UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ________ to ________
 
COMMISSION FILE NUMBER 000-30205
 
CMC Materials, Inc.
(Exact name of registrant as specified in its charter)

Delaware
 
36-4324765
(State of Incorporation)
 
(I.R.S. Employer Identification No.)

870 North Commons Drive
 
60504
Aurora, Illinois
 
(Zip Code)
(Address of principal executive offices)
   
 
Registrant’s telephone number, including area code: (630) 375-6631
 
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value
CCMP
The NASDAQ Stock Market LLC
 
Securities registered pursuant to Section 12(g) of the Act:  None
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.       Yes  ☒   No ☐
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes ☐   No
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes ☒   No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes ☒   No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer
 ☒  
Accelerated filer
 
Non-accelerated filer
 
Smaller reporting company

 
Emerging growth company

 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐


 Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes     No ☒
 
The aggregate market value of the registrant’s Common Stock held beneficially or of record by stockholders who are not affiliates of the registrant, based upon the closing price of the Common Stock on March 31, 2021, as reported by the NASDAQ Global Select Market, was approximately $5,125,185,387.  For the purposes hereof, “affiliates” include all executive officers and directors of the registrant.
 
As of January 7, 2022, the Company had 28,568,967 shares of Common Stock outstanding.



EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A (this “Form 10-K/A”) to the Annual Report on Form 10-K of CMC Materials, Inc. (“CMC”, “the Company”, “us”, “we”, or “our”) for the fiscal year ended September 30, 2021, filed with the Securities and Exchange Commission (the “SEC”) on November 12, 2021 (the “Original Form 10-K”) is being filed solely for the purpose of including the information required by Part III of Form 10-K. This information was previously omitted from the Original Form 10-K in reliance on General Instruction G(3) to Form 10-K, which permits the information in the above referenced items to be incorporated in the Form 10-K by reference from our definitive proxy statement if such statement is filed no later than 120 days after our fiscal year-end. We are filing this Amendment No. 1 to include Part III information in our Form 10-K because we will not file a definitive proxy statement containing such information within 120 days after the end of the fiscal year covered by the Original Form 10-K. In addition, this Form 10-K/A deletes the reference on the cover of the Original Form 10-K to the incorporation by reference of portions of our proxy statement into Part III of the Original Form 10-K.

Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Form 10-K/A also contains certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, which are attached hereto. Because no financial statements have been included in this Form 10-K/A and this Form 10-K/A does not contain or amend any disclosure with respect to Items 307 and 308 of Regulation S-K, paragraphs 3, 4, and 5 of the certifications have been omitted.

Except as described above, this Form 10-K/A does not modify or update disclosure in, or exhibits to, the Original Form 10-K. Furthermore, this Form 10-K/A does not change any previously reported financial results. Information not affected by this Form 10-K/A remains unchanged and reflects the disclosures made at the time the Original Form 10-K was filed.


 
PART III.
     
       
 
Item 10.
5
 
Item 11.
6
 
Item 12.
41
 
Item 13.
44
 
Item 14.
45
       
PART IV.
     
       
 
Item 15.
46
 
Item 16.
47
    50


PART III

ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
Directors
 
As of January 7, 2022, our current directors are as follows:
 
Richard S. Hill, 69. Mr. Hill was elected a director of our company in June 2012. Mr. Hill retired as the Chairman and Chief Executive Officer of Novellus Systems, Inc. in June 2012 after serving in these positions since 1996, and since 1993 as CEO upon his joining Novellus. Prior to leading Novellus, Mr. Hill held various senior leadership and management positions with Tektronix, Inc., General Electric, Inc., Motorola, Inc., and Hughes Aircraft, Inc. Mr. Hill also serves as a director of Arrow Electronics, Inc. and Marvell Technology Group Ltd. He also previously served as a director of Xperi, Inc. until June 2020, and of Symantec, Inc. from January until December 2019, also having served as Interim Chief Executive Officer there from May to November 2019. He received a B.S. in bioengineering from the University of Illinois and a M.B.A. from Syracuse University. Based upon Mr. Hill’s management and director experience and his technical background discussed above, the board has concluded Mr. Hill should serve as a director of our company.
 
Barbara A. Klein, 67. Ms. Klein was elected a director of our company in April 2008. Ms. Klein also is a director of Ingredion, Inc. She retired in May 2008 as the Senior Vice President and Chief Financial Officer of CDW Corporation. Prior to that, Ms. Klein held a variety of senior finance positions including Vice President and Chief Financial Officer of Dean Foods Company, Vice President and Corporate Controller of Ameritech Corporation, and Vice President and Corporate Controller of Pillsbury Co. Ms. Klein received a B.S. in accounting and finance from Marquette University, and an M.B.A. from Loyola University. Based upon Ms. Klein’s management and director experience and her accounting and finance background discussed above, the board has concluded Ms. Klein should serve as a director of our company.
 
David H. Li, 49. Mr. Li was elected a director of our company in January 2015, and has served as our President and Chief Executive Officer since then. From June 2008 through December 2014, Mr. Li served as our Vice President of the Asia Pacific Region. Prior to that role, Mr. Li served in various leadership roles throughout our business since joining us in 1998. Mr. Li received a B.S. in chemical engineering from Purdue University and an M.B.A. from Northwestern University. Based upon Mr. Li’s management experience, his knowledge of our company, its operations and customers, his knowledge of the chemical and semiconductor industries, and his Asia-focused, cross-border business experience, the board has concluded Mr. Li should serve as a director of our company.
 
William P. Noglows, 63. Mr. Noglows has served as our Chairman since 2003, and was our President and Chief Executive Officer from November 2003 through December 2014. Mr. Noglows also is a director of Aspen Aerogels, Inc. and Littelfuse, Inc. From 1984 through 2003, he served in various leadership positions at Cabot Corporation, culminating in serving as an executive vice president and general manager. Mr. Noglows had previously served as a director of our company from December 1999 until April 2002. Mr. Noglows received his B.S. in chemical engineering from the Georgia Institute of Technology. Based upon Mr. Noglows’ management experience, his knowledge of our company and its operations, and his knowledge of the chemical and semiconductor industries, the board has concluded Mr. Noglows should serve as a director of our company.
 
Paul J. Reilly, 64. Mr. Reilly was elected a director of our company in March 2017. Mr. Reilly served as an executive vice president of Arrow Electronics, Inc. through his retirement in January 2017, and had held various leadership roles there, including serving as the executive vice president, finance and operations, and chief financial officer from 2001 through May 2016, and head of global operations from 2009 through May 2016. Prior to joining Arrow in 1991, Mr. Reilly was a certified public accountant at KPMG Peat Marwick. Mr. Reilly also serves as a director of Assurant, Inc., and previously served as a director of comScore, Inc. from September 2017 until August 2019. He has a B.S. in accounting from St. John’s University. Based upon Mr. Reilly’s management and director experience and his accounting and finance background discussed above, the board has concluded Mr. Reilly should serve as a director of our company.

5

Dr. Anne K. Roby, 57. Dr. Roby was elected a director of our company in June 2021. She most recently served as an Executive Vice President and Member of the Management Committee of Linde plc, a leader in industrial and specialty materials for the semiconductor and other industries, from September 2017, upon Linde’s merger with Praxair, Inc., until her retirement in July 2020. Her tenure at Linde capped a more than 25-year career at Praxair prior to the merger, culminating in her serving as a Senior Vice President and Member of the Office of the Chairman from 2014 to 2017. Prior to this, she was the President, Praxair Asia and Electronics, based in Shanghai, China, for four years. Dr. Roby is the Vice Chair of the Board of the Nuvance Health Network, and is a Trustee of Villanova University. She received her B.Sc. from Villanova University, and her Ph.D. from the University of Delaware, both in Chemical Engineering, and is a Member of the National Academy of Engineering. Based upon Dr. Roby’s management experience and her technical background discussed above, the board has concluded that Dr. Roby should serve as a director of our company.
 
Susan M. Whitney, 71. Ms. Whitney was elected a director of our company in April 2015. Ms. Whitney retired from the IBM Corporation in 2007, following a 35-year career in which she held various operational leadership roles throughout the company. Ms. Whitney also serves as a trustee of the College of Mt. St. Vincent, and served as a director of LSI Logic Corporation prior to its acquisition by Avago Technologies, Ltd. in 2014. She received her B.A. in mathematics and economics from the College of Mt. St. Vincent. Based upon Ms. Whitney’s management and director experience and her background in technology companies discussed above, the board has concluded Ms. Whitney should serve as a director of our company.
 
Geoffrey Wild, 65. Mr. Wild was elected a director of our company in September 2015. Mr. Wild is the Chief Executive Officer of Atotech since March 2017. He previously had served successively as the Chief Executive Officer of AZ Electronic Materials, Cascade Microtech, Inc. and Nikon Precision, Inc. Mr. Wild previously served as a director of Materion Corporation until December 2019, and Axcelis Technologies, Inc. He received his B.S. in chemistry from the University of Bath, UK. Based upon Mr. Wild’s management and director experience and his technical background discussed above, the board has concluded Mr. Wild should serve as a director of our company.
 
Executive Officers
 
For information with respect to the executive officers of our Company, see “Information about our Executive Officers” in Part I of our Original Form 10-K.
 
Code of Business Conduct
 
We have adopted a code of business conduct for all our employees and directors, including our principal executive officer, other executive officers, principal financial officer and senior financial personnel. A copy of our code of business conduct is available free of charge on our Company website at www.cmcmaterials.com. We intend to post on our website any material changes to, or waivers from, our code of business conduct, if any, within two days of any such event.
 
Audit Committee Members and Financial Expert
 
The Audit Committee consists of Messrs. Hill, Reilly and Wild and Ms. Klein, with Mr. Reilly serving as the chair. The Board has determined that each current member of the Audit Committee is financially sophisticated under the listing standards of The Nasdaq Stock Market (the “Nasdaq Rules”). The Board has also determined that Mr. Reilly and Ms. Klein are “audit committee financial experts” as defined in Regulation S-K Item 407(d)(5)(ii) adopted by the SEC. All current members of the Audit Committee are considered independent because they satisfy the independence requirements prescribed by the Nasdaq Rules, including those set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
 
ITEM 11.
EXECUTIVE COMPENSATION
 
Compensation Discussion and Analysis
 
In this section, we discuss and analyze our executive officer compensation program and how we compensated each of our named executive officers identified in the following table in fiscal year 2021. The individuals listed below include our chief executive officer, chief financial officer, and our three other most highly compensated executive officers based on total compensation.

6

Name
Title
David H. Li
President and Chief Executive Officer
Scott D. Beamer
Former Vice President and Chief Financial Officer
Daniel D. Woodland
Vice President and President, Electronic Materials
Jeffrey M. Dysard
Vice President and President, Performance Materials
H. Carol Bernstein
Vice President, Secretary and General Counsel
 
As previously disclosed, on November 15, 2021, Mr. Beamer resigned as Vice President and Chief Financial Officer and Jeanette A. Press, our Principal Accounting Officer and Controller, was appointed to the additional role of Interim Chief Financial Officer. A description of the compensation arrangements with Mr. Beamer and Ms. Press in connection with the transition can be found under the headings, “Transition Arrangement with Mr. Beamer” and “Interim CFO Compensation Arrangement,” following the Summary Compensation Table below.
 
Fiscal Year 2021 Executive Compensation Summary
 
Our executive compensation program is structured to align our named executive officers’ interests with those of our stockholders, by linking compensation to business objectives and performance, and to attract and retain talented executives. In general, our executive officers, including David H. Li, our President and Chief Executive Officer, and our other named executive officers, are eligible for, and participate in, our compensation and benefits programs according to the same terms as those available to all our employees. Our executive officer compensation program is administered by the compensation committee of our board of directors, which is composed solely of independent directors. The key elements of our executive compensation program are base salary, annual cash incentives pursuant to our Short-Term Incentive Program (“STIP”), and long-term equity incentives. The compensation committee is responsible for determining the level of compensation awarded to our named executive officers and our other executive officers. The compensation committee targets compensation levels that take into account current market practices and believes that offering market-comparable pay opportunities allows our company to maintain a successful and stable executive team.
 
In fiscal year 2021, we achieved another year of record revenue, driven by the continued remarkable efforts of our worldwide team of employees who tirelessly and safely delivered on commitments to our customers, with a paramount focus on employee health and workplace safety occasioned by the ongoing challenges of the COVID-19 pandemic (the “Pandemic”). However, inflationary and supply chain challenges arising out of the Pandemic, which have affected many other businesses globally, adversely affected our profitability in fiscal year 2021, and as previously disclosed, we have implemented various cost optimization and productivity enhancement measures to mitigate their effect on our company.   Regardless of these challenges, all our businesses have continued in full operation around the world, as they have since the onset of the Pandemic as essential businesses according to various government requirements. As in fiscal year 2020, in fiscal year 2021, we continued to refine our global business continuity plans to help mitigate the impact of the Pandemic and global supply chain disruptions on our operations. We continue our operations with vigilance as the Pandemic has continued through the end of fiscal year 2021 and through our fiscal year 2022 to date. During these challenging times, we have also made efforts to give back and help the communities in which we operate, and to enhance our focus on sustainability, as demonstrated through our recently published 2021 Corporate Sustainability Report, which includes our Fiscal Year 2022 – Fiscal Year 2026 Sustainability Goals.
 
For fiscal year 2021, our leadership team, composed of our executive officers, including our named executive officers, achieved record revenue for the sixth consecutive year. Our electronic materials business, which comprises approximately 80 percent of our business and serves the semiconductor industry, contributed to this growth and maintained stability throughout the year as the industry showed resilience and some continued strengthening as the Pandemic drove technology demand through work from home, e-learning, and healthcare-related needs. Fiscal year 2021 also marked our first fiscal year operating as the rebranded CMC Materials, Inc. Our fiscal year 2021 results reflect the efforts of our global workforce, led by Mr. Li and our other executive officers, including our named executive officers.
 
7

Overview
 
General
 
Our executive compensation program is administered by the compensation committee of our board of directors, which is composed solely of independent directors. The compensation committee is responsible for determining the level of compensation paid to our named executive officers and our other executive officers, including determining awards under and administering the CMC Materials, Inc. 2021 Omnibus Incentive Plan (“2021 OIP”) (which replaced the CMC Materials, Inc. 2012 Omnibus Incentive Plan (“2012 OIP”) effective as of our 2021 annual meeting of stockholders). The compensation committee is also responsible for reviewing and establishing all other executive officer compensation programs and plans that we may adopt from time to time. During, and for, fiscal year 2021, the compensation committee made all decisions pertaining to the compensation of our named executive officers and our other executive officers. The compensation committee also reviewed and approved the methodology used for compensation of our general employee population. Our chief executive officer is neither present for voting or deliberation on, nor votes upon decisions relating to, his compensation. In addition, our chief executive officer does not vote upon decisions related to the compensation of our other executive officers. Our chief executive officer evaluates the performance of our other executive officers, including the named executive officers, discusses the compensation and mix and forms of compensation of the other executive officers with the compensation committee’s independent compensation consultant and with the committee, and makes recommendations to the committee with respect to the compensation of the other executive officers. However, the committee makes all final decisions regarding the executive officers’ compensation. Also, our vice president of human resources and her human resources staff support the compensation committee in its work by providing input and recommendations on the overall mix and forms of executive officer compensation, and discuss such matters with the committee’s independent compensation consultant, as directed by the compensation committee. Our vice president of human resources and her human resources staff do not make decisions regarding the amount of compensation for our named executive officers or other executive officers, and are not present for voting on any such matters.
 
As part of its responsibilities pursuant to its charter, the compensation committee also authorizes and reviews the non-binding stockholder advisory vote to approve our named executive officer compensation, as described in our proxy statement. At our 2021 annual meeting of stockholders, our stockholders approved the company’s named executive officer compensation, as described in our 2021 proxy statement, with approximately 97% of the votes cast in favor of the matter. Our compensation committee and our board of directors met following the 2021 annual meeting to consider the results of such non-binding stockholder advisory vote and made no changes to the company’s executive compensation program as a result of such vote.
 
Compensation Policy and Overall Objectives
 
In determining the amount and composition of executive officer compensation, the committee’s goal is to provide compensation that will enable us to:
 

link the interests of our executive officers to the interests of our stockholders,
 

align compensation with business objectives and performance, and
 

attract and retain talented executives.

8

In general, executive officers, including our President and Chief Executive Officer and our other named executive officers, are eligible for, and participate in, our compensation and benefits programs according to the same terms as those available to all our employees. For example, the terms and conditions of our annual non-qualified stock option and restricted stock unit awards under the 2021 OIP (and previously, the 2012 OIP) are the same for our executive officers as they are for our other employees. Similarly, the health and welfare benefit programs in the countries in which we operate are generally the same for all our employees, including our named executive officers and other executive officers; our executive officers participate in the same Employee Stock Purchase Plan, tax-qualified savings plan (the “401(k) Plan”) and non-qualified supplemental savings plan (the “Supplemental Plan”), according to the same terms, as our other employees. Aside from the change-in-control severance protection agreements with our named executive officers and other executive officers, and an employment agreement with Mr. Li, all of which are described in greater detail in the “Executive Compensation” section below, we do not have general post-termination of service agreements with our executive officers. Our executive officers have been eligible to participate in our Executive Officer Deposit Share Program, as described in greater detail below in the section entitled “Executive Compensation.” Since December 2017, the mix of annual equity awards granted to Mr. Li and our other named executive officers has been weighted in favor of performance-based awards, which helps to more closely link long term incentives with company performance and the interests of our stockholders. Such awards are more fully described below.
 
Competitive Compensation Benchmarking
 
The compensation committee believes that each element of the compensation program should target compensation levels that take into account current market practices. Offering market-comparable pay opportunities allows us to maintain a successful and stable management team. Since our acquisition of KMG Chemicals, Inc. in fiscal year 2019, we broadened our portfolio of specialty materials and strengthened our position as a premier materials supplier to the semiconductor industry by adding KMG’s electronic chemicals business to our portfolio, and also adding the performance materials businesses of KMG, which serve customers in several industries and generally relate to the broader specialty chemicals sector, and made related changes to our peer group of companies for compensation comparison purposes to include specialty materials companies in addition to semiconductor materials companies, as well as companies that have similar levels of revenue, market capitalization, geographic scope, and employment. The compensation committee considers changes to the composition of our peer group from time to time based on changes in our or others’ business, and last reviewed the group during fiscal year 2021 with analysis from the independent compensation consultant to the compensation committee, who as of April 2017 is Meridian. The compensation committee first used the current group for comparison purposes at the end of fiscal year 2019, and confirmed the use of such group (but for any changes due to prior peers no longer being independent entities due to acquisitions in the prior year) in fiscal year 2021 to consider benchmarks for fiscal year 2021 annual cash incentives under our STIP, and to assist in its review and consideration of fiscal year 2022 base salaries, annual cash incentive targets, and long-term equity incentive awards. The peer group is comprised of the following companies:

Advanced Energy Industries
II-VI, Inc.
Brooks Automation, Inc.
Ingevity Corp.
Cognex Corporation
Innospec Inc.
Coherent, Inc.
Macom Technology Solutions
Element Solutions, Inc.
Rogers Corporation
Entegris, Inc.
Semtech Corporation
FormFactor, Inc.
W.R. Grace & Co.

In evaluating the comparison group for compensation purposes, the compensation committee, in consultation with Meridian exercises its discretion and makes its judgment regarding executive officer compensation matters after considering all relevant factors. In general, the compensation committee targets total compensation for our named executive officers and our other executive officers at approximately the 50th percentile for comparable positions within the comparison group, with performance-based elements such as annual cash incentives under our STIP and long-term equity incentives affording a higher-level opportunity depending on the company’s and individual’s performance. A direct correlation may not always exist between the roles, responsibilities, experience and performance of each of our executive officers and those of the position that appears to best correspond to such individual at companies within the comparison group, and in these situations, the compensation committee also may use a comparison to another index, such as those for similarly-sized technology companies (collectively, “comparison group”). In addition, a direct correlation may not always exist between the relevant time period of evaluation given that the fiscal year end of companies within the comparison group is in most cases different from the company’s fiscal year end of September 30, thereby making direct or any comparison difficult, especially when significant macro-economic (i.e., the Pandemic) or other changes occur that materially affect business performance and therefore, compensation differently and in different reporting periods, for each the company and the companies within the comparison group.

9

Elements of Compensation
 
The key elements of our compensation program for our named executive officers and other executive officers, and the reasons we provide them, are set forth in the following table:

 
Element
 
Description
 
Reason Provided
 
 
Base Salary
 
Fixed amount paid in cash biweekly, as for all our employees.
 
As for all our employees, provides named executive officers with a steady, predictable amount of fixed income with merit increases from time-to-time based on performance and market comparisons (if provided, usually effective on January 1 of the calendar year following such evaluation).

 
 
Annual Cash Incentives (Short-Term Incentive Program, currently, pursuant to 2021 OIP and previously, pursuant to 2012 OIP)
 
Cash payment made within 75 days following completion of fiscal year depending on company and individual performance, as for all our employees.
 
As for all our employees, aligns compensation with business objectives and performance by communicating goals and motivating individuals to achieve these goals, and rewarding performance actually achieved.

 
 
Long-Term Equity Incentives (currently, pursuant to 2021 OIP and previously, pursuant to 2012 OIP)
 
Performance Share Units (Annual), Restricted Stock/Restricted Stock Unit Awards (Initial, Annual and Deposit Share Program) and Stock Option Grants (Initial, Annual).
 
As for all our employees who receive awards pursuant to our equity incentive plan, “at risk” and long-term performance goal-based nature of equity awards links interests with those of our stockholders; provides ongoing retention mechanism over vesting periods.

 
 
Change in Control Severance Protection Benefits for Executive Officers and other Key Employees (and Post-Termination Agreement for Chief Executive Officer)
 
Salary and other benefits paid if terminated within a certain period of time pursuant to a Change in Control of our company (three years’ salary and other benefits for Chief Executive Officer; two years’ for other Executive Officers other than Principal Accounting Officer; one year’s for Key Employees and Principal Accounting Officer).

 
Assures company of dedicated executive and key employee team, notwithstanding the possibility, threat or occurrence of a change in control; provides for continuity of executive management and key employees in the event of an actual or threatened change in control.
 
 
Retirement and Other Benefits
 
 401(k) defined contribution savings plan, Supplemental Plan, statutory benefits, basic life and disability insurance and limited perquisites, as for all our employees.
 
Represents market practice and competitive factors; the Supplemental Plan is a broad-based program for all U.S. employees who exceed the federal 401(k) compensation limit.

 
 
Each of these elements is also addressed separately below. In determining compensation for executive officers, the compensation committee considers all elements of an executive officer’s total compensation package in comparison to current market practices, and ability to participate in savings plans and other benefits. On at least an annual basis, the compensation committee considers the base salary, annual cash incentive opportunity under our STIP, and long-term equity incentive elements, and balance among these elements, of each executive officer’s overall compensation.

10

The receipt and retention by executive officers of certain elements of compensation, such as annual cash incentive and equity-based compensation, are subject to our company’s Code of Business Conduct, and the terms and conditions of relevant program, plan, and grant and award agreements, all of which include provisions that provide that the company may rescind or recover (“clawback”) from an executive officer, including post-separation of service, annual cash incentives and/or equity-based incentives paid or awarded to such executive officer immediately under certain circumstances, including, but not limited to, actions by the individual constituting Cause, as determined by the company in its discretion and as otherwise enforceable under local law and violation of our Code of Business Conduct, including those provisions related to financial reporting (e.g., in the event of a restatement caused by certain factors) and as may be required by law. In the event of any such rescission or right of recovery, the individual must repay the amount in question to the company, and the company shall be entitled to set-off against such amount any amount owed to the individual by the company, including unvested equity awards.
 
Base Salaries
 
The compensation committee regularly reviews each executive officer’s base salary. Base salaries for executive officers are initially determined by evaluating each executive officer’s level of responsibility, prior experience, breadth of knowledge, internal equity issues and external compensation practices, with particular reference to the comparison peer group of companies. Increases to base salaries are driven primarily by performance and current market practices and are evaluated by the compensation committee based on sustained levels of contribution to the company in the context of our performance-based management process. In the past several years, this generally has meant base salaries around the 50th percentile of the salary ranges of similarly positioned executive officers in the comparison group. The factors the compensation committee considers in determining base salary levels are not assigned specific weights. Rather, the compensation committee reviews all factors and makes base pay determinations that reflect the compensation committee’s analysis of the aggregate impact of these factors.
 
Current market practices, as represented by a comparison to executive officer base salaries in the comparison peer group of companies continued to serve as the primary reference for the compensation committee with respect to deciding upon any changes to base salary for both fiscal year 2021 (effective as of the January 1, 2021 pay period) and fiscal year 2022 (effective as of the January 1, 2022 pay period), similar to fiscal year 2020 (effective as of the January 1, 2020 pay period). Over this period, the comparative data reflect the effects of macroeconomic and industry factors, set in the context of individual company performance.  In light of the Pandemic-related inflationary and supply chain challenges to our business described above, the compensation committee determined not to increase the base salaries of any of our named executive officers for 2022.
 
According to methodology consistent with the above, the resulting base salaries for 2021 and 2022 for each of the named executive officers are:

Name
2021 Base Salary ($)
(Effective as of the
January 1, 2021 Pay Period)
Percentage Increase
Over FY 2020
and Reasoning
2022 Base Salary ($)
(Effective as of the
January 1, 2022 Pay Period)
Percentage Increase
Over FY 2021
and Reasoning
David H. Li
735,000
5%, in consideration of market comparables and individual and company performance
735,000
See above
Scott D. Beamer
432,600
3%, in consideration of market comparables and individual and company performance
432,600*
N/A
Daniel D. Woodland
500,000
5.3%, in consideration of market comparables and individual and company performance
500,000
See above
Jeffrey M. Dysard
445,500
10%, in consideration of market comparables, his relatively recent promotion to his current position and individual and company performance
445,500
See above
 
H. Carol Bernstein
425,300
5%, in consideration of market comparables and individual and company performance
425,300
See above
 
*Mr. Beamer will continue to receive his base salary during the transition period until February 1, 2022 following his resignation as an executive officer on November 15, 2021, as described in greater detail under the heading, “Transition Arrangement with Mr. Beamer,” following the Summary Compensation Table below.

11

Annual Cash Incentives Under Our Short Term Incentive Program (STIP)
 
All the company’s employees are eligible to participate in the company’s annual cash incentive program, the STIP. This program is administered pursuant to our 2021 OIP (and previously, pursuant to our 2012 OIP), with executive officer, including named executive officer, payouts, if any, determined by the compensation committee. As with all employees, executive officers’ opportunities to earn annual cash incentives correspond to the degree to which our company achieves the annually-established goals under the STIP. The compensation committee believes that an annual cash incentive program allows us to communicate specific goals that are of primary importance during such year and motivates executive officers to achieve these goals.
 
Performance-Based Management Program and Company Performance Objectives: At the beginning of each fiscal year, the compensation committee and board of directors establish specific performance goals for the company in accordance with our performance-based management process. These objectives are set to reflect the key elements of our annual plan and budget, and provide a common platform for our initiatives for the year, which are set within the context of our focus on achievement of our longer-term strategic initiatives. Throughout the year, our senior management periodically reviews the company’s progress in achieving these goals with our board of directors and compensation committee. In November 2020, according to our annual practice, the board of directors and compensation committee approved our Fiscal Year 2021 Company Performance Objectives, which also served as our Performance Goals for the purposes of our STIP. The fiscal year 2021 STIP Performance Goals were chosen to encourage a particular and enhanced focus on certain aspects of our company’s performance, business strategy and objectives for our named executive officers and other executive officers, and for which all our executive officers collectively have responsibility for influencing and driving.
 
The board of directors and compensation committee selected revenue and earnings before interest, income taxes, depreciation and amortization, adjusted for certain items that affect comparability from period to period (“adjusted EBITDA”), as our Fiscal Year 2021 Company Performance Objectives and STIP Performance Goals. These are financial measures that are consistent with those used by the investment community to evaluate the performance of our company, and which the board and committee determined would be appropriate goals by which to incent the ongoing balanced performance of the company and its executive officers, across all its operational units, within the industry environment anticipated in early fiscal year 2021. The Fiscal Year 2021 Company Performance Objectives and STIP Performance Goals with corresponding Weighting, Measures for evaluating attainment of such, and corresponding Performance Targets were as follows:

 
FY21 STIP Achievement Against Performance Goals
 
Performance Objectives and Weighting
 
Threshold
   
Target
   
Stretch
   
Actual
 
Revenue, $M (Weighted 50%)
 
$
1,104.1
   
$
1,200.1
   
$
1,296.1
   
$
1,199.8
 
Adjusted EBITDA, as a percentage of Revenue (Weighted 50%)
   
31.0
%
   
32.0
%
   
33.0
%
   
29.9
%
 
Performance Goals, Cash Incentive Pool and Cash Incentive Calculation: As in prior years, in fiscal year 2021, the level of achievement of the noted two Fiscal Year 2021 STIP Performance Goals served as the mechanism by which the company determined the amount of funding for our STIP Pool, which is approved by the compensation committee for our named executive officers and other executive officers.

12

To determine the funding of the STIP Pool, the performance goals generally are weighted, based on their relative importance to achieving the company’s overall goals. Then, for each performance goal, “threshold”, “target” and “stretch” metrics, or levels, of performance are established. Because each year our performance goals are set to reflect the key objectives of our annual plan and budget, the “threshold”, “target” and “stretch” metrics for each goal are designed to reflect increasing levels of difficulty and motivation in achieving each level; even the “threshold” level requires demonstrated significant achievement against objectives. For fiscal year 2021, the company set challenging Performance Targets for the STIP Performance Goals to encourage focus on continuing to achieve our strategic initiatives, regardless of any difficult industry or macroeconomic conditions (i.e., the Pandemic). As part of our senior management’s periodic review throughout the year of our progress in meeting our Company Performance Objectives and STIP Performance Goals with the compensation committee and board of directors, performance is discussed against a particular goal’s “threshold”, “target” and “stretch” levels.
 
The “threshold” level of performance for a particular performance goal represents the lowest level of performance for which any cash incentive would be earned on that goal. The “stretch” level of performance represents the level for which the maximum cash incentive would be earned for that particular goal, and the “target” represents the target level of performance. The actual cash incentive earned, if any, attributable to each performance goal is calculated based on the actual performance compared to these “threshold”, “target” and “stretch” performance levels, and these are added together for all the performance goals to determine the funding of the STIP Pool. In turn, the STIP Pool is allocated for payment of annual cash incentives to executive officers, including our named executive officers. For fiscal year 2021, the cash incentive payout for a particular executive officer was calculated by taking the applicable target annual cash incentive opportunity (percentage of base pay), multiplied by the weighting factor (for executive officers, 100% based solely on company achievement of performance goals), and multiplied by the performance factor (actual achievement of performance goals, ranging from 0% to 200%).
 
In addition, in certain years, in assessing the company’s overall performance and calculating the funding of the STIP Pool for our named executive officers and other executive officers, the compensation committee also may consider certain additional factors, such as, for example, acquisition activity or the impact of global or other events beyond the company’s control (i.e., the Pandemic), that may have affected our company’s achievement of certain of the Performance Goals that the committee considered important in evaluating the company’s performance for the particular fiscal year, but that were not able to be known to the company at the time the year’s STIP Performance Goals and related metrics were established. Examples of additional factors that the compensation committee considered in fiscal year 2021 were acquisition-related costs, acquisition-related amortization costs, restructuring and impairment charges related to the company’s wood treatment and pipeline and industrial materials businesses, superfund remedial action phase accruals, and certain operational costs (net of grants) related to the Pandemic.
 
For employees other than our named executive officers and other executive officers, the fiscal year 2021 STIP performance goals and measures were tied to a combination of the performance of the overall company and business segments to which such employees provided services in fiscal year 2021, and also included consideration of employees’ performance against their individual performance goals.
 
Individual Executive Officer STIP Target Levels and Cash Incentives Earned Under Our STIP: The compensation committee, in consultation with Meridian, its independent compensation consultant, has established an STIP award target for each executive officer, including each named executive officer, by evaluating factors such as external pay practices, with particular reference to the comparison group of companies (as described above, STIP award targets are established for each of our executive officers based on an individual’s role). In this regard, for fiscal year 2021, the compensation committee retained the STIP award targets for Mr. Li at 105% and for Mr. Beamer, Dr. Woodland, Dr. Dysard and Ms. Bernstein at 65%. As described above, actual payouts for cash incentive awards to executive officers are determined by the level of performance of our company, which as described above, consisted of performance for fiscal year 2021 exceeding the threshold level for revenue and falling just short of the threshold level for adjusted EBITDA. The compensation committee determined that overall performance against the fiscal year 2021 STIP Performance Goals was achieved at 49.9% of target. Thus, for fiscal year 2021, the actual payouts for cash incentive awards for all executive officers, including the named executive officers, as well as for the corporate component of performance for all employees, were reflected at the 49.9% level. The STIP award targets and actual amounts earned for our named executive officers for fiscal year 2021 were as follows:

13

 
Name
Fiscal Year 2021
STIP Target (as %
of Base Salary)
Fiscal Year 2021
STIP Target* ($)
Fiscal Year 2021
Actual Cash
Incentive Earned** ($)
 
David H. Li
   
105
   
771,750
   
380,481
 
 
Scott D. Beamer
   
65
   
281,200
   
139,300
 
 
Daniel D. Woodland
   
65
   
325,000
   
160,100
 
 
Jeffrey M. Dysard
   
65
   
289,600
   
141,200
 
 
H. Carol Bernstein
   
65
   
276,400
   
136,300
 
 

*
The STIP award target is calculated by reference to the actual base salary earned with respect to the fiscal year.
**
In assessing our company’s and executive officers’ achievement of the noted Performance Goals for purposes of the multiplier described above, the compensation committee concluded that a performance factor of 49.9% had been achieved and the STIP pool was funded accordingly, with allocation to the executive officers according to this percentage achievement. In assessing each named executive officer’s individual performance for fiscal year 2021, and for purposes of the multiplier described above, the compensation committee pursuant to its ability to exercise negative discretion, ultimately decided upon a factor of 1.0 for each named executive officer that recognized the collective contributions of the executive officers to the company’s success for the year.
 
As discussed above, cash incentives awarded to our executive officers are subject to rescission and recovery (“clawback”) by the company in certain circumstances.
 
Fiscal Year 2022 STIP, Performance Goals and STIP Targets: In November 2021, according to our annual practice, the compensation committee set our fiscal year 2022 STIP Performance Goals, generally using the process described above. The Performance Goals approved for fiscal year 2022 for all executive officers and certain other senior management of the company are financial goals that include revenue and adjusted EBITDA. In addition, the compensation committee approved and set the individual performance factor multiplier for each participant at the maximum level of 200%, and the compensation committee retained discretion to reduce this amount. The fiscal year 2022 STIP targets for all the named executive officers, including Mr. Li, remained unchanged from the fiscal year 2021 STIP targets. All our named executive officers and other executive officers are eligible to participate in the STIP based on the achievement of these overall company objectives. All our employees, other than our named executive officers and other executive officers, are eligible to participate in the fiscal year 2022 STIP subject to achievement of a combination of overall company and specific business segment goals, as well as achievement of certain individual performance objectives.
 
Long-Term Equity Incentives
 
Long-term equity incentives are provided to our named executive officers and other executive officers pursuant to the 2021 OIP (and before the 2021 OIP was adopted in March 2021, the 2012 OIP). All the company’s employees are eligible to participate in the 2021 OIP (and previously, the 2012 OIP), with the compensation committee determining all awards to executive officers, including named executive officers. The compensation committee believes that equity-based compensation is essential to our overall compensation program because it involves at-risk components of compensation that directly link our executive officers’ interests with those of our stockholders. The compensation committee, in consultation with its independent compensation consultant, evaluates the balance of equity-based compensation with cash compensation by considering factors such as the desired balance between the two elements, external compensation practices (particularly those practices of the comparison group of companies), and the financial impact of providing various kinds and amounts of equity-based compensation to our employees, including our executive officers.
 
Timing of Grants: Initial or “new-hire” equity grants may be awarded when employees, including our executive officers, join the company. Thereafter, equity grants may be awarded to employees, including each executive officer, annually or from time to time based on performance or certain other factors, such as promotion or retention awards. To enhance retention, equity grants awarded to all employees, including our executive officers, are subject to vesting restrictions that generally lapse over a four-year period, and performance-based awards are generally subject to three-year performance requirements.  For the annual equity award cycle, whether for executive officers, including our named executive officers, or other employees participating in our equity incentive program, our compensation committee has, for more than a decade, made decisions in November, following the close of our fiscal year, for annual awards to be made the first week in December.   Our practice with respect to stock options consistently has been to grant them, as approved by the compensation committee, with an exercise price that is the fair market value, as represented by the closing price on NASDAQ, of our stock on the applicable grant date. It is not our practice to set a stock option’s grant date as a date prior to the date of approval by the compensation committee (i.e., “backdating”), and we never have done so. In addition, we follow our annual award cycle, new hire award, and certain retention award processes, rather than making ad hoc stock option grants or other equity awards.

14

Allocation Among Award Types: As permitted by the 2021 OIP (and previously, the 2012 OIP), our compensation committee awards non-qualified stock options, restricted stock units and performance share units to certain employees selected to receive awards, including the named executive officers and other executive officers. The performance share units vest based on the company’s achievement of certain performance metrics (average annual revenue growth and cumulative earnings per share), with potential adjustment based on the total shareholder return (“TSR”) achieved by our company relative to the TSR of the S&P MidCap 400 Index over the respective three-year performance period (e.g., ending September 30, 2024, 2023, and 2022, respectively, for each of the fiscal year 2022, fiscal year 2021, and fiscal year 2020 awards), generally subject to continued employment through the end of the performance period. We believe that these performance share unit awards help us to even more directly align our executive officers’ interests with those of our stockholders and further enhance the link between pay and performance. In fiscal year 2021, the compensation committee also approved non-qualified stock option and time-based restricted stock unit awards to the company’s named executive officers and other executive officers with terms and conditions that are generally consistent with the awards granted in prior years. All equity awards granted in fiscal year 2021 provide for accelerated vesting, either in full or on a prorated basis, upon the recipient’s “retirement,” defined as the termination of the recipient’s employment following the attainment of a combination of age and years of service of at least 70, with a minimum of 55 years of age, or upon an involuntary termination of employment due to a position elimination or reorganization of the company. In addition, these awards will vest in full in the event of a change in control (see “Treatment of Equity Awards” following the Potential Payments Upon Termination or Change in Control table below for more information). For additional information regarding the fiscal year 2021 performance share unit awards, please see footnote 5 to the Grants of Plan-Based Awards table in the “Executive Compensation” section below.
 
In determining the allocation among award types for a particular fiscal year, our compensation committee considers a number of factors, including the overall number of units to be awarded pursuant to our annual equity incentive award program to all employees. The allocation of value for the fiscal year 2021 long-term equity incentive awards made to our named executive officers (other than Mr. Li) was 40% in the form of performance share units, 30% in the form of non-qualified stock options and 30% in the form of time-based restricted stock units, to reflect current market practices. As previously disclosed, upon the advice of the independent compensation consultant to the compensation committee, the compensation committee decided to award Mr. Li (as chief executive officer of our company) fiscal year 2021 long-term equity incentive awards with a value of 50% in the form of performance share units, 25% in the form of non-qualified stock options and 25% in the form of time-based restricted stock units.
 
Our compensation committee believes that this mix of awards competitively balances the types of equity incentives being awarded to our employees, and also appropriately addresses the financial impact of the expensing of equity-based compensation required pursuant to an accounting standard issued by the Financial Accounting Standards Board (ASC 718).
 
The breakdown of the allocation of value for the fiscal year 2022 long-term equity incentive awards is the same as set forth above for fiscal year 2021 for Mr. Li and for our other named executive officers.
 
Size of Awards: When determining awards for individual executive officers under the 2021 OIP (and previously, the 2012 OIP), the compensation committee primarily considers compensation practices and equity values awarded by the comparison group of companies, as well as the executive officer’s level of current and potential future responsibility, and also considers performance in the prior year and the underlying economic value associated with equity incentive awards. In determining award sizes, the compensation committee does not assign specific weights to these factors. Rather, the factors are evaluated on an aggregate basis. In November 2020, according to our annual practice, the compensation committee, upon the advice of its independent compensation consultant, considered all these factors in deciding our fiscal year 2021 annual equity incentive awards to be made on December 3, 2020, under the 2012 OIP, which for our named executive officers are shown in the following table:

15

 
Name
 
Fiscal Year 2021
Non-Qualified Stock
Option Grant (#)
   
Fiscal Year 2021
Restricted Stock Unit Award (#)
   
Target Performance Share Unit
Award (#) for the Fiscal Year
2021 through Fiscal Year 2023
Performance Period
 
 
David H. Li
 
23,196
   
6,680
   
13,360
 
 
Scott D. Beamer
 
6,610
   
1,903
   
2,538
 
 
Daniel D. Woodland
 
6,958
   
2,004
   
2,672
 
 
Jeffrey M. Dysard
 
5,915
   
1,703
   
2,271
 
 
H. Carol Bernstein
 
5,362
   
1,603
   
2,137
 

In November 2021, according to our annual practice, the compensation committee considered the same factors described above in deciding our fiscal year 2022 annual equity incentive awards to be made on December 6, 2021, under the 2021 OIP, which for our named executive officers are shown in the following table:

 
Name
 
Fiscal Year 2022
Non-Qualified Stock
Option Grant (#)
   
Fiscal Year 2022
Restricted Stock Unit Award (#)
   
Target Performance Share Unit
Award (#) for the Fiscal Year
2022 through Fiscal Year 2024
Performance Period
 
 
David H. Li
 
21,105
   
7,580
   
15,160
 
 
Scott D. Beamer*
 
   
   
 
 
Daniel D. Woodland
 
5,803
   
2,274
   
3,032
 
 
Jeffrey M. Dysard
 
5,381
   
1,932
   
2,577
 
 
H. Carol Bernstein
 
4,642
   
1,819
   
2,425
 
 
*As previously disclosed, Mr. Beamer resigned as Vice President and Chief Financial Officer on November 15, 2021 and as such, he did not receive any equity incentive awards with respect to fiscal year 2022.
 
In general, the compensation committee has not considered any actual amounts that may have been realized from prior equity-based compensation awards in awarding subsequent equity-based compensation, or other elements of compensation. However, in considering awards under the 2021 OIP (and previously, the 2012 OIP) to our employees, including executive officers, the compensation committee does consider whether equity-based awards that previously may have been made to them continue to fulfill the purposes of motivation and retention.
 
All our executive officers have meaningful equity ownership in our company through participation in various equity-based programs such as the Employee Stock Purchase Plan, Executive Officer Deposit Share Program, and our annual equity incentive award program, but we do not currently have equity-ownership requirements or guidelines for our executive officers.
 
Vesting of Fiscal Year 2019 through Fiscal Year 2021 Performance Share Unit Awards: In January 2019, each of our named executive officers received grants of performance share units for the performance period beginning on October 1, 2018 and ending on September 30, 2021. The performance share units were subject to vesting conditions based on the company’s achievement of average annual revenue growth and cumulative earnings per share metrics during the performance period. If threshold, target or maximum were attained for these measures during the performance period, 50%, 100% or 200% of the target performance share units for each named executive officer, respectively, would be earned, subject to potential upward (+20%) or downward (-20%) adjustment based on the TSR achieved by our company relative to the TSR of the S&P MidCap 400 Index over the three-year performance period.
 
The Company Performance Objectives applicable to the performance share units and Performance Goals with corresponding Weighting, Measures for evaluating attainment of such, and corresponding Performance Targets were as follows:

 
FY19-21 PSU Award Achievement Against Performance Goals
 
Performance Objectives and Weighting
 
Threshold
(50%)
   
Target
(100%)
   
Stretch
(200%)
   
Actual
 
Revenue Growth (Weighted 50%)
   
4%

   
7%

   
10%

   
4.1%

Cumulative Earnings per Share (Weighted 50%)
 
$
15.75
   
$
21.00
   
$
24.50
   
$
20.70
 
 
Our relative TSR ranking within the S&P MidCap 400 Index over the three-year performance period was in the 55th percentile, resulting in no adjustment to the award payout based on relative TSR.

16

The target number of performance share units granted to each named executive officer for the fiscal year 2019 through fiscal year 2021 performance share unit award, our overall actual performance, and the resulting share amounts earned, are set forth in the table below:

 
Name
 
Target Performance
Share Unit Award (#)
for the Fiscal Year
2019 through Fiscal
Year 2021
Performance Period
 
Revenue Growth
and
Cumulative EPS
Actual Performance
   
Relative TSR Multiplier
   
Overall Actual
Performance
   
Actual Shares
Earned (#)
 
 
David H. Li
   
13,728
   
74.7
%
   
1.0
x
   
74.7
%
   
10,255
 
 
Scott D. Beamer
   
3,295
   
74.7
%
   
1.0
x
   
74.7
%
   
2,461
 
 
Daniel D. Woodland
   
3,494
   
74.7
%
   
1.0
x
   
74.7
%
   
2,610
 
 
Jeffrey M. Dysard
   
1,997
   
74.7
%
   
1.0
x
   
74.7
%
   
1,492
 
 
H. Carol Bernstein
   
2,895
   
74.7
%
   
1.0
x
   
74.7
%
   
2,163
 
 
Clawback Policy; Anti-Hedging or Anti-Pledging Policy: As discussed above, equity-based compensation awarded to our executive officers is subject to rescission and recovery (“clawback”) by the company in certain circumstances. In addition, all equity-based compensation is subject to all the terms of our 2021 OIP (or the 2012 OIP, as applicable), the respective grant and award agreements for particular grants and awards, our Code of Business Conduct, our Insider Trading and Non-Disclosure Policy, including Trading Guidelines for Directors, Executive Officers and Other Key Employees, and our Reporting Requirements and Trading Guidelines for Directors and Executive Officers Under Section 16 of the Exchange Act and Rule 144 Under the Securities Act of 1933; as applicable, noted policies and procedures apply to any and all equity in our company held by our executive officers. For example, our executive officers, as well as our directors and designated other key employees, observe various requirements, such as those related to quarterly trading and other “blackout” periods, and affirmative pre-clearance of any transactions in our company’s securities. Our executive officers and directors are prohibited from and do not hedge or pledge equity in our company.
 
Change in Control Severance Protection Benefits.
 
The terms and conditions of the change in control severance protection agreements with our named executive officers and the employment letter with Mr. Li are described in more detail in the section entitled “Executive Compensation,” below. The board of directors and compensation committee originally determined the terms and conditions of the change in control severance protection agreements, including the severance benefit payable, and the triggering events for the payment of such severance benefit, pursuant to such agreement, in consultation with their independent compensation consultant and our financial and other advisors, and considered external practices at similarly situated companies regarding change in control arrangements. The board of directors and compensation committee also review the costs and benefits of the change in control severance protection agreements periodically. As a result of the most recent review, the board of directors and compensation committee, with advice from an independent outside compensation consultant regarding market practices, determined that the design of such agreements remains competitive and reasonable. The agreements are described in more detail in the section entitled “Executive Compensation,” below.
 
Retirement and Other Benefits.
 
We have adopted various employee benefit plans and arrangements for the purpose of providing employee benefits to our employees, including our executive officers. In general, the same terms apply to all our employees, including our executive officers. These plans and arrangements include our Employee Stock Purchase Plan, the 401(k) Plan, the Supplemental Plan, and the CMC Materials Health and Welfare Benefit Plan.
 
CEO Compensation
 
When Mr. Li became our President and Chief Executive Officer effective January 1, 2015, the compensation committee, in consultation with the committee’s independent compensation consultant at the time, considered the executive compensation practices described above to determine the terms of Mr. Li’s initial compensation, comprised of base salary, annual cash incentive under our STIP, and equity-based compensation elements, along with other terms, which are part of Mr. Li’s employment letter agreement with our company.

17

Upon completion of fiscal year 2021, the compensation committee, in consultation with the compensation committee’s independent compensation consultant, Meridian, considered the executive compensation practices described above, including the performance goals established by the committee, to determine Mr. Li’s total compensation, composed of an annual base salary, an annual cash incentive payment under our STIP for fiscal year 2021, and for fiscal year 2022 according to the annual equity incentive award cycle for which all employees were eligible, a non-qualified stock option grant, performance-share unit award, and restricted stock unit award. In addition, in setting both the cash-based and equity-based elements of Mr. Li’s compensation, the compensation committee made an overall assessment of Mr. Li’s leadership in achieving the company’s long-term and short-term strategic, operational and business goals. The compensation committee noted Mr. Li’s leadership throughout fiscal year 2021, which continued to be especially challenging due to the Pandemic. As noted above regarding the company’s performance overall in fiscal year 2021, the compensation committee observed that throughout the ongoing Pandemic, the company had continued to operate safely all manufacturing facilities, and also had secured its supply chain and had continued to supply customers on an ongoing basis despite Pandemic-related operational and logistics constraints, including inflationary and supply chain pressures. In addition, during the fiscal year and ongoing Pandemic, Mr. Li had continued to maintain and emphasize the Company’s culture and values. Further, he led the company to achieve another year of record revenue. Fiscal year 2021, in which the company recorded record revenue and other strong financial results, especially with respect to the company’s electronic materials business segment, followed consecutive successful years in fiscal years 2020 and 2019. Related to the company’s long-term strategic initiatives, the compensation committee noted Mr. Li’s leadership with respect to ongoing plans to continue to grow the company profitably and faster than the industries that it serves, while implementing cost and productivity improvement measures. The compensation committee, using its discretion, also considered Mr. Li’s compensation with respect to chief executive officers among the comparison group of companies, as well as equitable and consistent treatment compared to our other executive officers. In addition to these factors, as described in greater detail above, Mr. Li’s cash incentive award for fiscal year 2021, which was paid under our STIP, reflected the company’s overall performance against the pre-established goals for fiscal year 2021.
 
Based upon all this, the compensation committee awarded Mr. Li $380,481 as a cash incentive for fiscal year 2021. Mr. Li’s fiscal year 2021 cash incentive under our STIP of $380,481, together with his $726,250 base salary paid during fiscal year 2021, resulted in total cash compensation to Mr. Li for fiscal year 2021 of $1,106,731, which was a decrease of $418,269 from Mr. Li’s total cash compensation for fiscal year 2020 of $1,525,000, comprised of base salary paid in fiscal year 2020 of $700,000 and cash incentive under our STIP for fiscal year 2020 of $825,000.
 
In addition, as noted above and as reported in footnotes 2 and 3 to the 2021 Grants of Plan-Based Awards table that follows, in November 2021, according to our annual practice, the compensation committee awarded Mr. Li equity-based compensation to be made on the annual equity award date of December 6, 2021, in the form of 21,105 non-qualified stock options, 7,580 restricted stock units, and 15,160 performance share units (at target). Aside from the number of non-qualified stock options, restricted stock units and performance share units awarded, the terms and conditions of these grants and awards are the same as those for grants and awards made to our other employees and executive officers, including provisions that unvested awards will be forfeited at the time of certain terminations of employment. Because these equity awards were made after the completion of fiscal year 2021, they are reported in the referenced footnote and not specifically reported in the compensation tables that follow.
 
As noted above, the compensation committee and the board of directors review on a periodic basis the hypothetical costs to the company of Mr. Li’s change-in-control severance protection agreement, and those of the company’s other executive officers and key employees who have such agreements.

18

Regulatory and Other Factors
 
Internal Revenue Code Section 162(m). In its review of compensation matters, one of the factors the compensation committee considers is the anticipated tax treatment to our company and to our executive officers of various payments and benefits. Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally places a $1 million limit on the amount of compensation payable to certain covered executive officers that a company may deduct in any one year. While the compensation committee generally considers this limit when determining executive officer compensation, there are instances in which the compensation committee has concluded, and reserves the discretion to conclude in the future, that it is appropriate to exceed the limitation on deductibility under Section 162(m) such that executive officers are compensated in a manner that it believes to be consistent with the company’s best interests and those of its stockholders. Furthermore, interpretations of and changes in the tax laws, and other factors beyond the compensation committee’s control, may also affect the deductibility of compensation.
 
It is no longer necessary to include specific Section 162(m)-related limitations or provisions in our compensation plans and programs or to request stockholder approval for the purpose of a performance-based compensation exception to the $1 million limit referenced above. The company will continue to seek stockholder approval of certain compensation plans as may be required by applicable laws, regulations, or the rules of the applicable exchange on which the company’s shares are listed.
 
Other Factors. As described above, our compensation committee uses awards of performance share units, restricted stock and restricted stock units in addition to grants of non-qualified stock options to, among other reasons, address the financial impact of the expensing of equity-based compensation required under FASB ASC Topic 718. In addition, the company has intended for its non-qualified deferred compensation plans and other plans, programs and agreements subject to the requirements of Internal Revenue Code Section 409A to be in compliance with such requirements.
 
19

Executive Compensation
 
The following tables set forth certain compensation information for our Chief Executive Officer, Chief Financial Officer, and three other most highly compensated executive officers of the company (collectively, the “named executive officers”) for the fiscal year ended September 30, 2021. Information for the fiscal years ended September 30, 2020 and September 30, 2019 is also presented for executive officers who were named executive officers during those years.
 
Summary Compensation Table
 
Name and Principal
Position
Year
 
Salary
($)
   
Stock Awards
($)1
   
Option Awards
($)1
   
Non-Equity
Incentive
Plan
Compensation
($)2
   
All Other
Compen-
sation
($)3
   
Total Compen-
sation
($)
 
David H. Li
2021
     
726,250
   
3,004,303
     
1,186,107
     
380,481
     
298,319
     
5,595,460
 
President and Chief
Executive Officer
2020
     
700,000
   
2,423,521
     
938,799
     
825,000
     
264,081
     
5,151,401
 
2019
     
687,500
   
2,120,064
     
707,868
     
742,000
     
451,304
     
4,708,736
 
Scott D. Beamer
2021
     
429,450
   
668,283
     
337,996
     
139,300
     
28,709
     
1,603,738
 
Former Vice President and
Chief Financial Officer4
2020
     
418,000
   
531,294
     
260,822
     
304,800
     
46,896
     
1,561,812
 
2019
     
409,000
   
583,744
     
254,815
     
283,900
     
46,919
     
1,578,378
 
Daniel D. Woodland
2021
     
493,750
   
693,130
     
355,791
     
160,100
     
47,979
     
1,750,750
 
Vice President and President, Electronic Materials
2020
     
462,650
   
554,086
     
276,407
     
337,400
     
44,224
     
1,674,767
 
2019
     
414,200
   
619,274
     
270,295
     
293,200
     
51,064
     
1,648,033
 
Jeffrey M. Dysard
2021
     
435,375
   
639,001
     
302,458
     
141,200
     
43,367
     
1,561,401
 
    Vice President and
2020
     
391,250
   
429,190
     
189,732
     
285,300
     
36,404
     
1,331,876
 
President, Performance Materials
2019
     
337,278
   
353,972
     
154,470
     
221,200
     
127,462
     
1,194,383
 
H. Carol Bernstein
2021
     
420,225
   
554,385
     
300,985
     
136,300
     
43,490
     
1,455,385
 
Vice President, Secretary and General Counsel
2020
     
400,000
   
459,137
     
233,483
     
291,700
     
48,678
     
1,432,998
 
2019
     
380,075
   
512,889
     
227,023
     
265,300
     
54,950
     
1,440,237
 


1
The amounts in the column headed “Stock Awards” represent the aggregate grant date fair value of grants in fiscal years 2021, 2020 and 2019 computed in accordance with ASC 718. The actual value realized by a named executive officer related to stock or stock unit awards will depend on the market value of our common stock on the date the stock is sold. For restricted stock unit awards, the fair value is equal to the underlying value of the stock and is calculated using the closing price of our common stock on the award date. For performance share unit awards, the fair value is equal to the grant date fair value computed in accordance with ASC 718. The maximum potential value of the fiscal year 2021 performance share unit awards is shown below:

 
Name
 
Performance
Share
Units at
Maximum
Value ($)
 
 
Mr. Li
   
4,013,878
 
 
Mr. Beamer
   
762,516
 
 
Dr. Woodland
   
802,776
 
 
Dr. Dysard
   
682,300
 
 
Ms. Bernstein
   
642,040
 
 
20

The amounts in the column headed “Option Awards” represent the aggregate grant date fair value of grants in fiscal years 2021, 2020 and 2019 computed in accordance with ASC 718 (see Note 16 of Notes to Consolidated Financial Statements included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2021 for a description of the assumptions used in that computation). The actual value realized by a named executive officer related to option awards will depend on the difference between the market value of our common stock on the date the option is exercised and the exercise price of the option.
 
During fiscal years 2021, 2020 and 2019, no stock awards held by any of our named executive officers were modified or cancelled (forfeited).
 
2
The amounts in the column headed “Non-Equity Incentive Plan Compensation” represent the amounts earned under the STIP for fiscal years 2021, 2020 and 2019.

3
The information in the column headed “All Other Compensation” predominantly reflects amounts that by nature generally recur each year, such as benefit costs we contribute on behalf of our named executive officers in the same manner in which we contribute such costs for all our employees. For example, the information in the column includes contributions (both “nonelective” employer contributions and “matching” contributions) made by us to our tax-qualified savings plan (the “401(k) Plan”) and accruals under our non-qualified supplemental savings plan (the “Supplemental Plan”) according to the standard terms of each of these plans as applied to all our employees, including our named executive officers and other executive officers. Under the 401(k) Plan, we make a nonelective employer contribution on each employee’s behalf of 3% of the employee’s eligible compensation (up to the I.R.S. eligible compensation limit), regardless of whether the employee makes a contribution to the 401(k) Plan, and a safe harbor matching contribution on each employee’s behalf of 100% of the first 6% of the employee’s eligible compensation (up to the I.R.S. eligible compensation limit), that the employee contributes to the 401(k) Plan. With respect to the Supplemental Plan, which applies to all employees, including our named executive officers and other executive officers, at such time as they reach the I.R.S. eligible compensation limit under the 401(k) Plan, we continue to make an employer contribution of the equivalent of 4% of each employee’s eligible compensation (over the I.R.S. eligible compensation limit) to the Supplemental Plan on the employee’s behalf. Through December 31, 2021, employees have not been able to make contributions to the Supplemental Plan.
 
For fiscal year 2021, contributions as such to the 401(k) Plan and the Supplemental Plan on behalf of the named executive officers were made in the following amounts:
 
 
Name
 
401(k) Plan ($)
   
Supplemental Plan ($)
 
 
Mr. Li
   
14,644
     
50,423
 
 
Mr. Beamer
   
10,697
     
17,760
 

Dr. Woodland
   
26,100
     
21,627
 
 
Dr. Dysard
   
25,919
     
17,196
 
 
Ms. Bernstein
   
13,607
     
16,861
 
 
Similarly, the amounts in the column headed “All Other Compensation” include amounts we provided on behalf of each of our named executive officers for basic life insurance and accidental death and dismemberment insurance coverage in fiscal year 2021, which was provided on the same basis to all our employees. There is no cash surrender value associated with this insurance coverage. The value paid for this coverage in fiscal year 2021 attributable to each named executive officer is $252 for each of Mr. Li, Mr. Beamer, Dr. Woodland, Dr. Dysard, and Ms. Bernstein.
 
In addition, the figures in the column headed “All Other Compensation” for fiscal year 2021 reflect, for Ms. Bernstein, a transportation allowance for fiscal year 2021 in the amount of $8,000 and an executive physical of $4,770.
 
The amounts in the column headed “All Other Compensation” for fiscal years 2021, 2020 and 2019 for Mr. Li include certain amounts covered by his employment letter dated December 12, 2014. For fiscal year 2021, the amounts included housing-related expenses of $100,000, transportation expenses of $126,125 (paid in Singapore dollars and converted to U.S. dollars), tax preparation fees of $1,250, and an executive physical of $5,625.
 
4
Mr. Beamer resigned as Vice President and Chief Financial Officer on November 15, 2021.
 
Employment Letter with Mr. Li
 
As described in the Compensation Discussion and Analysis and as previously disclosed, on December 12, 2014, we entered into an employment letter with Mr. Li in connection with his appointment as our President and Chief Executive Officer effective as of January 1, 2015, which set forth his initial base salary and target bonus. Mr. Li also received an initial non-qualified stock option grant and an award of restricted shares of our common stock, each of which have vested in full.

21

Other than in a situation involving a change of control of our company, which would be addressed by Mr. Li’s Change in Control Severance Protection Agreement that had been previously entered into in 2008, in the event that Mr. Li’s employment is terminated by us without cause or by Mr. Li due to a material breach by us of the employment letter, (1) Mr. Li would be entitled to vesting of stock options and restricted shares held by him, including those described above, to the extent that such awards would have otherwise vested in accordance with their terms during the twelve-month period following the date of termination, and (2) Mr. Li would continue to receive his base salary for twelve months. Receipt of severance and the accelerated vesting described above is subject to Mr. Li’s execution and non-revocation of a release of claims against us.
 
In the event of a termination of Mr. Li’s employment in connection with a change of control of our company, Mr. Li’s rights are set forth in his existing change in control agreement. As of January 1, 2015, the severance amount multiple pursuant thereto is three times, and the benefits continuation period is 36 months.
 
Mr. Li is eligible to participate in all employee benefit plans, programs and arrangements applicable to our employees and executive officers. Due to the significant amount of time Mr. Li is expected to spend in Asia (Singapore since March 2019, and China prior to that time) and the United States, Mr. Li is also entitled to the continued provision of a car and driver in Singapore (China until March 2019) on the same basis as applied prior to January 1, 2015, a housing allowance of up to $100,000 per year to be used for housing expenses in Singapore (China until March 2019) and Aurora, Illinois, and a tax equalization benefit, on the same basis as applied prior to January  1, 2015. He also is able to utilize first class travel while he is employed by us.
 
Transition Arrangement with Mr. Beamer
 
As previously disclosed, effective as of November 15, 2021 (“Effective Date”), Mr. Beamer resigned as Vice President and Chief Financial Officer of the company. On December 6, 2021, we entered into a letter of understanding (the “Letter”) with Mr. Beamer, regarding the transition of his duties of employment on behalf of the company. Pursuant to the Letter, from the Effective Date through February 1, 2022 (the “Separation Date,” and such period, the “Transition Period”), Mr. Beamer is providing certain transition services in the role of Senior Advisor to the company’s Chief Executive Officer. Following the Separation Date, in consideration of a release of claims from Mr. Beamer and his agreement to abide by certain non-competition, non-solicitation, non-disparagement and confidentiality covenants, Mr. Beamer will receive a cash payment equal to one year of his current base salary ($432,600). The Letter also provides that the company will pay up to $10,000 in professional fees incurred by Mr. Beamer in the process of negotiating and preparing the Letter.
 
In addition, Mr. Beamer’s non-qualified stock option, restricted stock unit and performance share unit grants and awards under our 2012 OIP will remain outstanding and continue to vest in accordance with their terms during the Transition Period. Mr. Beamer will forfeit any non-qualified stock options and restricted stock units that remain unvested in accordance with their terms as of the Separation Date. In addition, Mr. Beamer will be eligible to vest in (i) his performance share unit award with respect to the 2020 fiscal year through 2022 fiscal year performance period, without proration, based on actual performance results, and (ii) a portion of his performance share unit award with respect to the 2021 fiscal year through 2023 fiscal year performance period, based on actual performance results and prorated for the time that Mr. Beamer was employed by us during such performance period through the Separation Date. Mr. Beamer also will be eligible for certain benefits of his Change in Control Severance Protection Agreement to the extent that a Change in Control, as defined thereunder, occurs within one year of the Separation Date, but any such benefits will be netted against the cash payment received pursuant to the Letter. Mr. Beamer will be reimbursed for up to $15,000 in costs associated with outplacement services. Mr. Beamer will not receive any short-term or long-term incentive awards with respect to the 2022 fiscal year or any future years.

22

Interim CFO Compensation Arrangement
 
As previously disclosed, on November 15, 2021, in conjunction with Mr. Beamer’s resignation as Vice President and Chief Financial Officer, the board of directors appointed Jeanette A. Press to the role of Interim Chief Financial Officer, in addition to the roles she already held as Principal Accounting Officer and Controller of the company. For the role of Interim Chief Financial Officer, Ms. Press will receive an incentive cash award of $150,000, to be paid the earlier of three months following the commencement of employment of a permanent chief financial officer, or November 15, 2022, subject to her continued employment through the payment date and certain other terms. In addition, on her appointment date, Ms. Press received an award of 1,162 restricted stock units pursuant to the 2021 OIP, with a grant date value equal to $150,000, which will vest in full on November 15, 2022. While serving as Interim Chief Financial Officer, Ms. Press will continue to receive her base salary, STIP target, and annual long-term equity incentive award target, as well as standard employee benefits, in effect immediately prior to her appointment.
 
Standard Employee Benefits
 
We have adopted various employee benefit plans and arrangements for the purpose of providing employee benefits to our employees, including our named executive officers and our other executive officers. In general, the same terms apply to all our employees, including our named executive officers and our other executive officers. These plans and arrangements include the Employee Stock Purchase Plan, the 401(k) Plan, the Supplemental Plan, and the CMC Health and Welfare Benefit Plan.
 
23

2021 Grants of Plan-Based Awards
 
The following table shows all awards granted to the named executive officers during the fiscal year ended September 30, 2021 pursuant to the 2012 OIP and the STIP.
 
Type of
Award
   
Grant
Date
   
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards ($) (1)
   



Estimated Possible
Payouts Under Equity
Incentive Plan Awards (#)(2)
   
All Other
Stock
Awards:
Number
of Shares
of Stock
or
Units (#)(2)
   
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)(3)
     
Exercise
or Base
Price of
Option
Awards
($/Sh)(4)
     
Grant Date
Fair Value
of Stock
and Option
Awards
($)(4)
 
Name
       
Threshold
   
Target
   
Maximum
   
Threshold
   
Target
   
Maximum
                 
David H. Li
 
PSU(5)
   
12/3/20
     
     
     
     
6,680
     
13,360
     
32,064
     
     
     
     
2,006,939
 

 
RSU(6)
   
12/3/20
     
     
     
     
     
     
     
6,680
     
     
     
972,474
 

 
Option(6)
   
12/3/20
     
     
     
     
     
     
     
     
23,196
     
145.58
     
1,186,107
 
 
  STIP      
     
0
     
771,750
     
1,543,500
     
     
     
     
     
     
     
 
Scott D. Beamer
 
PSU(5)
   
12/3/20
     
     
     
     
1,269
     
2,538
     
6,091
     
     
     
     
381,258
 

 
RSU(6)
   
12/3/20
     
     
     
     
     
     
     
1,903
     
     
     
277,039
 

   
Option(6)
   
12/3/20
     
     
     
     
     
     
     
     
6,610
     
145.58
     
337,996
 
 
  STIP      
     
0
     
281,200
     
562,400
     
     
     
     
     
     
     
 
Daniel D. Woodland
 
PSU(5)
   
12/3/20
     
     
     
     
1,336
     
2,672
     
6,413
     
     
     
     
401,388
 

 
RSU(6)
   
12/3/20
     
     
     
     
     
     
     
2,004
     
     
     
291,742
 

 
Option(6)
   
12/3/20
     
     
     
     
     
     
     
     
6,958
     
145.58
     
355,791
 

 
STIP
     
     
0
     
325,000
     
650,000
     
     
     
     
     
     
     
 
Jeffrey M. Dysard
 
PSU(5)
   
12/3/20
     
     
     
     
1,136
     
2,271
     
5,450
     
     
     
     
341,150
 

 
RSU(6)
   
12/3/20
     
     
     
     
     
     
     
1,703
     
     
     
247,923
 

 
Option(6)
   
12/3/20
     
     
     
     
     
     
     
     
5,915
     
145.58
     
302,458
 

 
STIP
     
     
0
     
289,600
     
597,200
     
     
     
     
     
     
     
 
H. Carol Bernstein
 
PSU(5)
   
12/3/20
     
     
     
     
1,069
     
2,137
     
5,129
     
     
     
     
321,020
 

 
RSU(6)
   
12/3/20
     
     
     
     
     
     
     
1,603
     
     
     
233,365
 

 
Option(6)
   
12/3/20
     
     
     
     
     
     
     
     
5,362
     
145.58
     
300,985
 

 
STIP
     
     
0
     
276,400
     
552,800
     
     
     
     
     
     
     
 
 
  

  1
The amounts in these columns reflect the threshold (0%), target (100%) and maximum (200%) amounts that could be earned by each named executive officer pursuant to the STIP for fiscal year 2021. The target STIP opportunity for each named executive officer was based on a percentage of base salary, which was 105% for Mr. Li, and 65% for each of Mr. Beamer, Dr. Woodland, Dr. Dysard, and Ms. Bernstein.
 
  2
The amounts in these columns do not include restricted stock units and performance share units awarded to our named executive officers after the end of fiscal year 2021. On December 6, 2021, as part of our annual equity incentive award program, we awarded restricted stock units to our named executive officers (other than Mr. Beamer) with a fair market value based on the closing price of our stock on the award date of $141.18 per share that lapse in equal increments upon each anniversary over four years, and performance share units to our named executive officers for the performance period of fiscal year 2022 through fiscal year 2024, in the amounts set forth in the table below:

 
Name
 
Restricted Stock
Unit Award (#)
   
Performance
Share
Unit Award
(#)
(Target)
 
 
Mr. Li
   
7,580
     
15,160
 
 
Mr. Beamer
   
     
 
 
Dr. Woodland
   
2,274
     
3,032
 
 
Dr. Dysard
   
1,932
     
2,577
 
 
Ms. Bernstein
   
1,819
     
2,425
 

3
As with all other grants of stock options and stock awards to our named executive officers and other executive officers, other than the number of options or restricted stock or restricted stock units awarded, the terms and conditions of the stock option grants in this column are the same as those made to all other employees.
 
24

These amounts do not include options granted to our named executive officers after the end of fiscal year 2021. On December 6, 2021, as part of our annual equity incentive award program, we granted options to our named executive officers (other than Mr. Beamer) that have an exercise price of $141.18, which as with all our grants and awards to date was the fair market value based on the closing price of our common stock on the date of grant, vest in equal increments upon each anniversary over four years and expire on December 6, 2031, in the amounts set forth in the table below:
 
 
Name
 
Securities Underlying Options (#)
 
 
Mr. Li
 
21,105
 
 
Mr. Beamer
 
 
 
Dr. Woodland
 
5,803
 
 
Dr. Dysard
 
5,381
 
 
Ms. Bernstein
 
4,642
 

4
As with all our grants and stock awards to date, the exercise price was the fair market value based on the closing price of our stock on the date of grant.
 
The grant date fair value was estimated using the Black-Scholes option pricing formula on the basis of the following assumptions: expected volatility: 39.54%; risk free rate of return: 0.65%; annualized dividend yield: 1.21%; and expected time until exercise: 8.58 years for people who were retirement eligible at the date of grant or those who will become retirement eligible during the four-year vesting period, and 6.75 years for people who were not retirement eligible at the date of grant and who will not become retirement eligible during the four-year vesting period. The differing assumptions reflect the differing statistical likelihoods of the named executive officers satisfying the “Rule of 70” for retirement vesting, which is applicable to all option grants made in fiscal year 2021. The “Rule of 70” means that the employee or executive officer has achieved a combination of age and years of service of at least seventy (70), with a minimum of fifty-five (55) years of age. On the December 3, 2020 grant date, Ms. Bernstein was retirement eligible at the date of grant, and Mr. Li, Dr. Woodland, Mr. Beamer, and Dr. Dysard were not retirement eligible at the date of grant and will not become retirement eligible during the four-year vesting period.
 
During fiscal year 2021, no stock awards held by our named executive officers were modified or cancelled (forfeited).
 
5
Payment of each performance share unit award is contingent on the company attaining certain levels of average annual revenue growth and cumulative earnings per share in the fiscal year 2021 through fiscal year 2023 performance period (weighted 50% each). If threshold, target, or stretch (maximum) performance goals are attained in the performance period, 50%, 100%, or 200% of the target amount, respectively, may be earned. If actual performance falls between the threshold and target goals or the target and stretch goals, the payout would be determined using linear interpolation. The shares initially earned based on performance against the performance metrics are subject to potential upward (+20%) or downward (-20%) adjustment based on the company’s relative TSR against a peer group during the performance period, resulting in a maximum payout of up to 240% of target.
 
6
Each restricted stock unit award and stock option grant vests in 25% increments on each of the first four anniversaries of the grant date.
 
Executive Officer Deposit Share Program
 
Our executive officers have been eligible to participate in the Executive Officer Deposit Share Program that our board of directors adopted in March 2000. Under this program, our executive officers have been entitled to use all or a portion of their after-tax annual cash incentive compensation to purchase at fair market value shares of restricted stock awarded under the 2021 OIP (previously, under the 2012 OIP). These shares are retained on deposit with us until the third anniversary of the date of deposit (“deposit shares”), and our company matches the deposit with a restricted stock award equal to 50% of the shares deposited by the participant (“award shares”). If the participant is employed by us on the third anniversary of the deposit date and the deposit shares have remained on deposit with us through such date, the restrictions on the award shares will lapse. As of January 7, 2022, Mr. Li, Mr. Beamer, and Dr. Dysard participate in the Executive Officer Deposit Share Program, as summarized in the table below:

 
Name
 
Shares on Deposit (#)
   
Corresponding Award Shares (#)
 
 
Mr. Li
 
335
   
167
 
 
Mr. Beamer
 
279
   
139
 
 
Dr. Dysard
 
1,398
   
699
 
 
Mr. Beamer will forfeit the award shares set forth in the table above as of February 1, 2022, commensurate with the termination of his employment with our company.

25

Outstanding Equity Awards at 2021 Fiscal Year-End
 
The following table shows outstanding equity awards as of September 30, 2021 for each named executive officer.

   
Option Awards
Stock Awards
 
Name
 
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable(1)
   
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable(1)
   
Option
Exercise Price
($)
   
Option
Expiration
Date
   
Number of
Shares or Units
of Stock That
Have Not
Vested
(#)(2)
   
Market Value
of Shares or
Units of Stock
That Have Not
Vested
($)(2)
   
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units, or
Other
Rights
That
Have Not
Vested
(#)(3)
   
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units, or
Other
Rights
That Have
Not Vested
($)(3)
 
 
David H. Li
   
31,100
     
     
60.27
   
12/5/2026
                         
       
16,540
     
5,514
     
92.57
   
12/5/2027
                         
       
12,712
     
12,712
     
101.73
   
12/6/2028
                         
       
5,903
     
17,709
     
127.48
   
12/5/2029
                         
       
     
23,196
     
145.58
   
12/3/2030
     
16,987
     
2,093,308
     
25,780
     
3,176,869
 
 
Scott D. Beamer
   
5,847
     
1,949
     
97.89
   
1/16/2028
                                 
       
4,576
     
4,576
     
101.73
   
12/6/2028
                                 
       
1,640
     
4,920
     
127.48
   
12/5/2029
                                 
       
     
6,610
     
145.58
   
12/3/2030
     
8,376
     
1,032,174
     
4,838
     
596,187
 
 
Daniel D. Woodland
   
1,055
     
     
46.45
   
12/3/2024
                                 
       
7,850
     
     
42.37
   
12/3/2025
                                 
       
15,800
     
     
60.27
   
12/5/2026
                                 
       
7,200
     
2,400
     
92.57
   
12/5/2027
                                 
       
4,854
     
4,854
     
101.73
   
12/6/2028
                                 
       
1,738
     
5,214
     
127.48
   
12/5/2029
                                 
       
     
6,958
     
145.58
   
12/3/2030
     
5,415
     
667,290
     
5,112
     
629,952
 
 
Jeffrey M. Dysard
   
1,293
     
     
60.27
   
12/5/2026
                                 
       
1,564
     
1,564
     
92.57
   
12/5/2027
                                 
       
1,387
     
2,774
     
101.73
   
12/6/2028
                                 
       
1,193
     
3,579
     
127.48
   
12/5/2029
                                 
       
     
5,915
     
145.58
   
12/3/2030
     
4,560
     
561,929
     
3,943
     
485,896
 
 
 H. Carol Bernstein
   
5,850
     
1,950
     
92.57
   
12/5/2027
                                 
       
4,022
     
4,022
     
101.73
   
12/6/2028
                                 
       
1,418
     
4,254
     
127.48
   
12/5/2029
                                 
       
     
5,362
     
145.58
   
12/3/2030
     
4,404
     
542,705
     
4,157
     
512,267
 
  

1
These columns show the outstanding stock option awards that are classified as exercisable or unexercisable that were held by each named executive officer as of September 30, 2021. The option awards vest or vested over four years in equal increments upon each anniversary of the grant date, with a term expiring on the tenth anniversary of the grant date. Outstanding options that vested after September 30, 2021 are shown in the section entitled “Security Ownership of Certain Beneficial Ownership and Management” above.
 
26

2
The restricted stock unit awards made to Mr. Li have the following vesting schedules: 6,680 units vest over four years in equal increments upon each anniversary of the December 3, 2020 award date, 4,659 units vest over three years in equal increments upon each anniversary of the December 5, 2019 award date, 3,432 units vest over two years in equal increments upon each anniversary of the December 6, 2018 award date, and 1,654 units vested on December 5, 2021 upon the anniversary of the December 5, 2017 award date. The restricted stock awards made to Mr. Li under the Deposit Share Program have the following vesting schedules: 395 shares vested on December 12, 2021 upon the third anniversary of the December 12, 2018 award date and 167 shares vest on December 15, 2023 upon the third anniversary of the December 15, 2020 award date.
 
The restricted stock unit awards made to Mr. Beamer have the following vesting schedules: 1,903 units vest over four years in equal increments upon each anniversary of the December 3, 2020 award date, 1,290 units vest over three years in equal increments upon each anniversary of the December 5, 2019 award date, 1,236 units vest over two years in equal increments upon each anniversary of the December 6, 2018 award date, and 3,808 units vested on January 16, 2022 upon the anniversary of the January 16, 2018 award date. The restricted stock awards made to Mr. Beamer under the Deposit Share Program have the following vesting schedules: 72 shares would vest on December 16, 2022 upon the third anniversary of the December 16, 2019 award date and 67 shares would vest on December 15, 2023 upon the third anniversary of the December 15, 2020 award date. See “Transition Arrangement with Mr. Beamer” above for a description of the treatment of Mr. Beamer’s outstanding equity awards in connection with the termination of his employment with our company.
 
The restricted stock unit awards made to Dr. Woodland have the following vesting schedules: 2,004 units vest over four years in equal increments upon each anniversary of the December 3, 2020 award date, 1,374 units vest over three years in equal increments upon each anniversary of the December 5, 2019 award date, 1,312 units vest over two years in equal increments upon each anniversary of the December 6, 2018 award date, and 725 units vested on December 5, 2021 upon the anniversary of the December 5, 2017 award date.
 
The restricted stock unit awards made to Dr. Dysard have the following vesting schedules: 1,703 units vest over four years in equal increments upon each anniversary of the December 3, 2020 award date, 939 units vest over three years in equal increments upon each anniversary of the December 5, 2019 award date, 750 units vest over two years in equal increments upon each anniversary of the December 6, 2018 award date, and 469 units vested on December 5, 2021 upon the anniversary of the December 5, 2017 award date. The restricted stock awards made to Dr. Dysard under the Deposit Share Program have the following vesting schedules: 364 shares vest on December 16, 2022 upon the third anniversary of the December 16, 2019 award date and 335 shares vest on December 15, 2023 upon the third anniversary of the December 15, 2020 award date.
 
The restricted stock unit awards made to Ms. Bernstein have the following vesting schedules: 1,603 units vest over four years in equal increments upon each anniversary of the December 3, 2020 award date,1,140 units vest over three years in equal increments upon each anniversary of the December 5, 2019 award date, 1,086 units vest over two years in equal increments upon each anniversary of the December 6, 2018 award date, and 575 units vested on December 5, 2021 upon the anniversary of the December 5, 2017 award date.
 
The value reported with respect to the stock awards held by each named executive officer equals the total number of unvested and unearned stock awards multiplied by $123.23, the closing market price of the company’s stock on the last business day of our fiscal year ending September 30, 2021, plus the following accrued dividend equivalents (which are not paid unless the underlying restricted stock units vest):
 
 
Name
 
Accrued Dividend Equivalents on
Outstanding Restricted Stock Unit
Awards ($)
 
 
Mr. Li
 
57,608
 
 
Mr. Beamer
 
38,955
 
 
Dr. Woodland
 
20,187
 
 
Dr. Dysard
 
13,462
 
 
Ms. Bernstein
 
16,451
 

3
The total amounts and values in these columns equal the total number of performance share units, at the target level for the fiscal year 2020-2022 performance period and at the maximum level for the fiscal year 2021-2023 performance period, held by each named executive officer and multiplied by the market price of company common stock at the close of the last trading day in fiscal year 2021, which was $123.23 per share. These amounts exclude the performance share units for the fiscal year 2019-2021 performance period that vested based on performance through September 30, 2021, and are reported in the “2021 Option Exercises and Stock Vested” table. In calculating the number of performance share units and their value, we are required by SEC rules to compare our performance through the end of fiscal year 2021 under the performance share unit grants against the threshold, target and maximum performance levels for the grant and report in these columns the applicable potential share number and payout amount. If the performance is between levels, we are required to report the potential payout at the next highest level. For example, if performance through the previous year exceeded target, even by only a modest amount, and even if it is unlikely that we will achieve the results that would dictate the payment of the maximum amount, we are required by SEC rules to report the maximum potential payouts. For the second year of the fiscal year 2020 through fiscal year 2022 performance period, we exceeded threshold levels of average annual revenue growth and cumulative earnings per share and have accordingly reported the performance share units at the target award level for this performance period (i.e., 100% of target). For the first year of the fiscal year 2021 through fiscal year 2023 performance period, we exceeded target levels of average annual revenue growth and cumulative earnings per share and have accordingly reported the performance share units at the maximum award level for this performance period (i.e., 200% of target). Such numbers are further subject to potential upward (+20%) or downward (-20%) adjustment based on the application of the company’s relative TSR multiplier, which will be applied following the completion of each performance period. The total value reported with respect to the performance share units held by each named executive officer includes the following accrued dividend equivalents with respect to each performance period, at the target and maximum levels, respectively (which are not paid unless the performance goals are met with respect to the underlying performance share units):
 
27

 
Name
 
Number of Fiscal
Year 2020 through
Fiscal Year 2022
Performance Shares
(Target)
   
Number of Fiscal
Year 2021 through
Fiscal Year 2023
Performance Shares
(Maximum)
   
Fiscal Year 2020 through
Fiscal Year
2022 Performance
Share Unit
Accrued Dividend
Equivalents ($)
   
Fiscal Year 2021 through
Fiscal Year
2023 Performance
Share Unit
Accrued Dividend
Equivalents ($)
 
 
Mr. Li
   
12,420
     
26,720
     
44,215
     
48,630
 
 
Mr. Beamer
   
2,300
     
5,076
     
8,188
     
9,238
 
 
Dr. Woodland
   
2,440
     
5,344
     
8,686
     
9,726
 
 
Dr. Dysard
   
1,672
     
4,542
     
5,952
     
6,086
 
 
Ms. Bernstein
   
2,020
     
4,274
     
7,191
     
7,779
 

2021 Option Exercises and Stock Vested
 
The following table sets forth certain information regarding stock options exercised during fiscal year 2021 and stock awards vested during fiscal year 2021 for the named executive officers.

   
Option Awards
   
Stock Awards
 
 
Name
 
Number
of Shares
Acquired
on
Exercise
(#)
   
Value
Realized
on
Exercise
($)1
   
Number
of Shares
Acquired
on
Vesting
(#)
   
Value
Realized
on
Vesting
($)2
 
 
David H. Li
   
38,000
     
3,967,199
     
20,469
     
3,153,159
 
 
Scott D. Beamer
   
     
     
7,317
     
1,195,571
 
 
Daniel D. Woodland
   
     
     
6,674
     
1,040,859
 
 
Jeffrey M. Dysard
   
     
     
3,374
     
524,496
 
 
H. Carol Bernstein
   
3,950
     
418,374
     
5,886
     
919,267
 
   

1
For option awards, the value realized on exercise is equal to the aggregate difference between the exercise price of the options and the fair market value of the shares on the date of exercise.
 
2
For stock awards (restricted stock units, performance share units, and deposit share program award shares), the value realized is the number of shares vested multiplied by the fair market value of the shares at the time of vesting plus payout of any accrued dividend equivalents.
 
Pension Benefits
 
The company does not maintain a defined benefit pension program.
 
2021 Nonqualified Deferred Compensation
 
The company maintains the CMC Materials, Inc. Supplemental Employee Retirement Plan, which is a nonqualified supplemental savings plan (the “Supplemental Plan”). The following table discloses the earnings and balances of our named executive officers under the company’s Supplemental Plan that provides for compensation deferral on a non-tax-qualified basis.

28

 
Name
 
Registrant
contributions
in last FY ($)1
   
Aggregate
earnings
in last FY ($)
   
Aggregate
balance at
last FYE ($)
 
 
David H. Li
   
50,423
     
61,328
     
410,215
 
 
Scott D. Beamer
   
17,760
     
13,240
     
74,358
 
 
Daniel D. Woodland
   
21,627
     
31,375
     
145,592
 
 
Jeffrey M. Dysard
   
17,196
     
7,664
     
60,059
 
 
H. Carol Bernstein
   
16,861
     
107,874
     
555,375
 
          

1
These amounts are included in the “All Other Compensation” column of the Summary Compensation Table.
 
Effective May 1, 2000, the company adopted the Supplemental Plan covering all eligible employees as defined by the Supplemental Plan. Through December 31, 2021, participants in the Supplemental Plan, including our named executive officers, do not make any contributions to the Supplemental Plan. The purpose of the Supplemental Plan is to provide for the deferral of the company contributions to certain highly compensated employees as defined under the provision of the Employee Retirement Income Security Act of 1974, as amended. Under the Supplemental Plan, the company contributes up to 4% of the named executive officers’ eligible compensation in excess of the I.R.S. eligible compensation limit. All amounts contributed by the company and earnings on these contributions are fully vested at all times. The same menu of investment funds under the 401(k) Plan is available under the Supplemental Plan. Like the 401(k) Plan, all investment decisions are made by the participants. Participants in the Supplemental Plan are not permitted to make hardship withdrawals prior to termination and distributions under the Supplemental Plan are paid in a lump sum.

Potential Payments Upon Termination or Change in Control
 
The following table and the accompanying narrative show potential benefits payable to our named executive officers upon the occurrence of the events specified herein, assuming such events occurred on September 30, 2021 and excluding certain benefits generally available to all salaried employees. Footnotes describing the assumptions in calculations are included following the last table in this section, as is a description of the employment terms and plans providing benefits specified in the table below. Except as noted, the amounts disclosed below reflect the aggregate potential payments under each scenario and category. The table does not include amounts to the extent that the form and amount of any payment or benefit are fully disclosed in an earlier table.

 
Named Executive
Officer
and Triggering
Event
 
Cash
Severance
($)1
   
Cash
Incentive
Through
Termination
Date($) 2
   
Cash Incentive
Continuation($)2
   
Retirement
Plan
Contributions($)
   
Accelerated
Vesting of
Equity
Awards($)3
   
Post-
Termination
Healthcare($)4
   
Outplacement
Services($)
   
280G
Tax
Gross
Up($)5
   
Total($)
 
 
David H. Li
                                                     
 
•   Involuntary (Not for Cause or
Good Reason – No Change in
Control)
   
735,000
     
     
     
     
1,166,844
     
     
     
     
1,901,844
 
 
•   Involuntary (Not for Cause or Good Reason – With Change in Control)
   
2,205,000
     
1,300,000
     
3,900,000
     
195,201
     
5,712,544
     
60,000
     
110,250
     
     
13,482,995
 
 
•   Position Elimination Termination(6)
   
     
     
     
     
     
     
     
     
 
 
•   Retirement (Rule of 70)(7)
   
     
     
     
     
     
     
     
     
 
 
•   Death
   
     
     
     
     
5,712,544
     
     
     
     
5,712,544
 
 
•   Disability
   
     
     
     
     
4,395,969
     
     
     
     
4,395,969
 
 
Scott D. Beamer
 
 
•   Involuntary (Not for Cause or Good Reason – No Change in Control)
   
     
     
     
     
     
     
     
     
 
 
•   Involuntary (Not for Cause or Good Reason – With Change in Control)
   
865,200
     
390,000
     
780,000
     
56,914
     
1,776,133
     
40,000
     
64,890
     
     
3,973,137
 
 
•   Position Elimination Termination
   
     
     
     
     
1,132,211
     
     
     
     
1,132,211
 
 
•   Retirement (Rule of 70)(7)
   
     
     
     
     
     
     
     
     
 
 
•   Death
   
     
     
     
     
1,776,133
     
     
     
     
1,776,133
 
 
•   Disability
   
     
     
     
     
1,526,633
     
     
     
     
1,526,633
 

29

 
 
Named Executive
Officer
and Triggering
Event
 
Cash
Severance
($)1
   
Cash
Incentive
Through
Termination
Date($) 2
   
Cash Incentive
Continuation($)2
   
Retirement
Plan
Contributions($)
   
Accelerated
Vesting of
Equity
Awards($)3
   
Post-
Termination
Healthcare($)4
   
Outplacement
Services($)
   
280G
Tax
Gross
Up($)5
    Total($)
 
 
Daniel D. Woodland
       
 
•   Involuntary (Not for Cause or
Good Reason – No Change in
Control)
   
     
     
     
     
     
     
     
     
 
 
•   Involuntary (Not for Cause or Good Reason – With Change in Control)
   
1,000,000
     
494,000
     
988,000
     
95,454
     
1,475,187
     
40,000
     
75,000
     
     
4,167,641
 
 
•   Position Elimination Termination
   
     
     
     
     
840,722
     
     
     
     
840,722
 
 
•   Retirement (Rule of 70)(7)
   
     
     
     
     
     
     
     
     
 
 
•   Death
   
     
     
     
     
1,475,187
     
     
     
     
1,475,187
 
 
•   Disability