ratify that selection.  KPMG audited the Company’s consolidated financial statements as of May 31, 2019 and May 31, 2018 and for each of the fiscal years in the three-year period ended May 31, 2019, and the effectiveness of the Company’s internal control over financial reporting as of May 31, 2019.  Representatives of KPMG are expected to be present at the Annual Meeting and will be given the opportunity to make a statement if they so desire and to respond to appropriate questions.

Required Vote and Board’s Recommendation

The affirmative vote of the holders of a majority of the votes entitled to be cast by the holders of outstanding common shares, present in person or by proxy, and entitled to vote on the proposal, is required to ratify the selection of KPMG as the Company’s independent registered public accounting firm for Fiscal 2020.  The effect of an abstention is the same as a vote “AGAINST” the proposal.  Even if the selection of KPMG is ratified by the shareholders, the Audit Committee, in its discretion, could decide to terminate the engagement of KPMG and to engage another firm if the Audit Committee determines such action is necessary or desirable.  If the selection of KPMG is not ratified, the Audit Committee will reconsider (but may decide to maintain) the selection.

THE AUDIT COMMITTEE AND THE BOARD UNANIMOUSLY RECOMMEND
THAT SHAREHOLDERS OF THE COMPANY VOTE “FOR” THE RATIFICATION OF THE SELECTION OF KPMG.

 

 

 

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Audit Committee Matters

 

Report of the Audit Committee for the Fiscal Year Ended May 31, 2019

The Audit Committee oversees the Company’s financial and accounting functions, controls, reporting processes and audits on behalf of the Board in accordance with the Audit Committee’s written charter.  The Audit Committee is responsible for providing independent, objective oversight of the integrity and quality of the Company’s consolidated financial statements, the qualifications and independence of the Company’s independent registered public accounting firm, the performance of the Company’s internal audit function and the Company’s independent registered public accounting firm and the annual independent audit of the Company’s consolidated financial statements.  Management has the primary responsibility for the preparation, presentation and integrity of the Company’s consolidated financial statements and the reporting process, for the appropriateness of the accounting principles and reporting policies that are used by the Company, for the establishment and maintenance of effective systems of disclosure controls and procedures and internal control over financial reporting, and for the preparation of the annual report on management’s assessment of the effectiveness of the Company’s internal control over financial reporting.  The Company’s independent registered public accounting firm, KPMG, is responsible for auditing the Company’s annual consolidated financial statements included in the Company’s Annual Report on Form 10-K in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and issuing KPMG’s report thereon based on such audit, for issuing an audit report on the effectiveness of the Company’s internal control over financial reporting, and for reviewing the Company’s unaudited interim consolidated financial statements included in the Company’s Quarterly Reports on Form 10-Q.

In fulfilling its oversight responsibilities, the Audit Committee reviewed with management the Company’s audited consolidated financial statements as of and for the fiscal year ended May 31, 2019 and discussed with management the quality, not just the acceptability, of the accounting principles and policies as applied in the Company’s financial reporting, the reasonableness of significant judgments and accounting estimates, and the clarity and completeness of disclosures in the consolidated financial statements.

In addition, the Audit Committee met with management of the Company, the Company’s internal auditors and KPMG throughout the year, with and without management of the Company present, to discuss the overall scope of their respective annual audit plans, the results of their respective audits, the effectiveness of the Company’s internal control over financial reporting, including management’s and KPMG’s reports thereon and the bases for the conclusions expressed in those reports, and the overall quality of the Company’s financial reporting.  Throughout that period, the Audit Committee reviewed management’s plan for documenting and testing controls, the results of the documentation and testing, any deficiencies discovered and the resulting remediation of any such deficiencies.  In addition, the Audit Committee reviewed and discussed with KPMG all matters required to be discussed by the applicable requirements of the PCAOB and the SEC.

The Audit Committee has discussed with KPMG the independence of that firm from management and the Company.  The Audit Committee has received from KPMG the written disclosures and the letter from KPMG required by applicable PCAOB requirements regarding KPMG’s communications with the Audit Committee concerning independence.  The Audit Committee has discussed with KPMG any relationships with or services to the Company or the Company’s subsidiaries or affiliates that may impact the objectivity and independence of KPMG.  The Audit Committee has satisfied itself as to the independence of KPMG.

Management of the Company and KPMG have represented to the Audit Committee that the Company’s audited consolidated financial statements, as of and for the fiscal year ended May 31, 2019, were prepared in accordance with accounting principles generally accepted in the United States, and the Audit Committee has reviewed and discussed those audited consolidated financial statements with management of the Company and with KPMG.

Based on the Audit Committee’s discussions with management of the Company and with KPMG and the Audit Committee’s review of the report of KPMG to the Audit Committee, the Audit Committee unanimously recommended to the Board that the Company’s audited consolidated financial statements be included (and the Board approved such inclusion) in the Company’s Annual Report on Form 10-K for Fiscal 2019 filed with the SEC on July 30, 2019.

The Audit Committee has also selected KPMG as the Company’s independent registered public accounting firm for Fiscal 2020 and unanimously recommends that the shareholders ratify such selection.

The foregoing report is provided by the Audit Committee of the Company’s Board:

 

 

 

Audit Committee

 

 

 

 

 

Carl A. Nelson, Jr., Chair

 

 

Kerrii B. Anderson

 

 

Mark C. Davis

 

 

Mary Schiavo

 

 

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Pre-Approval of Services Performed by the Independent Registered Public Accounting Firm

 

Under applicable SEC Rules and PCAOB standards, the Audit Committee is to pre-approve the audit and non-audit services performed by the Company’s independent registered public accounting firm in order to ensure that the performance of these services does not impair the firm’s independence from the Company.  The SEC Rules and PCAOB standards specify the types of non-audit services that independent registered public accounting firms may not provide to their audit clients and establish the Audit Committee’s responsibility for administration of the engagement of the Company’s independent registered public accounting firm.

Consistent with applicable SEC Rules and PCAOB standards, the charter of the Audit Committee requires that the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent registered public accounting firm to the Company.  The Audit Committee may delegate pre-approval authority to one or more designated members of the Audit Committee and, if it does, the decision of that member or members must be reported to the full Audit Committee at its next regularly scheduled meeting.

All requests or applications for services to be provided by the Company’s independent registered public accounting firm must be submitted to the Audit Committee by both the independent registered public accounting firm and the Company’s CFO and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC Rules and PCAOB standards governing auditor independence.

Independent Registered Public Accounting Firm Fees

Fees billed for services rendered by KPMG for each of Fiscal 2019 and Fiscal 2018 were as follows:

 

Type of Fees

 

 

Fiscal 2019

 

 

 

Fiscal 2018

 

Audit Fees

 

 

$

1,636,000

 

 

 

$

1,435,000

 

Audit-Related Fees

 

 

 

—

 

 

 

 

—

 

Tax Fees

 

 

 

95,000

 

 

 

 

97,000

 

Other Fees

 

 

 

23,000

 

 

 

 

84,000

 

Total

 

 

$

1,754,000

 

 

 

$

1,616,000

 

 

All of the services rendered by KPMG to the Company during Fiscal 2019 and Fiscal 2018 were pre-approved by the Audit Committee.

In accordance with applicable SEC Rules, “Audit Fees” are fees for professional services rendered for: the audit of the Company’s consolidated financial statements; the review of the interim consolidated financial statements included in the Company’s Forms 10-Q; the audit of the Company’s internal control over financial reporting with the objective of obtaining reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects; and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for the applicable fiscal years.  

“Tax Fees” are fees for professional services rendered for tax compliance, tax advice and tax planning.

“Other Fees” are fees for consulting services provided for the implementation of the new revenue recognition and lease accounting guidelines.

 

 

 

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Householding of Annual Meeting Materials

 

The SEC has implemented rules regarding the delivery of proxy materials (i.e., annual reports to shareholders, proxy statements and Notices of Internet Availability of Proxy Materials) to households.  This method of delivery, often referred to as “householding”, would permit the Company to send: (a) a single annual report to shareholders and/or a single proxy statement, or (b) a single Notice of Internet Availability of Proxy Materials to any household at which two or more registered shareholders reside if the Company reasonably believes such shareholders are members of the same family or otherwise share the same address or that one shareholder has multiple accounts.  In each case, the registered shareholder(s) must consent to the householding process in accordance with applicable SEC Rules.  The householding procedure reduces the volume of duplicate information shareholders receive and reduces the Company’s expenses.  The Company may institute householding in the future and will notify registered shareholders affected by householding at that time.  Registered shareholders sharing an address may request delivery of a single copy of annual reports to shareholders, proxy statements and Notices of Internet Availability of Proxy Materials, as applicable, by contacting the Investor Relations Department of the Company at Worthington Industries, Inc., 200 Old Wilson Bridge Road, Columbus, Ohio  43085, Attention: Marcus Rogier, Director, Investor Relations.

Many broker/dealers and other holders of record have instituted householding.  If your family or others with a shared address have one or more “street name” accounts under which you beneficially own common shares of the Company, you may have received householding information from your broker/dealer, financial institution or other nominee in the past.  Please contact the holder of record directly if you have questions, require additional copies of this Proxy Statement, the Company’s 2019 Annual Report to Shareholders or the Notice of Internet Availability of Proxy Materials and/or wish to revoke your decision to household and thereby receive multiple copies.  You should also contact the holder of record if you wish to institute householding.

 

 

 

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Shareholder Proposals for 2020 Annual Meeting

 

Shareholders of the Company seeking to bring business before an annual meeting of shareholders (an “annual meeting”) or to nominate candidates for election as directors at an annual meeting must provide timely notice thereof in writing to the Company’s Secretary.  Under Section 1.08(A) of the Company’s Code of Regulations, to be timely, a shareholder’s notice with respect to business to be brought before an annual meeting must be delivered to, or mailed and received at, the principal executive offices of the Company not less than 30 days prior to an annual meeting.  However, if less than 40 days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, the shareholder’s notice must be received no later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made.  In order for a shareholder’s notice to be in proper form, it must include: (a) a brief description of the business the shareholder desires to bring before an annual meeting; (b) the reasons for conducting the proposed business at an annual meeting; (c) the name and address of the proposing shareholder; (d) the number of common shares beneficially owned by the proposing shareholder; and (e) any material interest of the proposing shareholder in the business to be brought before an annual meeting.  The requirements applicable to nominations are described above in “CORPORATE GOVERNANCE – Nominating Procedures” beginning on page 15 of this Proxy Statement.

A shareholder seeking to bring business before an annual meeting must also comply with all applicable SEC Rules.  Under SEC Rule 14a-8, proposals of shareholders intended to be presented at the Company’s 2020 Annual Meeting must be received by the Company no later than April 16, 2020, to be eligible for inclusion in the Company’s proxy materials relating to the 2020 Annual Meeting.  Upon receipt of a shareholder proposal, the Company will determine whether or not to include the proposal in the proxy materials in accordance with applicable SEC Rules.

The SEC has promulgated rules relating to the exercise of discretionary voting authority pursuant to proxies solicited by the Board.  Generally, a proxy may confer discretionary authority to vote on any matters brought before an annual meeting if the Company did not have notice of the matter at least 45 days before the date on which the Company first sent its proxy materials for the prior year’s annual meeting and a specific statement to that effect is made in the proxy statement or form of proxy.  If during the prior year, the Company did not hold an annual meeting, or if the date of the annual meeting has changed more than 30 days from the prior year, then notice must not have been received a reasonable time before the Company mails its proxy materials for the current year.  Any written notice required as described in this paragraph must have been given by June 30, 2019, for matters to be brought before the 2019 Annual Meeting.  Any written notice required as described in this paragraph must be given by June 30, 2020 for matters to be brought before the 2020 Annual Meeting.

Any written notice to be given with respect to matters set forth in the three prior paragraphs of this “SHAREHOLDER PROPOSALS FOR 2020 ANNUAL MEETING” section must be sent to the Company’s Secretary, Dale T. Brinkman, Worthington Industries, Inc., 200 Old Wilson Bridge Road, Columbus, Ohio  43085 or by fax to (614) 840-3706.

The Company’s 2020 Annual Meeting of Shareholders is currently scheduled to be held on September 23, 2020.

 

 

 

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Future Electronic Access to Proxy Materials and Annual Report

 

Registered shareholders can further reduce the costs incurred by the Company by consenting to receive all future proxy statements, proxy cards, annual reports to shareholders and Notices of Internet Availability of Proxy Materials, as appropriate, electronically via e-mail or the Internet.  To sign up for electronic delivery of future proxy materials, you must vote your common shares electronically via the Internet by logging on to www.proxyvote.com and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years.  You will be responsible for any fees or charges that you would typically pay for access to the Internet.

Annual Report on Form 10-K

 

Audited consolidated financial statements for Worthington Industries, Inc. and its subsidiaries for Fiscal 2019 are included in the Company’s 2019 Annual Report to Shareholders.  Additional copies of these financial statements and the Company’s 2019 Form 10-K (excluding exhibits) may be obtained, without charge, by sending a written request to the Company’s Investor Relations Department at 200 Old Wilson Bridge Road, Columbus, Ohio 43085, Attention: Marcus Rogier, Director, Investor Relations.  The Company’s 2019 Form 10-K is also available on the Company’s website located at www.worthingtonindustries.com and can also be found on the SEC website located at www.sec.gov.

Other Business

 

As of the date of this Proxy Statement, the Board knows of no business that will be presented for action by the shareholders at the Annual Meeting other than those matters discussed in this Proxy Statement.  However, if any other matter requiring a vote of the shareholders properly comes before the Annual Meeting, the individuals acting under the proxies solicited by the Board will vote and act according to their best judgment in light of the conditions then prevailing, to the extent permitted under applicable law.

 

 

 

By Order of the Board of Directors,

 

 

 

 

 

 

 

 

Dated:  August 14, 2019

 

Dale T. Brinkman,

 

 

 

 

 

Secretary

 

 

 

 

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Appendix I

 

Companies in Comparator Group

 

 

3M

A.O. Smith

Abbott Laboratories

AbbVie

Abiomed

Accenture

ACH

Adecco

Adient

Advanced Drainage   Systems

Agilent Technologies

Agrium

AgroFresh Solutions

Air Liquide

Air Products and Chemicals

Alcoa

Alexander & Baldwin

Alexion Pharmaceuticals

Altice USA

Altria Group

Amazon.com

American Sugar Refining

Americas Styrenics

AmerisourceBergen

AMETEK

Amgen

AMSTED Industries

Amtrak

Amway

Andersons

Anheuser-Busch

Apex Tool Group

Arby's Restaurant Group

Archer Daniels Midland

Arconic

Arkema

Armstrong Flooring

Armstrong World Industries

Arrow Electronics

Arup USA

Asbury Automotive Group

Ascena Retail

Ashland

AstraZeneca

AT&T

AtriCure

Automatic Data Processing

Avery Dennison

Avis Budget Group

Avnet

BAE Systems

Ball

Barrick Gold of North America

Baxter

Bechtel Nuclear, Security & Environmental

Becton Dickinson

Bemis

Best Buy

Big Lots

Blount International

BMC Software

Bombardier Transportation

Booz Allen Hamilton

BorgWarner

Boston Scientific

Bradley

Brady

Brembo

Bridgestone Americas

Brink's

Bristol-Myers Squibb

Bunge

Burlington Northern Santa Fe

Bush Brothers & Company

CA Technologies

Cabot

Calgon Carbon

Campbell Soup

Canadian Pacific Railway

Cardinal Health

Cargill

Carlson Rezidor

Carnival

Carpenter Technology

Catalent Pharma Solutions

CDI

CDK Global

Celestica

Celgene

CenturyLink

CF Industries

CGI Technologies and Solutions

CH2M HILL

Charter Communications

Chemours Company

Chemtura

Chicago Bridge & Iron (CB&I)

CHS

Cincinnati Bell

Cisco Systems

Cliffs Natural Resources

Clorox

Coca-Cola

Coca-Cola Refreshments

Colgate-Palmolive

Columbia Sportswear

Comcast

Commercial Metals

CommScope

Compass

ConAgra Foods

Conduent

Continental Automotive Systems

Convergys

Cooper Standard Automotive

CoorsTek

Corning

Covestro

Crown Castle

CSX

Cubic

Curtiss-Wright

Cushman & Wakefield

CVR Energy

CVS Health

Dana

Darden Restaurants

Day & Zimmermann

Dean Foods

Delta Air Lines

Deluxe

Dematic Group

DENSO International

DHL Supply Chain

Diageo North America

Diebold Nixdorf

Donaldson

Dot Foods

Dover

Dow Chemical

Dr Pepper Snapple Group

DST Systems

DuPont

E & J Gallo Winery

E.W. Scripps

Eastman Chemical

Eastman Kodak

Eaton

Ecolab

Edwards Lifesciences

Electrolux

Element Fleet Management

Eli Lilly

Emergent BioSolutions

Encana Services Company

Endo

Enova International

Epson America

Equifax

Equity Office Properties

ESCO

Estée Lauder

Esterline Technologies

Experian Americas

Express Scripts

Faurecia US Holdings

Ferrara Candy Company

Fiat Chrysler Automobiles (FCA)

Finastra

FIS

Fiserv

Flowers Foods

Flowserve

Ford

Forsythe Technology

Fortune Brands Home & Security

Foundation Medicine

Freeman

Freeport-McMoRan

Fresenius Medical Care NA

Frontier Communications

FTD Companies

GAF Materials

Gannett

Gap

Garmin

GCP Applied Technologies

General Atomics

General Dynamics

General Electric

General Mills

General Motors

Genus

Gilead Sciences

GL&V

Glanbia Group Services

GlaxoSmithKline

GLOBALFOUNDRIES

Goodyear Tire & Rubber

Google

Graco

Graphic Packaging

Greene, Tweed and Co.

H.B. Fuller

Hallmark Cards

Halozyme Therapeutics

Halyard Health

Hanesbrands

Harland Clarke

Harman International Industries

Harris

Harsco

Hasbro

HD Supply

Healthcare Services Group

Henry Schein

Herc Rentals

Herman Miller

Hershey

Hexcel

Hexion

Hilton Grand Vacations

Hilton Worldwide

Hitachi Data Systems

HNI

HNTB

Hoffmann-La Roche

Hormel Foods

Host Hotels & Resorts

Houghton Mifflin Harcourt Publishing

HTC

Hunt Consolidated

Husky Injection Molding Systems

IBM

IDEX Corporation

IDEXX Laboratories

iHeartMedia

IMS Health

INEOS Olefins & Polymers USA

Ingenico

Ingersoll Rand

Ingevity

Intercontinental Hotels Group

International Flavors & Fragrances

International Game Technology

International Paper

ION Geophysical

Iron Mountain

Irvine

Itron

ITT Inc.

J. Crew

J.M. Smucker

Jabil Circuit

Jacobs Engineering

JetBlue Airways

John Wiley & Sons

Johns Manville

Johnson & Johnson

Johnson Controls

K. Hovnanian Companies

Kantar Group

Kapsch Partner Solutions

KBR

Kellogg

Kelly Services

Kennametal

Kerry Group

Keurig Green Mountain

Keystone Foods

Kimberly-Clark

Kinross Gold

Koch Industries

Kohler

Kraft Heinz

Kroger

Kum & Go LC

L-3 Communications

 

 

 

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Lafarge North America

Land O'Lakes

Lear

Ledcor Group of Companies

LEDVANCE

Leggett and Platt

Lehigh Hanson

Leidos

Lend Lease

Lenovo

Leprino Foods

LexisNexis

LG Electronics

Liberty Global

Lincoln Electric

L'Oréal

LSC Communications

Lutron Electronics

Lydall

LyondellBasell

Magellan Midstream Partners

Makino

Marriott International

Mars Incorporated

Martin Marietta Materials

Mary Kay

Masco

Mattel

Matthews International

McCormick

McDonald's

McLane Company

Medicines Company

Medtronic

Merck & Co

Meritor

Micron Technology

Microsoft

Millicom International Cellular

Mission Produce

Molex

Mondelez

Monsanto

Mosaic

MTS Systems

Mylan

Navigant Consulting

NBTY

NCR

Nestle USA

New York Times

Newegg.com

Newell Rubbermaid

Newmont Mining

Nike

Nissan North America

Nokia

Nordson Corporation

Norfolk Southern

Northrop Grumman

Northwest Pipe Company

Novartis

Novelis

NOW Foods

Nu Skin Enterprises

Occidental Petroleum

Orbital ATK

Oshkosh

Osram Sylvania

Owens Corning

Owens-Illinois

Panasonic of North America

PAREXEL

Parker Hannifin

Parmalat

Parsons Corporation

Peabody Energy

PepsiCo

Pfizer

Pharmavite

Philips Healthcare

Pitney Bowes

Plexus

Polar Beverages

Polaris Industries

PolyOne

Potash

Praxair

Precision Drilling

PulteGroup

Purdue Pharma

Quad/Graphics

Quest Diagnostics

Quintiles

Rackspace

Rank Group

Rayonier

Rayonier Advanced Materials

Redbox Automated Retail

Regency Centers

Regeneron Pharmaceuticals

Rev Group

Revlon

Reynolds American

Ricoh Americas

Riot Games

Rockwell Automation

Rockwell Collins

Rowan Companies

Royal Caribbean Cruises

RPM International

Ryder System

Ryerson

S.C. Johnson & Son

Sabre Corporation

SAIC

Samsung

Sanofi

SAS Institute

Sasol USA

Schmolz + Bickenbach

Schneider Electric

Scholastic

Schreiber Foods

Schwan Food Company

Schweitzer-Mauduit International

Scotts Miracle-Gro

Scoular Company

Scripps Networks Interactive

Sealed Air

Sensient Technologies

Serta Simmons Bedding

ServiceSource

SGS - Société Générale de Surveillance

Sherwin-Williams

Siemens

Simmons Foods

Smithfield Foods

Snap-on

SNC-Lavalin

Sodexo

Sonepar USA

Sonic Corp

Sonoco Products

Sony

Sony Electronics

Southwest Airlines

Spirit AeroSystems

Sprint

SPX Corporation

SPX FLOW

SSAB

Standex International

Stantec

Starz

Steelcase

Steris

Stryker

SunCoke Energy

Syncreon

Syngenta Crop Protection

Sysco Corporation

Takeda Pharmaceuticals

Target

Taubman Centers

TE Connectivity

TeleTech

Tempur Sealy

Teradata

Terex

Textron

Thermo Fisher Scientific

Thyssenkrupp

Tiffany & Co.

Time Warner

Timken

TimkenSteel

T-Mobile USA

Toro

Total Petrochemicals USA

Total System Service (TSYS)

Transocean

TransUnion

Tribune Media

Trimble Inc.

Trinity Industries

Tupperware Brands

Tyson Foods

Underwriters Laboratories

Unilever United States

Union Pacific Corporation

Unisys

United Continental Holdings

United States Cellular

United States Steel

United Technologies Corporation (UTC)

UPS

Valero Energy

Valvoline

Vectrus

Ventura Foods

Veolia Environmental Services North America

VeriSign

Verizon

Vertex Pharmaceuticals

Viacom

Viad

Vista Outdoor

Vulcan Materials

VWR International

W.R. Grace

W.W. Grainger

WageWorks

Walt Disney

Waste Management

Watts Water Technologies

Wendy's Group

West Pharmaceutical Services

Westlake Chemical

WestRock

Weyerhaeuser

Whirlpool

Wilsonart

Worthington Industries

Wyndham Worldwide

Yazaki

YP

Zebra Technologies

Zimmer Bonne

 

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Worthington | 2019 Proxy Statement • Appendix I

 

 

Appendix II

 

WORTHINGTON INDUSTRIES, INC.

AMENDED AND RESTATED

1997 LONG-TERM INCENTIVE PLAN

(Fourth Amendment)

This Fourth Amendment (this “Fourth Amendment”) to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (as previously amended, the “Plan”) is adopted as of June 26, 2019, subject to shareholder approval.

WHEREAS, pursuant to Section 12 of the Plan, the Board of Directors (the “Board”) of Worthington Industries, Inc. (the “Company”) may amend the Plan, with the approval of the shareholders of the Company, in order to increase the total number of common shares reserved for the purpose of the Plan; and

WHEREAS, the Board desires to amend the Plan to increase the total number of common shares reserved for the purpose of the Plan and to make other administrative changes to reflect current Company practices;

NOW, THEREFORE, the Board hereby amends the Plan, subject to and effective upon approval by the shareholders of the Company, as follows:

 

1.

The first and second paragraphs of Section 3(b) of the Plan are hereby deleted in their entirety and the following two paragraphs are substituted therefor:

The maximum number of Shares in respect of which Awards may be granted under the Plan, subject to adjustment as provided in Section 3(c) of the Plan, shall be 8,000,000.  Notwithstanding the foregoing, no Participant may be granted Awards in any one calendar year with respect to more than 200,000 Shares.  No Awards of Incentive Stock Options may be made after 2007.

For the purpose of computing the total number of Shares available for Awards under the Plan, there shall be counted against the foregoing limitations the number of Shares subject to issuance upon exercise or settlement of Awards as of the dates on which such Awards are granted.  Shares which were previously subject to Awards shall again be available for Awards under the Plan if any such Awards are forfeited, terminated, expire unexercised, settled in cash or property other than Shares or exchanged for other Awards including any withholding of Shares to pay taxes (to the extent of such forfeiture, termination, withholding or expiration of such Awards), or if the Shares subject thereto can otherwise no longer be issued.  Any Shares which are used as full or partial payment to Worthington by a Participant of the option price of Shares upon exercise of an Option shall again be available for Awards under the Plan; provided, however, that any Shares which are the subject of Options or of Stock Appreciation Rights granted on or after September 26, 2013, shall not again be available for Awards under the Plan, even if such Option or Stock Appreciation Right is forfeited, terminated, expires unexercised, settled in cash or property other than Shares or exchanged for another Award or the Shares subject to such Option or Stock Appreciation Right can otherwise no longer be issued.

IN WITNESS WHEREOF, the Company has caused this Fourth Amendment to the Plan to be executed by the Company’s duly authorized officer on June 26, 2019.

 

WORTHINGTON INDUSTRIES, INC.

 

 

By:

/s/Dale T. Brinkman

Name:

Dale T. Brinkman

Title:

Senior Vice President-Administration, General Counsel & Secretary

 

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WORTHINGTON INDUSTRIES, INC.

AMENDED AND RESTATED

1997 LONG-TERM INCENTIVE PLAN

(reflects First Amendment, Second Amendment

and Third Amendment thereto)

SECTION 1.  PURPOSE.  The purposes of the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan (the “Plan”) are to encourage selected key employees of the Company to acquire a proprietary and vested interest in the growth and performance of the Company, to generate an increased incentive to contribute to the Company’s future success and prosperity, thus enhancing the value of the Company for the benefit of shareholders, and to enhance the ability of the Company to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depends.   This Plan became effective on the Effective Date and is being amended and restated effective as of November 1, 2008 for purposes of Section 409A of the Code.

SECTION 2.  ADMINISTRATION.  The Plan shall be administered by the Committee.  The Committee shall have full power and authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to:  (i) select the Employees of the Company to whom Awards may from time to time be granted hereunder; (ii) determine the type or types of Award to be granted to each Participant hereunder; (iii) determine the number of Shares to be covered by each Award granted hereunder; (iv) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder; (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property or canceled or suspended; (vi) interpret and administer the Plan and any instrument or agreement entered into under the Plan; (vii) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (viii) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.  Decisions of the Committee shall be final, conclusive and binding upon all Persons, including the Company, any Participant, any shareholder, and any Employee of the Company.  A majority of the members of the Committee may determine its actions and fix the time and place of its meetings.

SECTION 3.  DURATION OF, AND SHARES SUBJECT TO PLAN.

(a) Term.  The Plan shall remain in effect until terminated by the Board, provided, however, that no Incentive Stock Option may be granted after more than 10 years after the Effective Date.

(b) Shares Subject to the Plan.  The maximum number of Shares in respect of which Awards may be granted under the Plan, subject to adjustment as provided in Section 3(c) of the Plan, shall be 6,500,000.  Notwithstanding the foregoing, in no event shall more than 1,000,000 Shares be cumulatively available for Awards of Incentive Stock Options under the Plan and provided further that no Participant may be granted Awards in any one calendar year with respect to more than 200,000 Shares. [NOTE: This paragraph Section 3(b) was amended pursuant to the Second Amendment to the Plan effective as of September 26, 2013.]

For the purpose of computing the total number of Shares available for Awards under the Plan, there shall be counted against the foregoing limitations the number of Shares subject to issuance upon exercise or settlement of Awards as of the dates on which such Awards are granted.  Subject to the following sentence, (a) any Shares which are used as full or partial payment to Worthington by a Participant of the option price of Shares upon exercise of an Option shall again be available for Awards under the Plan; and (b) Shares which were previously subject to Awards shall again be available for Awards under the Plan if any such Awards are forfeited, terminated, expire unexercised, settled in cash or property other than Shares or exchanged for other Awards (to the extent of such forfeiture, termination or expiration of such Awards), or if the Shares subject thereto can otherwise no longer be issued.  The above notwithstanding, any Shares which are the subject of Options or of Stock Appreciation Rights granted on or after September 26, 2013, shall not again be available for Awards under the Plan, even if such Option or Stock Appreciation Right is forfeited, terminated, expires unexercised, settled in cash or property other than Shares or exchanged for another Award or the Shares subject to such Option or Stock Appreciation Right can otherwise no longer be issued. [NOTE:  This paragraph of Section 3(b) was amended pursuant to the Second Amendment to the Plan effective as of September 26, 2013.]

Shares which may be issued under the Plan may be either authorized and unissued Shares or issued Shares which have been reacquired by Worthington.  No fractional Shares shall be issued under the Plan.

 

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(c) Changes in Shares.  In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, spin off, exchange of shares or similar transaction or other change in corporate structure or capitalization affecting the Shares or the price thereof, such adjustments and other substitutions shall be made to the Plan and to Awards as the Committee in its sole discretion deems equitable or appropriate, including without limitation such adjustments in the aggregate number, class and kind of Shares which may be delivered under the Plan, in the aggregate or to any one Participant, in the number, class, kind and option or exercise price of Shares subject to outstanding Options, Stock Appreciation Rights or other Awards granted under the Plan, and in the number, class and kind of Shares subject to Awards granted under the Plan (including, if the Committee deems appropriate, the substitution of similar options to purchase the shares of, or other awards denominated in the shares of, another company) as the Committee may determine to be appropriate in its sole discretion, provided that the number of Shares or other securities subject to any Award shall always be a whole number.  Any adjustment made pursuant to this Section 3(c) shall be made consistent with the requirements of Section 409A of the Code, to the extent applicable.

(d) Prohibition on Repricing.  Except for adjustments made pursuant to Section 3(c) of the Plan, in no event may the Committee, without obtaining shareholder approval:  (i) amend the terms of an outstanding Award to reduce the option price of an outstanding Option or the grant price of an outstanding Stock Appreciation Right; (ii) cancel an outstanding Option or Stock Appreciation Right in exchange for Options or Stock Appreciation Rights with an option price or grant price, as applicable, that is less than the option price or grant price of the original Option or Stock Appreciation Right; (iii) cancel an outstanding Option or Stock Appreciation Right with an option price or grant price, as applicable, which is above the current Fair Market Value of the Shares underlying the Option or Stock Appreciation Right in exchange for another Award, cash or other securities; (iv) take any other action that is treated as a “repricing” under generally accepted accounting principles; or (v) take any other action that has the effect of “repricing” an Award, as defined under the rules of the securities exchange or other recognized market or quotation system on which the Shares are then listed or traded. [NOTE:  This Section 3(d) was amended pursuant to the Second Amendment to the Plan effective as of September 26, 2013.]

SECTION 4.  ELIGIBILITY.  Any Employee (excluding any member of the Committee) shall be eligible to be selected as a Participant.

SECTION 5.  OPTIONS. Options may be granted hereunder to Participants, either alone or in addition to other Awards granted under the Plan.  Any Option granted under the Plan shall be evidenced by an Award Agreement in such form as the Committee may from time to time approve.  Any such Option shall be subject to the following terms and conditions and to such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable.  The provisions of Options need not be the same with respect to each Participant.

(a) Option Price.  The option price per Share purchasable upon exercise of an Option shall be determined by the Committee in its sole discretion; provided that such option price shall not be less than the Fair Market Value of the Share on the date of the grant of the Option.

(b) Option Period. The term of each Option shall be fixed by the Committee in its sole discretion; provided that no Incentive Stock Option shall be exercisable after the expiration of ten years from the date the Incentive Stock Option is granted.

(c) Exercisability.  Options shall be exercisable at such time or times as determined by the Committee at or subsequent to grant.  Unless otherwise determined by the Committee at or subsequent to grant, no Incentive Stock Option shall be exercisable during the year ending on the day before the first anniversary date of the granting of the Incentive Stock Option.

(d) Method of Exercise. Subject to the other provisions of the Plan and any applicable Award Agreement, any Option may be exercised by the Participant in whole or in part at such time or times, and the Participant may make payment of the option price in such form or forms, including, without limitation, payment by delivery of cash, Shares already owned by the Participant or other consideration (including, where permitted by law, by delivery or surrender of outstanding vested and exercisable Awards, including through the withholding of Shares which would otherwise be issued in connection with the exercise of a vested and exercisable Option, having a Fair Market Value on the exercise date equal to the total option price, or by any combination of cash, Shares and other consideration unless the Committee may otherwise specify in the applicable Award Agreement.

 

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(e) Incentive Stock Options.  In accordance with rules and procedures established by the Committee, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options held by any Participant which are exercisable for the first time by such Participant during any calendar year under the Plan (and under any other benefit plans of the Company or of any parent or subsidiary corporation of the Company) shall not exceed $100,000 or, if different, the maximum limitation in effect at the time of grant under Section 422 of the Code, or any successor provision, and any Treasury Regulations promulgated thereunder.  The terms of any Incentive Stock Option granted hereunder shall comply in all respects with the provisions of Section 422 of the Code, or any successor provision, and any Treasury Regulations promulgated thereunder.

SECTION 6.  STOCK APPRECIATION RIGHTS.  Stock Appreciation Rights may be granted hereunder to Participants, either alone or in addition to other Awards granted under the Plan, and may, but need not, relate to a specific Option granted under Section 5.  The provisions of Stock Appreciation Rights need not be the same with respect to each Participant.  Any Stock Appreciation Right related to a Nonstatutory Stock Option may be granted at any time thereafter before exercise, termination or expiration of such Nonstatutory Stock Option.  Any Stock Appreciation Right related to an Incentive Stock Option must be granted at the same time such Incentive Stock Option is granted.  In the case of any Stock Appreciation Right related to any Option, the Stock Appreciation Right or applicable portion thereof shall terminate and no longer be exercisable upon the termination or exercise of the related Option, except that a Stock Appreciation Right granted with respect to less than the full number of Shares covered by a related Option shall not be reduced until the number of Shares subject to the exercise or termination of the related Option exceeds the number of Shares not covered by the Stock Appreciation Right.  Any Option related to any Stock Appreciation Right shall no longer be exercisable to the extent the related Stock Appreciation Right has been exercised.  The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it shall deem appropriate.

SECTION 7.  RESTRICTED STOCK.

(a) Issuance.  Restricted Stock Awards may be issued hereunder to Participants, either alone or in addition to other Awards granted under the Plan, for such consideration as determined by the Committee in its sole discretion and the Committee may issue such Awards for no consideration or for such minimum consideration as may be required by applicable law.  Restricted Stock Awards shall contain such limitations, terms and conditions and other provisions as determined by the Committee in its sole discretion.  The provisions of Restricted Stock Awards need not be the same with respect to each Participant.

(b) Registration. Any Restricted Stock issued hereunder may be evidenced in such manner as the Committee in its sole discretion shall deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates.  In the event any stock certificate is issued in respect of shares of Restricted Stock awarded under the Plan, such certificate shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award.

(c) Forfeiture.  Except as otherwise determined by the Committee at the time of grant, upon termination of employment for any reason during the restriction period, all shares of Restricted Stock still subject to restriction shall be forfeited by the Participant and reacquired by Worthington, for the purchase price paid by the Participant or such other consideration (or no consideration) as set by the Committee as part of the terms and conditions of the Award, provided that except as provided in Section 11, in the event of a Participant’s retirement, permanent disability, other termination of employment or death, or in cases of special circumstances, the Committee may, in its sole discretion, waive in whole or in part any or all remaining restrictions with respect to such Participant’s shares of Restricted Stock.  Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be issued to the Participant after the period of forfeiture, as determined or modified by the Committee, shall expire.

SECTION 8.  PERFORMANCE AWARDS.  Performance Awards may be issued hereunder to Participants, either alone or in addition to other Awards granted under the Plan, for such consideration as determined by the Committee, in its sole discretion, and the Committee may issue such Performance Awards for no consideration or for such minimum consideration as may be required by applicable law.  The performance criteria to be achieved during any Performance Period, the length of the Performance Period and the other terms and conditions and provisions with respect to the Performance Award shall be determined by the Committee upon the grant of each Performance Award.  Except as provided in Section 10, Performance Awards will be distributed only after the end of the relevant Performance Period.  Performance Awards may be paid in cash, Shares or any combination thereof, in the sole discretion of the Committee at the time of payment.  The performance levels to

 

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be achieved for each Performance Period and the amount of the Award to be distributed shall be conclusively determined by the Committee.  Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period.  The maximum value of the property, including cash, that may be paid or distributed to any Participant pursuant to a grant of Performance Units made in any one calendar year shall be $2,500,000.  The provisions of Performance Awards need not be the same with respect to each Participant.

SECTION 9.  OTHER STOCK UNIT AWARDS.

(a) Other Stock Unit Awards Administration. Other Awards of Shares and other Awards that are valued in whole or in part by reference to, or are otherwise based on, Shares or other property (“Other Stock Unit Awards”) may be granted hereunder to Participants, either alone or in addition to other Awards granted under the Plan.  Other Stock Unit Awards may be paid in Shares, cash or any other form of property as the Committee shall determine.

(b) Terms and Conditions.  Other Stock Unit Awards granted under this Section 9 may be issued for such consideration as determined by the Committee in its sole discretion, and the Committee may issue such Awards for no consideration or for such minimum consideration as may be required by applicable law.  Shares (including securities convertible into Shares) purchased pursuant to a purchase right awarded under this Section 9 shall be purchased for such consideration as the Committee shall in its sole discretion determine, which shall not be less than the Fair Market Value of such Shares or other securities as of the date such purchase right is awarded.  The terms and conditions and other provisions with respect to Other Stock Unit Awards shall be determined by the Committee.  The provisions of Other Stock Unit Awards need not be the same with respect to each Participant.

SECTION 10.  CHANGE IN CONTROL PROVISIONS.

(a) Impact of Event.  Notwithstanding any other provision of the Plan to the contrary, but subject to the provisions of Section 10(c), in the event of a Change in Control:

 

(i)

Any Options and Stock Appreciation Rights outstanding as of the date such Change in Control is determined to have occurred, and which are not then exercisable and vested, shall become fully exercisable and vested to the full extent of the original grant; provided, that in the case of a Participant holding a Stock Appreciation Right who is actually subject to Section 16(b) of the Exchange Act, such Stock Appreciation Right shall not become fully vested and exercisable unless it shall have been outstanding for at least six months at the date such Change in Control is determined to have occurred.

 

(ii)

The restrictions applicable to any Restricted Stock shall lapse, and such Restricted Stock shall become free of all restrictions and become fully vested and transferable to the full extent of the original grant.

 

(iii)

All Performance Awards shall be considered to be earned and payable in full, and any other restriction shall lapse and such Performance Awards shall be immediately settled or distributed.  

 

(iv)

The restrictions and other conditions applicable to any Other Stock Unit Awards or any other Awards shall lapse, and such Other Stock Unit Awards or such other Awards shall become free of all restrictions or conditions and become fully vested and transferable to the full extent of the original grant.  

(b) Change in Control Cash-Out.  Notwithstanding any other provision of the Plan, during the 60-day period from and after a Change in Control (the “Exercise Period”), if the Committee shall determine at, or at any time after the time of grant, a Participant holding an Option shall have the right, whether or not the Option is fully exercisable and in lieu of the payment of the option price for the Shares being purchased under the Option and by giving notice to Worthington, to elect (within the Exercise Period) to, surrender all or part of the Option to Worthington and to receive cash, within 30 days of such notice, in an amount equal to the amount by which the Change in Control Price per Share on the date of such election shall exceed the purchase price per Share under the Option (the “Spread”) multiplied by the number of Shares granted under the Option as to which the right granted under this Section 10(b) shall have been exercised.

 

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(c) Provisions not Applicable. The provisions of this Section 10 shall not apply (i) if the Committee determines at the time of grant that such Section shall not apply or (ii) to any Change in Control when expressly provided otherwise by a three-fourths vote of the Whole Board, but only if a majority of the members of the Board then in office and acting upon such matters shall be Continuing Directors.

SECTION 11.  CODE SECTION 162(m) PROVISIONS.

(a) Applicability.  Notwithstanding any other provisions of the Plan, if the Committee determines at the time Restricted Stock, a Performance Award or an Other Stock Unit Award is granted to a Participant that such Participant is, or is likely to be at the time such Participant recognizes income for federal income tax purposes in connection with such Award a Covered Employee then the Committee may provide that this Section 11 is applicable to such Award.

(b) Performance Goals.  If an Award is subject to this Section 11, then the lapsing of restrictions thereon and the distribution of cash or Shares pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of one or any combination of the following:

 

(i)

Income or earnings (before or after interest, taxes, depreciation, amortization and/or other items);

 

(ii)

Earnings per Share;

 

(iii)

Economic value added;

 

(iv)

Sales or revenues;

 

(v)

Growth;

 

(vi)

Operating income;

 

(vii)

Return measures (including, but not limited to, return on assets, capital, invested capital, equity or revenue);

 

(viii)

Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity or cash flow return on investment);

 

(ix)

Gross, operating or other margins;

 

(x)

Productivity ratios or other productivity measures;

 

(xi)

Share price (including, but not limited to, growth measures and total shareholder return);

 

(xii)

Expense reduction, expense targets or cost control;

 

(xiii)

Operating or other efficiencies;

 

(xiv)

Market share;

 

(xv)

Developing new markets, new products and/or new lines of revenue; or

 

(xvi)

Identifying and completing acquisitions.

Such performance goals may be stated in absolute terms or relative to comparison entities, indices or other measures to be achieved during a Performance Period and may be applied solely with reference to the Company or an affiliate, business unit or division of the Company or relatively between the Company or an affiliate, business unit or division of the Company and one or more unrelated entities or business units or indices.  

 

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The Committee may provide in any performance goal that any evaluation of performance may include or exclude the impact of specific items related to the time period over which performance is evaluated including the following:  (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) changes in tax laws, accounting principles (or interpretations thereof), accounting methods (including the differences between LIFO and FIFO accounting methods), or other laws or provisions affecting reported results; (iv) any reorganization or restructuring program or restructuring costs; (v) extraordinary or non-recurring items; (vi) acquisitions or divestitures; and (vii) foreign exchange gains and losses.  To the extent such inclusions or exclusions affect an Award subject to this Section 11, they shall be prescribed in a form that meets the requirements of Section 162(m) of the Code and the Treasury Regulations promulgated thereunder for deductibility.

Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code and the Treasury Regulations promulgated thereunder.

[NOTE:  Section 11(b) was amended pursuant to the First Amendment to the Plan effective as of June 26, 2013.]

(c) Limitations on Adjustments.  Notwithstanding any provision of this Plan other than Section 10, with respect to any Award that is subject to this Section 11, the Committee may not adjust upwards the amount payable pursuant to such Award, nor may it waive the achievement of the applicable performance goals except in the case of the death or disability of the Participant.

(d) Other Restrictions.  The Committee shall have the power to impose such other restrictions on Awards subject to this Section 11 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(B) of the Code or any successor provision.

SECTION 12.  AMENDMENTS AND TERMINATION.  The Board may amend, alter or discontinue the Plan, but no amendment, alteration, or discontinuation shall be made that would impair the rights of a Participant under an Award theretofore granted, without the Participant’s consent, or that without the approval of the shareholders of Worthington would:

 

(a)

except as is provided in Section 3(c) of the Plan, increase the total number of Shares reserved for the purpose of the Plan; or

 

(b)

change the employees or class of employees eligible to participate in the Plan.

The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any Participant without the Participant’s consent.

SECTION 13.  GENERAL PROVISIONS.

(a) No Assignment.  Unless the Committee determines otherwise at the time the Award is granted, no Award, and no Shares subject to Awards described in Section 9 which have not been issued or as to which any applicable restriction, performance period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, except by will or by the laws of descent and distribution; provided that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary to exercise the rights of the Participant with respect to any Award upon the death of the Participant.  Each Award shall be exercisable, during the Participant’s lifetime, only by the Participant or, if permissible under applicable law, by the Participant’s guardian or legal representative.

(b) Term of Awards.  The term of each Award shall be for such period of months or years from the date of its grant as may be determined by the Committee; provided that in no event shall the term of any Option or Stock Appreciation Right exceed a period of 10 years from the date of its grant. [NOTE:  Section 13(b) was amended pursuant to Second Amendment to the Plan effective as of September 26, 2013.]

(c) No Right to Award.  No Employee or Participant shall have any claim to be granted any Award under the Plan and there is no obligation for uniformity of treatment of Employees or Participants under the Plan.

 

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(d) Written Agreement Required. The prospective recipient of any Award under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument evidencing the Award and delivered a fully executed copy thereof to Worthington, and otherwise complied with the then applicable terms and conditions.

(e) Adjustments. Except as provided in Section 11, the Committee shall be authorized to make adjustments in Performance Award criteria or in the terms and conditions of other Awards in recognition of unusual or nonrecurring events affecting the Company or its financial statements or changes in applicable laws, regulations or accounting principles.  The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry it into effect.  In the event Worthington shall assume outstanding employee benefit awards or the right or obligation to make future awards in connection with the acquisition of another corporation or business entity, the Committee may, in its discretion, make such adjustments in the terms of Awards under the Plan as it shall deem appropriate.

(f) Cancellations and Forfeitures. The Committee shall have full power and authority to determine whether, to what extent, and under what circumstances, any Award shall be canceled or suspended.  In particular, but without limitation, all outstanding Awards to any Participant shall be canceled if the Participant, without the consent of the Committee, while employed by the Company or after termination of such employment, becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee), any business that is in competition with the Company or with any business in which the Company has a substantial interest as determined by the Committee.

In the event a Participant terminates his or her employment with the Company for any reason whatsoever, and within 18 months after the date thereof becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee), any business that is in competition with the Company or with any business in which the Company has a substantial interest as determined by the Committee, the Committee, in its sole discretion, may require such Participant to return to the Company the economic value of any Award which is realized or obtained (measured at the date of exercise) by such Participant at any time during the period beginning on that date which is six months prior to the date of such Participant’s termination of employment with the Company.

(g) Securities Laws Restrictions.  No Shares shall be issued under the Plan unless counsel for Worthington shall be satisfied that such issuance will be in compliance with applicable Federal and state securities laws.  All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable Federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

(h) Payment Requirements.  Except as otherwise required in any applicable Award Agreement or by the terms of the Plan, recipients of Awards under the Plan shall not be required to make any payment or provide consideration other than the rendering of services.

(i) Withholding. Worthington shall be authorized to withhold from any Award granted or payment due under the Plan the amounts of withholding taxes.  The authority provided in this tax withholding section includes authority to determine the amounts to be withheld (including Shares or other portions of Awards) in satisfaction of a Participant’s or former Participant’s withholding obligations, or in satisfaction of other tax obligations, either on a mandatory or elective basis, as permitted in the discretion of Committee due in respect of an Award or payment hereunder and to take such other action as may be necessary in the opinion of Worthington to satisfy all obligations for the payment of such taxes.  The Committee shall be authorized to establish procedures for election by Participants to satisfy such withholding taxes by delivery of, or directing Worthington to retain, Shares, unless otherwise specified by the Committee in the Award Agreement.  [NOTE:  Section 13(i) was amended pursuant to the Third Amendment to the Plan effective as of June 28, 2017.]

(j) Other Arrangements.  Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is otherwise required, and such arrangements may be either generally applicable or applicable only in specific cases.

 

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(k) Applicable Law.  The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of Ohio and applicable Federal law.

(l) Invalid Provisions. If any provision of this Plan is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in full force and effect.

(m) Foreign Nationals. Awards may be granted to Employees who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy.  The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Employees on assignments outside their home country.

(n) No Right to Employment.  Neither the adoption of the Plan nor the granting of any Award shall confer upon any employee of the Company any right to continued employment with the Company, nor shall it interfere in any way with the right of the Company to terminate the employment of any of its employees at any time, with or without cause.

(o) Treatment as Compensation for Other Purposes.  Payments and other benefits received by a Participant under an Award made pursuant to the Plan shall not be deemed a part of a Participant’s regular, recurring compensation for purposes of the termination indemnity or severance pay law of any country and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan or similar arrangement provided by the Company unless expressly so provided by such other plan or arrangements, or except where the Committee expressly determines that an Award or portion of an Award should be included to accurately reflect competitive compensation practices or to recognize that an Award has been made in lieu of a portion of competitive annual cash compensation.  Awards under the Plan may be made in combination with or in tandem with, or as alternatives to, grants, awards or payments under any other Company plans.  The Plan notwithstanding, the Company may adopt such other compensation programs and additional compensation arrangements as it deems necessary to attract, retain and reward employees for their service with the Company.

SECTION 14.  EFFECTIVE DATE OF THE PLAN.  The Plan became effective on the Effective Date.  [NOTE:   Section 14 was amended pursuant to the Second Amendment to the Plan effective as of September 26, 2013.]

SECTION 15.  DEFINITIONS. As used in the Plan, the following terms shall have the meanings set forth below:

(a)“Acquiring Person” means any Person (any individual, firm, corporation or other entity) who or which, together with all Affiliates and Associates, has acquired or obtained the right to acquire the beneficial ownership of 25% or more of the Shares then outstanding.

(b)“Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act

(c)“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Performance Share, Performance Unit, Other Stock Unit Award, or any other right, interest, or option relating to Shares granted pursuant to the provisions of the Plan.

(d) “Award Agreement” shall mean any written agreement, contract, or other instrument or document evidencing any Award granted by the Committee hereunder.

(e)“Board” shall mean the Board of Directors of Worthington

(f)A “Change in Control” shall have occurred when any Person (other than (i) the Company, (ii) any employee benefit plan of the Company or any trustee of or fiduciary with respect to any such plan when acting in such capacity, or (iii) any Person who, on the Effective Date of the Plan, was an Affiliate of the Company owning in excess of 10% of the outstanding shares of Worthington and the respective successors,

 

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executors, legal representatives, heirs and legal assigns of such Person), alone or together with its Affiliates and Associates, has acquired or obtained the right to acquire the beneficial ownership of 25% or more of the Shares then outstanding; provided, however, that with respect to any Award subject to Section 409A of the Code that is settled or distributed upon the occurrence of a Change in Control, no settlement or distribution of such Award shall be made unless the Change in Control also constitutes a “change in control event” within the meaning of Section 409A of the Code.

(g)“Change in Control Price Per Share” shall mean the price per Share (i) paid by the Acquiring Person in connection with the transaction(s) that results in the Change in Control; or (ii) at any time after the Change in Control and before the Participant exercises his election under Section 10(b), the Fair Market Value of the Shares.  

(h)“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

(i)“Committee” shall mean the Compensation and Stock Option Committee of the Board, composed of no fewer than three directors, each of whom is a Non-Employee Director and an “outside director” within the meaning of Section 162(m) of the Code.

(j)“Company” shall mean Worthington and its subsidiaries, direct and indirect.  Subsidiaries of Worthington shall include (i) any entity of which Worthington owns, directly or indirectly, 50% or more of the total combined voting power of all classes of stock, if the entity is a corporation, or of the capital or profits interests, if the entity is a partnership or another form of entity and (ii) any other entity in which Worthington has a 20% or greater direct or indirect equity interest and which is designated as a “Subsidiary” by the Committee for purposes of this Plan; provided, however, that with respect to any Award that is subject to Section 409A of the Code, “Company” shall mean Worthington and its subsidiaries with whom Worthington would be considered a single employer under Sections 414(b) and (c) of the Code, but modified as permitted by Treasury Regulation §1.409A-1(b)(5)(iii)(E)(1).  [NOTE:  Section 15(j) was amended pursuant to the Second Amendment to the Plan effective as of September 26, 2013.]

(k)“Continuing Director” means any person who was a member of the Board on the Effective Date of the Plan or thereafter elected by the shareholders of Worthington or appointed by the Board prior to the date as of which the Acquiring Person became a Substantial Shareholder (as such term is defined in Article Seventh of Worthington’s Amended Articles of Incorporation) or, a Person designated (before his initial election or employment as a director) as a Continuing Director by three-fourths of the Whole Board, but only if a majority of the Whole Board shall then consist of Continuing Directors

(l)“Covered Employee” shall mean a “covered employee” within the meaning of Section 162(m)(3) of the Code.

(m)“Effective Date” shall mean September 18, 1997.

(n)“Employee” shall mean any common law employee of the Company. Unless otherwise determined by the Committee in its sole discretion, for purposes of the Plan, an Employee shall be considered to have terminated employment and to have ceased to be an Employee if his or her employer ceases to be a subsidiary of Worthington, even if he or she continues to be employed by such employer.  [NOTE:  The first sentence of Section 15(n) was amended pursuant to the Second Amendment to the Plan effective September 26, 2013.]

(o)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.

(p)“Fair Market Value”  The value of one Share on any relevant date, determined under the following rules:

 

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[1]  If the Shares are traded on an exchange or recognized market or quotation system on which “closing prices” are reported, the reported “closing price” on the relevant date, if it is a trading day, otherwise on the next trading day;

[2]  If the Shares are traded over-the-counter with no reported closing price, the mean between the highest bid and the lowest asked prices on the relevant date, if it is a trading day, otherwise on the next trading day; or

[3]  If neither subsections [1] or [2] of this definition apply, the fair market value as determined by the Board in good faith and consistent with any applicable provisions under the Code, except with respect to Options and SARs, in which event the fair market value as determined by the reasonable application of a reasonable valuation method taking into account all information material to the value of the Company satisfying the requirements of Code §409A.

(q)“Incentive Stock Option” shall mean an Option granted under Section 5 hereof that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.

(r)“Non-Employee Director” shall have the meaning set forth in Rule 16b-3(b)(3) promulgated by the Securities and Exchange Commission under the Exchange Act or any successor definition adopted by the Securities and Exchange Commission.

(s)“Nonstatutory Stock Option” shall mean an Option granted under Section 5 hereof that is not intended to be an Incentive Stock Option.

(t)“Option” shall mean any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine.

(u)“Other Stock Unit Award” shall mean any right granted to a Participant by the Committee pursuant to Section 9 hereof.

(v)“Participant” shall mean an Employee who is selected by the Committee to receive an Award under the Plan.

(w)“Performance Award” shall mean any Award of Performance Shares or Performance Units pursuant to Section 8 hereof.

(x)“Performance Period” shall mean that period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goal(s) specified by the Committee with respect to such Performance Award are to be measured.

(y)“Performance Share” shall mean any grant pursuant to Section 8 hereof of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

(z)“Performance Unit” shall mean any grant pursuant to Section 8 hereof of a unit valued by reference to a designated amount of property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

(aa)“Person” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, limited liability company, other entity or government or political subdivision thereof.

 

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(bb)“Restricted Stock” shall mean any Share issued with the restriction that the holder may not sell, transfer, pledge, or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose (including, without limitation, any restriction on the right to vote such Share, and the right to receive any cash dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

(cc)“Restricted Stock Award” shall mean an award of Restricted Stock under Section 7 hereof.

(dd)“Shares” shall mean the common shares, without par value, of Worthington and such other securities of Worthington as the Committee may from time to time determine.  

(ee)“Stock Appreciation Right” shall mean any right granted to a Participant pursuant to Section 6 hereof to receive, upon exercise by the Participant, the excess of (i) the Fair Market Value of one Share on the date of exercise over (ii) the grant price of the right on the date of grant, or if granted in connection with an outstanding Option on the date of grant of the related Option, as specified by the Committee in its sole discretion, which, other than in the case of substitute Awards, shall not be less than the Fair Market Value of one Share on such date of grant of the right or the related Option, as the case may be.  Any payment by Worthington in respect of such right may be made in cash, Shares, other property, or any combination thereof, as the Committee, in its sole discretion, shall determine.

(ff)“Treasury Regulations” means any regulations promulgated by the Department of Treasury and/or Internal Revenue Service under the Code.

(gg)“Whole Board” means the total number of directors which Worthington would have if there were no vacancies

(hh)“Worthington” shall mean Worthington Industries, Inc., an Ohio corporation.  

SECTION 16.  SECTION 409A. This Plan is intended to comply with or be exempt from the requirements of Section 409A of the Code and the Treasury Regulations promulgated thereunder, as applicable, and shall be interpreted, administered and operated accordingly.  Nothing in this Plan should be construed as a guarantee or entitlement of any particular tax treatment to a Participant.  None of the Company, the Board, the Committee or any other Person shall any liability with respect to any Participant in the event this Plan fails to comply with the requirements of Section 409A of the Code.

 

 

 

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VOTE BY INTERNET Before the Date of the Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m., Eastern Daylight Time, on September 24, 2019. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.  During the Meeting - Go to www.virtualshareholdermeeting.com/WOR19 You may attend the Annual Meeting via the Internet and vote during the Annual Meeting. Have the information that is printed in the box marked by the arrow on your proxy card or Notice of Internet Availability of Proxy Materials available and follow the instructions.  VOTE BY TELEPHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Daylight Time, on September 24, 2019. Have your proxy card or Notice of Internet Availability of Proxy Materials in hand when you call and then follow the instructions.  VOTE BY MAIL If you received a printed copy of the proxy materials, mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.  WORTHINGTON INDUSTRIES, INC.  ATTN: INVESTOR RELATIONS  200 OLD WILSON BRIDGE ROAD COLUMBUS, OH 43085 E83572-P27827 For All Withhold All For All Except  WORTHINGTON INDUSTRIES, INC.  To withhold authority to vote for any individual nominee(s), mark “For All Except“ and write the number(s) of the nominee(s) on the line below.  1. Election of four directors, each to serve for a term of three years to expire at the 2022 Annual Meeting of Shareholders: Nominees:  01) Kerrii B. Anderson 02) David P. Blom 03) John P. McConnell 04) Mary Schiavo For Against Abstain 2. Approval of advisory resolution on executive compensation.  3. Approval of the Fourth Amendment to the Worthington Industries, Inc. Amended and Restated 1997 Long-Term Incentive Plan, to authorize 1,500,000 additional common shares.  4. Ratification of selection of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending May 31, 2020.  The Board of Directors recommends that you vote FOR each of the listed nominees for election as a director, and FOR Proposals 2, 3 and 4.  NOTE: In their discretion, the proxies are authorized to vote on such other business as may properly come before the Annual Meeting.  Each of the foregoing proposals is more fully described in the Proxy Statement for the Annual Meeting.  Please sign exactly as your name appears on this proxy card. Executors, administrators, trustees, guardians, attorneys and agents must give their full titles. If shareholder is a corporation, an authorized officer must sign in full corporate name. If shareholder is a partnership or other entity, an authorized person must sign in the entity's full name. If the common shares represented by this proxy are held in joint tenancy, both holders must sign this proxy card. Signature (Joint Owners) Date Signature [PLEASE SIGN WITHIN BOX] Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDSDETACH AND RETURN THIS PORTION ONLY

 

 

 

 

 

NOTICE OF VIRTUAL ANNUAL MEETING OF SHAREHOLDERS WEDNESDAY, SEPTEMBER 25, 2019, AT 3:00 P.M., EASTERN DAYLIGHT TIME Access to this year’s virtual Annual Meeting of Shareholders will be available atwww.virtualshareholdermeeting.com/WOR19. A replay of the Annual Meeting of Shareholders will be available for one year. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders of Worthington Industries, Inc. to be Held on September 25, 2019: The Notice of Annual Meeting of Shareholders, the Proxy Statement and the Company's 2019 Annual Report to Shareholders are available at www.proxyvote.com. E83573-P27827 WORTHINGTON INDUSTRIES, INC. PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF WORTHINGTON INDUSTRIES, INC. PLEASE COMPLETE, SIGN AND DATE THIS PROXY CARD WITHIN THE BOXES ON THE REVERSE SIDE AND RETURN IT PROMPTLYIN THE ENCLOSED ENVELOPE. Each shareholder identified on this proxy card hereby constitutes and appoints John P. McConnell, B. Andrew Rose and Dale T. Brinkman, and each of them, with full power of substitution, the lawful agents and proxies of the shareholder to attend the Annual Meeting of Shareholders of Worthington Industries, Inc. (the "Company") to be held via live webcast only at www.virtualshareholdermeeting.com/WOR19,on Wednesday, September 25, 2019, at 3:00 p.m., Eastern Daylight Time, and to vote all of the common shares of the Company that the shareholder is entitled to vote at such Annual Meeting, as directed on the reverse side with respect to the matters set forth on the reverse side, and to vote such common shares with discretionary authority on all other matters which are properly brought before the Annual Meeting. This proxy, when properly executed, will be voted as directed. If no direction is made, except in the case of broker non-votes, this proxy will be voted FOR the election of all nominees listed on the reverse side in Proposal 1 and FOR Proposals 2, 3 and 4. All proxies previously given or executed by each shareholder identified on this proxy card are hereby revoked.  Continued and to be signed on reverse side