DEF 14A 1 d183013ddef14a.htm NOTICE & PROXY STATEMENT Notice & Proxy Statement
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

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

Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

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  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to § 240.14a-12

Koppers Holdings Inc.

(Name of Registrant as Specified In Its Charter)

 

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

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LOGO


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LOGO

 

April 5, 2021

Dear Fellow Shareholder:

You are cordially invited to attend the 2021 Annual Meeting of Shareholders of Koppers Holdings Inc. (Koppers). The meeting will be held via live virtual meeting webcast on Thursday, May 6, 2021, beginning at 10:00 a.m. Eastern Daylight Time.

Purpose of Our Meeting

The purpose of the meeting will be to elect eight directors, to approve an amendment to our 2020 Long Term Incentive Plan, to approve our amended and restated Employee Stock Purchase Plan, to hold an advisory vote on executive compensation and to ratify the audit committee’s appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2021.

This booklet includes the Notice of Annual Meeting and Proxy Statement. The proxy statement describes the business we will conduct at the meeting and provides information about Koppers that you should consider when you vote your shares. Also enclosed is our Annual Report, which includes our consolidated financial statements for 2020.

Your Vote is Important

Your vote is important regardless of how many shares you own and I urge you to vote your shares. Whether or not you plan to attend the annual meeting, please provide your proxy via Internet, telephone or sign, date and return the proxy card in the enclosed envelope to make sure that your shares are voted at the meeting. Voting your shares by proxy does not limit your right to be present at the virtual meeting and vote your shares electronically during the virtual annual meeting.

I appreciate your continued confidence in Koppers.

 

LOGO

  

Sincerely,

 

LOGO

 

Leroy M. Ball

President and Chief Executive Officer


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LOGO

 

 

NOTICE OF ANNUAL MEETING

OF SHAREHOLDERS

 

 

 

Date/Time:

 

LOGO

 

Thursday, May 6, 2021

10:00 a.m.

Eastern Daylight Time

 

Location:

 

LOGO

 

www.meetingcenter.io/243893297

  

Proposals:

 

1.  To elect eight members of our board of directors.

2.  To approve an amendment to our 2020 Long Term Incentive Plan.

3.  To approve our amended and restated Employee Stock Purchase Plan.

4.  To approve an advisory resolution on our executive compensation.

5.  To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2021.

 

We will also transact any other business that is properly raised at the meeting or any adjournment of the meeting.

There will be no in-person annual meeting. The meeting will be held virtually over the Internet and you will be able to attend and participate in the annual meeting online, vote your shares electronically and submit your questions prior to and during the meeting by visiting www.meetingcenter.io/243893297. The meeting will begin promptly at 10:00 a.m. Eastern Daylight Time and online access will open 15 minutes prior to allow time to log-in. The login password is KOP2021. Please follow these instructions to attend and participate in the annual meeting online:

Registered Shareholders

If your shares are registered in your name with Koppers transfer agent or you are a participant holding Koppers stock in a Koppers-sponsored plan and you wish to attend the online-only virtual meeting, please use the website and password set forth above and the voter control number that is located on your proxy card to log-in to the meeting at the date and time set forth above.

Beneficial Shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record)

If you hold your shares through an intermediary, such as a bank, broker or other nominee, you must register in advance to attend the online-only virtual annual meeting by submitting proof of your proxy power (legal proxy) reflecting your Koppers holdings along with your name and email address to Computershare. You can obtain a legal proxy by contacting your account representative at the bank, broker or other nominee that holds your shares.

Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. Eastern Daylight Time on Tuesday, May 4, 2021. You will receive a confirmation of your registration by email with a voter control number after we receive your valid registration materials. In order to attend the online-only virtual meeting, please use the website and password set forth above and the voter control number that you receive to log-in to the meeting at the date and time set forth above. Requests for registration should be directed to us by email as follows:

Forward the email from your broker, or attach a legible photograph of your legal proxy, to legalproxy@computershare.com.

In order to maintain the interactive nature of the virtual meeting, virtual attendees are able to:

 

 

Vote using the online meeting website

 

 

Submit questions during the meeting


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Record Date:

You can vote if you were a shareholder of record on March 22, 2021.

If the annual meeting is adjourned because of the absence of a quorum, those shareholders entitled to vote who attend the adjourned annual meeting, although constituting less than a quorum as provided herein, shall nevertheless constitute a quorum for the purpose of electing directors. If the annual meeting is adjourned for one or more periods aggregating at least fifteen (15) days because of the absence of a quorum, those shareholders entitled to vote who attend the reconvened annual meeting, if less than a quorum as determined under applicable law, shall nevertheless constitute a quorum for the purpose of acting upon any matter set forth in this Notice of Annual Meeting of Shareholders.

Admission to the Meeting:

You will not be able to attend the annual meeting in person. To attend the virtual annual meeting, please follow the instructions above.

By Order of the Board of Directors

 

LOGO

Stephanie L. Apostolou

General Counsel and Secretary

April 5, 2021

 

Your Vote Is Important

Whether or not you plan to attend the meeting, please promptly provide your proxy via Internet, telephone or by completing, dating, signing and returning the accompanying proxy card promptly so that we can be assured of having a quorum present at the meeting and so that your shares may be voted in accordance with your wishes.

Important Notice Regarding the Availability of Proxy

Materials for the Annual Meeting of Shareholders to be Held on May 6, 2021

A complete copy of this proxy statement and our annual report for the year ended

December 31, 2020 are also available at www.proxydocs.com/KOP.


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2021 PROXY SUMMARY

 

2021 Proxy Summary

This 2021 Proxy Summary highlights certain information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider before voting, and we strongly encourage you to carefully read the entire proxy statement before voting.

General Information About This Annual Meeting

 

Date and Time:

  

Thursday, May 6, 2021 at 10:00 a.m. Eastern Daylight Time

Location:

  

There will be no in-person annual meeting. The meeting will be held virtually over the Internet. To participate in the virtual meeting, please follow the instructions in the Notice of Annual Meeting of Shareholders above.

Record Date:

  

March 22, 2021

Voting:

  

Shareholders as of the record date have one vote for each share held on the record date for each proposal.

Who can vote (page 71)

You are entitled to vote if you owned shares of our common stock at the close of business on the record date, March 22, 2021. This proxy statement and the related proxy materials were first mailed to shareholders and made available on the Internet on or about April 5, 2021.

How to cast your vote (page 73)

You may vote your shares by proxy or electronically during the virtual annual meeting. If you are a shareholder of record, to vote your shares by proxy, you must provide your proxy via one of the following methods:

 

     
Internet   Telephone   Mail

 

LOGO

 

 

LOGO

 

 

LOGO

   
www.investorvote.com/KOP  

Follow the instructions

on the proxy card.

 

Complete, sign and date the proxy card and return it in the postage prepaid envelope provided.

 

 

 

If you are a beneficial owner, you must complete, sign and date the voting instructions included in the package from your broker, bank or other record holder and return those instructions to the broker, bank or other holder of record.

Proposals to be Considered and Board Recommendations

 

Proposal

  

Board Voting

Recommendation

    Page Reference 

Elect eight members of the board of directors

   FOR each director nominee    1

Approve an amendment to our 2020 Long Term Incentive Plan

   FOR    52

Approve our amended and restated Employee Stock Purchase Plan

   FOR    64

Approve an advisory resolution on our executive compensation

   FOR    69

Ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2021

   FOR    70

 

 

KOPPERS HOLDINGS INC.

   v

 


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2021 PROXY SUMMARY

 

Board Nominees

 

                   

Committee Memberships

Name

  Age  

Director

Since

  Independent   Audit  

Management

Development

and

Compensation

 

Nominating

and

Corporate

Governance

 

Strategy

and Risk

  Sustainability

Leroy M. Ball

  52   2015   No          

Xudong Feng, Ph.D.

  62   2009   Yes           (Chair)

Traci L. Jensen

  54   2018   Yes          

David L. Motley

  62   2018   Yes       (Chair)    

Albert J. Neupaver

  70   2009   Yes         (Chair)  

Louis L. Testoni

  71   2013   Yes   (Chair)        

Stephen R. Tritch (Chairman)

  71   2009   Yes          

Sonja M. Wilkerson

  60   2018   Yes       (Chair)        

2020 Performance Highlights1:

 

Consolidated

sales

 

$1.669 billion

 

increased by $32.1 million, or 2.0 percent, as compared to $1.637 billion in the prior year

 

 

Net

income

 

$122.0 million

 

compared with net income of $66.6 million in the prior year

 

Adjusted

EBITDA

 

$211.0 million

 

compared with $201.1 million

in the prior year

 

Diluted earnings

per share

 

$5.71

 

compared with $3.16

in the prior year

 

 

Consolidated sales of $1.669 billion increased by $32.1 million, or 2.0 percent, as compared to $1.637 billion in the prior year. Despite headwinds associated with the global pandemic, 2020 sales represented the fourth consecutive year of growth as well as the highest level of revenues in the history of the company, excluding Koppers (Jiangsu) Carbon Chemical Company Limited (“KJCC”), which was divested in September 2020.

 

 

Net income attributable to Koppers for 2020 was $122.0 million compared with net income of $66.6 million in the prior year. As adjusted, earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $211.0 million, compared with $201.1 million in the prior year.

 

 

Adjusted EBITDA margin for 2020 was 12.6% compared with 12.3% in the prior year.

 

 

We achieved diluted earnings per share (“EPS”) of $5.71 for fiscal year 2020, our second highest EPS ever behind only fiscal year 2008, compared with $3.16 in the prior year. As adjusted, EPS was $4.12 compared with $3.18 in the prior year.

1 On pages vi, 21, 23-27 and 52, we refer to our 2020 adjusted EBITDA, adjusted EBITDA margin and adjusted EPS results. Adjusted EBITDA, adjusted EBITDA margin and adjusted EPS are non-GAAP measures, which provide information useful to investors in understanding the underlying operational performance of our company, its business and performance trends, and facilitate comparisons between periods. The exclusion of certain items permits evaluation and a comparison of results for ongoing business operations, and it is on this basis that our management internally assesses the company’s performance. In addition, our board of directors and executive management team use adjusted EBITDA as a performance measure under the company’s annual incentive plan. As previously announced, the divestiture of KJCC was completed on September 30, 2020. Beginning in 2020, KJCC results are classified as held for sale and as discontinued operations for the current year as well as the comparable prior year period. The adjustments to EBITDA, EBITDA margin and EPS, as well as reconciliations to the most directly comparable GAAP measures, are set forth in Appendix C of this proxy statement. These reconciliations also reflect how adjusted EBITDA is calculated for purposes of compensation.


 

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2021 Proxy Statement

  

 


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2021 PROXY SUMMARY

 

Executive Compensation Highlights:

In awarding compensation to each of our named executive officers (“NEOs”) in 2020 our management development and compensation committee considered the company’s overall performance for the year. The table below reflects, for each NEO, the total direct compensation awarded in 2020, computed in accordance with SEC regulations.

 

                         

Long-Term Incentive

        

NEO

  

Base

Salary

     One-Time
Cash
Incentive(1)
    

Annual
Cash

Incentive

     PSUs     

Stock

Options

     RSUs     

Total Direct

Compensation

 

Leroy M. Ball

     $864,450        $205,808        $890,384        $763,596        $777,999        $518,664        $4,020,901  

Michael J. Zugay

     $402,791        $  57,538        $248,925        $148,245        $151,042        $100,682        $1,109,223  

James A. Sullivan

     $500,000        $189,280        $386,250        $294,445        $300,000        $199,990        $1,869,965  

Leslie S. Hyde

     $322,040        $  46,431        $200,875        $119,623        $121,882        $  81,249        $   892,100  

Stephanie L. Apostolou

     $282,913        $  35,712        $154,500        $  88,330        $          —        $149,993        $   711,448  

Steven R. Lacy

     $449,817        $  94,255        $          —        $          —        $          —        $562,262        $1,106,334  

Douglas J. Fenwick

     $304,485        $  92,730        $188,172        $112,063        $114,176        $  76,106        $   887,732  

 

(1)

All NEOs received a one-time cash incentive related to the sale of KJCC in 2020. In addition, Mr. Fenwick received a one-time cash incentive related to the exceptional performance of the Performance Chemicals business in 2020.

Our Summary Compensation Table can be found on page 33. In accordance with SEC regulations, the Summary Compensation Table also reports amounts for Changes in Pension Value, Nonqualified Deferred Compensation Earnings and All Other Compensation.

Key Pay-for-Performance Features of Our Executive Compensation Program:

 

 

Total compensation consists primarily of base salary, an annual cash incentive and long-term equity incentives.

 

 

Our NEOs received annual incentive awards at 103% of their targets. Additional one-time only cash incentives were awarded to all eligible participants in our annual incentive plan, including our NEOs, to recognize the successful completion of the sale of KJCC and related annual incentive shortfalls from prior years caused by understated pricing paid by KJCC’s largest customer in such prior years. All eligible participants in our annual incentive plan from our Performance Chemicals segment, including Mr. Fenwick, also received an additional one-time discretionary bonus in recognition of the exceptional performance of the Performance Chemicals business in 2020.

 

 

Long-term incentives comprise a significant portion of the executives’ total compensation package, with, generally, approximately 50% of the total dollar value of such awards consisting of performance-based restricted stock units (“PSUs”) with multi-year performance objectives and a three-year period for vesting (if the applicable performance objective is achieved).

 

 

PSUs do not vest unless a threshold level of performance is surpassed.

 

 

Executives receive only limited perquisites, most of which are for business-related purposes.


 

 

KOPPERS HOLDINGS INC.

   vii

 


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2021 PROXY SUMMARY

 

Total Realized Compensation

Below is a comparison of 2020 target compensation to total realized compensation for our NEOs. Total realized compensation is based on the actual dollar value of awards delivered to our NEOs in any given year. This measure further demonstrates our ongoing commitment to compensating our leadership based on the company’s performance and placing a significant portion of senior executive compensation at risk. For example, total realized compensation was meaningfully lower than target for most of our NEOs in 2020 because our total shareholder return measured against that of the S&P Small Cap 600 Materials Index over the three-year period ended December 31, 2020 was at the 24th percentile, and therefore, none of the PSUs awarded in 2018 vested. Mr. Lacy’s total realized compensation was meaningfully higher than target in 2020 because, in connection with Mr. Lacy’s transition from his position as Chief Administrative Officer, General Counsel and Secretary into the role of Assistant to the President of Koppers Inc., prior to his subsequent retirement on December 31, 2020, Mr. Lacy’s 2020 long-term incentive award consisted of a single time-based restricted stock unit (“RSU”) grant, which vested on December 31, 2020.

 

NEO

  

2020 Target

Compensation

    

2020 Total

Realized

Compensation

    

% of Target

Realized

 

Leroy M. Ball

     $4,322,250        $2,789,450        64.5%  

Michael J. Zugay

     $1,147,955        $   933,678        81.3%  

James A. Sullivan

     $1,875,000        $1,306,644        69.7%  

Leslie S. Hyde

     $   926,364        $   783,298        84.6%  

Stephanie L. Apostolou

     $   750,000        $   506,830        67.6%  

Steven R. Lacy

     $1,012,088        $1,836,765        181.5%  

Douglas J. Fenwick

     $   867,782        $   730,485        84.2%  

Total realized compensation is calculated as follows:

 

 

LOGO


 

viii  

2021 Proxy Statement

  

 


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2021 PROXY SUMMARY

 

Corporate Governance Highlights:

 

   

Majority Voting and Director

Resignation Policy

  

Our board is subject to a majority voting requirement; any director not receiving a majority of votes cast (excluding abstentions) in an uncontested election must tender his or her resignation to the board.

Term Limits for Directors

  

All directors, other than our CEO, who are first elected to the board of directors after August 2, 2017, will have a term limit of 15 years, unless the board approves an exception to this limit, which the board has the authority to do on a case-by-case basis.

Age Limits for Directors

  

A director is not eligible to stand for re-election if he or she has reached the age of 74 before the date of election, unless the board approves an exception to this limit, which the board has authority to do on a case-by-case basis.

Declassified Board Structure

  

Our entire board is re-elected every year; we have no staggered elections.

Annual Board and

Committee Self-Evaluations

  

Our board and committees engage in thorough self-evaluations on an annual basis.

No Poison Pill

  

The company currently does not have a poison pill in place.

Independent Board

  

Our board is comprised of all independent directors, other than Mr. Ball, and our independent directors regularly meet in executive sessions.

Stock Ownership Guidelines

for Directors and Stock

Ownership Requirements

for Executive Officers

  

We have adopted stock ownership guidelines for directors and stock ownership requirements for executives that encourage a long-term perspective and ensure that the interests of directors and executives are closely aligned with shareholders.

Corporate Governance

Guidelines

  

We have adopted corporate governance guidelines to ensure we are fully compliant with the law and engaging in corporate governance “best practices.” These guidelines are reviewed at least annually.

Strong Board Attendance

  

In 2020, we had cumulative director attendance of 98% at board and committee meetings.


 

 

KOPPERS HOLDINGS INC.

   ix

 


Table of Contents

TABLE OF CONTENTS

 

PROXY STATEMENT         
PROXY SUMMARY      v  

General Information About This Annual Meeting

     v  

Who Can Vote

     v  

How to Cast Your Vote

     v  

Proposals to be Considered and Board Recommendations

     v  

Board Nominees

     vi  

2020 Performance Highlights

     vi  

Executive Compensation Highlights

     vii  

Corporate Governance Highlights

     ix  
PROXY ITEM 1 — PROPOSAL FOR ELECTION OF DIRECTORS      1  

General

     1  

Vote Required

     1  

Director Qualifications

     2  

Biographical Summaries of Nominees

     3  

Board Meetings and Committees

     7  
CORPORATE GOVERNANCE MATTERS      12  

Corporate Governance Guidelines

     12  

Director Independence

     12  

Board Leadership Structure

     13  

Executive Sessions

     13  

Risk Oversight

     13  

Code of Conduct and Code of Ethics

     14  

Sustainability

     14  

Communications with the Board

     17  

Nomination Procedures

     17  

Committee Reports to Shareholders

     18  

Audit Committee Report

     18  

Management Development and Compensation Committee Report

     18  
COMMON STOCK OWNERSHIP      19  

Director and Executive Officer Stock Ownership

     19  

Beneficial Owners of More Than Five Percent

     20  
EXECUTIVE AND DIRECTOR COMPENSATION      21  

Compensation Discussion and Analysis

     21  

Summary Compensation Table

     33  

2020 Grants of Plan Based Awards Table

     35  

Outstanding Equity Awards at Fiscal Year-End 2020

     37  

2020 Option Exercises and Stock Vested

     40  

2020 Pension Benefits

     41  

2020 Non-qualified Deferred Compensation

     42  

Potential Payments upon Termination or Change in Control

     43  

Director Compensation

     47  

Stock Ownership Guidelines for Our Non-Employee Directors

     48  

2020 Pay Ratio Disclosure

     49  
TRANSACTIONS WITH RELATED PERSONS      50  
AUDITORS      51  
PROXY ITEM 2 — PROPOSAL TO APPROVE AN AMENDMENT TO OUR 2020 LONG TERM INCENTIVE PLAN      52  
EQUITY COMPENSATION PLANS      63  
PROXY ITEM 3 — PROPOSAL TO APPROVE OUR AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN      64  
PROXY ITEM 4 — PROPOSAL TO APPROVE AN ADVISORY RESOLUTION ON OUR EXECUTIVE COMPENSATION      69  
PROXY ITEM  5 — PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2021      70  
GENERAL MATTERS      71  

Annual Meeting Q&A

     71  

Shareholder Proposals for the Next Annual Meeting

     75  

 

APPENDIX A — FIRST AMENDMENT TO THE KOPPERS HOLDINGS INC. 2020 LONG TERM INCENTIVE PLAN      A-1  
APPENDIX B — KOPPERS HOLDINGS INC. EMPLOYEE STOCK PURCHASE PLAN AS AMENDED AND RESTATED      B-1  
APPENDIX C — UNAUDITED RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES      C-1  
 


Table of Contents

PROXY ITEM 1 — PROPOSAL FOR ELECTION OF DIRECTORS

General

We are asking shareholders to elect the eight nominees named in this proxy statement to serve on the board of directors of Koppers Holdings Inc. (the “company,” “Koppers,” “we” or “us”) until the 2022 Annual Meeting of Shareholders or until their successors have been duly elected and qualified.

Each nominee currently serves on our board of directors and has been nominated for election by our nominating and corporate governance committee and approved by our board. The board has nominated Leroy M. Ball, Xudong Feng, Ph.D., Traci L. Jensen, David L. Motley, Albert J. Neupaver, Louis L. Testoni, Stephen R. Tritch and Sonja M. Wilkerson for election.

Each nominee who is elected as a director will hold office for the length of their term or until the director’s death, resignation, incapacity or until the director’s successor shall be elected and shall qualify. Vacancies on the board of directors, including vacancies resulting from an increase in the number of directors, will be filled by a majority vote of the directors then in office, even if less than a quorum.

As set forth in our corporate governance guidelines, all directors, other than our CEO, who are first elected to the board of directors after August 2, 2017, will have a term limit of 15 years, unless the board approves an exception to this limit, which the board has the authority to do on a case-by-case basis. In addition, a director will not be eligible to stand for re-election as a director where he or she has reached the age of 74 before the date of election, unless the board approves an exception to this guideline, which the board has the authority to do on a case-by-case basis.

Vote Required

In any uncontested election of directors, each director will be elected if more votes are cast “for” the director’s election than are cast “against” the director’s election, with abstentions and broker non-votes not being counted as a vote cast either “for” or “against” the director’s election. A plurality standard will apply in any contested election of directors, which is an election in which the number of nominees for director exceeds the number of directors to be elected.

If any incumbent director fails to receive a majority of the votes cast in any uncontested election, the director will be required to tender his or her resignation to the board of directors within ten days following certification of the election results. The nominating and corporate governance committee of the board of directors, or such other committee as the board may designate, will then recommend to the board whether to accept or reject such director’s resignation, or whether other action should be taken. The nominating and corporate governance committee may consider any factors it considers appropriate or relevant in considering whether to accept or reject a director’s resignation, or whether other action should be taken. The board will act on the nominating and corporate governance committee’s recommendation and publicly disclose its decision within 120 days following the date of the certification of the election results. If the tendered resignation is accepted by the board, the board may fill the resulting vacancy or decrease the number of directors comprising the board in accordance with our bylaws.

Your proxy will be voted “FOR” the election of the nominees set forth in the proxy card, unless you vote against, or abstain from voting for or against, one or more of them. If any nominee is unable or unwilling to stand for election, your proxy authorizes us to vote for a replacement nominee if the board names one.

 

 

KOPPERS HOLDINGS INC.

   1


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PROXY ITEM 1 — PROPOSAL FOR ELECTION OF DIRECTORS

 

Director Qualifications

There are no specific minimum qualifications a nominee must meet in order to be recommended for the board. However, our nominating and corporate governance committee seeks to establish, as required by the committee’s charter, a board that consists of individuals from diverse educational and professional experiences and backgrounds, that, when taken as a whole, provide meaningful counsel to management. Board candidates are considered based upon various criteria, such as their broad-based business skills and experiences, prominence and reputation in their profession, global business perspective, concern for the long-term interests of our shareholders and personal integrity, values and judgment — all in the context of an assessment of the perceived needs of the board. In addition, directors must have significant time available to devote to board activities and to enhance their knowledge of our business. Although we do not have a formal policy with respect to diversity, our nominating and corporate governance committee considers the diversity of our board as a whole, including the skills, background and experience of our directors.

Our nominating and corporate governance committee believes each member of our board of directors possesses the individual qualities necessary to serve on the company’s board of directors, including high personal and professional ethical standards and integrity, honesty and good values. Our directors are highly educated and have diverse backgrounds and extensive track records of success in what we believe are highly relevant positions with large international companies, firms and major private and public institutions. They have each demonstrated an ability to exercise sound judgment and have exhibited a commitment of service to the company and to the board, and each of our directors possesses strong communication skills. In addition, we believe that each director brings the skills, experience and perspective that, when taken as a whole, creates a board that possesses the requirements necessary to oversee the company’s business. Each nominee’s particular experience, qualifications, attributes and skills that led the board to conclude that such nominee should serve as a director for the company are set forth below. The committee reviews the board membership criteria and modifies them as necessary each year.

 

LOGO  

        

 

    

 

        

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The board of directors recommends a vote “FOR” the election of all eight nominees.

 

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Biographical Summaries of Nominees

 

      

 

 

 

     LOGO     

 

Age: 52

 

Director since: 2015      

 

Committees:

 

 Sustainability

 

 

      

 

        

 

LEROY M. BALL

 

 

Experience, Qualifications, Attributes or Skills:

Mr. Ball has served as President and Chief Executive Officer of the company and Koppers Inc., our wholly-owned subsidiary, since January 2015. From August 2014 through December 2014, Mr. Ball served as Chief Operating Officer of the company and Koppers Inc. and from May 2014 until August 2014, Mr. Ball served as both Chief Operating Officer and Chief Financial Officer of the company and Koppers Inc. Mr. Ball served as Vice President and Chief Financial Officer of the company and Koppers Inc. from September 2010 to May 2014. Prior to joining Koppers, Mr. Ball was Senior Vice President and Chief Financial Officer of Calgon Carbon Inc., a provider of services, products and solutions for purifying water and air, since 2002. Mr. Ball has been a director of Koppers Inc. since May 2013. Mr. Ball has served as a director of Allegheny Technologies Incorporated, a public company and global manufacturer of technically advanced specialty materials and complex components, since February 2019.

 

Mr. Ball has significant leadership experience in global businesses and valuable financial expertise and experience. As the only current management representative on our board, Mr. Ball enhances board discussions by providing an insider’s perspective on the company’s business, operations and strategic direction and insight into all aspects of the company’s business.

 

Other Public Company Directorships:

 Allegheny Technologies Incorporated

 

      

 

 

 

     LOGO     

 

Age: 62

 

Director since: 2009      

 

Committees:

 

 Management Development and Compensation

 

 Nominating and Corporate Governance

 

 Sustainability (Chair)

 

 

      

 

        

 

XUDONG FENG, PH.D.

 

 

Experience, Qualifications, Attributes or Skills:

Dr. Feng has served as Director of Science and Technology and Global Analytical Sciences of PPG Industries, Inc., a global supplier of paints, coatings, optical products, and specialty materials, since March 2020. From June 2018 to March 2020, Dr. Feng served as Director of Research, Industrial and Packaging Coatings of PPG Industries, Inc. In addition, Dr. Feng has served as the Chief Executive Officer of ImmunArtes LLC, a biotech startup company, since November 2017. From September 2012 to June 2018, Dr. Feng held the positions of Executive Director and subsequently the Senior Associate Dean for Budget and Strategy of the University of Chicago’s Institute for Molecular Engineering, an interdisciplinary research institute and academic unit of a private research university.

 

Dr. Feng holds a Ph.D. in inorganic chemistry, which has provided her with a technical background and a strong expertise in the specialty chemicals industry. Dr. Feng’s technical and industry experience, her experience in risk management and regulatory compliance, and her knowledge of environmental risks and best practices, developed through her leadership positions with PPG Industries, Inc., Bayer MaterialScience LLC and Lanxess Corporation, provide an invaluable perspective to the board’s discussions.

 

Other Public Company Directorships:

 None

 

 

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     LOGO     

 

Age: 54

 

Director since: 2018      

 

Committees:

 

 Audit

 

 Management Development and Compensation

 

 Strategy and Risk

 

 Sustainability

 

 

 

      

 

        

 

TRACI L. JENSEN

 

 

Experience, Qualifications, Attributes or Skills:

Ms. Jensen has served as Vice President, Global Business Process Improvement, at H.B. Fuller Company, a global adhesives manufacturer, since January 2020. From September 2016 to January 2020, Ms. Jensen served as Senior Vice President, Global Construction Adhesives, at H.B. Fuller Company. Ms. Jensen served as Senior Vice President, Americas Adhesives, at H.B. Fuller Company from January 2012 to September 2016. Additionally, Ms. Jensen serves on the board of the H.B. Fuller Foundation and previously served as Executive Committee Chairman on the Adhesives and Sealants Council.

 

Ms. Jensen brings to the board robust experience in international operations within the chemicals industry and unique chemicals industry insights, developed through her leadership responsibilities in areas such as manufacturing, sales, marketing, research and development, and human resources. In particular, Ms. Jensen’s international expertise contributes to the board’s consideration of our global operations.

 

Other Public Company Directorships:

 None

 

      

 

 

 

     LOGO     

 

Age: 62

 

Director since: 2018      

 

Committees:

 

 Audit

 

 Nominating and Corporate Governance (Chair)

 

 Strategy and Risk

 

 

      

 

        

 

DAVID L. MOTLEY

 

 

Experience, Qualifications, Attributes or Skills:

Mr. Motley has served as Managing Partner with BlueTree Venture Fund, a venture fund based in Pittsburgh, Pennsylvania, since April 2012. In addition, Mr. Motley has served as Chief Executive Officer and President of MCAPS, LLC, a professional services company, since January 2018. From February 2011 to July 2017, Mr. Motley served as Senior Managing Partner of Headwaters SC, a private equity advisory services company. Mr. Motley has served as a director of F.N.B. Corporation, a public financial services corporation, since July 2013. Mr. Motley has also served as a director of Deep Lake Capital Acquisition Corp., a publicly-listed special purpose acquisition company formed for the purpose of entering into a combination with one or more businesses, since January 2021, and as a director of II-VI Incorporated, a worldwide leader in engineered materials and opto-electronic components, since February 2021.

 

During his career, Mr. Motley has served in various leadership roles involving strategic planning, business group management, mergers and acquisitions, and corporate portfolio management. With more than 30 years of experience in consulting with executive management across multiple industries, Mr. Motley has been instrumental in developing corporate diversity initiatives in the United States and has served as a director on various non-profit charitable and educational organizations. In addition to his deep board experience, Mr. Motley’s expertise in corporate strategy, mergers and acquisitions and other corporate growth initiatives deliver valuable insight to the board and enhance Mr. Motley’s ability to evaluate these matters as a member of our board.

 

Other Public Company Directorships:

 F.N.B. Corporation

 Deep Lake Capital Acquisition Corp.

 II-VI Incorporated

 

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     LOGO     

 

Age: 70

 

Director since: 2009

 

Committees:

 

 Audit

 

 Management Development and Compensation

 

 Strategy and Risk (Chair)

 

      

 

        

 

ALBERT J. NEUPAVER

 

 

Experience, Qualifications, Attributes or Skills:

Mr. Neupaver has alternately served as the Executive Chairman or Chairman of Westinghouse Air Brake Technologies Corporation, a public company and one of the world’s largest providers of value-added, technology-based equipment and services for the global rail industry, since May 2014. From February 2006 until May 2014, Mr. Neupaver served as the President and Chief Executive Officer of Westinghouse Air Brake Technologies Corporation. His operational knowledge and leadership skills are further demonstrated by his additional public company experience at AMETEK, Inc., a leading global manufacturer of electronic instruments and electromechanical devices, where he served as the President of the electromechanical group from 1998 to February 2006.

 

Mr. Neupaver is also an experienced board member, having served as a director of Westinghouse Air Brake Technologies Corporation since 2006, a director of Robbins & Myers, Inc., a public company and leading supplier of engineered equipment and systems, from January 2009 to February 2013 and a director of Genesee & Wyoming Inc., a public company and owner/operator of short line and regional freight railroads, from October 2015 to December 2019. His other affiliations include service on the board of directors of the Carnegie Science Center, the board of trustees of the Carnegie Museums of Pittsburgh and the Children’s Hospital Foundation Board. Mr. Neupaver’s experience as a chief executive officer provides the board with important leadership insights and allows him to better assess our operational risks and growth opportunities.

 

Other Public Company Directorships:

 Westinghouse Air Brake Technologies Corporation

 

      

 

 

 

     LOGO     

 

Age: 71

 

Director since: 2013

 

Committees:

 

 Audit (Chair)

 

 Nominating and Corporate Governance

 

 Strategy and Risk

 

      

 

        

 

LOUIS L. TESTONI

 

 

Experience, Qualifications, Attributes or Skills:

Mr. Testoni has served as a member of the board of directors of ABARTA, Inc., a private holding company, since April 2011, and has served as its Independent Lead Director since January 2019. Mr. Testoni has also served as the Lead Independent Director for Control Concepts Corporation, Inc., a family-owned business, since 2015, and as a member of the board of advisors of Henderson Brothers, Inc., a privately-held insurance agency, since December 2012. Mr. Testoni served as an executive in residence at the University of Pittsburgh Katz School of Business, a major public university, from September 2012 until June 2016. From September 2007 through June 2010, Mr. Testoni served as the Lake Erie Market Managing Partner of PricewaterhouseCoopers LLP, an international professional services firm.

 

Mr. Testoni’s board experience also includes his position as a member of the board of trustees of The Frick Art and Historical Center and as a member of the board of Achieving The Dream, Inc., a non-profit seeking to bring under-educated urban youth into colleges for advanced education and technical training. Mr. Testoni also previously served as Chairman of the board of trustees of the Carnegie Library of Pittsburgh and as a director of the Three Rivers Chapter of the National Association of Corporate Directors, a non-profit membership group for corporate board members. In addition to his broad board experience, Mr. Testoni’s financial background offers the board a key perspective and depth on financial and accounting matters.

 

Other Public Company Directorships:

 None

 

 

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     LOGO     

 

Age: 71

 

Director since: 2009

 

Chairman

 

Committees:

 

 Sustainability

 

      

 

        

 

STEPHEN R. TRITCH

 

 

Experience, Qualifications, Attributes or Skills:

Mr. Tritch served as the Chief Executive Officer of Westinghouse Electric Company, a global provider of fuel, services, technology, plant design, and equipment for the commercial nuclear electric power industry, from June 2002 to June 2008. While serving in that role, Mr. Tritch had oversight of that company’s operations, financial reporting and risk analysis. During his 37 years with Westinghouse Electric Company, Mr. Tritch held a number of management positions, including Senior Vice President Fuel Business Unit, Senior Vice President Integration and Senior Vice President Services Business Unit. Mr. Tritch has served as a director of Charah Solutions, Inc., a public company and leading provider of mission critical environmental and maintenance services to the power generation industry, since June 2018, and currently serves as Chairman of its board.

 

An experienced board member, Mr. Tritch has served as Chairman of the Company’s board since October 2018 and served as the Chairman of the board of Westinghouse Electric Company from June 2006 until his retirement in June 2010. He also served as Chairman of the audit committee of Westinghouse Electric Company. Mr. Tritch served as a director of The Shaw Group, Inc., a public company and a global provider of pumping systems, engineering procurement and construction services, from April 2009 to February 2013. His additional leadership roles include past service as the Chairman of the board of trustees at the University of Pittsburgh and as a former member of the board of trustees of the John Heinz History Center. His business acumen and proven leadership skills developed through years of managing an international organization provide the board with an executive and leadership perspective on the management and operations of a large company with global operations.

 

Other Public Company Directorships:

 Charah Solutions, Inc.

 

      

 

 

 

     LOGO     

 

Age: 60

 

Director since: 2018

 

Committees:

 

 Management Development and Compensation (Chair)

 

 Nominating and Corporate Governance

 

 Sustainability

 

 

      

 

        

 

SONJA M. WILKERSON

 

 

Experience, Qualifications, Attributes or Skills:

Ms. Wilkerson has served as the Executive Vice President and Chief Human Resource Officer of Bloom Energy Corporation, which designs, manufactures and sells solid-oxide fuel cell systems, since January 2019. From December 2016 to January 2019, Ms. Wilkerson served as the Senior Vice President, Human Resources, at Infinera Corporation, a vertically integrated packet-optical solutions provider, serving the largest network operators in the world. From November 2014 to December 2016, Ms. Wilkerson served as Vice President, Human Resources, at Hewlett Packard Enterprise. From October 2004 to October 2014, Ms. Wilkerson served as Director, Human Resources, at Cisco Systems.

 

Ms. Wilkerson brings years of global and diverse experience having served as a Vice President of Administration, responsible for human resources, information technology and facilities management for both domestic and international operations. In addition, Ms. Wilkerson has led merger integration activities and successfully managed the joining of diverse international cultures. Ms. Wilkerson’s depth of experience in human resources and talent management, especially with respect to planning for the workforce of the future, serve as a unique resource and valuable viewpoint in the board’s discussions.

 

Other Public Company Directorships:

 None

 

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Board Meetings and Committees

Board Meetings

Our corporate governance guidelines provide that our directors are expected to attend the meetings of the board, the board committees on which they serve and the annual meeting of shareholders. All directors then in office typically attend all committee meetings. All directors then in office attended our 2020 annual meeting of shareholders.

During 2020, the board held seven meetings. Each incumbent director attended at least 75 percent of the aggregate number of meetings of our board and of the committees on which he or she sat, and the cumulative attendance at meetings of our board and committees of our board during 2020 was 98 percent.

Board Committees

Our board of directors currently has five standing committees: an audit committee, a management development and compensation committee, a nominating and corporate governance committee, a strategy and risk committee and a sustainability committee. Descriptions of these committees are set forth below. Each of our committees operates under a charter adopted by our board of directors. The charters of our committees are available on our website at www.koppers.com. You may also request a printed copy of any committee charter at no cost by writing to our corporate secretary at Koppers Holdings Inc., Attention: Corporate Secretary’s Office, 436 Seventh Avenue, Pittsburgh, Pennsylvania 15219.

Our shares of common stock are listed on the New York Stock Exchange, or NYSE. We are subject to the NYSE corporate governance rules and certain rules of the Securities and Exchange Commission, which we refer to as the SEC, including the rules relating to independent members on certain of our board committees. NYSE rules require that all of the members of our audit, nominating and corporate governance, and management development and compensation committees be independent. Certain SEC independence rules also apply to members of our audit committee. All of the members of our audit, nominating and corporate governance, and management development and compensation committees are independent as required by applicable NYSE and SEC rules.

 

 

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Audit Committee

  

Members: Louis L. Testoni (Chair and, as determined by our board of directors, Audit Committee Financial Expert), Traci L. Jensen, David L. Motley, Albert J. Neupaver

All Members Independent

 

10 meetings in 2020

  

Responsibilities. The audit committee’s responsibilities include oversight of the integrity of our financial statements; the appointment, compensation and supervision of our independent registered public accounting firm, which we also refer to as our independent auditor; review of the independence of our independent auditor; resolution of disagreements between our management and our independent auditor and oversight of our internal audit function. The audit committee has the authority to engage independent counsel or other outside advisors and experts as necessary to advise the committee in the performance of its duties.

  

Overseeing the Integrity of our Financial Statements. The audit committee’s responsibilities include oversight of the integrity of our financial statements, which entails:

 

  Reviewing, prior to the audit, the scope and procedures to be utilized in the audit with the independent auditor;

 

  Receiving reports from the independent auditor regarding our critical accounting policies and practices;

 

  Meeting with the independent auditor, without our management, to discuss the audit or other issues deemed relevant by the audit committee, including, but not limited to significant audit issues or concerns and management’s response thereto;

 

  Reviewing management’s assessment of the effectiveness of internal controls over financial reporting, including any significant deficiencies or material weaknesses identified by management or the independent auditor;

 

  Meeting with management and the independent auditor to review significant reporting issues and practices, including changes in or adoption of accounting principles and disclosure practices; and

 

  Reviewing disclosures in our periodic reports filed with the SEC, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of such reports.

  

Appointment and Supervision of the Independent Auditor. In connection with the appointment and supervision of our independent auditor, the audit committee’s responsibilities include, among other things:

 

  Receiving annual written communication from the independent auditor delineating all relationships with and proposed professional services to us;

 

  Reviewing all non-audit services proposed to be provided by the independent auditor;

 

  Receiving and reviewing, on an annual basis, reports from the independent auditor regarding its internal quality control procedures, results of its most recent peer review or any inquiry or investigation by any governmental or professional authorities within the preceding five years and its independence and all relationships between the independent auditor and the company;

 

  Reviewing the qualifications and performance of the independent auditor and the lead partner of the independent auditor and making certain that a replacement is named to the lead partner position every five years; and

 

  Reviewing and approving, as appropriate, the compensation of the independent auditor.

 

 

  

Receipt and Treatment of Complaints. The board has established, and the audit committee has reviewed, procedures for the receipt and treatment of complaints we receive concerning, among other things, accounting, internal controls or auditing matters, as well as confidential anonymous submissions by our employees regarding accounting or auditing matters. The audit committee also reviews our process for communicating these procedures to our employees.

 

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Management Development and Compensation Committee

  

Members: Sonja M. Wilkerson (Chair), Xudong Feng, Traci L. Jensen, Albert J. Neupaver

All Members Independent

 

6 meetings in 2020

  

Responsibilities. The management development and compensation committee is responsible, among other things, for establishing and reviewing compensation criteria at the board and executive levels. The committee seeks to ensure that our compensation practices are in compliance with the law and with our Code of Conduct and are commensurate with the high standards of performance expected of our directors and officers.

  

Director and Executive Compensation. The committee will periodically review and propose to the full board the compensation for non-employee directors. Such review must occur at least once every two years. In addition, the management development and compensation committee annually approves and recommends to the board for ratification our chief executive officer’s compensation and, based in part on recommendations from our chief executive officer, the compensation structure for all other officers and key executives, including the adoption of cash-based and equity-based incentive compensation plans.

  

Administration of Incentive Compensation Plans. The management development and compensation committee is charged with administering our cash-based and equity-based incentive compensation plans, which we refer to as incentive compensation plans. Among other things, the management development and compensation committee will determine which eligible employees receive awards under such plans, determine the types of awards to be received and the conditions thereof, and will make any other determination or take any other action that it deems necessary or desirable to administer each incentive compensation plan. From time to time, the management development and compensation committee will also review and recommend medical, retirement, insurance and other benefit packages for officers and eligible employees.

  

Succession Planning. At least annually, after considering the recommendations of management, the management development and compensation committee will make recommendations to the board regarding a succession plan, including succession in the event of an emergency or crisis, for our chief executive officer and other officers and key employees, after considering recommendations of management.

 

 

  

Use of Advisers. The management development and compensation committee has the sole power to retain and terminate consulting firms to assist it in performing its responsibilities, including the authority to approve the firm’s fees and retention terms. The committee has the authority to obtain advice and assistance from internal or external legal, accounting, human resource or other advisors and to have direct access to such advisors without the presence of our management or other employees. The committee is directly responsible for the appointment, compensation and oversight of the work of any such advisors retained by the committee and may select a compensation consultant, legal counsel or other advisor only after taking into consideration all factors relevant to that person’s independence from management, as required by NYSE rules.

 

 

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Nominating and Corporate

Governance Committee

  

Members: David L. Motley (Chair), Xudong Feng, Louis L. Testoni, Sonja M. Wilkerson

All Members Independent

 

4 meetings in 2020

  

Recommendations for Director Candidates. The nominating and corporate governance committee’s goals and responsibilities include identifying and recommending individuals qualified to serve as members of the board of directors consistent with criteria approved by the board of directors. The committee identifies candidates for the board of directors by soliciting recommendations from committee members and incumbent directors and considering recommendations from employees and shareholders. The committee also has sole authority to retain and terminate search firms, which will report directly to the committee, to assist in identifying director candidates. The nominating and corporate governance committee charter provides that the committee will ensure that the nominees for membership on the board of directors are of a high caliber and are able to provide insightful, intelligent and effective guidance to our management. The committee may establish procedures for evaluating the suitability of potential director nominees proposed by management, other members of the board or by shareholders.

  

Oversight of the Evaluation of the Board and Management. The committee is responsible for the oversight of the evaluation of the board of directors and corporate management. In doing so, the nominating and corporate governance committee evaluates, and reports to the board of directors, the performance and effectiveness of the board of directors as a whole and each committee of the board as a whole (including an evaluation of itself and the effectiveness of the management development and compensation committee in its process of establishing goals and objectives for, and evaluating the performance of, our chief executive officer and our other officers). The committee reviews the suitability for continued service as a director of each board member when his or her term expires, when he or she has a significant change in status, including but not limited to an employment change, or when the director submits his or her resignation in accordance with the company’s director resignation policy then in effect, and recommends whether or not the director should continue to serve.

 

 

  

Corporate Governance Matters. The committee is committed to ensuring that our corporate governance is in full compliance with the law, reflects generally accepted principles of good corporate governance, encourages flexible and dynamic management without undue burdens and effectively manages the risks of our business and our operations. To accomplish this, the committee developed and recommended to the board of directors a set of corporate governance guidelines. The committee must review and, if appropriate, recommend to the board appropriate changes to the corporate governance guidelines at least once every year and the articles of incorporation, bylaws, the Code of Conduct and the Code of Ethics Applicable to Senior Officers at least once every two years. The committee is charged with investigating and advising the board with respect to any violations of the Code of Ethics Applicable to Senior Officers and, to the extent involving directors or officers, the Code of Conduct, including conflicts of interest between directors or officers and us, and including a review of the outside activities of directors and officers. It is the obligation of each director and officer to bring to the attention of the nominating and corporate governance committee any actual, apparent or possible conflict of interest.

 

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Strategy and Risk Committee

  

Members: Albert J. Neupaver (Chair), Traci L. Jensen, David L. Motley, Louis L. Testoni

All Members Independent

 

4 meetings in 2020

  

The committee’s responsibilities include, among other things:

 

  Advising the board and management regarding long-range planning in the areas of transactions, financial matters, shareholder engagement, risk management and related matters;

 

  Assessing and providing oversight to management relating to the identification and evaluation of major strategic, operational, regulatory, information and external risks inherent in the business of the company and the control processes with respect to such risks;

 

  Reviewing significant relationships with analysts, shareholders, financing sources and related parties;

 

  Reviewing and advising the board and management regarding the company’s strategic planning process;

 

  Staying abreast of activities of the company’s shareholders and other stakeholders;

 

  Monitoring shareholder turnover;

 

  Reviewing governance as it pertains to the company’s shareholder base; and

 

  Preparing in advance in order to respond to engagement from the company’s shareholders.

   

Sustainability Committee

  

Members: Xudong Feng (Chair), Leroy M. Ball, Traci L. Jensen, Stephen R. Tritch, Sonja M. Wilkerson

4 meetings in 2020

  

Our sustainability committee serves to assist the board in its assessment of the company’s policies, programs and performance in accordance with our vision and commitment to environmental and social responsibility in accordance with sustainability principles. The committee is responsible for reviewing and overseeing the company’s programs and performance related to sustainability, including:

 

  Reviewing the company’s strategy, policies and practices for consistency with sustainability concepts, including (1) environmental protection, (2) climate change, (3) resource protection, (4) human rights, (5) workplace rights, (6) communications programs, (7) stakeholder engagement, and (6) promotion of inclusion and diversity;

 

  Reviewing standards and best practices for sustainability and assessment of the company’s programs in comparison to industry practice;

 

  Confirming and advising the board on progress against key sustainability goals and alignment with stakeholder expectations;

 

  Reviewing the company’s external reporting on sustainability;

 

  Reviewing the company’s positions in relevant independent ranking systems and the company’s progress and position in sustainability rankings;

 

  Advising the board on whether the company should seek external assurance of its sustainability data;

 

  Advising the board on significant stakeholder concerns and shareholder proposals related to sustainability;

 

  Monitoring the company’s corporate reputation and providing guidance on the protection of the company’s reputation; and

 

  Bringing to the attention of the board, as appropriate, current and emerging political, social and environmental trends and major public policy issues that may affect business operations, performance or the public image of the company.

 

The committee is also responsible for reviewing and overseeing our programs and performance related to safety (occupational and process), health, environment, security and product stewardship in accordance with the American Chemistry Council’s Responsible Care® Management System. The committee reviews and evaluates the effectiveness of the management systems used to provide oversight and control of the company’s product stewardship, safety, health, environmental, security and sustainability programs. The sustainability committee’s charter gives the committee authority to meet as required with relevant company managers who are accountable for product stewardship, safety, health, environmental, security and sustainability programs.

 

 

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CORPORATE GOVERNANCE MATTERS

Corporate Governance Guidelines

Our board of directors has adopted corporate governance guidelines to ensure we are fully compliant with the law and engaging in corporate governance “best practices,” which promote the long-term interests of shareholders and strengthen board and management accountability.

Our corporate governance guidelines address matters such as:

 

 

the selection and composition of the board;

 

 

board leadership;

 

 

board performance;

 

 

the board’s relationship to senior management;

 

 

meeting procedures;

 

 

committee matters;

 

 

leadership development; and

 

 

stock ownership guidelines for non-employee directors.

A copy of our corporate governance guidelines is available on our website at www.koppers.com. You may also request a printed copy at no cost by writing to our corporate secretary at Koppers Holdings Inc., Attention: Corporate Secretary’s Office, 436 Seventh Avenue, Pittsburgh, Pennsylvania 15219.

Director Independence

For a director to qualify as independent, our board must affirmatively determine that a director does not have a material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a material relationship with the company). Our board has established its own guidelines for what constitutes independence for directors (which are included in our corporate governance guidelines available on our website at www.koppers.com) which conform to, or are more exacting than, the independence requirements of the NYSE. In making its independence determinations, the board reviewed the independence guidelines that are part of our corporate governance guidelines, the corporate governance rules of the NYSE and the individual circumstances of each director.

Our Guidelines on Independence

The following is a summary of the guidelines established by our board in our corporate governance guidelines and which are used by the board to help determine the independence of each director. In general, the board will determine that a director will not be independent if, within the preceding three years:

 

 

the director was or is currently also our employee;

 

 

an immediate family member of the director was or is currently employed by us as an executive officer;

 

 

the director was (but is no longer) a partner in or employed by a firm that is our internal or external auditor and personally worked on our audit within that time;

 

 

an immediate family member of the director was (but is no longer) a partner in or employed by a firm that is our internal or external auditor and personally worked on our audit within that time;

 

 

one of our current executive officers was or is currently on the compensation committee of a company which employed our director, or which employed an immediate family member of the director as an executive officer at the same time; or

 

 

the director or an immediate family member of the director received in any twelve-month period during such three-year period direct compensation from us and our consolidated subsidiaries in excess of $120,000 other than director compensation (including committee fees) and pensions or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).

In addition, the board will determine that a director is not independent if:

 

 

the director or the immediate family member of the director is a current partner of a firm that is our internal or external auditor;

 

 

the director is a current employee of such internal or external auditing firm; or

 

 

the director has an immediate family member who is a current employee of such internal or external auditing firm and who personally works on our audit.

 

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When the board reviews the independence of its members, the board considers the following commercial or charitable relationships to be material relationships that would impair a director’s independence:

 

 

the director is a current employee of, or has an immediate family member who is a current executive officer of, another company that has made payments to, or received payments from, us in any of the last three fiscal years that exceed the greater of $1.0 million or two percent of the consolidated gross revenues of the company with which he or she is so associated;

 

 

the director is an executive officer of another company which is indebted to us, or to which we are indebted, and the total amount of either company’s indebtedness to the other is two percent or more of the total consolidated assets of the company for which he or she serves as an executive officer; or

 

 

the director serves as an officer, director or trustee of a charitable organization, and our discretionary charitable contributions to the organization exceed the greater of $1.0 million or two percent of that organization’s consolidated gross revenues (excluding for this purpose our automatic matching, if any, of employee and director charitable contributions).

Each independent director is required to notify the chair of the nominating and corporate governance committee of any event, situation or condition that may affect the board’s evaluation of the director’s independence.

Our Board’s Independence Determinations

Our board of directors reviewed the independence of each of our current directors and nominees, in accordance with our corporate governance guidelines and NYSE rules. Based on its review, the board of directors determined that a majority of our current directors and nominees have no material relationship with us (either directly or as a partner, shareholder or an officer of an organization that has a relationship with us) and are independent under the independence criteria for directors established by the NYSE and in accordance with our corporate governance guidelines. Based on this evaluation, our board has determined that Dr. Feng, Ms. Jensen, Mr. Motley, Mr. Neupaver, Mr. Testoni, Mr. Tritch and Ms. Wilkerson each satisfy the independence standards. In addition, based on its evaluation, the board determined that Mr. Ball is not independent.

Board Leadership Structure

Our current practice is that the roles of the chairman of the board and the chief executive officer should be separate because our board believes separating the roles allows the chairman to serve as a check on the chief executive officer and to independently assess the overall performance of the company on behalf of the shareholders. In addition, our board believes it is important to separate the roles of the chief executive officer and the chairman of the board due to the differences between the two roles and the time-intensive responsibilities of each. Our chief executive officer is the officer through whom the board delegates authority to corporate management. He is responsible for setting our strategic direction and the day-to-day leadership and performance of the company, while ensuring that all orders and resolutions of the board are carried into effect. The chairman of the board, on the other hand, provides guidance to our chief executive officer, presides over meetings of the full board, calls meetings of the board and board committees when he deems them necessary and performs all duties assigned to him by the board. Our chairman of the board is also responsible for acting as chairman at all meetings of our shareholders. Mr. Tritch, one of our independent directors, is currently the chairman of our board and the lead independent director for executive sessions.

Executive Sessions

Our independent directors meet at regularly scheduled executive sessions without management. Our corporate governance guidelines provide that when the roles of the chairman of the board of directors and the chief executive officer are separate and the chairman of the board of directors is not an employee, then the chairman of the board of directors also serves as the independent Presiding Director. The independent Presiding Director presides over the executive sessions of the independent directors and, together with the members of the nominating and corporate governance committee, develops the agendas for the executive sessions and periodically reviews and proposes revisions to the board’s procedures and the corporate governance guidelines. The independent Presiding Director is also responsible for communicating the board’s annual evaluation of the chief executive officer.

Risk Oversight

Our board as a whole has an active role in overseeing the company’s management of risks. Our board regularly assesses the major risks facing the company and reviews options for their mitigation by reviewing

 

 

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information regarding accounting, operational, legal and regulatory, and strategic and reputational risks based on reports from senior management, including by our director of compliance, and our independent auditor.

In addition, our board has established a formal risk management process that involves regular and systematic identification and evaluation of risks. Our board delegates the oversight of specific risk areas to board committees as follows:

 

Committee

   Risk Oversight Responsibilities

Audit

  

  Review with management and our independent auditor the company’s risk assessment and risk management practices and discuss policies with respect to risk assessment and risk management

 

  Oversee the company’s risk policies and processes relating to financial statements, financial systems, financial reporting processes, compliance and auditing, as well as the guidelines, policies and processes for monitoring and mitigating such risks

Nominating and Corporate Governance

  

  Manage risks associated with the independence of the board, potential conflicts of interest, reputation and ethics and corporate governance

Management Development and Compensation

  

  Review risks associated with human capital, employee benefits and executive compensation

Strategy and Risk

  

  Assess and provide oversight to management relating to the identification and evaluation of major strategic, operational, regulatory, information and external risks inherent in the business of the company and the control processes with respect to such risks

Sustainability

  

  Review and oversee the company’s programs and performance related to sustainability, safety (occupational and process), health, the environment, security and product stewardship

Code of Conduct and Code of Ethics

Our board of directors has adopted a Code of Conduct for all directors, officers and employees and a Code of Ethics Applicable to Senior Officers. A copy of each code is available on our website at www.koppers.com. You may also request a written copy at no cost by writing to our corporate secretary at Koppers Holdings Inc., Attention: Corporate Secretary’s Office, 436 Seventh Avenue, Pittsburgh, Pennsylvania 15219. The Code of Conduct covers such matters as conflicts of interest, insider trading, misuse of confidential information, compliance with laws and protection and proper use of corporate assets. Directors are expected to comply with the Code of Conduct and report any violations of the code, including any potential conflicts of interest, as outlined in the code. All directors must remove themselves from any discussion or decision affecting their business or personal interests. We intend to post on our website all disclosures that are required by law, the SEC rules or the NYSE rules concerning any amendments to, or waivers from, any provision of our codes.

Sustainability

Koppers aspires to be a leader in sustainability through the ways we operate our business, care for our communities and secure success for all our stakeholders. Sustainability is a journey we undertake with a steadfast commitment to—and belief in—our ability to create positive change. With a greater appreciation of Koppers place in the world, our decision-making is guided by a clear and unifying Purpose: To Protect What Matters and Preserve the Future.

Our shareholders, employees, customers, regulators and other stakeholders are all increasingly focused on the importance of effective engagement and action on environmental, social, and governance (“ESG”) topics. Corporate social responsibility, our obligation to people, the environment, and to good corporate governance processes, has been a part of our culture for many years. We believe this culture, supported by a spirit of collaboration and innovation, allows us to decrease our impact on the environment and create value for all of our stakeholders. We believe this commitment is reflected in our improving safety culture and our trend of greenhouse gas and energy usage reductions.

We have established a governance structure to support and develop our sustainability practices. In 2020, we established a sustainability committee of the board of directors (formerly the safety, health and environmental committee) to provide oversight of our programs. The sustainability committee of our board of directors serves to assist the board in its assessment of the company’s policies, programs and performance in accordance with our vision and commitment to environmental and social responsibility and sustainability principles. Management provides direction through its leadership council, which is chaired by

 

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the CEO. We have also established a chief sustainability officer position, reporting directly to the CEO and sitting on the leadership council, to ensure that the company’s strategy, policies and practices are consistent with its sustainability goals. Our sustainability steering committee, chaired by our chief sustainability officer, provides guidance on goals and programs designed to improve our performance against expectations.

Toward this goal, and starting in 2019, we began work on a materiality analysis in line with the Global Reporting Initiative Standards, both internally and externally, that highlighted the areas where we can most effectively address the needs of our stakeholders. The materiality assessment considered a full range of ESG topics based on relevant sources and frameworks, including: the American Chemistry Council’s Responsible Care® guidelines, the Sustainable Forestry Initiative, the World Business Council for Sustainable Development’s Chemical Sector Roadmap for the United Nations Sustainable Development Goals, and the Sustainability Accounting Standards Board’s standards for the Chemical and Building Materials & Construction industries.

 

In December 2020, we were named as one of America’s Most Responsible Companies 2021 by Newsweek magazine in recognition of our corporate performance in environmental, social and governance areas. Koppers, ranked 178th, placed in the top half of 399 companies making the list, from a pool of 2,000 U.S.-based publicly traded companies. The company also ranked 30th overall in the social category and placed in the top 10 among Pennsylvania-based companies included.

 

    

   LOGO

Our full annual disclosure of sustainability performance can be found in our most recent Sustainability Report on the Company’s website at www.koppers.com. We published our first Corporate Social Responsibility report (“CSR”) in 2008 and our historical CSR reports are also available on www.koppers.com. Our sustainability reporting referenced in this proxy statement, including, without limitation, our most recent Sustainability Report and our historical CSR reports, and the information on, or accessible through, our websites are not part of or incorporated by reference into this proxy statement.

Environmental

The circular nature of our business starts with our raw materials, the majority volume of which are by-products generated by other industries (including scrap copper and coal tar) and renewable resources (trees). We annually purchase approximately 33 million pounds of scrap copper or other compounds containing copper, all of which is postconsumer or post-industrial in nature. We believe this places Koppers in the center of what is known as the “circular economy” that emphasizes the “reduce, reuse, recycle” mentality that continues to frame global conservation efforts. Our wood-treatment solutions, while supporting an important role in our global infrastructure across multiple industries, also support an important role in the carbon cycle. Treating wood significantly increases its useful lifespan, allowing the carbon stored within the wood to be immobilized for up to 50 years, keeping it out of the atmosphere and limiting carbon’s impact on the environment.

In 2018, we advanced our circular business model even further through our acquisitions of Koppers Recovery Resources and Koppers Utility and Industrial Products. Both businesses add product life cycle management capabilities to help solve our customers’ challenge of responsibly disposing of end-of-life crossties and utility poles by repurposing used wood products, including as a fuel source. This reduces the end-of-life impact of our ties and poles, contributing to greater product sustainability.

Social

Our ability to positively affect our communities starts with investing in our people. We put the health, safety and well-being of our employees at the forefront of everything we do as part of our Zero Harm culture. Our people-focused strategy considers all aspects of the employee experience, from hiring practices and onboarding to health and wellness and talent management. We seek to create and foster an inclusive and welcoming culture where all employees feel empowered and can directly impact and share in the organization’s success. Key to this effort is delivering a consistent onboarding experience, as well as communications and safety training in all of our facilities across the globe.

Our decision-making considers the impact our actions may have on our employees and for each action we take, protecting employee health and well-being is our priority. To accomplish all this, and to better reflect the importance of our employees, we recently transformed our human resources function into a Culture and

 

 

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Engagement team to enhance the employee experience. This transformation is a reflection of how we approach our corporate culture, and how we engage with and support our employees both at work and in other aspects of their lives.

We support an inclusive and diverse work environment across our company through a range of strategic programs. Our internal processes and programs target inclusion and diversity as a key area of importance and externally we place emphasis on the topic during philanthropic activities. Our Director for Global Inclusion and Diversity focuses on supporting our strategy to be an employer of choice, chairs the company’s Inclusion and Diversity Committee, and helps to ensure that all employees feel they are heard and valued to harness the power of an engaged workforce.

We are committed to proactively evaluating and addressing community needs in the areas where we operate. Many of our locations have made strong connections with local community members, allowing Koppers representatives to share facility information and address any questions, observations, concerns and ideas. Our community impact is demonstrated through our employees’ volunteer commitments and a corporate philanthropy program. Employees worldwide volunteer their time to mentor students, enhance local education initiatives, take care of the elderly, assist at homeless shelters and provide hands-on help to those affected by natural disasters.

Collaboration – Communication across our global footprint drives our efforts. All Koppers employees take part in safety training programs and provide direct feedback to leadership as part of the company’s annual engagement survey.

Inclusion and Diversity – We are committed to supporting inclusion and diversity in process and practice. Our Culture and Engagement team ensures that a diverse slate of candidates is considered for open positions. Our first employee resource group, LINKwomen, which was launched in 2018, provides an important development forum for employees and serves as a model for future initiatives. Additionally, the composition of our board of directors has been recognized for gender and racial diversity, including the following:

 

 

The 2020 Women on Boards Gender Diversity Index ranks Koppers as a Winning “W” Company with 20% or more women on our board of directors.

 

 

In February 2020, three members of our board of directors, Xudong Feng, Traci L. Jensen and Sonja M. Wilkerson were named to WomenInc. magazine’s 2019 Most Influential Corporate Directors.

 

 

In 2019, we were nominated for the National Association of Corporate Directors NXT recognition in the Small Cap category, which recognizes exemplary board leadership practices that promote greater diversity and inclusion, ultimately fostering long-term value creation.

Governance

We believe our corporate governance structure is designed to assure accountability to our stakeholders and to make certain that we conduct business in a responsible, ethical way. We maintain a comprehensive Code of Conduct that details the expectations and requirements we have as an organization for our employees. This Code of Conduct applies to all employees, whether we are engaging in peer-to-peer interactions, working to comply with complex regulations, marketing our products, purchasing materials, creating new products, managing our finances or interacting with our communities.

Training employees on the Code of Conduct is a key aspect of our approach to ethics. We require every Koppers employee to complete training on the Code of Conduct annually. We also conduct focused trainings on specific topics that are relevant to employees with particular responsibilities.

We encourage our employees who have questions regarding the Code of Conduct and other ethics issues to seek guidance. Similarly, if an employee recognizes a potential ethics violation, they are empowered and encouraged to notify the appropriate management personnel so that Koppers can investigate and take appropriate corrective action. Employees can also utilize the Koppers Compliance Line, a free confidential resource available 24 hours a day, seven days a week, to ask questions or raise concerns. Another option for anonymous reporting is our third-party email reporting system.

Our board of directors is broadly responsible for contributing to the strategic direction and oversight of the company. Among its duties and responsibilities, the board oversees management’s direction of the legal, ethical and socially responsible behavior of the company, such as developing effective performance measurement systems, reviewing the company’s long-term strategy and overseeing risk management processes. Our leadership council is responsible for directing the development and implementation of the company’s strategic plan, and business operations around the globe. These executive leaders establish and maintain our commitment to ethics, integrity, fiscal responsibility, growth and sustainability.

 

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Communications with the Board

The board of directors welcomes the input and suggestions of shareholders and other interested parties. Shareholders and other interested parties wishing to contact the chairman of the board, the non-management directors as a group or specified individual directors may do so by sending a written communication to the attention of the chairman of the board, c/o Koppers Holdings Inc., Corporate Secretary’s Office, 436 Seventh Avenue, Pittsburgh, Pennsylvania 15219. Issues or complaints regarding questionable accounting practices, internal accounting controls or auditing matters may be sent in writing to the attention of the audit committee chairman, c/o Koppers Holdings Inc., Corporate Secretary’s Office, 436 Seventh Avenue, Pittsburgh, Pennsylvania 15219. Our corporate secretary will forward all written communications to the director or directors to whom it is addressed. Alternatively, you may place an anonymous, confidential, toll-free call in the United States to our Compliance Line at 800-385-4406.

Nomination Procedures

The nominating and corporate governance committee will consider nominees for director recommended by the committee, other directors, employees and shareholders and evaluate such nominees against the same criteria used to evaluate all candidates for director. Any shareholder wishing to recommend a candidate for director to the nominating and corporate governance committee should submit the recommendation in writing to our corporate secretary at Koppers Holdings Inc., Attention: Corporate Secretary’s Office, 436 Seventh Avenue, Pittsburgh, Pennsylvania 15219.

Pursuant to our bylaws, in order to recommend a nominee for election at our annual meeting a shareholder must provide advance notice of such nomination (1) if the meeting is to be held on a date that is within 30 days before or 30 days after the anniversary date of the prior annual meeting, not less than 120 days nor more than 150 days prior to such annual meeting, or (2) if the meeting is to be held on a date that is not within 30 days before or 30 days after the prior annual meeting, not later than the tenth day following the day on which notice of the date of the meeting was mailed or the first public disclosure of the date of such meeting was made, whichever occurs first. In the case of a special meeting to elect directors, notice must be received no later than the tenth day following the earlier of the day on which notice was mailed or the first public disclosure of the date of such meeting. Any such notice must set forth, among other things: (1) the name, age, address and principal occupation of the nominee; (2) a representation that the notifying shareholder intends to appear in person or by proxy to nominate the nominee; (3) the class and number of shares beneficially owned by the nominee; (4) the number of shares to be voted by the notifying shareholder for the nominee; (5) a description of all arrangements between the notifying shareholder and the nominee and other persons pursuant to which the nomination is to be made; (6) all information about the nominee that would be required to be disclosed in a proxy statement (including a written consent to serving as director); and (7) a written representation and agreement, (i) disclosing, and providing that if elected that he or she will disclose, any agreement with any person as to how such nominee will act or vote, (ii) disclosing, and providing that if elected that he or she will disclose, any other commitments that could interfere with his or her fiduciary duties, (iii) disclosing, and providing that if elected that he or she will disclose, any agreement with any person with respect to direct or indirect compensation or indemnification for services as director, and (iv) providing that if elected that he or she will comply with all applicable corporate governance, conflict of interest, stock ownership, trading, and other policies and guidelines.

As to the shareholder giving notice, any beneficial owner on whose behalf the nomination is made, and any person controlled by or controlling such shareholder and beneficial owners, such notice must set forth: (1) their name and address; (2) class and number of shares beneficially owned and of record and any other positions owned, including derivatives, hedges and any other economic or voting interest in the company; (3) a representation whether such person intends to be part of the group which intends to deliver a proxy statement or otherwise solicit proxies from shareholders; (4) whether hedging or other transactions have been made to mitigate a loss of such person; and (5) any other information relating to each party that would be required to be disclosed in a proxy statement.

All notices provided must be updated so that the information provided is true and correct as of the record date and as of the date that is ten business days prior to the meeting.

The company may also require any nominee to submit to background checks and an in-person interview and furnish such other information as reasonably required to determine the eligibility of the nominee to serve as an independent director or that could be material to the understanding of independence.

Under our bylaws, no nominations may now be made by shareholders for the 2021 annual meeting.

 

 

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Committee Reports to Shareholders

Audit Committee Report

As set forth in our charter, management is responsible for the preparation, presentation and integrity of our financial statements, and for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures designed to provide reasonable assurance of compliance with accounting standards and related laws and regulations. Our internal auditors are responsible for providing reliable and timely information to the board of directors and senior management concerning the quality and effectiveness of, and the level of adherence to, our control and compliance procedures and risk management systems. Our independent auditor is responsible for planning and carrying out an integrated audit of our consolidated annual financial statements and the effectiveness of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”), reviewing our annual report on Form 10-K prior to the filing of such report with the SEC, and reviewing our quarterly financial statements prior to the filing of each of our quarterly reports on Form 10-Q with the SEC.

In the performance of its oversight function, the audit committee has reviewed and discussed the audited financial statements for the year ended December 31, 2020, with management and with KPMG LLP, our independent auditor for 2020. The audit committee has discussed with our independent auditor the matters required to be discussed by the applicable requirements of the PCAOB. The audit committee has received the written disclosures and the letter from the independent auditor required by the applicable requirements of the PCAOB regarding the independent auditor’s communications with the audit committee concerning independence and has discussed with the independent auditor its independence. Also, in the performance of its oversight function, during 2020 the audit committee received frequent reports from our director of internal audit.

At various times the audit committee has considered whether the provision of non-audit services by the independent auditor to us is compatible with maintaining the independent auditor’s independence and has discussed with KPMG LLP their independence. The audit committee or its chairman (acting pursuant to delegated authority) pre-approves all new non-audit services (as defined in the Sarbanes-Oxley Act of 2002) proposed to be performed by our independent auditor.

Based upon the review and discussions described in this report, and subject to the limitations on the role and responsibilities of the audit committee referred to above and in its charter, the audit committee recommended to the board of directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2020, for filing with the SEC.

The audit committee of the board of directors presents the foregoing report.

 

Louis L. Testoni (Chair)

  

David L. Motley

Traci L. Jensen

  

Albert J. Neupaver

Management Development and Compensation Committee Report

The management development and compensation committee has reviewed and discussed the Compensation Discussion and Analysis with our management. Based on our review and discussions, the committee has recommended to our board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

The management development and compensation committee of the board of directors presents the foregoing report.

 

Sonja M. Wilkerson (Chair)

  

Traci L. Jensen

Xudong Feng

  

Albert J. Neupaver

 

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COMMON STOCK OWNERSHIP

Director and Executive Officer Stock Ownership

Set forth below is certain information with respect to the beneficial ownership of shares of our common stock as of March 22, 2021, by directors, the NEOs, who are included in the Summary Compensation Table, and all directors and executive officers as a group. Except as otherwise indicated, sole voting power and sole investment power with respect to the shares shown in the table are held either by the individual alone or by the individual together with his or her spouse.

 

Name of

Beneficial Owner

  

Amount and Nature of

Beneficial  Ownership(1)(2)(3)

 

Xudong Feng

     32,192  

Traci L. Jensen

     14,138  

David L. Motley

     14,138  

Albert J. Neupaver

     65,936  

Louis L. Testoni

     32,708  

Stephen R. Tritch

     38,217  

Sonja M. Wilkerson

     14,138  

Leroy M. Ball

     533,773  

Michael J. Zugay

     146,353  

James A. Sullivan

     130,564  

Leslie S. Hyde

     88,361  

Stephanie L. Apostolou

     18,608  

Steven R. Lacy

     67,609 (4) 

Douglas J. Fenwick

     43,718 (5) 

All Directors and Executive Officers as a Group (15 in total)

     1,291,153  

 

(1)

Includes the following amounts of common stock that the following individuals and the group have the right to acquire on or within 60 days after March 22, 2021 through the exercise of stock options or vesting of restricted stock units: Mr. Ball, 295,697; Mr. Zugay, 69,287; Mr. Sullivan, 72,290; Ms. Hyde, 48,826; Mr. Lacy, 47,128; and Mr. Fenwick, 27,662; 8,434 restricted stock units for Dr. Feng, Mses. Jensen and Wilkerson and Messrs. Motley, Neupaver, Testoni and Tritch; and all directors and executive officers as a group, 626,987.

 

(2)

The total number of shares beneficially owned by Mr. Ball and by all directors and executive officers as a group constitutes approximately 2.5% and 5.9%, respectively, of the outstanding shares of our common stock as of March 22, 2021 plus shares of our common stock deemed outstanding pursuant to Rule 13d-3(d)(1) under the Securities Exchange Act of 1934. The total number of shares beneficially owned by each other individual listed in the table above constitutes less than 1.0% of the outstanding shares of our common stock as of March 22, 2021.

 

(3)

Amounts reported for executive officers include unvested time-based restricted stock units.

 

(4)

Mr. Lacy ceased being an executive officer pursuant to Rule 3b-7 under the Securities Exchange Act of 1934 effective as of March 1, 2020. Mr. Lacy retired on December 31, 2020.

 

(5)

Mr. Fenwick ceased being an executive officer pursuant to Rule 3b-7 under the Securities Exchange Act of 1934 effective as of February 14, 2020.

 

 

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Beneficial Owners of More Than Five Percent

The following table shows shareholders whom we know were beneficial owners of more than five percent of our common stock as of March 22, 2021.

 

Name and Address of Beneficial Owner

  

Amount and Nature of

Beneficial Ownership

      

Percent of

Class

 

BlackRock, Inc.(1)

55 East 52nd Street

New York, NY 10055

     3,207,259          15.10%  

The Vanguard Group, Inc.(2)

100 Vanguard Blvd.

Malvern, PA 19355

     2,213,476          10.42%  

Fuller & Thaler Asset Management, Inc.(3)

411 Borel Avenue, Suite 300

San Mateo, CA 94402

     1,710,415          8.05%  

 

(1)

According to the amended Schedule 13G filed January 26, 2021, BlackRock, Inc. beneficially owns 3,207,259 shares of our common stock and has sole dispositive power over such shares. BlackRock, Inc. has sole voting power over 3,178,964 shares.

 

(2)

According to the amended Schedule 13G filed February 10, 2021, The Vanguard Group, Inc., through certain affiliates, beneficially owns an aggregate of 2,213,476 shares of our common stock and has sole dispositive power over 2,156,952 shares, shared dispositive power over 56,524 shares and shared voting power over 38,115 shares.

 

(3)

According to the amended Schedule 13G filed February 11, 2021, Fuller & Thaler Asset Management, Inc. beneficially owns 1,710,415 shares of our common stock and has sole dispositive power over such shares. Fuller & Thaler Asset Management, Inc. has sole voting power over 1,668,756 shares.

 

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EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

 

Executive Summary

Our Compensation

Philosophy

  Our management development and compensation committee (which we refer to as the committee) makes compensation decisions in a manner it believes will best serve the long-term interests of our shareholders by attracting and retaining executives who will be inspired and motivated to meet and exceed the company’s goals and whose interests will be aligned with the interests of our shareholders. To accomplish these objectives, the committee has implemented a strong pay-for-performance compensation program, while striving to pay our executives competitively and align our compensation program with our business strategies.
Our Pay Practices   What we do:    What we don’t do:
 

 Directly link a significant portion of pay to performance

 

 Weigh long-term incentives more heavily in favor of performance-based awards

 

 Require compliance with stock ownership requirements

 

 Engage an independent consultant

 

 Maintain the ability to clawback compensation in connection with a financial restatement

  

×  No change in control tax gross-ups

 

×  No new participants in our Pension or Supplemental Executive Retirement Plans

 

×  No stock options with exercise price below market

 

×  No hedging, pledging or short sales of our stock

  

Our Performance

 

  Consolidated sales of $1.669 billion increased by $32.1 million, or 2.0 percent, as compared to $1.637 billion in the prior year. Despite headwinds associated with the global pandemic, 2020 sales represented the fourth consecutive year of growth as well as the highest level of revenues in the history of the company, excluding KJCC.

 

  Net income attributable to Koppers for 2020 was $122.0 million compared with net income of $66.6 million in the prior year. As adjusted, EBITDA was $211.0 million, compared with $201.1 million in the prior year.

 

  Adjusted EBITDA margin for 2020 was 12.6% compared with 12.3% in the prior year.

 

  We achieved diluted EPS of $5.71 for fiscal year 2020, our second highest EPS ever behind only fiscal year 2008, compared with $3.16 in the prior year. As adjusted, EPS was $4.12 compared with $3.18 in the prior year.

Compensation of our

Named Executive Officers

 

  Our NEOs received annual incentive awards at 103% of their targets. Additional one-time only cash incentives were awarded to all eligible participants in our annual incentive plan, including our NEOs, to recognize the successful completion of the sale of KJCC and related annual incentive shortfalls from prior years caused by understated pricing paid by KJCC’s largest customer in such prior years. All eligible participants in our annual incentive plan from our Performance Chemicals segment, including Mr. Fenwick, also received an additional one-time discretionary bonus in recognition of the exceptional performance of the Performance Chemicals business in 2020.

 

  Long-term incentives represented, on average, 43% of our NEOs’ 2020 total direct compensation, 28% of which were in the form of performance-based awards.

Our Named Executive

Officers

  This Compensation Discussion and Analysis describes the compensation of the following NEOs:
    Name    Current Title

 

 

Leroy M. Ball

   President and Chief Executive Officer

 

 

Michael J. Zugay

   Chief Financial Officer

 

 

James A. Sullivan

   Executive Vice President and Chief Operating Officer

 

 

Leslie S. Hyde

   Senior Vice President and Chief Sustainability Officer

 

 

Stephanie L. Apostolou

   General Counsel and Secretary

 

 

Steven R. Lacy

   Former Assistant to the President of Koppers Inc.*

 

 

Douglas J. Fenwick

   President, Performance Chemicals**
   

 

*   Mr. Lacy served as our Chief Administrative Officer, General Counsel and Secretary through March 1, 2020 and as our Assistant to the President of Koppers Inc. until his retirement on December 31, 2020. Mr. Lacy ceased being an executive officer pursuant to Rule 3b-7 under the Securities Exchange Act of 1934 effective as of March 1, 2020.

 

**  Mr. Fenwick ceased being an executive officer pursuant to Rule 3b-7 under the Securities Exchange Act of 1934 effective as of February 14, 2020.

 

 

 

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Executive Compensation Program Principles

The committee considers the following principles when it makes compensation decisions:

 

 

Pay for Performance — A significant portion of the total compensation of our NEOs should be based on performance and at risk. We will pay our NEOs higher compensation when they exceed our goals and lower compensation when they do not meet our goals.

 

 

Support Business Strategy — Our compensation programs should be aligned with our short-term and long-term business strategies.

 

 

Pay Competitively — We believe that total compensation for our NEOs should generally approximate the market median at target performance. Market is defined as individuals holding comparable positions and producing similar results at companies that the committee selects as our peers based on similar industry, revenue and complexity. Our peer group is listed below in the section called “Companies Used for Defining Competitive Compensation.”

Executive Compensation Objectives

Consistent with these overall principles, the committee has established the following objectives for its executive compensation programs, which are critical to our long-term success:

 

 

Attract — We want our compensation programs to be comparable to market in terms of level of pay and form of award so that we can attract talented executives.

 

 

Retain — We want to retain talented leaders whose continued employment is a key component of our overall success.

 

 

Engage — We want to inspire our executives to meet or exceed our goals and generate superior returns for our shareholders.

 

 

Align — We want to align the financial interests of our executives with those of our shareholders.

Key Components of Our Compensation Program

The compensation objectives for our NEOs are achieved through the following mix of components of target direct compensation for our CEO and most other NEOs, respectively, which are discussed in more detail later in this Compensation Discussion and Analysis.

 

              CEO Target

              Direct Compensation

 

LOGO

 

                Other NEO Target

                Direct Compensation

 

LOGO

 

 

Base Salary — Recognizes different levels of responsibility within the company and serves as the basis for establishing target payouts for annual cash incentives and long-term equity incentives. Base salaries achieve our objectives to attract and retain our executives.

 

 

Annual Cash Incentive or ACI — Variable annual cash awards, based upon adjusted EBITDA performance. Annual cash incentives serve to enhance our business growth and profitability by linking executive pay to corporate performance. Annual cash incentives achieve our objectives of attracting, retaining, and engaging our executives and aligning our executives’ financial interests with those of our shareholders.

 

 

Long-Term Equity Incentives — Generally comprised of PSUs, stock options and RSUs. Long-term equity incentives focus executives on the achievement of long-term corporate goals and strengthen the retention value of our compensation program. Long-term equity incentives also achieve our objectives of attracting, retaining, and engaging our executives and aligning our executives’ financial interests with those of our shareholders.

 

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In addition to the components outlined above, our compensation program also provides our executives with retirement benefits and certain perquisites. While we do not consider these benefits key components of our compensation program, they do assist in achieving our compensation objectives of attracting and retaining talented executives.

2020 Say-on-Pay Vote

We received strong support for our executive compensation program in the annual “say on pay” vote with over 97% approval at the 2020 annual meeting. The committee believes these results reflect our shareholders’ affirmation of our executive compensation program. Nevertheless, the committee regularly reviews and adjusts the program as needed to ensure it remains competitive and aligned with the best interests of the company and its stakeholders.

Our Compensation-Setting Process

Through the course of our compensation-setting process:

 

 

The independent members of our board make CEO compensation decisions, based on the recommendation of the committee;

 

 

The independent members of the board make compensation decisions regarding the other NEOs, based on the recommendation of the committee and the CEO; and

 

 

The committee is advised by an independent compensation consultant.

As in prior years, the fiscal year 2020 compensation decisions for our NEOs were made in three steps.

 

Steps

  

When

1.  Design Program — The program for the year is approved (including targeted levels of annual and long-term pay, fixed and incentive compensation, and any base salary adjustment).

   Beginning of fiscal year

2. Establish Range of Compensation Opportunities — Incentive compensation opportunities are set based on corporate performance. Minimum, target, and maximum performance levels and payouts are established for incentive awards.

   Beginning of fiscal year

3. Review Performance — Performance is reviewed and incentive pool amounts are approved which leads to decisions about annual cash incentive awards and performance-based long-term equity awards.

   Beginning of next fiscal year

The committee may use its judgment to supplement, reduce or modify at any time the compensation intended to be paid or awarded to the NEOs. The committee believes that it is in the best interest of the company and its shareholders that the committee have sufficient latitude to recognize and reward superior performance, which is important to attract and retain talented executives, and to adjust awards to reflect the quality of the company’s financial performance.

Overview of 2020 Operating Performance and Summary of Cash Incentive Determinations

Our 2020 results reflected our success in advancing our company’s strategy to be the global leader in wood-preservation based technologies and expanding our profitability. Specifically, we achieved the following operational milestones in 2020:

 

 

Consolidated sales of $1.669 billion increased by $32.1 million, or 2.0 percent, as compared to $1.637 billion in the prior year. Despite headwinds associated with the global pandemic, 2020 sales represented the fourth consecutive year of growth as well as the highest level of revenues in the history of the company, excluding KJCC.

 

 

Our Performance Chemicals segment achieved its highest revenue ever at $526.3 million, as compared to $448.3 million in the prior year.

 

 

Net income attributable to Koppers for 2020 was $122.0 million compared with net income of $66.6 million in the prior year. As adjusted, EBITDA was $211.0 million, compared with $201.1 million in the prior year.

 

 

Adjusted EBITDA margin for 2020 was 12.6% compared with 12.3% in the prior year.

 

 

We achieved diluted EPS of $5.71 for fiscal year 2020, our second highest EPS ever behind only fiscal year 2008, compared with $3.16 in the prior year. As adjusted, EPS was $4.12 compared with $3.18 in the prior year.

In addition to these operational milestones, on September 30, 2020, we sold KJCC to Fangda Carbon New Material Co., Ltd and C-Chem Co., Ltd., a subsidiary of Nippon Steel Chemical & Material Co., Ltd. KJCC was located in Pizhou, Jiangsu Province, China and was a 75 percent-owned coal tar distillation company which was part of our CMC segment. The sales price was $107.0 million, excluding working capital adjustments. We

 

 

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realized approximately $65 million of net cash, after taxes and expenses, and applied the proceeds toward debt reduction. Consequently, in 2020, through cash generated from operating activities and the KJCC net proceeds, we were able to reduce our net debt by $131.5 million, a record amount in debt paydown.

As a result of our financial performance in 2020, annual cash incentives and certain one-time cash incentives related to the sale KJCC or the exceptional performance of the Performance Chemicals business were paid to our NEOs and all eligible participants in our annual incentive plan, as discussed below.

Overview of 2020 NEO Compensation. Our 2020 actual NEO compensation includes both short- and long-term incentives established using financial metrics. In addition to base salary, this structure, shown graphically below, includes cash incentives and long-term equity incentives, comprised of PSUs (for all NEOs except Mr. Lacy), stock options (for all NEOs except Mr. Lacy and Ms. Apostolou) and RSUs.

For our CEO, Mr. Ball, approximately 79 percent of 2020 direct compensation is pay-at-risk, which is payable over time or determined based upon financial goals or performance achievements. For our other NEOs, on average approximately 66 percent of 2020 direct compensation is pay-at-risk.

 

2020 CEO Actual

Compensation Mix

 

LOGO

 

2020 Other NEOs Average Actual

Compensation Mix

 

LOGO

The following represents the total direct compensation to our NEOs for 2020, computed in accordance with SEC regulations.

 

                         

Long-Term Incentive

        

NEO

  

Base

Salary

     One-Time
Cash Incentive(1)
    

Annual Cash

Incentive

     PSUs     

Stock

Options

     RSUs     

Total Direct

Compensation

 

Leroy M. Ball

  

 

$864,450

 

  

 

$205,808

 

  

 

$890,384

 

  

 

$763,596

 

  

 

$777,999

 

  

 

$518,664

 

  

 

$4,020,901

 

Michael J. Zugay

  

 

$402,791

 

  

 

$  57,538

 

  

 

$248,925

 

  

 

$148,245

 

  

 

$151,042

 

  

 

$100,682

 

  

 

$1,109,223

 

James A. Sullivan

  

 

$500,000

 

  

 

$189,280

 

  

 

$386,250

 

  

 

$294,445

 

  

 

$300,000

 

  

 

$199,990

 

  

 

$1,869,965

 

Leslie S. Hyde

  

 

$322,040

 

  

 

$  46,431

 

  

 

$200,875

 

  

 

$119,623

 

  

 

$121,882

 

  

 

$  81,249

 

  

 

$   892,100

 

Stephanie L. Apostolou

  

 

$282,913

 

  

 

$  35,712

 

  

 

$154,500

 

  

 

$  88,330

 

  

 

$          —

 

  

 

$149,993

 

  

 

$   711,448

 

Steven R. Lacy

  

 

$449,817

 

  

 

$  94,255

 

  

 

$          —

 

  

 

$          —

 

  

 

$          —

 

  

 

$562,262

 

  

 

$1,106,334

 

Douglas J. Fenwick

  

 

$304,485

 

  

 

$  92,730

 

  

 

$188,172

 

  

 

$112,063

 

  

 

$114,176

 

  

 

$  76,106

 

  

 

$   887,732

 

 

(1)

All NEOs received a one-time cash incentive related to the sale of KJCC in 2020. In addition, Mr. Fenwick received a one-time cash incentive related to the exceptional performance of the Performance Chemicals business in 2020.

Please see our Summary Compensation Table on page 33 which also reports amounts for Changes in Pension Value, Nonqualified Deferred Compensation Earnings and All Other Compensation.

Total Realized Compensation

Below is a comparison of 2020 target compensation to total realized compensation for our NEOs. Total realized compensation is based on the actual dollar value of awards delivered to our NEOs in any given year. This measure further demonstrates our ongoing commitment to compensating our leadership based on the company’s performance and placing a significant portion of senior executive compensation at risk. For example, total realized compensation was meaningfully lower than target for most of our NEOs in 2020 because our total shareholder return measured against that of the S&P Small Cap 600 Materials Index over the three-year period ended December 31, 2020 was at the 24th percentile, and therefore, none of the PSUs

 

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awarded in 2018 vested. Mr. Lacy’s total realized compensation was meaningfully higher than target in 2020 because, in connection with Mr. Lacy’s transition from his position as Chief Administrative Officer, General Counsel and Secretary into the role of Assistant to the President of Koppers Inc., prior to his subsequent retirement on December 31, 2020, Mr. Lacy’s 2020 long-term incentive award consisted of a single RSU grant, which vested on December 31, 2020.

 

NEO

    

2020 Target

Compensation

      

2020 Total

Realized

Compensation

      

% of Target

Realized

 

Leroy M. Ball

    

 

$4,322,250

 

    

 

$2,789,450

 

    

 

64.5%

 

Michael J. Zugay

    

 

$1,147,955

 

    

 

$   933,678

 

    

 

81.3%

 

James A. Sullivan

    

 

$1,875,000

 

    

 

$1,306,644

 

    

 

69.7%

 

Leslie S. Hyde

    

 

$   926,364

 

    

 

$   783,298

 

    

 

84.6%

 

Stephanie L. Apostolou

    

 

$   750,000

 

    

 

$   506,830

 

    

 

67.6%

 

Steven R. Lacy

    

 

$1,012,088

 

    

 

$1,836,765

 

    

 

181.5%

 

Douglas J. Fenwick

    

 

$   867,782

 

    

 

$   730,485

 

    

 

84.2%

 

Total realized compensation is calculated as follows:

 

LOGO

2020 Compensation Decisions and Performance

Base Salary. As part of setting pay mix and structure for 2020, the committee evaluated NEO base salaries. Annual salary increases are neither automatic nor guaranteed, but determined by the committee after taking into consideration each NEO’s position with the company, their respective responsibilities and experience and peer company information for similar positions. Based on this evaluation, the following base salary increases were approved by the committee in 2020. The committee only approved base salary increases for NEOs who assumed new responsibilities in 2020. The committee elected to leave the base salary rate of the other NEOs unchanged for 2020.

 

NEO

    

Base Salary as of

January 1, 2020

      

Base Salary as of

March 1, 2020

      

Percentage
Increase

in 2020

 

Mr. Ball

       $864,450          $864,450          0.0%  

Mr. Zugay

       $402,791          $402,791          0.0%  

Mr. Sullivan(1)

       $500,000          $500,000          21.4%  

Ms. Hyde(2)

       $309,440          $325,040          5.0%  

Ms. Apostolou(3)

       $211,150          $300,000          42.1%  

Mr. Fenwick

       $304,485          $304,485          0.0%  

 

(1)

Effective January 1, 2020, a base salary increase of 21.4% was awarded to Mr. Sullivan to reflect his new responsibility as Executive Vice President and Chief Operating Officer, which he assumed on January 1, 2020.

 

(2)

Effective March 1, 2020, a base salary increase of 5.0% was awarded to Ms. Hyde to reflect her new responsibility as Senior Vice President and Chief Sustainability Officer, which she assumed on January 1, 2020.

 

(3)

Effective March 1, 2020, a base salary increase of 42.1% was awarded to Ms. Apostolou to reflect her new responsibility as General Counsel and Secretary, which she assumed on March 1, 2020.

Annual Cash Incentives. In early 2020, the committee approved and the board ratified our annual incentive plan, which served as the company’s main annual incentive plan for salaried employees. The annual cash incentive payouts under the annual incentive plan are based upon: (1) each participant’s target total annual incentive (100% of salary for Mr. Ball, 75% of salary for Mr. Sullivan, 60% of salary for Mr. Zugay, Ms. Hyde

 

 

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and Mr. Fenwick and 50% of salary for Ms. Apostolou) and (2) the company’s performance in relation to adjusted EBITDA targets contained in the plan. Adjusted EBITDA, as measured under the annual incentive plan, is defined as earnings before interest, taxes, depreciation and amortization, as adjusted by the committee in its discretion to account for certain items, as set forth on Appendix C hereto.

Effective March 1, 2020, Mr. Lacy transitioned from his position as Chief Administrative Officer, General Counsel and Secretary and into the role of Assistant to the President of Koppers Inc., prior to his subsequent retirement on December 31, 2020. In connection with his transition and retirement, we entered into a separate arrangement with Mr. Lacy which provided that he would not be eligible for an annual cash incentive award for 2020 and his 2020 long-term incentive award consisted of a single RSU grant, which vested on December 31, 2020.

Taking all of these elements together, the committee’s framework for determining annual cash incentives for the NEOs, except Mr. Lacy, can be expressed as follows:

 

 

 

LOGO

 

(1)

The 2020 target total annual incentives for our NEOs were: Mr. Ball ($864,450), Mr. Zugay ($241,675), Mr. Sullivan ($375,000), Ms. Hyde ($195,024), Ms. Apostolou ($150,000) and Mr. Fenwick ($182,691).

The committee established a target corporate adjusted EBITDA performance level of $209.4 million along with a range of incentive payouts at threshold, target and maximum performance levels, as set forth below.

 

Corporate Adjusted EBITDA

  

Performance

      

% of Target

      

% of Payout

 

Maximum

  

$

251,280,000

 

    

 

120%

 

    

 

150%

 

Actual

  

$

211,508,000

 

    

 

101%

 

    

 

103%

 

Target

  

$

209,400,000

 

    

 

100%

 

    

 

100%

 

Threshold

  

$

167,520,000

 

    

 

80%

 

    

 

50%

 

For 2020, the company achieved adjusted EBITDA performance of $211.5 million, as calculated for purposes of the annual cash incentives. This corresponded to achievement of 101% of target adjusted EBITDA performance and a 103% payout level, which resulted in the following annual cash incentives to our NEOs:

 

                                                                            

  Annual Cash Incentive
 
Mr. Ball     LOGO
 
Mr. Zugay     LOGO
 
Mr. Sullivan     LOGO
Ms. Hyde     LOGO

 

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Ms. Apostolou     LOGO
 
Mr. Fenwick     LOGO

One-Time Cash Incentives. In November 2020, the committee approved a one-time cash incentive payment in the aggregate amount of $3.0 million to all eligible participants in our annual incentive plan, including our NEOs. This one-time cash incentive was intended to not only recognize the successful completion of the sale of KJCC on September 30, 2020, but also to recognize that annual incentive determinations in prior years were impacted by the understated pricing paid by KJCC’s largest customer in such prior years. As a result, the following one-time cash incentive payments to our NEOs were approved:

 

NEO

   One-Time Cash
Incentive Payment
 

Mr. Ball

     $205,808  

Mr. Zugay

     $  57,538  

Mr. Sullivan

     $189,280  

Ms. Hyde

     $  46,431  

Ms. Apostolou

     $  35,712  

Mr. Lacy

     $  94,255  

Mr. Fenwick

     $  43,495  

Separately, in February 2021, the committee approved a one-time discretionary cash incentive to all eligible participants in our annual incentive plan from our Performance Chemicals segment, including to Mr. Fenwick in the amount of $49,235. This one-time discretionary cash incentive was intended to recognize the exceptional performance of the Performance Chemicals business, which achieved record-setting sales and profitability levels in 2020.

 

 

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Long-Term Equity Incentives. In 2020, each NEO (except Mr. Lacy and Ms. Apostolou) received his or her long-term incentive award in three primary forms (with the applicable weighting determined as described below): PSUs (50%), which measure our performance over a three-year period, stock options (30%) and RSUs (20%), which vest in annual installments of 25% over four years. Equity awards are granted under our shareholder-approved 2020 Long Term Incentive Plan, or a predecessor plan (the “LTIP”). As noted above, Mr. Lacy’s long-term incentive award consisted of a single time-based restricted stock unit grant, which vested on December 31, 2020. Ms. Apostolou’s long-term incentive award consisted of PSUs (50%) and RSUs (50%). This was intended to accelerate Mr. Lacy’s equity ownership and to facilitate an orderly transition of Mr. Lacy’s responsibilities to Ms. Apostolou. The table below summarizes the material terms and conditions of the 2020 long-term incentive awards.

 

 

What objective does the award serve?

  

 

   PSUs align shareholder and management interests by focusing management on relative stock price appreciation.

 

   Stock options align shareholder and management interests by providing a reward based solely on stock price appreciation.

 

   RSUs align to shareholder interests and also help to retain participants (some of whom are currently eligible for retirement), as well as to attract the next generation of our senior management.

 

 

When do the options and RSUs vest?

 

  

 

Stock options and RSUs vest in equal annual installments over four years.

 

 

When do the PSUs vest?

  

 

Subject to certain retirement and termination provisions, PSUs will vest, if earned, if the participant remains in service through the third anniversary of the award date.

 

 

How do we measure performance for the PSUs?

  

 

   PSUs granted prior to 2019 will vest, if at all, if the relevant threshold performance level is met at the end of the three-year performance period.

 

   PSUs granted in 2019 or later will be eligible to be earned in three separate tranches each representing one-third of the total award. The first tranche will be earned, if at all, if the relevant threshold performance level is met at the end of a one-year performance period. The second tranche will be earned, if at all, if the relevant threshold performance level is met at the end of a two-year performance period and the third tranche will be earned, if at all, if the relevant threshold performance level is met at the end of a three-year performance period.

 

   Performance is based upon the company’s TSR relative to the S&P Small Cap 600 Materials Index at the end of the applicable performance period.

 

PSU performance is based on a range of relative TSR achieved over the relevant performance period as set forth in the following table:

 

Relative TSR

   Performance        % of Units
to Vest
 

Outstanding

     ³80th percentile          200

 

     70th percentile          150

Target

     50th percentile          100

 

     35th percentile          50

Threshold

     £  25th percentile          0

The percentage vesting is interpolated on a straight-line basis for performance between levels above the threshold. If the company’s TSR is negative during the three-year performance period, then the cumulative number of units that may vest for such three-year period will be capped at either 100% of target (for awards granted in or before 2019) or 150% of target (for awards granted in or after 2020). For PSUs granted in 2019 or later, performance is based upon the same range of relative TSR to the S&P Small Cap 600 Materials Index, but, as described above, such PSUs will be eligible to be earned in three equal tranches based upon the company’s relative TSR achieved over one-year, two-year and three-year performance periods.

We grant equity awards to executives on an annual basis using a grant date that occurs in the first quarter of each year. We also periodically grant equity awards in connection with certain management events, such as the hiring or promotion of an executive or the achievement by an executive of extraordinary personal performance objectives. Each equity award granted to our executives has a grant date that was on or after the date on which the committee approved the award. It is possible that the committee may possess material

 

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nonpublic information when it approves awards. However, awards are granted only at certain times of the year or in connection with certain management events, and the committee does not try to achieve more advantageous grant dates in connection with the timing of the release of material nonpublic information.

The target dollar value of all equity awards to each NEO is determined based upon a multiplier of base salary. Once the total dollar value of the awards is determined for each NEO, the actual number of PSUs, stock options and RSUs is determined for each NEO (except Mr. Lacy and Ms. Apostolou) as follows: 50 percent of the total dollar value is allocated to the PSU portion of the award, 30 percent of the total dollar value is allocated to the stock option portion of the award and 20 percent of the total dollar value is allocated to the RSU portion of the award. As described above, for Mr. Lacy 100 percent of the total dollar value of his 2020 award was allocated to RSUs and, for Ms. Apostolou, 50 percent of the total dollar value was allocated to the PSU portion of the award and 50 percent of the total dollar value was allocated to the RSU portion of the award. The committee then uses the closing price of our common stock on the NYSE on the grant date to determine the number of PSUs and RSUs awarded. To determine the number of stock options awarded, the committee divides the total dollar value attributed to the stock option portion of the award by the estimated fair value of the stock options on the date of grant, which is determined in accordance with the Black-Scholes valuation method by an independent valuation consultant.

The granting of a combination of stock options, RSUs and PSUs falls within the range of peer group practices and has a strong performance orientation. Based on data provided by our compensation consultant, the long-term incentive portion of our NEO’s total direct compensation is aligned with peer group average practice.

Forfeiture of the 2018-2020 Performance-Based Restricted Stock Units. On December 31, 2020, the three-year performance period ended for the PSUs awarded in 2018. Our total shareholder return was measured against that of the S&P Small Cap 600 Materials Index (as described above) over the three-year period ended December 31, 2020. Our ranking on this performance measure was at the 24th percentile, which meant that the threshold was not met. Therefore, none of the PSUs awarded in 2018 vested.

Results for the 2019-2021 Performance-Based Restricted Stock Units. On December 31, 2020, the two-year performance period ended for the second tranche of the PSUs awarded in 2019, and on December 31, 2019, the one-year performance period ended for the first tranche of the PSUs awarded in 2019. Our total shareholder return was measured against that of the S&P Small Cap 600 Materials Index (as described above) over the two-year period ended December 31, 2020 and the one-year period ended December 31, 2019, respectively. Our ranking on this performance measure was at the 85th percentile for the two-year period ended December 31, 2020 and at the 92nd percentile for the one-year period ended December 31, 2019, resulting in payouts at 200% of target for both tranches. All earned shares generally will vest on March 6, 2022 if the participant remains in service through such date. If the company’s TSR is negative during the three-year performance period beginning on January 1, 2019 and ending on December 31, 2021, then the cumulative number of units that may vest for such three-year period will be capped at 100% of target.

Results for the 2020-2022 Performance-Based Restricted Stock Units. On December 31, 2020, the one-year performance period ended for the first tranche of the PSUs awarded in 2020. Our total shareholder return was measured against that of the S&P Small Cap 600 Materials Index (as described above) over the one-year period ended December 31, 2020. Our ranking on this performance measure was at the 6th percentile for the one-year period ended December 31, 2020. Therefore, no shares were earned for the first tranche of the PSUs awarded in 2020. All earned shares for the second tranche and third tranche, if any, generally will vest on March 3, 2023 if the participant remains in service through such date. If the company’s TSR is negative during the three-year performance period beginning on January 1, 2020 and ending on December 31, 2022, then the cumulative number of units that may vest for such three-year period will be capped at 150% of target.

Retirement Benefits. We maintain a defined contribution plan that permits U.S. salaried employees, including the NEOs, to contribute up to 60 percent of pay, subject to applicable limits for 401(k) plans. We match 100 percent of salaried employee contributions to the 401(k) plan on the first three percent of an employee’s salary contributed to the plan and match 50 percent on the next two percent of an employee’s salary contributed to the plan. We also maintain a supplemental benefit plan, which we refer to as the benefit restoration plan, to restore employer non-elective contributions lost by certain U.S. highly-paid employees, including the NEOs, in our defined contribution plan under U.S. tax law. Under both plans, we make employer non-elective contributions tied to our financial performance. Employer contributions have not yet been made for 2020, however, we have assumed such contributions will be paid for 2020 and the corresponding amounts are included in the tables below.

At the time of his retirement on December 31, 2020, Mr. Lacy was covered by the Retirement Plan of Koppers Inc. and Subsidiaries for Salaried Employees, a tax-qualified pension plan that we refer to as the

 

 

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salaried plan, the Retirement Income Restoration Plan, a non-qualified excess defined benefit plan that we refer to as SERP l, and the Supplemental Executive Retirement Plan, a non-qualified excess defined benefit plan that we refer to as SERP II. Ms. Hyde is also a participant in the salaried plan and SERP II. No other NEOs participate in the salaried plan, SERP I or SERP II. At the time of his retirement on December 31, 2020, Mr. Lacy was also covered under our Survivor Benefit Plan, which makes him eligible for a post-retirement survivor benefit. Ms. Hyde is also a participant in the Survivor Benefit Plan. No other NEOs are covered under our Survivor Benefit Plan. More information on the salaried plan, SERP I, SERP II and the Survivor Benefit Plan can be found under 2020 Pension Benefits on pages 41 and 42.

Perquisites and Other Benefits. We provide a limited number of perquisites and other benefits to certain of our NEOs, which include club dues, parking and executive physicals. Additional details of the perquisites and other benefits we provide are more fully described in the footnotes to the “All Other Compensation” column of the Summary Compensation Table below.

We provide these perquisites and other benefits to promote a healthy work/life balance and provide opportunities for developing business relationships. We believe they are important to our ability to attract and retain top-quality executive talent and are consistent with those provided to executives at other companies comparable to us. The costs associated with providing these benefits for our NEOs are reflected in the “All Other Compensation” column of the Summary Compensation Table below on page 33.

Our NEOs also participate in the same standard salaried benefit plans as our other U.S. salaried employees. This includes a basic welfare benefits package consisting of medical, dental, vision, life and disability insurance and accident insurance plans, as well as flexible spending arrangements for health care, dependent care and transportation expenses.

Compensation Policies and Practices

Compensation and Risk. The committee believes that the company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the company. The committee has designed a total compensation package with features that it believes will mitigate the risks associated with compensation policies and practices including:

 

 

Our compensation programs provide a reasonable balance between annual and long-term performance, with a significant portion of compensation being delivered in the form of long-term incentives;

 

 

Annual cash incentives are determined based on the company’s performance;

 

 

The committee has the ability to modify annual cash incentives earned to reflect the quality of the company’s financial performance, individual performance and other factors that should influence compensation;

 

 

The long-term incentive program focuses participants on longer-term stock price appreciation; and

 

 

Executives are subject to stock ownership requirements that encourage a long-term perspective and ensure that the interests of executive officers are closely aligned with shareholders.

Role of Consultants. In accordance with its authority to retain advisors, in early 2020, the committee engaged Meridian Compensation Partners, LLC (“Meridian”) as outside consultants to advise the committee with respect to 2020 compensation design decisions.

Meridian does not advise our management, or receive any other compensation from us. In its role as independent advisor to the committee, Meridian provided advice to the committee from time to time on various executive compensation matters including conducting an annual competitive compensation analysis, which Meridian prepared for the committee in early 2020.

In compliance with the SEC and the NYSE disclosure requirements regarding the independence of compensation consultants, Meridian provided the committee with a completed questionnaire addressing each of the six independence factors enumerated in the SEC requirements. Their responses affirm the independence of Meridian and the partners, consultants, and employees who service the committee on executive compensation matters and governance issues.

 

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Companies Used for Defining Competitive Compensation. As stated above, one of the committee’s principles is to target the compensation of our NEOs within a range of the market median of our peer companies that were selected based on comparability in terms of industry, revenue and complexity. For purposes of 2020 compensation decisions, the peer group selected by the committee, in consultation with Meridian, consisted of the following:

 

     

Aegion Corporation

   H.B. Fuller Company    Simpson Manufacturing Co., Inc.

Armstrong World Industries, Inc.

   Hillenbrand, Inc.    Standex International Corporation

Cabot Corporation

   Innospec, Inc.    Stepan Company

EnPro Industries, Inc.

   Louisiana-Pacific Corporation    Sterling Construction Company, Inc.

Ferro Corporation

   Masonite International Corporation    Tronox Holdings plc

Gibraltar Industries, Inc.

   Minerals Technologies, Inc.    UFP Industries, Inc.

The Greenbrier Companies, Inc.

   OMNOVA Solutions Inc.(1)   

 

Granite Construction Incorporated

   Quaker Chemical Corporation     

 

(1)

OMNOVA Solutions Inc. was part of the peer group for purposes of determining 2020 compensation. OMNOVA Solutions Inc. was acquired by Synthomer PLC in April 2020. Because compensation benchmarking data is no longer available for OMNOVA Solutions Inc., the committee removed it from the peer group for 2021.

In terms of size, our revenue, total assets and net income ranked in the 56th, 39th and 32nd percentiles, respectively, of our peer group, while our market capitalization and number of employees ranked below the 25th percentile. Statistical regression was not used to adjust peer compensation data based on our revenue positioning relative to the peer group.

Through its competitive assessment, Meridian determined that the aggregate target cash and target total compensation for the majority of our executives fell at or below the market median competitive range, primarily due to base salaries (which drive target annual incentives and long-term incentives) that are generally below market.

In advance of its decisions regarding 2021 compensation, the committee again reviewed with Meridian the peer group companies listed above and confirmed that it continues to constitute an appropriate peer group for benchmarking our executive compensation programs. Accordingly, the committee did not make any changes to the peer group for purposes of 2021 compensation decisions, other than the removal of OMNOVA Solutions Inc. from the peer group as described above.

Stock Ownership Requirements for Our Named Executive Officers. The committee and our board of directors have approved stock ownership requirements. The requirements apply to selected members of the management team, including all of the NEOs except Mr. Lacy. The committee and our board of directors have also approved stock ownership guidelines, which apply to our non-employee directors, as described more fully below under “Stock Ownership Guidelines for Our Non-Employee Directors.” The stock ownership requirements were designed to achieve the following objectives:

 

 

demonstrate senior management’s commitment to and confidence in the company’s long-term prospects;

 

 

align senior management’s interests with those of our shareholders;

 

 

support a long-term focus; and

 

 

quantify our expectations with regard to ownership of our stock by our senior management.

Our stock ownership requirements require our officers to accumulate a specified number of shares expressed as the value of stock ownership as a multiple of base salary. The required stock ownership level is converted into a number of shares that is recalculated annually. Until the stock ownership level is achieved, members of the management team are required to retain 75 percent of the net profit shares (i.e., excluding shares used for the payment of taxes) received from exercising stock options, the vesting of RSUs and PSUs.

 

Position

         

Ownership Requirement

Multiple

of Base Salary

 

Chief Executive Officer

   (Mr. Ball)        6x  

Chief Operating Officer

   (Mr. Sullivan)        4x  

Chief Financial Officer; Chief Sustainability Officer; President, Performance Chemicals

   (Mr. Zugay, Ms. Hyde and Mr. Fenwick)        3x  

General Counsel and Secretary

   (Ms. Apostolou)        2x  

 

 

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Unvested RSUs and shares owned outright by the executives and/or their spouses count toward meeting the requirements. Unvested PSUs and unexercised stock options do not count toward meeting the stock ownership requirements for our executives.

Four of our NEOs have achieved compliance with the target ownership level and two NEOs continue to comply with the 75 percent retention ratio. Mr. Lacy was no longer subject to our stock ownership requirements effective March 1, 2020 upon his transition into the role of Assistant to the President of Koppers Inc.

Policy on Derivative Transactions and Restrictions on Hedging Transactions. In January 2017, we instituted a policy that prohibits our employees, officers and directors from directly or indirectly engaging in the following types of transactions with respect to our securities: certain forms of hedging or monetization transactions, such as prepaid variable forward contracts, equity swaps, collars and exchange funds, that would allow an employee, officer or director to hedge or offset any decrease in the market value of our securities; short sales; transactions in publicly traded options; pledging our securities as collateral for a loan; or holding our securities in margin accounts or a brokerage account with a “margin feature” (unless the margin feature is not utilized, company securities are otherwise excluded from being pledged or the account holder does not engage in any transaction that results in a lien upon the company securities in the account).

Clawback Policy. In March 2017, we instituted a clawback policy that provides that any cash or equity incentive-based compensation paid to any executive officer and certain employees is subject to recoupment if we are required to restate our financial statements due to material noncompliance with any financial reporting requirement. Our right of recoupment under this policy applies only to cash or equity incentive-based compensation paid during the three years prior to the date of the restatement, provided, however, that this three-year limitation will not apply if the restatement resulted from fraud or misconduct.

Contracts. We use contractual arrangements where appropriate to assist in recruitment and retention of our NEOs. We have entered into separate change in control agreements with all NEOs, except Mr. Lacy. Each of these agreements is described in the “Potential Payments upon Termination or Change in Control” section beginning on page 43 below.

Tax Considerations. For federal income tax purposes, cash compensation, such as base salary or cash incentive, is includible as ordinary compensation income when earned, unless deferred under a company-sponsored deferral plan. Deferrals under tax-qualified plans, such as a 401(k) plan, do not affect the timing of our tax deduction. Deferrals under non-qualified plans, the adoption of which have been approved by the board of directors, will result in the deferral of our compensation deduction until such time as the cash compensation is paid to the employee.

Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the deductibility of compensation in excess of $1 million paid to any one NEO in any calendar year. Under the tax rules in effect before 2018, compensation that qualified as “performance-based” under Section 162(m) was deductible without regard to this $1 million limit. In 2017 and prior years, the committee designed awards under its prior cash incentive plan, as well as PSUs and stock options granted under equity incentive plans, that were intended to qualify for this performance-based compensation exception. However, the Tax Cuts and Jobs Act, which was signed into law December 22, 2017, eliminated this performance-based compensation exception effective January 1, 2018, subject to a special rule that “grandfathers” certain awards and arrangements that were in effect on or before November 2, 2017. As a result, compensation payable under awards granted by the committee before 2018 with the intent of qualifying as performance-based compensation under Section 162(m) that is paid on or after January 1, 2018 may not be fully deductible, depending on the application of the special grandfather rules. Moreover, compensation in excess of $1 million payable to our NEOs under awards granted on and after January 1, 2018 generally will not be deductible. While the Tax Cuts and Jobs Act will limit the deductibility of compensation paid to the NEOs, the committee will — consistent with its past practice — design compensation programs that are intended to be in the best long-term interests of the company and our shareholders, with deductibility of compensation being one of several considerations taken into account.

Accounting Considerations. When reviewing preliminary recommendations and in connection with approving the terms of a given incentive plan period, management and the committee review and consider the accounting implications of a given award, including the estimated expense and impact on EPS.

 

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Summary Compensation Table

The following table and related footnotes describe the total compensation awarded to, earned by or paid to our NEOs for services rendered during fiscal years 2020, 2019 and 2018.

 

Name and

Principal Position

  Year     Salary     Bonus    

Stock

Awards(4)

   

Option

Awards(4)

   

Non-Equity

Incentive Plan

Compensation

   

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings(5)

   

All Other

Compensation(6)

    Total  

Leroy M. Ball

President and Chief Executive Officer

    2020     $ 864,450     $ 205,808     $ 1,282,260     $ 777,999     $ 890,384     $ 2,383     $ 103,263     $ 4,126,547  
    2019       857,719             2,208,407       692,535       864,634       977       94,066       4,718,338  
    2018       833,338             1,717,559       672,361       725,350       854       94,583       4,044,045  

Michael J. Zugay

Chief Financial Officer

    2020     $ 402,791     $ 57,538     $ 248,927     $ 151,042     $ 248,925     $ 553     $ 56,696     $ 1,166,472  
    2019       399,641             467,632       146,651       241,694       223       50,275       1,306,116  
    2018       388,243             363,662       142,376       202,760       182       65,157       1,162,380  

James A. Sullivan

Executive Vice President and Chief Operating Officer

    2020     $ 500,000     $ 189,280     $ 494,435     $ 300,000     $ 386,250     $ 499     $ 66,726     $ 1,937,190  
    2019       408,766             573,975       179,999       247,193       190       56,706       1,466,829  
    2018       388,642             459,756       179,997       219,143       142       53,966       1,301,646  

Leslie S. Hyde(1)

Senior Vice President and Chief Sustainability Officer

    2020     $ 322,040     $ 46,431     $ 200,872     $ 121,882     $ 200,875     $ 39,718     $ 125,481     $ 1,057,299  
                 
                 
                                                                       

Stephanie L. Apostolou(2)

General Counsel and Secretary

    2020     $ 282,913     $ 35,712     $ 238,323     $     $ 154,500     $     $ 21,204     $ 732,652  
                 
                                                                       

Steven R. Lacy

Former Assistant to the President of Koppers Inc.

    2020     $ 449,817     $ 94,255     $ 562,262     $     $     $ 60,953     $ 155,317     $ 1,322,604  
    2019       446,263             522,084       163,721       269,829       66,180       177,995       1,646,072  
    2018       433,438             406,015       158,955       226,363       790       51,528       1,277,089  

Douglas J. Fenwick(3)

President, Performance Chemicals

    2020     $ 304,485     $ 92,730     $ 188,169     $ 114,176     $ 188,172     $ 350     $ 45,274     $ 933,356  
    2019       299,316             341,124       106,974       176,306       157       39,212       963,089  
                 
                                                                       

 

(1)

Ms. Hyde was not an NEO in 2018 or 2019.

 

(2)

Ms. Apostolou was not an NEO in 2018 or 2019.

 

(3)

Mr. Fenwick was not an NEO in 2018.

 

(4)

The amounts shown in these columns represent the aggregate grant date fair value of RSUs, stock options and PSUs granted to our NEOs computed in accordance with FASB ASC Topic 718. The value of PSUs disclosed in the table is based upon the target amount of shares granted, using a fair value based on a Monte Carlo valuation model. These award grant date fair values have been determined using the assumptions underlying the valuation of equity awards set forth in note 8 of the consolidated financial statements in our annual reports on Form 10-K for the years ended December 31, 2020, December 31, 2019 and December 31, 2018. Assuming the maximum amount of shares are granted (based on our relative TSR performance), the grant date fair values of PSUs granted in 2020, 2019 and 2018 are: (i) for 2020, Mr. Ball, $1,527,192; Mr. Zugay, $296,491; Mr. Sullivan, $588,890; Ms. Hyde, $239,246; Ms. Apostolou, $176,660; and Mr. Fenwick, $224,125; (ii) for 2019, Mr. Ball, $3,493,446; Mr. Zugay, $739,747; Mr. Sullivan, $907,959; Mr. Lacy, $825,908; and Mr. Fenwick, $539,617; and (iii) for 2018, Mr. Ball, $2,538,637; Mr. Zugay, $537,545; Mr. Sullivan, $679,565; and Mr. Lacy, $600,120.

 

(5)

The amount disclosed in this column represents: (i) for Mr. Lacy and Ms. Hyde, the aggregate change in the present value of the executive’s accumulated pension benefit; and (ii) the portion of interest accrued (but not currently paid or payable) on deferred compensation above 120 percent of the applicable federal long-term rate at the maximum rate payable under our Benefit Restoration Plan. The increase or decrease, as applicable, in the present value of accumulated pension benefit was as follows: Ms. Hyde: $39,545 (2020); and Mr. Lacy: $59,379 (2020), $65,444 (2019), and negative $12,837 (2018). Negative amounts are not reflected in the amounts disclosed above. The remainder of the amount reported in this column for each NEO for 2020, 2019 and 2018, respectively, represents the above-market interest on deferred compensation. Additional information regarding these plans is below under “2020 Pension Benefits” and “2020 Non-qualified Deferred Compensation.”

 

 

 

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(6)

Includes all other compensation as described in the table below.

All Other Compensation Table (2020)

 

     Perquisites      Other Compensation         
      Club
Dues
     Total
Perquisites(1)
     Defined
Contribution
Plan
Contributions(2)
     Benefit
Restoration
Plan
Contributions(3)
     Total Other
Compensation(4)
     Total All
Other
Compensation
 

Leroy M. Ball

   $ 14,710      $ 15,055      $ 20,546      $ 67,662      $ 88,208      $ 103,263  

Michael J. Zugay

     16,463        16,513        23,085        17,098        40,183        56,696  

James A. Sullivan

     16,978        17,028        23,085        26,613        49,698        66,726  

Leslie S. Hyde

                   21,566        8,497        125,481        125,481  

Stephanie L. Apostolou

                   17,228        3,976        21,204        21,204  

Steven R. Lacy

                   23,085        21,685        155,317        155,317  

Douglas J. Fenwick

     12,378        12,378        23,085        9,811        32,896        45,274  

 

(1)

The aggregate incremental cost for the perquisites is based on our direct, out-of-pocket cost for providing those benefits. In addition to club dues, Mr. Ball received parking reimbursement and Messrs. Ball, Zugay and Sullivan received a nominal holiday gift.

 

(2)

The full amount of “defined contribution plan contributions” disclosed for each NEO includes an assumed amount for employer contributions made under our 401(k) plan. Actual employer contributions have not yet been made for 2020, however, for purposes of this table, we have assumed that such contributions will be paid for 2020. The assumed amount included for employer contributions with respect to each NEO is $11,685.

 

(3)

Actual Benefit Restoration Plan contributions have not yet been made for 2020, however, for purposes of this table, we have assumed that such contributions will be credited for 2020 in accordance with past practice. Additional information regarding this plan is below under “2020 Non-qualified Deferred Compensation.”

 

(4)

The full amount of “Total All Other Compensation” disclosed for Ms. Hyde includes $95,418 and for Mr. Lacy includes $110,547 based on an accrued amount attributed to benefits pursuant to the Survivor Benefit Plan rather than our out-of-pocket expenses attributed to the plan. The expense associated with the Survivor Benefit Plan is calculated by determining the annual change in fair value of our liability for this benefit for accounting purposes.

 

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2020 Grants of Plan Based Awards Table

As further described in the “Compensation Discussion and Analysis” section above, the following table shows the details concerning the potential amounts payable to Messrs. Ball, Zugay, Sullivan, Lacy and Fenwick and Mses. Hyde and Apostolou for performance during 2020 under our annual incentive plan. The actual amounts paid to each NEO are included in the “Summary Compensation Table” above. The table below also reflects PSUs, RSUs and stock options granted to each NEO during 2020 under our LTIP, where applicable.

 

 

 

 

Form of
Award(1)

 

Grant

Date

   

Date

Management,

Development

and

Compensation

Committee

Took Action

to Grant

Award

   

Estimated Possible 2020

Payouts Under

Non-Equity Incentive

Plan Awards(2)(4)

     

 

   

 

 

Estimated Future

Payouts Under

Equity Incentive

Plan Awards(3)

   

All

Other

Stock

Awards:

Number
of

Shares of

Stock or

Units(3)

(#)

   

All

Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)

   

Exercise
or

Base

Price of

Option

Awards(4)

($/Sh)

   

Grant

Date

Fair

Value of

Stock

and

Option

Awards(5)

($)

 

Name

 

 

Threshold

($)

   

Target

($)

   

Maximum

($)

      

 

   

Threshold

(#)

   

Target

(#)

   

Maximum

(#)

 

Leroy M. Ball

  Annual Cash Incentive Award    

 

 

 

 

 

   

 

 

 

 

 

    432,225       864,450       1,296,675      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

  PSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    33,028       66,055       132,110      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

  $ 763,596  

 

  RSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    26,422      

 

 

 

 

 

   

 

 

 

 

 

    518,664  
 

 

  Option Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    92,180     $ 19.63       777,999  

Michael J. Zugay

  Annual Cash Incentive Award    

 

 

 

 

 

   

 

 

 

 

 

    120,838       241,675       362,513      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

  PSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    6,412       12,824       25,648      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

  $ 148,245  

 

  RSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    5,129      

 

 

 

 

 

   

 

 

 

 

 

    100,682  
 

 

  Option Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    17,896     $ 19.63       151,042  

James A. Sullivan

  Annual Cash Incentive Award    

 

 

 

 

 

   

 

 

 

 

 

    187,500       375,000       562,500      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

  PSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    12,736       25,471       50,942      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

  $ 294,445  

 

  RSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    10,188      

 

 

 

 

 

   

 

 

 

 

 

    199,990  
 

 

  Option Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    35,545     $ 19.63       300,000  

Leslie S. Hyde

  Annual Cash Incentive Award    

 

 

 

 

 

   

 

 

 

 

 

    97,512       195,024       292,536      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

  PSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    5,174       10,348       20,696      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

  $ 119,623  

 

  RSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    4,139      

 

 

 

 

 

   

 

 

 

 

 

    81,249  
 

 

  Option Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    14,441     $ 19.63       121,882  

Stephanie L. Apostolou

  Annual Cash Incentive Award    

 

 

 

 

 

   

 

 

 

 

 

    75,000       150,000       225,000      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

  PSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    3,821       7,641       15,282      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

  $ 88,330  
 

 

  RSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    7,641      

 

 

 

 

 

   

 

 

 

 

 

    149,993  

Steven R. Lacy

  RSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    28,643      

 

 

 

 

 

   

 

 

 

 

 

  $ 562,262  

Douglas J. Fenwick

  Annual Cash Incentive Award    

 

 

 

 

 

   

 

 

 

 

 

    91,346       182,691       274,037      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

  PSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    4,847       9,694       19,388      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

  $ 112,063  

 

  RSU Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    3,877      

 

 

 

 

 

   

 

 

 

 

 

    76,106  
 

 

  Option Award     3/3/2020       2/11/2020      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    13,528     $ 19.63       114,176  

 

(1)

The material terms of the awards reflected in this column are provided in the “Compensation, Discussion and Analysis—2020 Compensation Decisions and Performance” section under the headings “Annual Cash Incentives” and “Long-Term Equity Incentives.” Grants of long-term equity incentives were made from the 2018 Long Term Incentive Plan.

 

(2)

The amounts shown in these columns represent the threshold, target and maximum possible payouts in 2020 expressed as a percentage of each NEO’s salary as of January 1, 2020. For Mr. Ball, the target payout was 100% of salary. For Mr. Sullivan, the target payout was 75% of salary. For Messrs. Zugay and Fenwick and Ms. Hyde, the target payout was 60% of salary. For Ms. Apostolou, the target payout was 50% of salary. Mr. Lacy was not eligible for an award under our annual incentive plan in 2020. Threshold performance would yield a payout of 50% of target and maximum performance would yield a payout of 150% of target. Amounts paid to each NEO under our annual incentive plan are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.

 

(3)

Unvested RSUs and PSUs granted under our LTIP are entitled to dividends at the same rate as those paid, if any, to holders of our common stock which are converted annually into additional RSUs or PSUs, respectively, that vest on the same schedule as the underlying award. We call these dividend equivalent units.

 

 

KOPPERS HOLDINGS INC.

   35


Table of Contents

EXECUTIVE AND DIRECTOR COMPENSATION

 

(4)

The option and RSU awards generally will vest in equal annual installments over four years and have a maximum term of 10 years. As noted above, Mr. Lacy’s 2020 long-term incentive award consisted of a single RSU award, which vested on December 31, 2020.

 

(5)

The amounts shown in this column represent the aggregate grant date fair value of RSUs, stock options and PSUs granted to our NEOs in 2020. See Footnote 4 to the Summary Compensation Table above.

 

36  

2021 Proxy Statement

  


Table of Contents

EXECUTIVE AND DIRECTOR COMPENSATION

 

Outstanding Equity Awards at Fiscal Year-End 2020

The table below provides information concerning unvested RSUs, PSUs and unexercised options held by each NEO at December 31, 2020.

 

 

 

   

 

    Option Awards           Stock Awards  

Name

 

Grant

Date

   

Number of

Securities

Underlying

Unexercised

Options

Exercisable(#)

   

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(3)($)

   

 

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares,

Units or

Other

Rights That

Have Not

Vested(4)(#)

   

Equity

Incentive

Plan Awards:

Market or

Payout Value

of Unearned

Shares, Units

or Other

Rights That

Have Not

Vested(3)($)

 

Leroy M. Ball

    2/22/2011       6,100      

 

 

 

 

 

  $ 40.26       2/21/2021      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    2/21/2012       7,807      

 

 

 

 

 

    38.21       2/21/2022      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    2/19/2013       7,591      

 

 

 

 

 

    42.76       2/19/2023      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    2/18/2014       9,167      

 

 

 

 

 

    37.93       2/18/2024      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/3/2015       92,410      

 

 

 

 

 

    17.57       3/3/2025      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/1/2016       60,728      

 

 

 

 

 

    18.11       3/1/2026      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/3/2017       25,139       8,380       44.10       3/3/2027      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/2/2018       20,561       20,562       41.60       3/2/2028      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/6/2019       15,294       45,884       26.63       3/6/2029      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/3/2020             92,180       19.63       3/1/2030      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    104,871     $ 3,267,780       50,914     $ 1,586,480  

Michael J. Zugay

    3/3/2015       26,041      

 

 

 

 

 

  $ 17.57       3/3/2025      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/1/2016       18,061      

 

 

 

 

 

    18.11       3/1/2026      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/3/2017       5,777       1,926       44.10       3/3/2027      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/2/2018       4,354       4,354       41.60       3/2/2028      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/6/2019       3,238       9,717       26.63       3/6/2029      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/3/2020             17,896       19.63       3/1/2030      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    21,781     $ 678,696       10,395     $ 323,908  

James A. Sullivan

    3/3/2015       23,437      

 

 

 

 

 

  $ 17.57       3/3/2025      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/1/2016       16,609      

 

 

 

 

 

    18.11       3/1/2026      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

    3/3/2017       5,364       1,788       44.10       3/3/2027