DEF 14A 1 s002065x1_def14a.htm DEF 14A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No.  )

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Soliciting Material under §240.14a-12


WELBILT, 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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March 14, 2018

Dear Welbilt Stockholders,

It is our pleasure to invite you to Welbilt’s 2018 Annual Meeting of Stockholders. This year’s meeting will be held on Friday, April 27, 2018, at 1:00 p.m. Eastern time, at our corporate headquarters, located at 2227 Welbilt Boulevard, New Port Richey, Florida 34655.

This year we are again pleased to furnish our proxy materials via the Internet. Providing our materials to stockholders electronically allows us to conserve natural resources and reduce our printing and mailing costs for the distribution of the proxy materials. We have mailed to stockholders a Notice of Internet Availability of Proxy Materials for the 2018 Annual Meeting which contains instructions on how to access those documents over the Internet. Stockholders who wish to receive paper copies of the proxy materials may do so by following the instructions on the Notice of Internet Availability of Proxy Materials.

Your vote is important to us. Whether or not you plan to attend the 2018 Annual Meeting, we encourage you to promptly vote and submit your proxy via the Internet, by phone, or by signing, dating, and returning the enclosed proxy card in the enclosed envelope. If you attend the Annual Meeting, you can vote in person even if you previously submitted your proxy. On behalf of the Board of Directors, thank you for your continued support of Welbilt.

Sincerely,



Cynthia M. Egnotovich
Hubertus M. Muehlhaeuser
Chairperson of the Board of Directors
President and Chief Executive Officer

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NOTICE OF 2018 ANNUAL MEETING OF
STOCKHOLDERS

 
 
TIME AND DATE:
1:00 p.m. Eastern time, on Friday, April 27, 2018
 
 
PLACE:
Welbilt’s corporate headquarters, located at 2227 Welbilt Boulevard, New Port Richey, Florida 34655
 
 
RECORD DATE:
Stockholders of record at the close of business on February 28, 2018 are entitled to notice of, and to vote at, the 2018 Annual Meeting of Stockholders and at any adjournments or postponements thereof.
 
 
ITEMS OF BUSINESS:
1.
To elect eight members to the Board of Directors, each to serve for a one-year term.
 
 
 
2.
To approve, on an advisory basis, the 2017 compensation of Welbilt’s named executive officers.
 
 
 
3.
To ratify the selection of PricewaterhouseCoopers LLP as Welbilt’s independent registered public accounting firm for 2018.
 
 
 
4.
To transact such other business as may properly come before the 2018 Annual Meeting of Stockholders and any adjournments or postponements thereof.
 
 
ADMISSION TO MEETING:
Proof of share ownership will be required for admission to the 2018 Annual Meeting of Stockholders. See the section titled “General Information about the Annual Meeting” appearing at the end of this Proxy Statement for details.
 
 
HOW TO VOTE:
Your vote is important to us. To make sure your shares are represented and voted at the Annual Meeting, we encourage you to authorize a proxy to vote your shares in one of the following ways, even if you plan to attend the meeting in person:
 
 
 
By Telephone. Call 1-800-690-6903 from the United States or Canada. You will need your 16-digit control number on your Notice of Internet Availability, proxy card or voting instruction form.
 
 
 
By Internet. Visit www.proxyvote.com. You will need your 16-digit control number on your Notice of Internet Availability, proxy card or voting instruction form.
 
 
 
By Mail. Mark, sign and date your proxy card or voting instruction form and return it in the postage-paid envelope.
 
 
 
By Order of the Board of Directors,
 
 
 

 
 
New Port Richey, Florida
March 14, 2018
Joel H. Horn
Corporate Secretary
 
 
 
 
 
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on April 27, 2018: The Notice, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2017 are available at www.proxyvote.com.
 
 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in this Proxy Statement constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts are forward-looking statements and include, for example, descriptions of our plans and objectives and assumptions on which those plans or objectives are based. Certain of these forward-looking statements can be identified by the use of words such as “anticipates,” “believes,” “intends,” “estimates,” “targets,” “expects,” “could,” “will,” “may,” “plans,” “projects,” “assumes,” “should” or other similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, and our actual results could differ materially from future results expressed or implied in these forward-looking statements. The forward-looking statements included in this Proxy Statement are based on our current beliefs and expectations and speak only as of the date hereof. These statements are not guarantees or indicators of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those risks, uncertainties and factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 and in our other filings with the SEC. We do not intend, and, except as required by law, we undertake no obligation, to update any of our forward-looking statements after the date of this Proxy Statement to reflect any future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

NON-GAAP FINANCIAL MEASURES

This Proxy Statement includes certain non-GAAP financial measures. For important information regarding the use of non-GAAP financial measures, including reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with U.S. GAAP, please see “Non-GAAP Financial Measures” under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in our Annual Report on Form 10-K for the year ended December 31, 2017.

PRESENTATION OF INFORMATION

Unless otherwise expressly stated or the context otherwise requires, references to “we,” “our,” “us,” the “Company” or “Welbilt,” refer to Welbilt, Inc., “MTW” refers to The Manitowoc Company, Inc., and “Spin-Off” refers to our separation from MTW on March 4, 2016.

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PROXY SUMMARY

This Proxy Summary provides general information about Welbilt and highlights certain information contained elsewhere in this Proxy Statement. As it is only a summary, please refer to the entire Proxy Statement and the Annual Report on Form 10-K for the year ended December 31, 2017 before you vote. The Proxy Statement and accompanying materials were first provided to stockholders on or about March 14, 2018.

2017 HIGHLIGHTS

This past year was an exciting year for Welbilt and was our first full year as a stand-alone company. In 2017, we successfully completed the rebranding of our Company and product suite, made significant progress on our Simplification and Right-Sizing initiatives, further advanced on our 1,000 basis point margin improvement journey, improved our capital structure by paying down debt and continued to bring innovative products and solutions to the market.

DIRECTOR NOMINEES

Name
Age
Director
Since(1)
Independent
Audit
Committee
Compensation
Committee
Corporate
Governance
Committee
Cynthia M. Egnotovich, Chair
60
2008
Yes
 
 
Dino J. Bianco
56
2015
Yes
 
Joan K. Chow
57
2012
Yes
 
Thomas D. Davis
62
2016
Yes
 
Janice L. Fields
62
(2)
Yes
 
 
 
Brian R. Gamache
59
2017
Yes
 
Andrew Langham
44
2016
Yes
 
Hubertus M. Muehlhaeuser
48
2016
No
 
 
 
(1)
Includes service on the Board of Directors of Welbilt’s former parent company prior to the Spin-Off.
(2)
Not currently a member of the Board of Directors.
Chairperson
Member


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CORPORATE GOVERNANCE HIGHLIGHTS

Separate Board Chairperson and CEO
Regular Board and Committee self-evaluations
Risk oversight by full Board and Committees
Majority voting standard for uncontested Director elections
Annual elections of directors
Eliminated meeting fees for directors beginning in 2018
Bylaws provide for Proxy Access by stockholders
No stockholder rights plan
Annual advisory Say-On-Pay Vote
Mandatory retirement policy for directors

OUR COMPENSATION APPROACH

Consistent with our pay philosophy, the majority of our named executive officers’ target total compensation for 2017 (i.e. the sum of annualized base salary, target STIP award and target LTIP award) is performance-based or “at-risk,” meaning it is only earned if specific financial goals are achieved or, in the case of stock options, if the stock price appreciates following the grant date.


AGENDA ITEMS AND BOARD RECOMMENDATIONS

Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of our Board of Directors. Each of the below proposals are described in more detail in this Proxy Statement:

 
Proposal
Board’s Voting
Recommendation
1.
Election of the eight director nominees named in this Proxy Statement to serve for one-year terms.
FOR
2.
Approval, on an advisory basis, of the 2017 compensation of Welbilt’s named executive officers.
FOR
3.
Ratification of the selection of PricewaterhouseCoopers LLP as Welbilt’s independent registered public accounting firm for the fiscal year ending December 31, 2018.
FOR

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GOVERNANCE



GOVERNANCE FRAMEWORK

As stated in our Corporate Governance Guidelines, the mission of the Board of Directors (the “Board”) is to represent the Company’s stockholders as a whole and seek to ensure the long-term well-being of the enterprise. In furtherance of this mission, Welbilt has adopted a comprehensive corporate governance framework designed to enable the Board to provide effective oversight of the business and affairs of the Company, allow the Board to make decisions independent of management, align the interests of our Board and management with those of our stockholders and maintain compliance with the requirements of the New York Stock Exchange (“NYSE”) and applicable law. This framework sets forth our practices with respect to Board composition, Board independence, Board and committee evaluations, CEO and executive compensation, stockholder engagement, risk oversight and more.

Copies of our current corporate governance documents and policies, including our Code of Conduct, Global Ethics Policy, Corporate Governance Guidelines, Director Independence Criteria, Bylaws and committee charters, are available on the Investor Relations section of our website at http://ir.welbilt.com. The Board of Directors reviews these corporate governance documents and policies, from time to time, and revises them when it believes it serves the interests of the Company and its stockholders to do so, such as in response to changing governance practices or legal requirements.

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS

Our Board of Directors (the “Board”) currently consists of seven directors, and all of our incumbent directors as well as a new director candidate, Janice L. Fields, have been nominated for election to the Board, have consented to being named as a nominee and have consented to serve as directors if elected. We believe that our director nominees, individually and together as a whole, possess the requisite skills, experience and qualifications necessary to carry out their duties and to serve the best interests of the Company and its stockholders.

Set forth below is a brief biography of each nominee and a description of certain key attributes that the Board considered in recommending such nominee for election. All information is presented as of the date of this Proxy Statement.

   
 


   
Chairperson of the Board
Age: 60
Director Since: 2008
Independent: Yes
Committees:
Corporate Governance Committee, Chair
Cynthia M. Egnotovich. Ms. Egnotovich has served as Chairperson of our Board and chairperson of the Corporate Governance Committee since the Spin-Off in March 2016. From July 2012 until her retirement in November 2013, Ms. Egnotovich served as President, Customer Service of Aerospace Systems of United Technologies Corporation (“UTC”), a diversified company that provides a broad range of high-technology products and services to the global aerospace and building systems industries. From 1986 to July 2012, Ms. Egnotovich held leadership roles of increasing significance at Goodrich Corporation, an aerospace manufacturer ultimately acquired by UTC, including Segment President of Nacelles and Interior Systems, Segment President of Engine Systems, Segment President of Electronic Systems and Segment President of Engine & Safety Systems. Additionally, Ms. Egnotovich has served as a director and Audit Committee member of Hexcel Corporation (NYSE: HXL) since 2015 and as a director of MTW from 2008 until the Spin-Off. Ms. Egnotovich holds a B.B.A. in Accounting from Kent State University and a B.S. in Biology from Immaculata College.
 
Key Qualifications and Skills: With nearly 30 years of relevant experience in finance, accounting, and senior management in various segments of large manufacturing companies, experience serving on the Boards of other public companies and direct knowledge of the Company’s business before and after the Spin-Off, Ms. Egnotovich is well suited to serve on our Board and Corporate Governance Committee.
   
 

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Age: 56
Director Since: 2015
Independent: Yes
Committees:
Audit Committee, Chair
Compensation Committee, Member
Dino J. Bianco. Mr. Bianco has served as a Director, chairperson of the Audit Committee and member of the Compensation Committee since the Spin-Off. Since March 2018, Mr. Bianco has served as Chief Executive Officer of KP Tissue and Kruger Products L.P., a Canadian manufacturer of quality tissue products for North American household, industrial and commercial use. Formerly, Mr. Bianco served as Executive Vice President (2012 to April 2015) of Kraft Foods Group, Inc. (“Kraft”) and President of its Beverages business (2013 to April 2015). Kraft (now known as The Kraft Heinz Company after a merger with the H.J. Heinz Company), is a North American consumer packaged food and beverage company. Prior to his 23-year career with Kraft, Mr. Bianco was employed by PricewaterhouseCoopers LLP. In addition, Mr. Bianco is a past chair of Food and Consumer Products of Canada, past member of the Board of The Grocery Foundation, and past member of the Board of Trustees of the United Way of Toronto. Additionally, Mr. Bianco has served as a director and Audit Committee chair of Andrew Peller Ltd. (TSX: ADW.A) from 2016 to 2017 and as a director of MTW from 2015 until the Spin-Off. Mr. Bianco holds a Bachelor of Commerce from the University of Toronto and is a Chartered Professional Accountant.
 
Key Qualifications and Skills: Mr. Bianco brings over 25 years of financial, accounting, sales and marketing and senior management experience to our Board, including extensive experience with one of the largest food and beverage companies in North America and more recently as Chief Executive Officer at a Canadian manufacturing company. This experience is amplified by his service on relevant professional organizations.
   
 
   
 


   
Age: 57
Director Since: 2012
Independent: Yes
Committees:
Compensation Committee, Chair
Corporate Governance Committee, Member
Joan K. Chow. Ms. Chow has served as a Director, chairperson of the Compensation Committee and member of the Corporate Governance Committee since the Spin-Off. Since February 2016, Ms. Chow has served as Chief Marketing Officer of the Greater Chicago Food Depository. From 2007 to August 2015, Ms. Chow served as Executive Vice President and Chief Marketing Officer at ConAgra Foods, Inc., a North American packaged food company. From 1998 to 2007, Ms. Chow served in various marketing positions of increasing responsibility at Sears Holdings Corporation, including as Senior Vice President and Chief Marketing Officer of Sears Retail. Prior thereto, she served in leadership positions with Information Resources Inc. and Johnson & Johnson Consumer Products, Inc. Ms. Chow served on the Board of Feeding America, a leading hunger-relief charity in the United States, from 2008 to 2016. Additionally, Ms. Chow has served as a director and Human Resources & Corporate Governance Committee member of High Liner Foods (TSX: HLF) since 2017 and as a director of MTW from 2012 until the Spin-Off. Ms. Chow holds an M.B.A. from the Wharton School of the University of Pennsylvania and a Bachelor’s degree from Cornell University.
Key Qualifications and Skills: Ms. Chow has extensive leadership experience in marketing, advertising, branding, consumer insights, and digital/social marketing. She also has significant knowledge of and experience with human resources and compensation matters, which she has gained through serving on the Boards of various public companies as well as a senior executive at ConAgra Foods. Additionally, Ms. Chow’s direct knowledge of the Company’s business before and after the Spin-Off provides the Board with valuable insight.
   
 

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Age: 62
Director Since: 2016
Independent: Yes
Committees:
Audit Committee, Member
Compensation Committee, Member
Thomas D. Davis. Mr. Davis has served as a Director, member of the Audit Committee and member of the Compensation Committee since the Spin-Off. Mr. Davis has served as President and Chief Executive Officer of Viskase Companies, Inc. (“Viskase”), a meat casing company, since 2007, and also as its Chairman, since 2011. Viskase is majority owned by Icahn Enterprises, L.P., one of the Icahn Shareholders (as defined herein). From 2000 to 2006, Mr. Davis served as President and Chief Executive Officer of Specialty Foods Group, Inc., a producer of premium meat products. He also served in various executive positions with Smithfield Foods, Inc. from 1995 to 1999, and in various operational and financial roles with John Morrell & Company from 1980 until it was acquired by Smithfield Foods in 1995. Mr. Davis holds an M.B.A. from Benedictine University and a B.S. from SUNY-Plattsburgh.
Key Qualifications and Skills: Mr. Davis’s experience as Chief Executive Officer at two food processing companies, as well as his operational and financial background in the food processing industry, provide a valuable perspective to our Board.
   
 
   
 



Age: 62
Director Since: N/A
Independent: Yes
Committees:
N/A
Janice L. Fields. Ms. Fields, if elected, is expected serve as a Director immediately following election at the Annual Meeting. Ms. Fields has served as President of McDonald’s USA, LLC, a subsidiary of McDonald’s Corporation, a fast food chain operator and franchiser, from 2010 until her retirement in 2012. During her over 35-year career at McDonald's, Ms. Fields held numerous roles, from starting as a crew member to holding several executive positions within McDonald’s USA, including as U.S. Division President for the Central Division from 2003 through 2006 and Executive Vice President and Chief Operating Officer from 2006 through 2010, when she was named President. Additionally, Ms. Fields has served on the board of directors of: Monsanto Corporation (NYSE: MON) since 2008, including as chair of its Sustainability and Corporate Responsibility Committee since 2015; Chico’s FAS (NYSE: CHS) since 2013, as well as the chair of its Corporate Governance and Nominating Committee since 2014; Buffalo Wild Wings, Inc. (Nasdaq: BWLD) from 2016 to 2018, including as its Chairperson from August 2017 to February 2018; and the Ronald McDonald House Charities Global Brand since 2012. Ms. Fields was recommended for consideration to serve on our Board by our Chief Executive Officer and our Chairperson.
 
Key Qualifications and Skills: Ms. Fields has broad operational, financial and leadership experience from her long-standing career in the food industry, with particular expertise related to marketing, strategic planning, risk management, production, and human resources. These skills, combined with her extensive experience serving as a board member of other public companies, provide valuable insights and perspective and make her well-suited to serve as a member of our Board.
   
 

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Age: 59
Director Since: 2017
Independent: Yes
Committees:
Audit Committee, Member
Compensation Committee, Member
Brian R. Gamache. Mr. Gamache has served as a Director, member of the Audit Committee and member of the Compensation Committee since March 2017. Mr. Gamache currently serves as an advisor or consultant to several private equity firms and corporations, is a guest lecturer at Northwestern University’s Kellogg School of Management and also is a member of the Dean’s Council of the University of Florida’s Warrington School of Business. Previously, Mr. Gamache served as the Chairman and Chief Executive Officer and a director of WMS Industries Inc., a designer, manufacturer and marketer of games for the casino and on-line gaming industries, from 2001 to 2013, when it was acquired by Scientific Games Corporation. Prior thereto, Mr. Gamache held various executive positions with Wyndham International, WHG Resorts and Casinos, Inc. (a subsidiary of WMS Industries Inc.), Marriott Hotel Corporation and Hyatt Hotels Corporation. Additionally, Mr. Gamache has been a director of KapStone Paper and Packaging Corporation (NYSE: KS) since 2009 and serves as the chair of their Nominating and Corporate Governance Committee. Mr. Gamache holds a B.S. in Business Administration from the University of Florida.
Key Qualifications and Skills: Mr. Gamache brings expertise on organizational development, financial and brand management as well as sales and marketing experience to our Board. He has significant experience in implementing digital strategies in the fast-moving gaming industry, which is a great match with our connected kitchen strategy for commercial kitchen operations. He also brings a deep understanding of the hotel and hospitality industry, which is a key end market of the Company’s product offerings.
   
 
   
 


   
Age: 44
Director Since: 2016
Independent: Yes
Committees:
Audit Committee, Member
Corporate Governance Committee, Member
Andrew Langham. Mr. Langham has served as a Director, member of the Corporate Governance Committee and member of the Audit Committee since the Spin-Off. Mr. Langham has served as General Counsel of Icahn Enterprises L.P., a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, gaming, railcar, food packaging, metals, real estate and home fashion, since 2014. From 2005 to 2014, Mr. Langham was Assistant General Counsel of Icahn Enterprises. Prior thereto, Mr. Langham was an associate at the law firm of Latham & Watkins LLP focusing on corporate finance, mergers and acquisitions, and general corporate matters. Additionally, Mr. Langham has served as a director of Freeport McMoRan Inc. (NYSE: FCX) from 2015 to March 2018; CVR Partners LP (NYSE: UAN) since 2015; CVR Refining, LP (NYSE: CVRR) since 2014; CVR Energy, Inc. (NYSE: CVI) from 2014 to 2017; and Cheniere Energy, Inc. (NYSE MKT: LNG) since 2017. CVR Partners, CVR Refining and CVR Energy are each indirectly controlled by Carl C. Icahn. Mr. Icahn also has non-controlling interests in Freeport-McMoRan and Cheniere Energy through the ownership of securities. Mr. Langham received a B.A. from Whitman College, and a J.D. from the University of Washington.
Key Qualifications and Skills: Mr. Langham’s legal background, particularly his expertise in corporate matters, finance, and mergers and acquisitions, provides a valuable perspective to our Board. His connection with the food packaging business provides additional insight as a Board member. As General Counsel of Icahn Enterprises L.P., he also brings relevant experience with corporate governance, compliance, and regulatory matters.
   
 
 
Arrangement pursuant to which Director was Nominated to the Board: Mr. Langham was initially appointed to the Board in connection with the Spin-Off. In accordance with the terms of the Settlement Agreement (the “Settlement Agreement”) entered into by MTW with Carl C. Icahn, Icahn Partners Master Fund LP, Icahn Offshore LP, Icahn Partners LP, Icahn Onshore LP, Beckton Corp., Hopper Investments LLC, Barberry Corp., High River Limited Partnership, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P. and Icahn Enterprises G.P. Inc (the “Icahn Shareholders”) and which the Company subsequently joined. The Settlement Agreement provided the Icahn Shareholders with the option to cause MTW to appoint one designee of the Icahn Shareholders to our Board in connection with the Spin-Off. Mr. Langham has been nominated for election to the Board at our 2018 Annual Meeting of Stockholders in accordance with such Settlement Agreement.
   
 

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Age: 48
Director Since: 2016
Independent: No
Committees: None
Hubertus M. Muehlhaeuser. Mr. Muehlhaeuser has served as the Company’s President and Chief Executive Officer since August 2015 and as a Director since the Spin-Off. Prior to joining the Company, from 2013 to 2015, Mr. Muehlhaeuser served as Managing Partner of Karl-H. Muehlhaeuser GmbH & Co KG (a subsidiary of Mühlhäuser Holding GmbH (Switzerland)), a leader in the development, production, distribution and service of rail-bound and trackless tunneling and mining equipment. From 2005 to 2012, Mr. Muehlhaeuser held various leadership positions at AGCO Corporation (“AGCO”), a leading manufacturer and distributor of agricultural equipment and related replacement parts, including Senior Vice President and General Manager, Europe/Africa/Middle East; Senior Vice President—Strategy & Integration; General Manager, Eastern Europe/Asia and General Manager—Engines. Prior thereto, Mr. Muehlhaeuser led the Global Strategy and Organization Practice at Arthur D. Little, Ltd., an international management consulting firm and also served as a member of the firm’s Global Management Team and the firm’s Managing Director, Switzerland. Additionally, Mr. Muehlhaeuser is a member of the Board of Directors of the National Association of Manufacturers (USA) and Cormoran de Bilbao S.L. (Spain), and he is the non-executive Chairman of the Board of Mühlhäuser Holding GmbH (Switzerland), where he is still the majority shareholder. Mr. Muehlhaeuser studied Business Administration at the European Business Schools in Oestrich Winkel and London, as well as the Universidad Argentina de la Empresa, and holds an M.B.A. from EBS University of Business and Law.
Key Qualifications and Skills: As the President and Chief Executive Officer of Welbilt, Mr. Muehlhaeuser’s day-to-day leadership of the business provides an invaluable contribution to the Board. His prior senior management experience in equipment and manufacturing industries and his multi-functional expertise, including strategy and integration, operational execution, financial acumen, capital markets knowledge, and strong channel and brand management, offers Welbilt a unique set of skills as it positions itself for long-term, sustainable growth.
   
 

BOARD COMPOSITION

CRITERIA FOR EVALUATING DIRECTOR CANDIDATES. The Corporate Governance Committee of our Board is responsible for evaluating potential candidates for service on our Board, including evaluating the performance and suitability of incumbent directors before recommending them to the full Board for re-election, reviewing candidates recommended by certain qualified stockholders and identifying and recommending new candidates for nomination to fill existing or expected vacancies on the Board. Under our Corporate Governance Guidelines, qualified directors should generally meet certain specified expectations, including:

Education, experience and insight necessary to understand the Company’s business and give long-term direction and guidance for the success of the enterprise.
Business or professional stature necessary to represent the Company before the public, its stockholders and other individuals and groups that affect the Company’s business.
Strong measures of independence (for outside directors) and strength of conviction while also leaving behind personal prejudice so as to be open to other points of view from fellow directors.
Willingness and ability to objectively and constructively appraise management performance and recommend appropriate changes when necessary.
Avoid any activity or interest that might conflict with a director’s fiduciary responsibility to the Company and its stockholders.

DIVERSITY. In addition, the Board appreciates the value that can come from a diverse representation on the Board. In identifying candidates for the Board, the Corporate Governance Committee considers foremost the qualifications and experience that the committee believes would best suit the Board’s needs created by each particular vacancy. As part of the process, the Corporate Governance Committee and the Board endeavor to have a Board comprised of individuals with diverse backgrounds, viewpoints, and life and professional experiences, provided such individuals should all have a high level of management and/or financial experience. In this process, the Board and the Corporate Governance Committee do not discriminate against any candidate on the basis of

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race, color, national origin, gender, religion, disability, sexual orientation, or gender identity. While the Company has no formal diversity policy that applies to the consideration of director candidates, the Corporate Governance Committee believes that diversity includes not just race and gender but differences of viewpoint, experience, education, skill and other qualities or attributes.

BOARD LEADERSHIP STRUCTURE. Currently, the roles of Board Chairperson and Chief Executive Officer are held by two different individuals. The Board has determined that the interests of the Company and the Board are best served at this time by separating these roles. In light of the Company’s recent spin-off in March 2016, the Board continues to believe that it is important to have a President and Chief Executive Officer focus on the day-to-day management of the business and execution of our strategic plan and have a separate independent Board Chairperson with a long-standing familiarity of the Company focus on leading the Board of Directors, providing advice and support to the President and CEO when needed, facilitating the Board’s independent oversight of management and enabling the Board to fulfill its risk oversight responsibilities. The current leadership structure not only encourages the free and open dialogue of competing views but also provides for strong checks and balances. In the event that the Chairperson of the Board is also the Chief Executive Officer, the Corporate Governance Guidelines provide for the designation of a lead independent director to serve as a liaison between the Chairperson of the Board and the independent directors, among other things.

BOARD INDEPENDENCE. The Board affirmatively determined that all of our director nominees, except for Mr. Muehlhaeuser, our President and CEO, are independent according to our Corporate Governance Guidelines, the Director Independence Criteria adopted by the Board and applicable rules of the NYSE. For a director to be considered independent under the NYSE rules, the Board must affirmatively determine that a director does not have a material relationship with Welbilt (other than as a director). In determining whether a director has a material relationship with Welbilt, the Board will consider the nine criteria specified in the Company’s Director Independence Criteria. Any director who meets all of the nine criteria will be presumed by the Board to have no material relationship with Welbilt.

The Corporate Governance Committee is responsible for periodically reviewing and making recommendations to the Board regarding director independence. Upon the committee’s recommendation, the Board reviews and makes its independence determinations. These determinations are generally made on an annual basis at the same meeting at which the Board approves director nominees for election at the annual meeting of stockholders and at such other times as circumstances dictate, including if a director joins the Board in the interim or an individual director’s circumstances should change in such a manner that would impact his or her independence from management.

DIRECTOR ORIENTATION AND ONGOING EDUCATION. All new directors elected to the Board participate in a new director orientation program, which is established and administered under the direction of the Corporate Governance Committee. Continuing directors who are not currently serving as officers of other public companies are encouraged to participate in a minimum of eight hours of seminars and educational opportunities per year in an area pertinent to the Company or such director’s committee assignments. Educational opportunities may include attendance at relevant trade shows, tours of Company facilities and service as a director on other company boards.

ELECTION OF DIRECTORS. Under our Bylaws, in the event of an uncontested election of directors, each director nominee shall be elected to the Board by the vote of the majority of the votes cast. For purposes of the election of directors, a “majority of the votes cast” means that the number of shares voted “For” a director nominee must exceed the number of shares voted “Against” that director nominee. Abstentions and broker non-votes are not considered votes cast for this purpose and will have no effect on the election of director nominees.

BOARD CANDIDATES. The Corporate Governance Committee will consider candidates recommended by officers, Board members, stockholders and third-party professional search firms retained by the Corporate Governance Committee. In late 2016, as part of an initiative to refresh the skills, experience and perspectives represented on Board, the Corporate Governance Committee retained Korn Ferry to assist with identifying and recruiting independent, experienced and diverse directors to expand and augment the Board’s collective and individual capabilities.

Stockholder Submissions. The Corporate Governance Committee will only review recommendations for director nominees from any stockholder beneficially owning, or group of stockholders beneficially owning in the aggregate, at least 5% of the issued and outstanding common stock of the Company for at least one year as of the date that the recommendation was made (a “Qualified Stockholder”). Qualified Stockholders who wish to recommend individuals to the Corporate Governance Committee for consideration as potential director candidates may do so by submitting their recommendation no later than the 120th calendar day before the anniversary date the Company’s proxy statement was released to stockholders in connection with the previous year’s annual meeting for the recommendation to be considered by the Corporate Governance Committee, together with appropriate

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biographical and background information sufficient to allow the committee to review the individual’s qualifications and a statement as to whether the Qualified Stockholder beneficially owned in the aggregate, at least 5% of the issued and outstanding common stock of the Company for at least one year as of the date that the recommendation was made. Any recommendation must be submitted in accordance with the procedures set forth in the Corporate Governance Guidelines under the heading “Communications to the Board of Directors.” The Corporate Governance Committee will review any compliant and timely submitted recommendations and has sole discretion as to whether to nominate the recommended individual.

The Corporate Governance Committee did not receive any recommendations for director nominees from any Qualified Stockholder (as defined in the foregoing policy).

Incumbent Directors. Prior to the expiration of the term of a director desiring to stand for re-election, the Corporate Governance Committee will evaluate the performance and suitability of the particular director. The evaluation may include the opportunity for other sitting directors to provide input to the Corporate Governance Committee or its chairperson and may include an interview of the director being evaluated. If the director being evaluated is the chairperson of the Corporate Governance Committee, another member of the Corporate Governance Committee will be appointed to lead the evaluation. The Corporate Governance Committee will make a recommendation to the Board, and the Board will make a final determination as to which directors shall be nominated for re-election.

Board Vacancies. In the event of a vacancy on the Board, the Corporate Governance Committee will manage the process of searching for a suitable director. The Corporate Governance Committee will use its judgment in structuring and carrying out the search process based on the Corporate Governance Committee’s and the Board’s perception as to what qualifications would best suit the Board’s needs for each vacancy. The process may include the consideration of candidates recommended by officers, Board members, stockholders, and/or a third party professional search firm retained by the Corporate Governance Committee. The Corporate Governance Committee has sole authority to retain (including to determine the fees and other retention terms) and terminate any third party to be used to identify director candidates and/or evaluate any director candidates. Any candidate should meet the expectations for directors set forth in the Company’s Corporate Governance Guidelines. Strong preference should be given to candidates who are “independent,” as that term is defined in the Company’s Director Independence Criteria and the NYSE rules, and to candidates who are sitting or former executives of companies whose securities are listed on a national securities exchange and registered pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Corporate Governance Committee is not required to consider candidates recommended by a stockholder except in accordance with the section captioned, “Consideration of Candidates for the Board of Directors Submitted by Shareholders” set forth in the Corporate Governance Committee Charter. If the Corporate Governance Committee decides to consider a candidate recommended by a stockholder, the Corporate Governance Committee will be free to use its discretion and judgment as to what deference will be given in considering any such candidate.

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COMMITTEES OF THE BOARD

Our Board has established three standing committees—Audit, Compensation and Corporate Governance—each of which operates under a written charter approved by the Board and available on the Investor Relations section of our website at http://ir.welbilt.com. Our Board delegates substantial responsibilities to the committees, which then report their activities and actions back to the full Board as appropriate or necessary. The Board, upon the recommendation of the Corporate Governance Committee, annually reviews committee composition and reassigns directors as needed so that the Board and each of its committees are best positioned to carry out their respective duties. The Board has determined that all of the members of the Audit, Compensation and the Corporate Governance Committees, including committee chairpersons, are independent in accordance with the standards set forth in our Corporate Governance Guidelines and Director Independence Criteria, including applicable SEC and NYSE rules.

AUDIT COMMITTEE
Responsibilities. The Audit Committee’s responsibilities include:
Meetings in 2017: 8
   
Members:
Dino J. Bianco, Chair
Thomas D. Davis
Brian R. Gamache
Andrew Langham
   
All Independent: Yes
   
Heightened Requirements: Yes. The Board of Directors has determined that each member of the Audit Committee meets the financial literacy and independence requirements of the SEC and the NYSE applicable to audit committee members and has designated all such members as an “audit committee financial expert” in accordance with applicable SEC rules.
   
Purpose: The purpose of the Welbilt Audit Committee is to (A) assist the Board of Directors in fulfilling its oversight of (1) the integrity of the Company’s financial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence, (4) the performance of the Company’s internal audit function and independent auditors, and (5) the risks across the organization and the management and/or mitigation of those risks; and (B) prepare the report that SEC rules require be included in the Company’s annual proxy statement.
appointing, retaining, terminating, providing for the compensation of and overseeing the work of the Company’s independent registered public accounting firm;
reviewing annually with Company management and the Company’s independent auditor, their plans for the scope of the activities to be undertaken by the Company’s independent auditor, including any contemplated permissible non-audit services and pre-approval of such fees;
obtaining and reviewing, at least annually, certain reports from the independent registered public accounting firm relating to the firm’s internal quality-control procedures and their most-recent internal quality-control review or peer review;
evaluating the qualifications, performance and independence of the Company’s independent auditor and presenting such conclusions to the full Board;
setting clear policies relating to the hiring of current or former employees of the independent auditors
reviewing and discussing with management our annual and quarterly financial statements and related disclosures and quarterly earnings press releases;
discussing with management our policies with respect to risk assessment and risk management;
discussing with Company management and the Company’s independent auditors, internal controls over financial reporting, disclosure controls and procedures and the Code of Conduct;
meeting independently with the Company’s internal auditing staff, independent registered public accounting firm and management;
establishing procedures for the receipt and retention of accounting and audit-related complaints and concerns; and
preparing the annual audit committee report as required by applicable laws, rules and regulations.
Pursuant to applicable NYSE rules, no member of the Audit Committee may serve on the audit committee of more than 3 public companies, including Welbilt, unless the Board of Directors determines that such simultaneous service would not impair the ability of such member to effectively serve on its Audit Committee and the Company discloses such determination on its website or in its annual proxy statement. No member of the Welbilt Audit Committee currently serves on the audit committees of more than 3 public companies, including Welbilt.

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COMPENSATION
COMMITTEE
Responsibilities. The Compensation Committee’s responsibilities include:
annually reviewing and approving corporate goals and objectives relevant to CEO and executive compensation;
Meetings in 2017: 5
   
Members:
Joan K. Chow, Chair
Dino J. Bianco
Thomas D. Davis
Brian R. Gamache
   
All Independent: Yes
   
Heightened Requirements: Yes. The Board of Directors has determined that each member of the Compensation Committee meets the independence requirements of the SEC and NYSE applicable to Compensation Committee members.
   
Purpose: The purpose of the Welbilt Compensation Committee is to provide assistance to the Board of Directors in fulfilling its responsibility to achieve the Company’s purpose of maximizing the long-term total return to shareholders by ensuring that officers, directors and employees are compensated in accordance with the Company’s philosophy, objectives and policies. The Compensation Committee shall review and approve compensation and benefits policies, strategies, and pay levels necessary to support corporate objectives and shall provide an annual report on executive compensation for inclusion in the Company’s proxy statement, in accordance with applicable rules and regulations.
evaluating the compensation levels and payouts for the CEO and other executive officers annually against an appropriate comparison group;
reviewing and recommending to the Board for approval, the compensation levels of the CEO and other key executives;
overseeing the Company’s equity incentive plans;
reviewing and recommending to the Board for approval non- employee director compensation;
reviewing the Company’s compensation programs and practices in light of tax, accounting, legal and regulatory requirements; and
evaluating the results of each shareholder advisory vote on executive compensation.
Compensation Committee Interlocks and Insider Participation. During 2017, no member of our Compensation Committee was an employee or officer or former officer of the Company or had any relationships requiring disclosure under Item 404 of Regulation S-K. None of our executive officers has served on the Board of Directors or Compensation Committee of any other entity that has or has had one or more executive officers who served as a member of our Board of Directors or our Compensation Committee during 2017.
Compensation Consultant. The Compensation Committee engaged Willis Towers Watson (“WTW”) as its independent compensation consultant to provide the committee with information regarding market trends and guidance on our 2017 executive pay programs. During 2017, WTW performed the following tasks:
provided competitive market analyses and advice on general marketplace trends, developments and best practices with respect to executive compensation and director compensation;
attended and participated in meetings of the Compensation Committee;
assessed the competitiveness of our compensation program and whether it aligned stockholder interests with those of our named executive officers;
provided advice and recommendations regarding the composition of our compensation peer group; and
provided general advice and analysis relating to our executive and director compensation structure, plan designs and associated risks.
WTW was selected by, and reported directly to, the Compensation Committee. WTW and its affiliates did not provide any services to the Company or any of the Company’s affiliates during 2017 other than (i) advising the Compensation Committee on director and executive compensation and related corporate governance matters and (ii) consulting on broad-based plans that do not discriminate in scope, terms, or operation, in favor of executive officers or directors of the Company. In April 2017, the Compensation Committee reviewed the independence of WTW in light of the factors set forth in the SEC and NYSE rules and determined that WTW remained an independent consultant for the Compensation Committee and that no conflicts of interest existed. Following such determination, the Compensation Committee determined to continue their retention of WTW as their independent compensation consultant.

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CORPORATE GOVERNANCE COMMITTEE
Responsibilities. The Corporate Governance Committee’s responsibilities include:
Meetings in 2017: 5
   
Members:
Cynthia M. Egnotovich, Chair
Joan K. Chow
Andrew Langham
   
All Independent: Yes
   
Heightened Requirements: No
   
Purpose: The purpose of the Welbilt Corporate Governance Committee is to assist the Board in its corporate governance responsibilities, including to identify individuals qualified to become Board members, consistent with criteria approved by the Board; to recommend to the Board, for the Board’s selection, director nominees for the next annual meeting of the shareholders; to develop and to recommend to the Board a set of corporate governance principles and guidelines; and to oversee the evaluation of the Board and management.
considering candidates for serving as director nominees for election to the Board, including evaluating the performance and suitability of incumbent directors, searching for suitable candidates to fill any vacancies on the Board and reviewing recommendations for director nominees submitted by qualified shareholders;
ensuring that new directors are provided with an orientation program and making recommendations to the Board with respect to continuing education of current directors;
establishing and managing a process for Board and committee self-assessments;
periodically reviewing the size, composition and independence of the Board and the number and structure of Board committees in light of the Company’s evolving needs;
facilitating executive sessions of the Board at each regularly scheduled Board meeting; and
reviewing and making recommendations to the Board regarding governance practices including stock ownership guidelines and compulsory retirement age and term limits for directors.








BOARD OPERATIONS

RISK OVERSIGHT. Management is responsible for the day-to-day management of the risks we face, and the Board is responsible for the oversight of risk across the entire Company. This responsibility is administered more directly through the Audit Committee, as one of its stated purposes pursuant to its committee charter is to assist the Board in fulfilling its role in the oversight of the risk across the organization and the management and/or mitigation of those risks. To this end, the Audit Committee discusses guidelines and policies with respect to risk assessment and risk management, which includes a discussion of the Company’s major risks and the steps that management has taken or is taking to monitor and manage those risks within acceptable levels.

Additionally, each committee reviews and evaluates the Company’s process for managing and mitigating those Company risks assigned by the Board to such committee for review and evaluation, if any. The Board and its committees regularly receive information and reports from members of senior management on areas of material risk based on their respective areas of responsibility.

STOCKHOLDER ENGAGEMENT. Our Board and management focus on creating long-term, sustainable stockholder value. Key to this goal is regular stockholder engagement through meetings with stockholders at conferences and in one-on-one meetings to discuss our financial performance, corporate governance practices, executive compensation programs and other matters. Our conversations with stockholders allow us to better understand our stockholders’ perspectives and provide us with useful feedback to calibrate our priorities. Stockholders and other interested parties who wish to communicate with the Board, the Board Chairperson, independent members of the Board as a group, or any committee chair may do so by following the procedures described in our Corporate Governance Guidelines under the heading “Communications to the Board of Directors.”

MEETINGS AND EXECUTIVE SESSIONS. Directors are expected to commit to attend at least 75% of all scheduled meetings of the Board and committees of which the director is a member each year and are strongly encouraged to attend the annual meetings of stockholders. During 2017, our Board met a total of 6 times, each member of our Board attended at least 75% of the aggregate of the meetings of the Board and the committees on which he or she served, and each member of our Board attended our 2017 Annual Meeting, other than Timothy J. Fenton, who did not stand for re-election at such meeting. Additionally, our independent directors meet in separate executive sessions, without management, at each regularly scheduled Board and committee meeting. Our practice is for the Board Chairperson or the applicable committee chair to preside over executive sessions.

SUCCESSION PLANNING. On an annual basis, the Compensation Committee, the Board and our CEO review the Company’s long-term plan for the development, retention and succession of senior management and also assess Board composition.

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CODE OF CONDUCT AND GLOBAL ETHICS POLICY. We have adopted a written Code of Conduct and a Global Ethics Policy that apply to all of our employees and directors and reflect our commitment to operate our business in a manner that meets the highest ethical standards. These policies are posted on the Investor Relations section of our website at http://ir.welbilt.com. Any waiver of these policies granted to executive officers or directors may be made only by the Board or a board committee, and if required, any such waivers or amendments will be disclosed on the Corporate Governance section of our website on a timely basis.

DIRECTOR COMPENSATION

ELEMENTS OF NON-EMPLOYEE DIRECTOR COMPENSATION. The annual compensation package for non-employee directors is designed to attract and retain highly experienced and qualified individuals to serve on the Company’s Board. The 2017 compensation package, which consisted of both cash and equity components, was established in consultation with WTW and was intended to be competitive relative to the Company’s custom peer group and promote a strong alignment of interests between the Company’s non-employee directors and its stockholders. The Compensation Committee approves the non-employee director compensation program annually and intends to review the market competitiveness of such program every two years. As our President and CEO, Mr. Muehlhaeuser does not receive additional compensation for his service as a director.

The following table summarizes the compensation elements provided to the Company’s non-employee directors for 2017:

Compensation Element
Amount
 
Annual Cash Retainers (paid quarterly):
 
 
 
 
 
 
Board Member
$
60,000
 
 
 
 
Audit Committee Chairperson
$
15,000
 
 
 
 
Compensation Committee Chairperson
$
12,000
 
 
 
 
Corporate Governance Committee Chairperson
$
12,000
 
 
 
 
Independent Chairperson
$
43,750
 
 
 
 
Meeting Fees (per-meeting):
 
 
 
 
 
 
Board Meetings
$
1,500
 
 
 
 
Committee Meetings
$
1,500
 
 
 
 
Annual Stock Awards:
 
 
 
 
 
 
Board members (5,753 Restricted Stock Units)
$
110,000
 
 
 
 
Independent Chairperson (4,254 shares of common stock)
$
81,250
 
 
 
 
Miscellaneous:
Reimbursement for reasonable fees and expenses incurred in connection with Board-related activities
 
 
 
Provision of directors’ and officers’ liability insurance under Company’s corporate insurance policies
 
 
 

The Independent Chairperson fees, which are in addition to the fees earned by all non-employee directors, consist of $125,000, paid in common stock (65%) and cash (35%), and provide compensation for the additional time commitment attendant to this role, including managing meetings of the Board of Directors, setting the agenda for Board meetings, representing the Board at the annual stockholders meeting, consulting with committee chairpersons as needed and acting as a liaison between the Board and management on major developments and decisions that are likely to be of interest to the Board.

Restricted stock units (“RSUs”) awarded to non-employee directors (other than Mr. Gamache) were granted on February 16, 2017, with the number of units awarded determined based upon a price of $19.12, the average closing price of our common stock as reported on the NYSE during the 20-trading day period prior to and including the date of grant. Mr. Gamache was appointed to the Board on March 6, 2017 and received a grant of restricted stock units determined by prorating the number of units awarded to other non-employee directors for 2017 compensation. Restricted stock units granted to non-employee directors vest on the second anniversary of the grant date. Under the terms of the award, unless the Compensation Committee in its discretion determines otherwise, (i) the restricted stock units will be immediately forfeited if the director ceases to be a member of the Board prior to the vesting date for any reason other than the director’s retirement (due to reaching the mandatory retirement age established by the Board), death, or disability; and (ii) the restricted stock units are subject to various transfer restrictions prior to the vesting date.

In addition, under the Company’s Deferred Compensation Plan, each non-employee director may elect to defer all or any part of the director’s annual retainer and meeting fees, as well as restricted stock unit awards, for future payment upon death, disability, termination of service as a director, a date specified by the participant, or the earlier of any such date to occur.

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2017 NON-EMPLOYEE DIRECTOR COMPENSATION. Consistent with the compensation elements discussed above, the below table summarizes the 2017 compensation of all of our non-employee directors other than Mr. Muehlhaeuser, whose compensation is discussed under the section titled “Compensation Discussion and Analysis” and related tables. All amounts are calculated and presented in accordance with SEC disclosure rules.

Name
Fees Earned
or Paid in
Cash(1)
Stock
Awards(2)
Option
Awards(3)
Total
Cynthia M. Egnotovich
$
153,250
 
$
185,805
 
$
339,055
 
Dino J. Bianco
$
105,000
 
$
107,063
 
$
212,063
 
Joan K. Chow
$
109,500
 
$
107,063
 
$
216,563
 
Thomas D. Davis
$
88,500
 
$
107,063
 
$
195,563
 
Timothy J. Fenton(4)
$
42,000
 
$
152,577
 
$
194,577
 
Brian R. Gamache(5)
$
71,815
 
$
97,908
 
$
169,723
 
Andrew Langham
$
93,000
 
$
107,063
 
$
200,063
 
(1) Reflects all applicable fees earned in 2017, whether paid in cash or deferred under the Deferred Compensation Plan, including annual retainers, committee chairperson retainers, Independent Chairperson fees and meeting fees.
(2) Reflects the aggregate grant date fair value of RSUs awarded in 2017, computed in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. At December 31, 2017, Mr. Fenton had no RSUs outstanding (as explained in footnote 4 below), Mr. Gamache had 4,776 RSUs outstanding and all other current non-employee directors had 13,895 RSUs outstanding.
(3) No stock options were awarded to directors in 2017. At December 31, 2017, Ms. Egnotovich had outstanding options to purchase 2,000 shares of stock, and no other director had outstanding options.
(4) Mr. Fenton served as a director until April 28, 2017. Upon his departure from the Board, 8,142 RSUs granted to Mr. Fenton in 2016 were accelerated and 5,753 RSUs granted to him in February 2017 were forfeited. Accordingly, amounts shown for Mr. Fenton reflect the aggregate grant date fair value of RSUs awarded in 2017 and the incremental fair value associated with the accelerated RSUs.
(5) Mr. Gamache was appointed to the Board effective March 6, 2017, and his annual retainer and award of restricted stock units were prorated accordingly.

CHANGES TO 2018 NON-EMPLOYEE DIRECTOR COMPENSATION. Following a review of peer group data and market trends, the Board determined to eliminate the use of meeting fees and grant RSUs that vest on the first anniversary of the grant date, beginning in 2018. The non-employee director compensation program now consists of a retainer-based fee structure to create simplicity, enhance transparency and eliminate financial incentives to have additional meetings.

DIRECTOR STOCK OWNERSHIP GUIDELINES

Under our Corporate Governance Guidelines, each non-employee director should acquire and hold an amount of our common stock with a value equal to, at a minimum, five times the director’s total annual cash retainer (excluding any additional retainer for committee or Board chair positions). For purposes of determining stock ownership under the guidelines, restricted stock units and shares held in the Deferred Compensation Plan will be included but unexercised options will be excluded.

Compliance is measured annually at the first regularly scheduled Board meeting of the calendar year, following an initial transition period to achieve compliance, and will be based on each director’s stock ownership and the stock price as of the close of business on the last day of the preceding calendar year. For directors who were previously members of the Board of MTW, the requirement to comply with such stock ownership guidelines commences on the later of (a) the first Board meeting in the sixth full calendar year after the director was first elected a member of the Board of MTW or (b) the first Board meeting in the fourth full calendar year after the Spin-Off. For directors who were not previously members of the Board of MTW, the requirement to comply with such stock ownership requirements commences on the first Board meeting of the sixth full calendar year after the director was first elected to the Board.

As of December 31, 2017, each of the non-employee directors was expected to achieve compliance with the stock ownership guidelines within the required time period. The Corporate Governance Committee reviews these stock ownership guidelines as well as directors’ progress toward achieving compliance with such guidelines on an annual basis.

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PROPOSAL NO. 1—ELECTION OF DIRECTORS



The Board has nominated eight directors, each of whom, if elected, are expected to hold office for a one-year term expiring at the 2019 Annual Meeting of Stockholders until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. Each nominee has indicated an intention to serve. In the event that any of the nominees should be unable or unwilling to serve, proxies may be voted for the election of some other person or for fixing the number of directors at a lesser number. Proxies cannot be voted for a greater number of persons than the number of nominees named.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
THE FOLLOWING DIRECTORS TO THE WELBILT BOARD:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cynthia M. Egnotovich
Janice L. Fields
 
Dino J. Bianco
Brian R. Gamache
 
Joan K. Chow
Andrew Langham
 
Thomas D. Davis
Hubertus M. Muehlhaeuser

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MANAGEMENT



Set forth below is a brief biography of each our executive officers, other than Mr. Muehlhaeuser, our President and CEO, whose biography appears above under “Governance Nominees for Election to the Board of Directors.” All information is presented as of the date of this Proxy Statement.

Haresh Shah
Senior Vice President
and Chief Financial Officer
Mr. Shah, 49, has served as Senior Vice President and Chief Financial Officer of the Company, since May 1, 2017 and, from June 2016 to April 2017, served as the Company’s Vice President, Corporate Controller and Chief Accounting Officer. Prior to joining the Company, he served as Vice President, Corporate Controller of Syniverse Technologies, LLC, a mobile communication services leader in mobile interoperability, mobile communications and mobile expertise, from 2012 until May 2016. He previously served in financial leadership roles at Amkor Technology, Inc., a leading provider of outsourced semiconductor packaging and test services, including Vice President, International Finance, from 2009 until 2012. Prior thereto, he held positions with increasing responsibility at Alcatel-Lucent, a provider of internet protocol (IP) and cloud networking and ultra-broadband access, from 2000 until 2008, including serving as Controller, Asia Pacific and China — Convergence Business Group. Mr. Shah holds a B.B.A. degree in accountancy from Baruch College and is a Certified Public Accountant.
Josef Matosevic
Senior Vice President
and Chief Operating Officer
Mr. Matosevic, 46, has served as Senior Vice President and Chief Operating Officer of Welbilt since August 2015. Previously, Mr. Matosevic served as Senior Vice President of Global Operational Excellence of MTW from 2014 to 2015, and as Executive Vice President—Global Operations and Purchasing of MTW Cranes from 2012 to 2014. Prior to joining MTW, from 2008 to 2012, Mr. Matosevic served in various executive positions with Oshkosh Corporation, a designer, manufacturer and marketer of a broad range of specialty vehicles and vehicle bodies, including as its Executive Vice President, Global Manufacturing Operations from 2010 to 2012, with responsibilities for the defense segment, global operating systems and lean deployment. He previously served as Vice President of Global Operations from 2005 to 2007 and Chief Operating Officer from 2007 to 2008 at Wynnchurch Capital/Android Industries, a sub-assembler and sequencer of complex modules for automotive original equipment manufacturers. Mr. Matosevic has over 20 years of global operating and business experience, with skills and experience in Lean Six Sigma practices, automation, and supply chain development. Mr. Matosevic holds a Bachelor’s degree from Bayerische Julius-Maximilian’s Universität in Wurzburg, Germany.
Joel H. Horn
Senior Vice President,
General Counsel and Secretary
Mr. Horn, 49, has served as Senior Vice President, General Counsel and Secretary of Welbilt since January 2017 and as the Vice President, Associate General Counsel and Assistant Secretary of Welbilt from the Spin-Off through the remainder of 2016. Mr. Horn joined MTW in 2008 as Associate General Counsel and held that role until the Spin-Off. Prior to joining MTW, Mr. Horn was Senior Counsel and General Counsel for Enodis, PLC from 2004 until 2008, and was Associate General Counsel for Mitsubishi Power Systems, Inc. from 2000 through 2004. Mr. Horn holds a B.S. in Political Science and Government from Stockton University in Pomona, New Jersey, and a J.D. from New England Law | Boston in Boston, Massachusetts.
Richard N. Caron
Senior Vice President,
Innovation
Mr. Caron, 61, has served as Senior Vice President, Innovation since 2015. Previously, he served as Executive Vice President, Global Marketing and Innovation for Welbilt and as Welbilt’s Chief Technology Officer, a position that he held since 2005 while employed with Enodis. Mr. Caron was instrumental in the development and success of the Education and Technology Center. He has also led a variety of new product development initiatives, which have helped distinguish the Company as a technology leader in the foodservice industry. Prior to joining the Company and its predecessor, Mr. Caron served as Chief Executive Officer for the Moseley Corporation in Franklin, Massachusetts. Additionally, Mr. Caron’s professional experience includes serving as President and Chief Executive Officer of TurboChef, Inc. in Dallas, Texas and as a Managing Director of the consumer products practice at Arthur D. Little in Cambridge, Massachusetts. During his 19-year affiliation with Arthur D. Little, Mr. Caron led many consulting assignments involving technology, strategy, and product development. In addition, Mr. Caron holds several patents in the foodservice industry, including automated frying and rapid cooking systems. Mr. Caron holds a M.S. and B.S. in Chemical Engineering Practice from the Massachusetts Institute of Technology.

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Andreas G. Weishaar
Senior Vice President, Strategy, Marketing and Digital
Mr. Weishaar, 44, has served as Senior Vice President, Strategy, Marketing and Digital of Welbilt since November 2017 and as Senior Vice President, Strategy, Marketing and Human Resources from February 2016 through November 2017. Previously, Mr. Weishaar served ten years at AGCO Corporation (“AGCO”), a leading manufacturer and distributor of agricultural equipment and related replacement parts, most recently as Vice President and General Manager of Global Green Harvesting, where he was responsible for the company’s worldwide hay, forage and sugar business. Prior to joining AGCO, Mr. Weishaar was part of the Strategy & Organization practice of Arthur D. Little, where he worked in areas of strategy and organization, performance improvement and mergers & acquisitions. He holds an M.B.A. from the European Business School, Germany, and studied both at the Ecole Supérieure de Commerce de Dijon, France, and the Thunderbird School of Global Management, USA.
Diana Sacchi
Senior Vice President, Chief Human Resources Officer
Diana Sacchi, 58, has served as Senior Vice President and Chief Human Resources Officer of Welbilt since November 2017. From 2016 through November 2017, Ms. Sacchi served as Vice President Human Resources, North America for LG Electronics U.S.A, Inc., a multinational electronics company, where she was responsible for leading the Human Resources function supporting the company’s businesses throughout the U.S. and Canada. From 2014 to 2016, Ms. Sacchi served as Senior Vice President and Chief Human Resources Officer of Grameen America, Inc., a nonprofit microfinance organization. Prior to this, Ms. Sacchi held various human resources leadership positions with responsibility over EMEA and Asia Pacific at each of Avon Products, Inc., a direct selling beauty company, and Bristol-Myers Squibb, a global biopharmaceutical company, among others. Ms. Sacchi holds a M.Ed. in Psychological Counseling and M.A. in Organizational Psychology from Columbia University and a B.A. from Texas Woman’s University.

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COMPENSATION DISCUSSION AND ANALYSIS



EXECUTIVE SUMMARY

2017 COMPENSATION HIGHLIGHTS

2017 was an exciting year for Welbilt and our first full year as a standalone company. Our 2017 compensation programs were based on our prior year program designs but further refined to drive our overall business strategy. In particular, we modified the weighting of metrics under our annual incentive program to reflect our heightened focus on cash flow generation to fund future growth opportunities and our debt reduction efforts. In addition, our annual incentive program was revised to include the metric, Adjusted Operating EBITDA Margin (in lieu of Adjusted Operating EBITA Margin), to align with changes in our external reporting practices. We believe the performance measures selected under our long-term incentive plan continued to capture our key financial drivers of success and therefore no changes were made to those metrics.

Additionally, in 2017, we made certain significant changes to our executive leadership team and organizational structure, including: promoting Haresh Shah to Chief Financial Officer following the retirement of John O. Stewart; promoting Joel H. Horn to General Counsel following the retirement of Maurice D. Jones; recruiting Diana Sacchi to serve as Chief Human Resources Officer; and shifting the role of Andreas G. Weishaar to include oversight of Digital, IT and our M&A process.

For 2017, our named executive officers are:

Name
Title
Hubertus M. Muehlhaeuser
President and Chief Executive Officer
John O. Stewart
Former Senior Vice President and Chief Financial Officer (through May 1, 2017)
Haresh Shah
Senior Vice President and Chief Financial Officer (effective May 1, 2017)
Josef Matosevic
Senior Vice President and Chief Operating Officer
Andreas G. Weishaar
Senior Vice President, Strategy, Marketing and Digital
Richard N. Caron
Senior Vice President, Innovation
Maurice D. Jones
Former Senior Vice President, General Counsel and Secretary (through January 2, 2017)

2017 COMPENSATION ELEMENTS

The following table summarizes the primary components of our 2017 executive compensation program, each as described in greater detail below.

 
Compensation Element
Key Characteristics and Objectives
FIXED
Base Salary
Fixed compensation.
 
 
Designed to attract and retain qualified executives.
 
 
Benchmarked to adequately compensate individual for his or her competencies, skills, experience and responsibilities.
 
 
Subject to annual review based on performance and changes in job responsibilities.
 
 
No automatic or guaranteed increases.
AT RISK
Annual Cash Bonus (“STIP”)
Variable compensation.
 
 
Rewards executives for the achievement of certain financial goals that are aligned to our strategic plan and budget.
 
 
Based upon multiple metrics (Free Cash Flow, Adjusted Operating EBITDA Margin and Organic Net Sales Growth) and a “hurdle” below which no awards are earned.
AT RISK
Long-Term Equity Awards
Variable compensation.
 
 
Rewards executives for the achievement of certain long-term financial goals.
 
 
Includes multiple vehicles (options and performance share units), with performance component based upon multiple metrics (Average ROIC, Cumulative Adj. Diluted EPS).
 
 
Aligned to our strategic plan forecast.
 
 
Promotes retention.
FIXED
Perquisites and Benefits
Fixed compensation.
 
 
Market-competitive practices.
 
 
Limited perquisites and benefits.

2017 COMPENSATION DESIGN

The performance measures used in our 2017 compensation programs included a range of key financial metrics designed to promote achievement of our strategic goals while also driving long-term stockholder value. Our 2017 short-term incentive plan (“STIP”) was based upon Free Cash Flow, Adjusted Operating EBITDA Margin and Organic

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Net Sales Growth, all of which were key metrics of our 2017 annual budget. Our 2017 long-term incentive plan, which was aligned to our strategic plan, consisted of performance share units with a three-year performance period and stock options vesting ratably over a four-year period. Furthermore, all metrics were adjusted to exclude the impact of foreign currency fluctuations.

SAY-ON-PAY ADVISORY VOTE

The Compensation Committee considers the results of our annual say-on-pay advisory vote in determining executive compensation decisions and policies as it provides useful input to the committee in its work to design and oversee an executive compensation program that serves the long-term interests of our stockholders. At our 2017 Annual Meeting of Stockholders, approximately 98% of the votes cast were voted “FOR” approval of our executive compensation program as described and disclosed in the Compensation Discussion and Analysis section, compensation tables and narrative discussion in our accompanying proxy statement. The Compensation Committee believes such results affirm stockholders’ support of the Company’s approach to and structure of executive compensation.

COMPENSATION PHILOSOPHY AND PRACTICES

OBJECTIVES AND PHILOSOPHY.

Our executive compensation program is intended to align the interests of our executives with those of our stockholders and motivate our executives to maximize long-term total returns of our stockholders. Our Compensation Committee designs our executive compensation programs to be competitive and ensure alignment between executive pay and Company performance. An important element of our compensation program design is to provide incentive-based compensation that is directly tied to Company performance. Our Compensation Committee annually reviews the key elements of our program considering our business strategy and talent needs. Our executive compensation program seeks to provide competitive total compensation opportunities to attract, motivate and retain highly-qualified executives critical to the achievement our financial and strategic goals.

Key objectives and elements of our compensation philosophy include the following:

Pay-For-Performance. The majority of the target compensation awarded to our named executive officers is incentive-based and “at risk,” meaning it is only earned if specific financial goals are achieved or, in the case of stock options, if our stock price appreciates over the next several years following the grant date.
Competitive. Pay levels are generally targeted to be at or near market median levels based on individual factors (such as experience, length of service, and level of responsibility), internal structure and internal and external equity, business needs, Company performance, comparable positions at general industrial companies of similar size, and other factors.
Encourage Retention. Long-term compensation awards make up a significant portion of each named executive officer’s overall target compensation. These awards include multi-year vesting terms thereby encouraging retention of our executives.
Promote Stock Ownership. Long-term incentive awards to executives are solely equity-based, and executive officers are expected to comply with stock ownership guidelines to ensure meaningful ongoing alignment with stockholders’ interests.

BEST PRACTICES IN GOVERNANCE.

Our executive compensation program reflects a strong pay-for-performance design and incorporates many best practices in executive compensation governance.

WHAT WE DO
WHAT WE DON’T DO
Engage independent compensation consultant to advise Compensation Committee
No pledging or hedging permitted
No change in control excise tax gross-ups
Adopt stock ownership guidelines for directors and executive officers
No single-trigger cash severance provisions
No excessive perquisites
Use of multiple and balanced performance measures to reward key drivers of our business.
 
 
Provide majority of compensation in the form of “at risk” awards
 
 
Communicate with stockholders regarding our pay practices
 
 

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ADMINISTRATION AND OVERSIGHT.

Our Compensation Committee reviews and approves all elements of our executive compensation program that cover our named executive officers and also reviews the design of our annual and long-term incentive programs applicable to all employees. Our Compensation Committee’s review of our executive compensation program includes an annual consideration of business strategy and talent needs and alignment of compensation to performance and stockholder interests. Our Compensation Committee has engaged Willis Towers Watson to assist with its duties, though the Compensation Committee retains the ultimate decision-making authority for all executive pay matters.

PEER GROUP.

Following the Spin-Off, our Compensation Committee, together with Willis Towers Watson, considered how to best use competitive market data to benchmark executive compensation practices and design our executive compensation programs. The Compensation Committee considered a multitude of factors, including how such data would be used, whether the data would be aligned with stockholder expectations, the breadth, consistency and reliability of the data and our ability to compete effectively for top executive talent. As a result of this review, our Compensation Committee determined to use third-party market data from two sources: published survey data reflecting a broader industry group (“Survey Data”) and a customized peer group (the “Custom Peer Group”). Together, these sources enable the Compensation Committee to make informed decisions and achieve its compensation objectives.

Survey Data. The Survey Data is based on Willis Towers Watson’s Executive Compensation Survey and reflects approximately 1,000 companies from general industry. The Survey Data is adjusted, generally through regression analysis, to fit Welbilt’s revenue scope, and specific companies are not selected as the data reflects the broad general industry participants in the survey. The Survey Data serves as a reliable market reference and is used as the primary source for benchmarking pay levels for our executives.

Custom Peer Group. The Custom Peer Group is used for designing the overall executive compensation program, including design of the short-term incentive program and long-term incentive plan, and serves as a secondary source for benchmarking pay levels of the CEO, CFO and General Counsel positions and benchmarking benefits and perquisites. In developing the Custom Peer Group, the Compensation Committee considered both quantitative factors (are the companies of a comparable size in terms of revenue, employee headcount, market capitalization and/or net income?) and qualitative factors (do the companies operate within a comparable or adjacent industry? do the companies compete globally? how mature is the company?). Based upon this review, the Compensation Committee selected a group of 18 core companies and two non-core companies that would only be used for benchmarking pay practices but not pay levels given their relatively large revenue size and market capitalization.

2017 Custom Peer Group
Actuant Corporation
A.O. Smith Corp.
B/E Aerospace Inc.
Briggs & Stratton Corporation
Carlisle Companies Incorporated
Chart Industries, Inc.
Dover Corporation*
General Holdings, Inc.
Graco Inc.
Harsco Corporation
IDEX Corporation
Illinois Tool Works Inc.*
John Bean Technologies Corporation
Kennametal Inc.
Lennox International, Inc.
Lincoln Electric Holdings, Inc.
Middleby Corp.
Nortek Inc.
Standex International Corp.
The Timken Company
* Included in the peer group for reviewing compensation program design, but not for benchmarking pay levels.

The Custom Peer Group was selected in 2016 and first used in connection with 2017 compensation decisions. During 2017, the Compensation Committee and Willis Towers Watson reviewed the peer group again and determined the same group, with the exception of 2 companies that had since been acquired, was appropriate with respect to 2018 compensation decisions. The Compensation Committee intends to continue its practice of reviewing and, if necessary, updating the peer group annually for use in designing the following year’s executive compensation program.

Benchmarking Pay Levels. The Compensation Committee generally refers to the market median from the Survey Data and Custom Peer Group for base salary, target total cash compensation, target long-term incentive compensation and target total direct compensation as an initial point of reference, and then adjusts such amounts up or down to give effect to each individual’s experience, number of years serving in the current role, level of responsibility, performance and such other factors the Compensation Committee deems important.

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STOCK OWNERSHIP GUIDELINES.

The Compensation Committee has established stock ownership guidelines for executive officers as set forth below. Under the guidelines, executives are provided with a reasonable period of time to achieve compliance. If he or she does not satisfy the applicable requirement prior to the end of the calendar year of his or her respective compliance date, the guidelines provide that the executive will be required to retain all net shares from the exercise of stock options and from the vesting of restricted stock, restricted stock units and performance share units, until compliance is achieved. For purposes of these stock ownership guidelines, common stock, restricted stock, restricted stock units, performance share units (at target) and stock equivalents held in deferred compensation and/or retirement arrangements are counted towards the individual’s ownership attainment level. Additionally, one-half of the guideline amount can be met by vested, in-the-money stock options held by the executive officer.

Name
Multiple of
Base Salary
Compliance Date(1)
Status(2)
Hubertus M. Muehlhaeuser
5x
2020
In Compliance
Haresh Shah
3x
2021
In Compliance
Josef Matosevic
3x
2020
In Compliance
Andreas G. Weishaar
3x
2021
In Compliance
Richard N. Caron
3x
2021
In Compliance
Other Current Executive Officers
3x
5 Years after becoming an Executive Officer
In Compliance
(1) Compliance date reflects 5 years from the date such individual became an executive officer of the Company or, if earlier, MTW.
(2) All current executive officers are in compliance with applicable holding requirements or expected to achieve compliance prior to their respective compliance date.

CLAWBACKS.

In addition to any right of recoupment against our CEO or CFO pursuant to Section 304 of the Sarbanes-Oxley Act of 2002, we intend to recoup executive officer compensation, or a portion thereof, to the extent required under rules to be adopted by the SEC and NYSE pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. To that end, our 2016 Omnibus Incentive Plan provides that any awards granted under such plan, and any shares issued or cash paid pursuant to an award, will be subject to any recoupment or clawback policy that we adopt from time to time, or any recoupment or similar requirement otherwise made applicable by law, regulation or listing standards. Furthermore, the administrator under the plan may terminate or cause a participant to forfeit an award, and require a participant to disgorge to us any gains attributable to an award, if the participant engages in any action constituting, as determined by the administrator in its discretion, cause for termination, or a breach of any agreement between the participant and us or one of our affiliates concerning non-competition, non-solicitation, confidentiality, trade secrets, intellectual property, non-disparagement or similar obligations.

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COMPENSATION RISK ASSESSMENT.

In 2017, management and Willis Towers Watson each conducted separate risk assessments to provide the Compensation Committee with an internal and external view of our compensation programs and policies. Management reviewed the compensation programs applicable to both executives and non-executive employees, and WTW primarily focused their review on executive compensation plans and practices. In particular, management and/or WTW considered the following risk criteria:

 
Compensation Risk Criteria
Compensation Philosophy and Plan Design
Are the Company’s compensation programs aligned with our near-term and long-term strategic goals and initiatives, effectively communicated to and understood by employees and motivating employees and executives to work collaboratively in the Company’s best interest?
Oversight
Whether there is adequate and regular oversight by the Compensation Committee and management to allow for effective implementation and to the extent appropriate, discretion.
Pay Mix
Whether our compensation programs reflect an appropriate mix of fixed and variable compensation that both mitigates the incentive for excessive risk taking while also encouraging executives and employees to achieve our strategic goals.
Time Horizon
Do the performance periods and vesting periods of our long-term incentive plan awards encourage our employees to focus on sustained growth of our Company over the long term, rather than taking short-term risks?
Performance Goals
Do our performance-based compensation programs use multiple metrics that promote long-term enterprise value? Are the performance goals set at levels that are challenging but still reasonably achievable without taking inappropriate risks?
Stock Ownership Practices
Whether we have policies in place to align the interests of our executives and employees with those of our stockholders, such as stock ownership guidelines and prohibitions on hedging of Company securities.

The results of both the internal and external assessments are that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. We believe that our compensation program is aligned with current market practices and contains an appropriate balance of risk versus rewards. Furthermore, our compensation program incorporates appropriate risk mitigating factors, such as multi-year vesting periods, performance goals tied to both top-line and bottom-line financial metrics, executive stock ownership guidelines and strong operational oversight and audit processes.

TAX CONSIDERATIONS.

Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally disallows a tax deduction to public corporations for compensation in excess of $1.0 million in a calendar year to certain covered executives. For 2017, our covered executives for Section 162(m) purposes were Messrs. Muehlhaeuser, Matosevic, Weishaar and Caron. Starting with 2018, as a result of the changes made to Section 162(m) by the Tax Cuts and Jobs Act, our number of covered executives will increase to include: (i) those four covered executives listed above for 2017, (ii) any executive who serves as our Chief Executive Officer or Chief Financial Officer at any time on or after January 1, 2018, and (iii) any executive who is among our three most highly compensated executive officers for any calendar year beginning with 2018.

For compensation paid for 2017, the statute generally exempts qualifying performance-based compensation from the $1.0 million annual deduction limit if certain conditions are met. Starting with 2018, only qualifying performance-based compensation that is paid pursuant to a written binding contract in effect on November 2, 2017 (and not subsequently materially modified) will be exempt from the deduction limit. Accordingly, any compensation paid in the future pursuant to compensation arrangements entered into after November 2, 2017, even if performance-based, will count towards the $1.0 million fiscal year deduction limit if paid to a covered executive. Because of the many factors influencing a well-rounded, comprehensive executive compensation program as well as the changes made to Section 162(m) by the Tax Cuts and Jobs Act, some of the compensation we provide to our executive officers may not be deductible.

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DESIGN OF 2017 COMPENSATION PROGRAM

The following section discusses the design of our 2017 compensation program for our named executive officers, other than Mr. Jones. Mr. Jones retired effective January 2, 2017, and therefore, nearly all of the compensation earned by Mr. Jones with respect to the year ended December 31, 2017 relates to compensation in connection with his retirement. For additional information, see the section titled “Potential Payments upon Termination or Change in Control.”

Name
Base
Salary
($)
Target
STIP
(% of Base)
Target
STIP
($)
Target
LTIP
($)(1)
Total Target
2017
Compensation
($)
Hubertus M. Muehlhaeuser
 
870,000
 
 
100
%
 
870,000
 
 
2,500,000
 
 
4,240,000
 
John O. Stewart(2)
 
540,000
 
 
70
%
 
378,000
 
 
700,000
 
 
1,618,000
 
Haresh Shah(3)
 
380,000
 
 
80
%
 
304,000
 
 
500,000
 
 
1,184,000
 
Josef Matosevic
 
472,000
 
 
80
%
 
377,600
 
 
570,000
 
 
1,419,600
 
Andreas G. Weishaar(4)
 
432,600
 
 
65
%
 
281,190
 
 
500,000
 
 
1,213,790
 
Richard N. Caron
 
342,916
 
 
50
%
 
171,458
 
 
300,000
 
 
814,374
 
(1) Reflects aggregate value of long-term incentive plan awards granted to each named executive officer in 2017. As further described below, 25% of such value was awarded in the form of stock options and 75% was awarded in the form of PSUs.
(2) Reflects Mr. Stewart’s 2017 compensation in effect through the date of his retirement.
(3) Reflects Mr. Shah’s 2017 compensation following his promotion to Chief Financial Officer, effective May 1, 2017.
(4) Mr. Weishaar is compensated in Swiss Francs (CHF). Amounts shown in the table have been translated into U.S. Dollars (USD) based upon an exchange rate of USD1 to CHF1.03, the exchange rate in effect at December 31, 2017.

BASE SALARY.

In reviewing 2017 base salaries, the Compensation Committee considered individual factors such as competencies, skills, experience, and performance, as well as internal equity and market data. Base salaries were generally reviewed and approved in December 2016 for the 2017 fiscal year or, if applicable, in connection with such individual’s promotion.

SHORT-TERM INCENTIVE PLAN (“STIP”).

Annual incentive awards to our named executive officers were made under the Welbilt 2016 Omnibus Incentive Plan and are referred to in this Proxy Statement as Short-Term Incentive Plan (“STIP”) awards. The STIP rewards executives for the achievement of certain financial goals that are aligned to our strategic plan and budget.

For all of our named executive officers, the 2017 STIP was based upon the following financial metrics:

Free Cash Flow, a liquidity measure relating to the Company's ability to generate cash internally to fund initiatives such as debt repayment, acquisitions, dividends and share repurchases;
Adjusted Operating EBITDA Margin, a performance measure used by management to evaluate financial performance as a percentage of net sales and make resource allocation and other operating decisions; and
Organic Net Sales Growth, which measures top-line growth over prior year results, disregarding acquisitions and dispositions.

All of the above metrics were compared against budget-rate currencies to remove the impact of foreign currency fluctuations during the year. Additionally, 2017 STIP awards were subject to a hurdle such that no awards would be paid to any named executive officer if the Company’s Adjusted Operating EBITDA Margin for 2017 was less than 14.5%.

The target STIP award opportunity granted to our named executive officers for 2017 ranged from 50% to 100% of base salary, with actual payout potential ranging from 0% to 200% of each individual’s target. Any STIP awards earned are generally paid during the first quarter of the following fiscal year.

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Presented below are the specific performance levels adopted under the 2017 STIP, as well as 2017 actual Company results. Threshold performance would have resulted in a payout of 50% of target and maximum performance would have resulted in a payout of 200% of target, with the payout between specific performance levels calculated using straight line interpolation. The STIP opportunity and actual payout for each of the named executive officers are presented in the subsequent executive compensation tables named “Grants of Plan-Based Awards in 2017” and “Summary Compensation Table,” respectively.

Performance Goal ($ in millions)
Weight
Threshold
Target
Maximum
Actual (4)
Actual
%(5)
Free Cash Flow(1)
 
35
%
$
130.0
 
$
154.0
 
$
178.0
 
$
111.6
 
 
0.0
%
Adjusted Operating EBITDA Margin(2)
 
35
%
 
18.0
%
 
19.0
%
 
20.7
%
 
18.9
%
 
92.6
%
Organic Net Sales Growth(3)
 
30
%
 
-0.5
%
 
0.5
%
 
1.5
%
 
(1.3
)%
 
0.0
%
Total
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
32.4
%
(1) “Free Cash Flow” represents net cash provided by operating activities less capital expenditures.
(2) “Adjusted Operating EBITDA Margin” represents (a) net earnings before interest, income taxes, other expense - net, depreciation and amortization, plus certain items such as gain or loss from the impairment or disposal of assets, restructuring, separation charges and loss on early extinguishment of debt, divided by (b) net sales.
(3) “Organic Net Sales Growth” represents the percentage change in actual current year net sales adjusted for budgeted foreign currency rates compared to prior year Organic Net Sales. “Organic Net Sales” reflect net sales excluding the impact of divestitures.
(4) Reflects actual results as adjusted to exclude the effects of fluctuations in foreign currency during fiscal year 2017 compared to budget rates in accordance with the STIP. See “Non-GAAP Financial Measures” appearing elsewhere in this Proxy Statement for important additional information.
(5) Reflects percent of target payout to be applied to each executive officer.

LONG-TERM INCENTIVE PLAN.

Our long-term incentive plan (“LTIP”) awards are made under our 2016 Omnibus Incentive Plan. LTIP awards are intended to align the interests of executives and key employees with those of stockholders by allowing such individuals to share in the growth and financial success of the Company and motivating and rewarding achievement of specific longer-term financial goals. In addition, LTIP awards facilitate the attraction, retention and motivation of key members of management and employees. Our general practice is for all of our named executive officers’ LTIP awards to be “at risk”—requiring achievement of specific multi-year financial goals or stock price appreciation—rather than being solely time-based awards. In 2017, the Compensation Committee granted LTIP awards to each of the named executive officers that, in the aggregate, were within the 25th to 75th percentile of the industry survey data used for benchmarking pay levels. The aggregate value was then granted in the form of stock options, which accounted for 25% of the total LTIP award, and performance share units, which accounted for 75% of the total LTIP award.

Stock Options. Stock options align executives’ interest with those of stockholders, since options only have realizable value if the price of our stock increases relative to the exercise price, which is the closing price of our common stock on the date of grant. Stock options granted to the named executive officers under our 2017 LTIP vest annually in 25% increments beginning on the first anniversary of the grant date and continuing on each subsequent anniversary until the fourth anniversary and expire 10 years after the date of grant.

Performance Share Units. Performance share units were provided to the named executive officers in 2017 to directly align the shares earned, if any, to the achievement of certain multi-year goals. The Compensation Committee selected cumulative fully diluted Adjusted Earnings per Share (“Adjusted EPS”) and average return on invested capital (“ROIC”) over the three-year period, both weighted 50%, as the performance metrics for the 2017 performance share units, with a performance period of January 1, 2017 to December 31, 2019. Additionally, no awards will be paid to any named executive officer under the 2017 performance share units if the Company’s cumulative fully diluted Adjusted EPS for the performance period is less than a specified hurdle rate.

The target number of performance share units granted to each named executive officer was determined based upon a price of $19.12, the average closing price of our common stock as reported on the NYSE during the 20-trading day period prior to and including the date of grant. At the end of the performance period, our named executive officers will receive shares of stock ranging from 0% to 200% of their target number of shares based upon the actual achievement of the performance goals.

The actual financial performance targets of the 2017 performance share units and achievement against those targets will be disclosed at the end of the three-year performance period.

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Treatment of Equity-Based Awards in the Spin-Off. Each MTW stock option, restricted stock, restricted stock unit and performance share unit that was outstanding as of the date of the Spin-Off was deemed bifurcated into two separate awards: a modified award relating to MTW common stock; and a new equity award of the same type relating to Welbilt common stock. Following the Spin-Off, each of these awards remained subject to their original terms and conditions, except:

with respect to stock option awards, the per-share exercise price for both the modified MTW award and the new Welbilt award was adjusted so that the two awards, together, would retain, in the aggregate, the same intrinsic value that the original MTW stock option award had immediately prior to the Spin-Off (subject to rounding);
with respect to outstanding performance share units, the performance goals were deemed met at the target level and the number of performance share units was calculated with no proration, but the performance share units will remain outstanding and subject to continued time-based vesting until the end of the applicable performance period;
with respect to any continuous employment requirement associated with any equity-based incentive awards of either us or MTW, such requirement will be satisfied after the Spin-Off by our employees based on their continuous employment with our Company;
in the event a change in control (as defined in the applicable equity incentive plan or award agreement) occurs with respect to MTW, then any accelerated vesting and/or exercisability applicable to MTW equity-based incentive awards then held by our employees or former employees will apply; and
in the event we experience a change in control (as defined in the applicable equity incentive plan or award agreement), then any accelerated vesting and/or exercisability applicable to our equity-based incentive awards held by our current or former employees will also apply to the MTW equity-based incentive awards then held by such individuals.

BENEFITS AND PERQUISITES.

401(k) Retirement Plan. All active, regular, full-time, non-union, U.S.-based employees, including each of our named executive officers (other than Mr. Weishaar, who is a non-U.S. resident), are eligible to participate in the Company’s 401(k) Retirement Plan, which allows employees to build retirement savings on a tax-deferred basis. The plan has a tax-qualified defined contribution savings component (the 401(k) Savings feature) in which participating employees receive a matching contribution from the Company, subject to the terms set forth in the plan. In addition, all eligible employees may receive a performance-based contribution from the Company, in which the Company contributes up to 3% of eligible compensation each year, subject to satisfaction of certain specified performance goals, an initial vesting period and other terms set forth in the plan. The value of the employer contributions made on behalf of each of our named executive officers in 2017 is presented in the Summary Compensation Table.

Deferred Compensation Plan. Welbilt sponsors a non-qualified deferred compensation plan that allows our named executive officers and other key employees to defer a portion of their compensation and the taxation on such compensation to a specified date in the future. Welbilt may also, at its option, make employer contributions to participants’ accounts. During 2017, none of our named executive officers made any contributions to the deferred compensation plan, and we did not make any contributions on their behalf.

Perquisites and Personal Benefits. To provide a market competitive total compensation package, we provide a limited amount of perquisites and supplemental benefits to our named executive officers. In 2017, we provided the following: supplemental life and long-term disability insurance, reimbursement for tax preparation, personal use of a company car, car allowance, spouse/guest travel, reimbursement for an executive physical, and limited personal use of a plane leased by the Company. We also made certain contributions to a Swiss governmental pension scheme on Mr. Weishaar’s behalf and reimbursed him for financial planning fees. Any aggregate incremental cost to us of perquisites and supplemental benefits provided in 2017 is presented in the Summary Compensation Table and footnotes.

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EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL BENEFITS

We have entered into agreements with our named executive officers to provide market-competitive severance protections and continuity of the leadership team leading up to and after a change in control.

Employment Agreements. During 2017, we entered into a new employment agreement with Mr. Shah, in connection with his promotion to Chief Financial Officer, and an amendment to Mr. Stewart’s employment agreement as further described below. The employment agreements previously entered into with each of the other named executive officers remain in effect.

The employment agreements set forth the executive officers’ title, compensation and benefits. The employment agreements provide that each executive officer is entitled to an annual base salary of a certain amount, subject to potential increase from time to time, and that each is eligible to participate in the STIP with target award amounts equal to a percentage of base salary, and to receive LTIP awards under our 2016 Omnibus Incentive Plan in an amount determined by our Compensation Committee each year. Each executive officer also receives a car allowance, vacation time and reimbursement for tax preparation and financial planning fees under the terms of the agreements.

For all named executive officers except Mr. Weishaar, the employment agreements also provide that the executive officer will be eligible to participate in our 401(k) Retirement Plan, Deferred Compensation Plan, our health, dental, and life insurance plans and for Mr. Jones only, the SERP. Because Mr. Weishaar is employed in Switzerland, his employment agreement provides that he will receive health, welfare, and other retirement benefits per the Swiss standard applicable for an equivalent position. To comply with this requirement, we made contributions to Swiss Social Security and pension programs and paid for 50% of the premium for Mr. Weishaar to receive local private health insurance comparable to the health insurance our other executives receive under our group health plan.

Each of the employment agreements provide that if we terminate the executive officer’s employment without cause or the executive resigns with good reason (in each case, as described more fully in the contract), then the executive will be entitled to receive a severance payment and all outstanding equity awards granted prior to the year of termination shall be deemed fully vested, subject to the executive signing a release of any and all claims or potential claims against the Company. More details regarding the severance payments and equity acceleration is provided in the “Potential Payments upon Termination or Change in Control” section.

Additionally, as required by the terms of the employment agreements, we also maintain Director and Officer insurance coverage for each named executive officer and provide such officer with indemnification as permitted by law. In connection with entering into these employment agreements, each named executive officer also agreed to certain non-competition, non-solicitation and confidentiality provisions.

Amendment to Mr. Stewart’s Employment Agreement. In connection with Mr. Stewart’s retirement as Chief Financial Officer, the Company entered into an amendment to his employment agreement providing that his retirement will be deemed a termination without “Cause” and he will be entitled to receive the applicable severance payments, equity acceleration and other benefits outlined in his employment agreement. In addition to such benefits, the amendment provided that 35% of Mr. Stewart’s performance share units and stock options granted in 2017 will be vested upon his retirement and the remaining equity awards granted in 2017 will be forfeited.

Change in Control Severance Arrangements. We have also entered into Contingency Employment Agreements, which govern change in control severance arrangements, with each of our named executive officers. These Contingency Employment Agreements provide for the executives’ continued employment upon a change in control for a three-year period for Mr. Muehlhaeuser and a two-year period for the other executives. In addition, the arrangements provide for certain severance benefits in the event an executive is terminated without cause (as defined therein) prior to the end of the change in control employment period (as such, the agreements have a “double trigger”). The severance benefit would consist of base salary, annual incentive compensation (calculated at the target level), and other benefits that the executive otherwise would have been entitled to receive if his or her employment had not been terminated prior to the respective three- or two-year change in control employment period. Further detail regarding these agreements is presented below under the heading “Potential Payments upon Termination or Change in Control.”

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed this Compensation Discussion and Analysis for fiscal year 2017 with management. Based on this review and discussion, the Compensation Committee recommended to the Board, and the Board approved, that the Compensation Discussion and Analysis be incorporated by reference in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and included in this Proxy Statement for filing with the SEC.

Compensation Committee of the Board of Directors
Joan K. Chow, Chair
Dino J. Bianco
Thomas D. Davis
Brian R. Gamache

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EXECUTIVE COMPENSATION TABLES

The following tables set forth certain information regarding the compensation of our named executive officers and have been prepared in accordance with applicable disclosure rules. These tables and the accompanying narratives should be read in conjunction with the “Compensation Discussion and Analysis” section above.

SUMMARY COMPENSATION TABLE

The table below sets forth the total compensation earned by our named executive officers during the fiscal years indicated. The table also discloses compensation earned by our named executive officers for their service to MTW for all or part of the fiscal years ending December 31, 2016 and 2015, to the extent such individual was also a named executive officer of Welbilt or MTW during those years.

Name & Principal Position
Year
Salary
Bonus
Stock
Awards(1)
Option
Awards(2)
Non-Equity
Incentive Plan
Compensation(3)
Change in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings(4)
All Other
Compensation(5)
Total
Hubertus M.
Muehlhaeuser
President and Chief
Executive Officer
 
2017
 
$
867,308
 
 
 
$
1,825,045
 
$
625,083
 
$
281,880
 
 
 
$
105,164
 
$
3,704,480
 
 
2016
 
$
800,000
 
 
 
$
1,655,442
 
$
551,880
 
$
597,600
 
 
 
$
54,240
 
$
3,659,162
 
 
2015
 
$
184,615
 
$
200,000
 
 
 
$
1,000,000
 
 
 
 
 
$
134,962
 
$
1,519,577
 
John O. Stewart(6)
Senior Vice President
and Chief Financial
Officer
 
2017
 
$
207,692
 
 
 
$
650,889
 
$
237,666
 
 
 
 
 
$
1,017,484
 
$
2,113,731
 
 
2016
 
$
540,000
 
 
 
$
579,403
 
$
193,158
 
$
282,366
 
 
 
$
219,932
 
$
1,814,859
 
 
2015
 
$
62,308
 
$
54,886
 
 
 
$
700,000
 
 
 
 
 
$
24,072
 
$
841,266
 
Haresh Shah
Senior Vice President
and Chief Financial
Officer
 
2017
 
$
343,946
 
 
 
$
257,404
 
$
86,575
 
$
81,474
 
 
 
$
31,177
 
$
800,575
 
Josef Matosevic
Senior Vice President
and Chief Operating
Officer
 
2017
 
$
470,385
 
 
 
$
416,120
 
$
142,516
 
$
122,342
 
 
 
$
218,747
 
$
1,370,109
 
 
2016
 
$
430,000
 
 
 
$
462,702
 
$
154,252
 
$
224,847
 
 
 
$
125,631
 
$
1,397,432
 
 
2015
 
$
347,289
 
 
 
$
194,398
 
$
142,657
 
 
 
 
 
$
50,280
 
$
734,624
 
Andreas G. Weishaar(7)
Senior Vice President
Strategy, Marketing and
Human Resources
 
2017
 
$
432,600
 
 
 
$
365,017
 
$
125,017
 
$
91,106
 
 
 
$
34,296
 
$
1,048,035
 
 
2016
 
$
377,451
 
 
 
$
751,600
 
$
237,977
 
$
182,998
 
 
 
$
24,763
 
$
1,574,789
 
Richard N. Caron
Senior Vice President,
Innovation
 
2017
 
$
342,916
 
 
 
$
219,002
 
$
75,013
 
$
55,552
 
 
 
$
28,054
 
$
720,538
 
 
2015
 
$
342,916
 
 
 
$
92,214
 
$
87,261
 
 
 
 
 
$
7,800
 
$
530,191
 
Maurice D. Jones(8)
Former Senior Vice
President, General
Counsel and Secretary
 
2017
 
$
19,301
 
 
 
$
51,038
 
$
11,537
 
 
 
$
 
$
1,101,831
 
$
1,183,706
 
 
2016
 
$
418,180
 
 
 
$
516,497
 
$
172,189
 
$
203,047
 
$
223,508
 
$
21,400
 
$
1,554,821
 
 
2015
 
$
418,180
 
 
 
$
391,201
 
$
370,432
 
 
 
$
204,118
 
$
31,054
 
$
1,414,985
 
(1) Amounts listed represent the aggregate grant date fair value of all stock awards computed in accordance with FASB ASC Topic 718, are based upon the probable outcome of any applicable performance conditions, exclude the impact of estimated forfeitures related to service-based vesting conditions and are consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718. Additional information about the assumptions used in valuing these stock awards is set forth in Note 16 Stock-Based Compensation of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. For restricted stock awards and PSUs, fair value is computed by multiplying the total number of shares subject to the award (or target number or shares, if applicable) by the closing price per share of our common stock as reported on the NYSE on the date of grant. PSUs are earned based on our financial performance over a three-year period, and the shares earned are not restricted after completion of the performance period and settlement of the award. The maximum values of the 2017 stock awards as of the grant date, assuming the highest level of performance conditions are attained, are as follows: Mr. Muehlhauser $3,650,091; Mr. Shah $514,807; Mr. Matosevic $832,239; Mr. Weishaar $730,033 and Mr. Caron $438,005.
(2) Amounts listed reflect the aggregate grant date fair value of all stock option awards granted during the year in accordance with FASB ASC Topic 718. Additional information about the assumptions that we used when valuing option awards is set forth in Note 16 Stock-Based Compensation of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. Amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.
(3) Consists of amounts earned pursuant to the STIP for performance during the year indicated and paid the following year.
(4) This amount reflects the actuarial change in pension value from the preceding year as we did not provide above-market earnings on nonqualified deferred compensation. The amount consists entirely of the change in the actuarial present value of Mr. Jones’s accumulated benefit under our and MTW’s SERP (e.g., for 2016 this reflects the change from December 31, 2015 to December 31, 2016.). For 2017, the actuarial change in present value decreased by $223,508 as Mr. Jones received a distribution from the SERP during the year ended December 31, 2017.

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(5) All other compensation for 2017 consists of the following:
Name
Company
401(k)
Contributions
Tax and
Financial
Planning
Services
Car
Allowance
Insurance
Premiums(a)
Separation
Payments(b)
Tax
Gross-Ups(c)
Other(d)
Total
Muehlhaeuser
$
10,800
 
$
25,000
 
$
10,800
 
$
4,645
 
 
 
$
1,459
 
$
52,460
 
$
105,164
 
Stewart
$
10,800
 
$
6,900
 
$
4,500
 
$
665
 
$
994,453
 
$
166
 
$
 
$
1,017,484
 
Shah
$
10,800
 
$
10,000
 
$
7,200
 
$
2,855
 
 
 
$
322
 
$
 
$
31,177
 
Matosevic
$
10,800
 
 
 
$
10,800
 
$
3,555
 
 
 
$
18,856
 
$
174,736
 
$
218,747
 
Weishaar
 
 
$
9,576
 
$
24,720
 
 
 
 
 
 
 
 
 
$
34,296
 
Caron
$
10,800
 
$
750
 
$
10,800
 
$
4,461
 
 
 
$
18
 
$
1,225
 
$
28,054
 
Jones
$
2,316
 
$
3,265
 
$
900
 
$
 
$
1,094,902
 
$
87
 
$
 
$
1,101,831
 
(a) Represents life, accidental death and dismemberment and long-term disability insurance premiums paid by us on behalf of our named executive officers.
(b) Represents amounts paid or accrued during 2017 pursuant to Mr. Stewart’s and Mr. Jones’ retirement. See “Potential Payments upon Termination or Change in Control” for additional information.
(c) Consists of tax gross-ups relating to tax and financial planning services, relocation and personal use of aircraft.
(d) For Mr. Muehlhaeuser, consists of shipment of household goods ($44,994) and personal use of aircraft. For Mr. Matosevic, consists of relocation allowance ($103,581), housing allowance and personal use of aircraft. For Mr. Caron, consists of reimbursement for an executive physical. Amounts reported for personal use of aircraft reflect the aggregate incremental cost of limited personal use of a plane leased by the Company, based on the total cost of the aircraft for the year prorated to reflect the number of hours of personal use.
(6) Mr. Stewart served as our Senior Vice President and Chief Financial Officer from November 9, 2015 through May 1, 2017 and remained employed with the Company through his separation date of May 5, 2017. The amounts reported for 2017 reflect all compensation earned by Mr. Stewart during 2017, including compensation awarded to Mr. Stewart in connection with his separation. In accordance with applicable disclosure requirements and in order to reflect all compensation decisions made by the Company during 2017 with respect to equity awards, the amount disclosed under “Stock Awards” for Mr. Stewart for 2017 in the table above represents the sum of: (a) the grant date fair value of the PSUs granted to him on February 16, 2017 pursuant to the Company’s 2017 LTIP (which are computed as described in footnote 1 above); and (b) the incremental fair value of the PSUs modified in connection with his separation (which is computed as of the modification date in accordance with FASB ASC Topic 718 under the assumptions identified in footnote 1 above). The amount disclosed under “Option Awards” for Mr. Stewart for 2017 in the table above represents the sum of: (a) the grant date fair value of the stock options granted to him on February 16, 2017 pursuant to the Company’s 2017 LTIP (which are computed as described in footnote 2 above); and (b) the incremental fair value of the stock option awards modified in connection with his separation (which is computed as of the modification date in accordance with FASB ASC Topic 718 under the assumptions identified in footnote 2 above). The incremental value of each of the modified awards is:
Award
Value
Modified 2016 Performance Share Units (granted March 17, 2016)
$
139,896
 
Modified 2017 Performance Share Units (granted February 16, 2017)
 
 
Modified 2015 Stock Options (granted November 9, 2015)
 
 
Modified 2016 Stock Options (granted March 17, 2016)
$
62,646
 
Modified 2017 Stock Options (granted February 16, 2017)
 
 
(7) Mr. Weishaar commenced employment as a Senior Vice President on February 1, 2016, and all amounts reported for 2016 reflect the compensation earned by Mr. Weishaar during 2016 from such date, including a prorated STIP award for such year. Additionally, certain elements of Mr. Weishaar’s compensation were paid in Swiss Francs but converted into U.S. dollars for purposes of this presentation. For 2017, amounts shown are based upon an exchange rate of $1 to CHF1.03, the exchange rate effective as of December 31, 2017. For 2016, amounts shown are based upon an exchange rate of $1 to CHF1.02, the exchange rate effective as of December 31, 2016.
(8) Mr. Jones served as our Senior Vice President, General Counsel and Secretary from September 1, 2015 through January 2, 2017. The amounts reported for 2017 reflect all compensation earned by Mr. Jones during 2017, which consists entirely of compensation related to his separation. In accordance with applicable disclosure requirements and in order to reflect all compensation decisions made by the Company during 2017 with respect to equity awards, the amount disclosed under “Stock Awards” for Mr. Jones for 2017 in the table above represents the incremental fair value of the restricted stock units, restricted stock and PSUs modified in connection with his separation (which is computed as of the modification date in accordance with FASB ASC Topic 718 under the assumptions identified in footnote 1 above). The amount disclosed under “Option Awards” for Mr. Jones for 2017 in the table above represents the incremental fair value of the stock option awards modified in connection with his separation (which is computed as of the modification date in accordance with FASB ASC Topic 718 under the assumptions identified in footnote 2 above). The incremental value of each of the modified awards is:
Award
Value
Modified 2015 Restricted Stock Units (granted February 17, 2015)
 
 
Modified 2015 Restricted Stock Awards (granted April 8, 2015)
 
 
Modified 2014 Performance Share Units (granted February 14, 2014)
 
 
Modified 2016 Performance Share Units (granted March 17, 2016)
$
51,038
 
Modified 2013 Stock Options (granted February 26, 2013)
 
 
Modified 2014 Stock Options (granted February 14, 2014)
 
 
Modified 2015 Stock Options (granted February 17, 2015)
 
 
Modified 2016 Stock Options (granted March 17, 2016)
$
11,537
 

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PAY RATIO.

As calculated in accordance with applicable disclosure rules, the 2017 annual total compensation of Mr. Muehlhaeuser was $3,704,480 and the 2017 annual total compensation of our median employee was $40,836. As a result, we estimate that Mr. Muehlhaeuser’s 2017 annual total compensation was approximately 91 times that of our median employee. We identified our median employee by comparing the compensation of all individuals that we employed on November 30, 2017 based upon the sum of: (i) base salary (annualized for any employees hired after January 1, 2017), (ii) overtime pay, (iii) short-term incentive awards, if any, and (iv) long-term incentive awards, if any, based on the grant date fair value of the target number of awards granted. After we identified our median employee, we calculated such employee’s total annual compensation in the same way that we calculate the annual total compensation of our named executive officers in the Summary Compensation Table.

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GRANTS OF PLAN-BASED AWARDS IN 2017.

The table below sets forth all equity and non-equity incentive awards granted to our named executive officers during 2017, all of which were made under our 2016 Omnibus Incentive Plan. As discussed under “Design of 2017 Compensation Program” above, 2017 equity awards to our named executive officers consisted of performance share units (“PSU”) and non-qualified stock options (“NQO”), and non-equity incentive awards consisted of our STIP.

 
 
   
   
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards(2)
   
   
Estimated Future Payouts Under
Equity Incentive Plan
Awards
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
Exercise
or Base
Price of
Option
Awards(3)
($/Sh)
Grant Date
Fair Value
of Stock
and Option
Awards(4)
($)
Name and
Award Type
Grant
Date(1)
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Hubertus M. Muehlhaeuser
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STIP
 
02/16/17
 
$
435,000
 
$
870,000
 
$
1,740,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PSU
 
02/16/17