DEF 14A 1 def14a2021_welbiltinc.htm DEFINITIVE PROXY STATEMENT

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

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SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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Soliciting Material under §240.14a-12

WELBILT, INC.

(Name of Registrant as Specified In Its Charter)

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NOTICE OF 2021 ANNUAL MEETING OF
STOCKHOLDERS

TIME AND DATE:

1:00 p.m. Eastern Time, on Friday, April 23, 2021

LOCATION:

Virtual. To support the health and well-being of our employees and stockholders, the 2021 Annual Meeting of Stockholders will be conducted in a virtual only format at: www.virtualshareholdermeeting.com/WBT2021

RECORD DATE:

Stockholders of record at the close of business on February 26, 2021 are entitled to notice of, and to vote at, the 2021 Annual Meeting of Stockholders and at any adjournments or postponements thereof.

ITEMS OF BUSINESS:

1.   To elect seven members to the Board of Directors, each to serve for a one-year term.

 

2.   To approve, on an advisory basis, the compensation of Welbilt’s named executive officers.

 

3.   To ratify the selection of Grant Thornton LLP as Welbilt’s independent registered public accounting firm for 2021.

 

4.   To approve an amendment of the Welbilt, Inc. 2016 Omnibus Incentive Plan to authorize an additional 5,000,000 shares to be reserved for issuance.

 

5.   To transact such other business as may properly come before the 2021 Annual Meeting of Stockholders and any adjournments or postponements thereof.

ADMISSION TO MEETING:

To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/wbt2021, you must enter the control number found on your proxy card, voting instruction form or Notice of Internet Availability. You will have the ability to vote your shares at the meeting even if you previously authorized a proxy. Proof of share ownership will be required for admission to the 2021 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 AUTHORIZE A PROXY:

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 Annual Meeting and vote your shares during the meeting:

 

•    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
12, 2021

Joel H. Horn
Corporate Secretary

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on April 23, 2021: The Notice, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2020 are available at www.proxyvote.com.

 

TABLE OF CONTENTS

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, 2020 and in our other filings with the U.S. Securities and Exchange Commission (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

Welbilt Inc. prepares its financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”). 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, 2020.

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. and its subsidiaries, “MTW” refers to The Manitowoc Company, Inc., and “Spin-Off” refers to our separation from MTW on March 4, 2016.

 

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, 2020 before you vote. The Proxy Statement and accompanying materials were first provided to stockholders on or about March 12, 2021.

DIRECTOR NOMINEES

Name

Age

Director
Since
(1)

Independent

Audit
Committee

Compensation
Committee

Corporate
Governance
Committee

Cynthia M. Egnotovich, Chair

63

2008

Yes

C

Dino J. Bianco

59

2015

Yes

C

ü

Joan K. Chow

60

2012

Yes

C

ü

Janice L. Fields

65

2018

Yes

ü

ü

Brian R. Gamache

62

2017

Yes

ü

ü

Andrew Langham

47

2016

Yes

ü

ü

William C. Johnson

57

2018

No

(1)              Includes service on the Board of Directors of Welbilt’s former parent company prior to the Spin-Off.

C        Chair

ü       Member

Welbilt, Inc.  2021 Proxy Statement | 1

 

CORPORATE GOVERNANCE HIGHLIGHTS

•       Separate Board Chair and Chief Executive Officer

•       Regular Board and Committee self-evaluations

•       Risk oversight by full Board and Committees

•       Continuous focus on matters of societal impact and sustainability

•       Majority voting standard for uncontested Director elections

•       Regular benchmarking of executive and Director compensation with independent compensation consultant

•       No meeting fees included in Director compensation

•       Annual election of directors

•       Bylaws provide for proxy access by stockholders

•       No stockholder rights plan

•       Annual advisory say-on-pay vote

OUR COMPENSATION APPROACH

Consistent with our pay philosophy, the majority of our named executive officers’ target total compensation for 2020 (i.e. the sum of annualized base salary, target annual incentive award and target long-term incentive awards) is performance-based or “at-risk,” meaning it is only earned if specific financial targets 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 seven director nominees named in this Proxy Statement each to serve for a one-year term.

ü FOR

2.

Approval, on an advisory basis, of the compensation of Welbilt’s named executive officers.

ü FOR

3.

Ratification of the selection of Grant Thornton LLP as Welbilt’s independent registered public accounting firm for the fiscal year ending December 31, 2021.

ü FOR

4.

Approval of an amendment of the Welbilt, Inc. 2016 Omnibus Incentive Plan to authorize an additional 5,000,000 shares to be reserved for issuance.

ü FOR

2 | Welbilt, Inc.  2021 Proxy Statement

 

GOVERNANCE

GOVERNANCE FRAMEWORK

As stated in our Corporate Governance Guidelines, the mission of our 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, Chief Executive Officer (the “CEO”) and executive compensation, stockholder engagement, risk oversight and more.

Copies of our current corporate governance documents and policies, including our Code of Conduct, Corporate Governance Guidelines, Director Independence Criteria, Bylaws and committee charters, are available on the Investor Relations section of our website at ir.welbilt.com. The Board 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 currently consists of seven directors. All of the incumbent directors have been nominated for re-election to the Board. Each nominee has consented to being named as a nominee and has consented to serve as a director 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. There are no family relationships among any of our directors or executive officers.

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.

Chair of the Board
Age:
63
Director Since: 2008
Independent: Yes
Committees:
Corporate Governance (Chair)

Cynthia M. Egnotovich. Ms. Egnotovich has served as Chair of our Board and chair of the Corporate Governance Committee since the Spin-Off in March 2016. Ms. Egnotovich has also served as a director of MTW from 2008 until the Spin-Off. 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 the Chair of HXL’s Corporate Governance Committee since November 2020. 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 extensive 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.

Welbilt, Inc. 2021 Proxy Statement | 3

 

Age: 59
Director Since: 2015
Independent: Yes
Committees:
Audit (Chair)
Compensation

Dino J. Bianco. Mr. Bianco has served as a Director, chair of the Audit Committee, member of the Compensation Committee since the Spin-Off and as a director of MTW from 2015 until 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 former chair of Food and Consumer Products of Canada, former member of the Board of The Grocery Foundation, and former 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. 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 30 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 as Chief Executive Officer of a Canadian manufacturing company. This experience is amplified by his service on relevant professional organizations.

Age: 60
Director Since: 2012
Independent: Yes
Committees:
Compensation (Chair)
Corporate Governance

Joan K. Chow. Ms. Chow has served as a Director, chair of the Compensation Committee, member of the Corporate Governance Committee since the Spin-Off and as a director of MTW from 2012 until 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. Previously, 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 a member of the human resources committee of High Liner Foods (TSX: HLF) since 2017. 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 extensive knowledge of the Company’s business before and after the Spin-Off provides the Board with valuable insight.

4 | Welbilt, Inc. 2021 Proxy Statement

 

Age: 65
Director Since: 2018
Independent: Yes
Committees:
Compensation
Corporate Governance

Janice L. Fields. Ms. Fields has served as a Director, member of the Compensation Committee and member of the Corporate Governance Committee since April 2018. Ms. Fields had an over 35-year career at McDonald’s USA, LLC until her retirement in 2012, where she started as a crew member and advanced to hold several executive positions, including U.S. Division President for the Central Division (2003 – 2006), Executive Vice President and Chief Operating Officer (2006 – 2010) and President (2010 – 2012). Additionally, Ms. Fields has served on the board of directors of: Chico’s FAS (NYSE: CHS) since 2013, including as the chair of its corporate governance committee since 2014 and a member of its executive committee; Taubman Centers, Inc. (NYSE: TCO) from 2019 to 2020, including as a member of its compensation committee; Monsanto Corporation (NYSE: MON) from 2008 to 2018, including as chair of its sustainability and corporate responsibility committee since 2015; Buffalo Wild Wings, Inc. (Nasdaq: BWLD) from 2016 to 2018, including as its chair from August 2017 to February 2018; the Ronald McDonald House Charities Global Brand since 2012; and Alimentation Couche-Tard Inc. (OTCMKTS: ANCUF) since September 2020.

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.

Age: 62
Director Since: 2017
Independent: Yes
Committees:
Audit
Compensation

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. Mr. Gamache has served as a director of Foresight Acquisition Corp. (Nasdaq: FOREU), a special purpose acquisition company, since February 2021. Previously, Mr. Gamache served as the Chair and Chief Executive Officer of WMS Industries Inc., a designer, manufacturer and marketer of games for the casino and online gaming industries, from 2001 to 2013, when it was acquired by Scientific Games Corporation. Previously, 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) from 2009 until its sale in November 2018 and served as the chair of its 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.

Welbilt, Inc. 2021 Proxy Statement | 5

 

Age: 47
Director Since: 2016
Independent: Yes
Committees:
Audit
Corporate Governance

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, food packaging, metals, real estate and home fashion, since 2014. From 2005 to 2014, Mr. Langham was Assistant General Counsel of Icahn Enterprises. Previously, Mr. Langham was an associate at the law firm of Latham & Watkins LLP, focusing on corporate finance, mergers and acquisitions, and general corporate matters. Mr. Langham has served as a director of: Herc Holdings, Inc. (NYSE: HRI), an equipment rental company, since April 2020; Occidental Petroleum Corporation (NYSE: OXY), an oil and gas exploration and production company, since March 2020; Cheniere Energy, Inc. (NYSEAMERICAN: LNG), a developer of natural gas liquefaction and export facilities and related pipelines, since 2017; and CVR Partners LP (NYSE: UAN), a nitrogen fertilizer company, since 2015. Mr. Langham was previously a director of: CVR Energy, Inc. (NYSE: CVI), a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries, from 2014 to 2017; CVR Refining, LP (NYSE: CVRR), an independent downstream energy limited partnership, from 2014 to 2019; Freeport-McMoRan Inc. (NYSE: FCX), a leading international mining company, from 2015 to 2018; and Newell Brands Inc., a global marketer of consumer and commercial products, in 2018. CVR Partners and CVR Energy are each indirectly controlled by Carl C. Icahn and, CVR Refining was previously indirectly controlled by Mr. Icahn. Mr. Icahn also has non-controlling interests in Welbilt, Herc Holdings, Occidental, Cheniere, Freeport-McMoRan and Newell Brands 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 (collectively, the “Icahn Stockholders”) and which the Company subsequently joined. The Settlement Agreement provided the Icahn Stockholders with the option to cause MTW to appoint one designee of the Icahn Stockholders to our Board in connection with the Spin-Off. Mr. Langham has been nominated for election to the Board at our 2020 Annual Meeting of Stockholders in accordance with the Settlement Agreement.

6 | Welbilt, Inc. 2021 Proxy Statement

 

Age: 57
Director Since: 2018
Independent: No
Committees: None

William C. Johnson. Mr. Johnson has served as our President and CEO since November 2018, and as a Director since October 2018. Before joining Welbilt, he served as the Chief Executive Officer and President of Chart Industries, Inc. (Nasdaq: GTLS), a diversified global manufacturer of highly engineered equipment for the industrial gas, energy, and biomedical industries, from May 2017 to June 2018, and as its President and Chief Operating Officer from July 2016 to May 2017. Previously, Mr. Johnson served as President and Chief Executive Officer at Dover Refrigeration & Food Equipment, Inc., a subsidiary of Dover Corporation, a diversified global manufacturer of industrial products. Mr. Johnson held multiple executive positions at Dover and its manufacturing companies, which he joined in August 2006 as Executive Vice President at Hill Phoenix, Inc. Prior to his tenure with Dover, Mr. Johnson served as President and Chief Executive Officer of Graham Corporation (NYSE: GHM), a manufacturer of oil refining, petrochemical and power equipment. Mr. Johnson holds a B.S. in Ceramic Engineering from Alfred University and an M.B.A. from Rollins College.

Key Qualifications and Skills: As the President and CEO of Welbilt, Mr. Johnson’s day-to-day leadership of the business provides an invaluable contribution to the Board. He has over 30 years of experience in the industrial products and manufacturing sector, including strategic transactions, operating and supply chain excellence, capital structure optimization, and productivity and margin enhancements. He is a proven leader who has demonstrated exceptional success in his prior roles and brings the experience, vision and values to lead Welbilt into the future as it pursues its strategic priorities for excellence and growth.

Welbilt, Inc. 2021 Proxy Statement | 7

 

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, without limitation:

•       Education, experience and insight necessary to understand the Company’s business and provide 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.

•       Avoidance of 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 consisting 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 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 and attributes.

BOARD LEADERSHIP STRUCTURE. Currently, the roles of Board Chair and CEO 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. The Board continues to believe that it is important to have a President and CEO focus on the day-to-day management of the business and execution of our strategic plan and have a separate independent Board Chair with a long-standing familiarity of the Company focus on leading the Board, 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 Chair of the Board is also the CEO, the Corporate Governance Guidelines provide for the designation of a lead independent director to serve as a liaison between the Chair of the Board and the independent directors, among other things.

BOARD INDEPENDENCE. The Board has affirmatively determined that all of our director nominees, except for Mr. Johnson, 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 considers 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.

8 | Welbilt, Inc. 2021 Proxy Statement

 

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 a manner that would impact the director’s 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 the boards of other companies.

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 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.

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 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, except that in no event will a candidate so recommended be nominated who is not “independent,” as that term is defined in the Company’s Director Independence Criteria, and who does not meet the minimum expectations for a director set forth in the Company’s Corporate Governance Guidelines.

The Corporate Governance Committee did not receive any recommendations for director nominees from any Qualified Stockholder.

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 chair and may include an interview of the director being evaluated. If the director being evaluated is the chair 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.

Welbilt, Inc. 2021 Proxy Statement | 9

 

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 procedures described above under “Stockholder Submissions” and in the section captioned “Consideration of Candidates for the Board of Directors Submitted by Stockholders” 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, except that in no event will a candidate so recommended be nominated who is not “independent,” as that term is defined in the Company’s Director Independence Criteria, and who does not meet the minimum expectations for a director set forth in the Company’s Corporate Governance Guidelines.

10 | Welbilt, Inc. 2021 Proxy Statement

 

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 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 chairs, 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

Meetings in 2020: 8

Members:
Dino J. Bianco, Chair
Brian R. Gamache
Andrew Langham

All Independent: Yes

Heightened Requirements: Yes. The Board 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 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 (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.

Responsibilities. The Audit Committee’s responsibilities include:

•    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, 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 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 the “tone at the top” that emphasizes the importance of an environment that supports integrity in the financial reporting process;

•    reviewing non-GAAP measures, along with related Company policies and disclosure controls;

•    setting clear policies relating to the hiring of current or former employees of the independent auditors;

•    overseeing implementation of new accounting standards;

•    overseeing and participating in the resolution of any internal control issues;

•    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 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

Meetings in 2020: 8

Members:
Joan K. Chow, Chair
Dino J. Bianco
Janice L. Fields
Brian R. Gamache

All Independent: Yes

Heightened Requirements: Yes. The Board 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 in fulfilling the Board’s responsibility of maximizing the long-term total return to stockholders by ensuring that officers, directors and employees are compensated in accordance with the Company’s philosophy, objectives and policies. The Compensation Committee reviews and approves compensation and benefits policies, strategies, and pay levels necessary to support corporate objectives and provides an annual report on executive compensation for inclusion in the Company’s proxy statement, in accordance with applicable rules and regulations.

Responsibilities. The Compensation Committee’s responsibilities include:

•    annually reviewing and approving corporate goals and objectives relevant to CEO and other executive compensation;

•    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 and evaluating the Company’s process for managing and mitigating compensation-related risks assigned by the Board

•    reviewing the Company’s compensation programs and practices in light of tax, accounting, legal and regulatory requirements; and

•    evaluating the results of each stockholder advisory vote on executive compensation.

The Compensation Committee may form and delegate authority to one or more subcommittees as it deems appropriate (including a subcommittee consisting of a single member), subject to any law or regulation requiring action by the full Compensation Committee. The Compensation Committee may also delegate certain authority under the Company’s 2016 Omnibus Incentive Plan to other committees or to the Company’s officers.

Compensation Committee Interlocks and Insider Participation. During 2020, 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 2020 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 or our Compensation Committee during 2020.

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 2020 executive pay programs. During 2020, WTW performed the following tasks:

•    provided competitive market analyses and advice on general marketplace trends, developments and best practices with respect to executive and director compensation;

•    provided continuing updates on changes in compensation trends and other market developments with respect to the ongoing COVID-19 pandemic;

•    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 2020 other than (i) advising the Compensation Committee on director and executive compensation and related corporate governance matters, (ii) advising the Company on process in connection with the amendment of its omnibus incentive plan and (iii) 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 2020, 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 the retention of WTW as its independent compensation consultant.

12 | Welbilt, Inc. 2021 Proxy Statement

 

CORPORATE GOVERNANCE COMMITTEE

Meetings in 2020: 5

Members:
Cynthia M. Egnotovich, Chair
Joan K. Chow
Janice L. Fields
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 stockholders; 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.

Responsibilities. The Corporate Governance Committee’s responsibilities include:

•    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 stockholders;

•    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, 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. The Audit Committee administers this responsibility more directly, as one of the committee’s stated purposes pursuant to its 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 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 Chair, 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 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 2020, our Board met a total of 18 times, each member of our Board attended at least 75% of the aggregate of the meetings of the Board and the committees on which such director served, and each member of our Board attended our 2020 Annual 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 Chair or the applicable committee chair to preside over executive sessions.

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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 to assess Board composition.

Our CEO and other executive succession planning process includes identifying and developing potential internal candidates on an ongoing basis and identifying external candidates as needed. Our Board is committed to being prepared for a planned or unplanned change in leadership in order to ensure stability.

As part of the Board’s succession planning, the Corporate Governance Committee and the Board regularly review the composition of the Board and assess the balance of knowledge, experience, skills, expertise, tenure and diversity that is appropriate for the Board and the Company.

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 ir.welbilt.com. Any waiver of these policies granted to executive officers or directors must 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 2020 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 generally reviews the market competitiveness of such program every two years. As our President and CEO, Mr. Johnson 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 2020:

Compensation Element

Amount

 

Annual Cash Retainers (paid quarterly):

   

•   Board Member

$    80,000

 

•   Audit Committee Chair (in addition to Member fee)

$    15,000

 

•   Audit Committee Member

$    10,000

 

•   Compensation Committee Chair (in addition to Member fee)

$    12,000

 

•   Compensation Committee Member

$      7,500

 

•   Corporate Governance Committee Chair (in addition to Member fee)

$    12,000

 

•   Corporate Governance Committee Member

$      7,500

 

•   Independent Chair (in addition to Member fee)

$    43,750

 

Annual Stock Awards:

   

•   Board members (8,195 Restricted Stock Units)

$  120,000

 

•   Independent Chair (5,549 shares of common stock in addition to Member award)

$    81,250

 

Miscellaneous:

   

•   Reimbursement for reasonable expenses incurred in connection with Board-related activities

•   Provision of directors’ and officers’ liability insurance under Company’s corporate insurance policies

In March 2020, as part of company-wide expense reduction actions to mitigate the adverse financial impact of the COVID-19 pandemic, our Board members voluntarily agreed to reduce the cash component of their compensation (including all committee member, committee chair, and Board chair fees) by 50% for a period of two months.

The annual cash retainers of $80,000 and the value of annual stock awards of $120,000 for non-employee directors remain unchanged for 2021.

The Independent Chair fees included in the table above are granted in addition to the fees earned by all non-employee directors, consisting of $125,000, paid in common stock (65%) and cash (35%). These fees represent compensation for the additional time commitment attendant to this role, including managing meetings of the

14 | Welbilt, Inc. 2021 Proxy Statement

 

Board, setting the agenda for Board meetings, representing the Board at the annual stockholder meeting, consulting with committee chairs as needed and acting as a liaison between the Board and management.

Annual awards of restricted stock units (“RSUs”) issued to non-employee directors were granted on February 21, 2020, with the number of units awarded determined based upon a price of $14.64, 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. RSUs granted to non-employee directors generally vest on the first anniversary of the grant date. Under the terms of the award, unless the Compensation Committee in its discretion determines otherwise, (i) the RSUs 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 RSUs 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 generally elect to defer all or any part of the director’s annual retainer and meeting fees, as well as RSU awards, for future payment upon death, disability, termination of service as a director, a date specified by the participant, or the earliest of any such date to occur.

2020 NON-EMPLOYEE DIRECTOR COMPENSATION. Consistent with the compensation elements discussed above, the below table summarizes the 2020 compensation of each of our non-employee directors who served in such capacity during 2020. Mr. Johnson’s 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

$ 131,312

$ 192,553

$ 342,444

Dino J. Bianco

$ 103,750

$ 114,812

$ 224,947

Joan K. Chow

$   98,708

$ 114,812

$ 219,447

Janice L. Fields

$   87,708

$ 114,812

$ 207,447

Brian R. Gamache

$   90,000

$ 114,812

$ 209,947

Andrew Langham

$   89,375

$ 114,812

$ 209,947

(1)      Reflects all applicable fees earned in 2020, whether paid in cash or deferred under the Deferred Compensation Plan, including annual retainers and Independent Chair fees.

(2)      Reflects the aggregate grant date fair value of RSUs awarded in 2020, computed in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The grant date fair value was $14.01. At December 31, 2020, all current non-employee directors had 8,195 RSUs outstanding. Ms. Egnotovich’s 2020 stock awards also include 5,549 shares of common stock awarded as compensation for serving as the Board Chair, which vested immediately upon grant.

(3)      No stock options were awarded to non-employee directors in 2020 or are outstanding for non-employee directors as of December 31, 2020.

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, RSUs 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 is 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, 2020, each of the non-employee directors was in compliance with the stock ownership guidelines. The Corporate Governance Committee reviews these stock ownership guidelines as well as each director’s progress toward achieving compliance with such guidelines on an annual basis.

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PROPOSAL NO. 1—ELECTION OF DIRECTORS

The Company’s Amended and Restated Bylaws provide that the Board shall consist of up to nine directors who shall be elected annually by the stockholders. The Board has nominated seven directors, each of whom, if elected, is expected to hold office for a one-year term expiring at the 2022 Annual Meeting of Stockholders and 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 if elected and has consented to being named in this Proxy Statement. 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:

 
 

ü

Cynthia M. Egnotovich

ü

Janice L. Fields

 
 

ü

Dino J. Bianco

ü

Brian R. Gamache

 
 

ü

Joan K. Chow

ü

Andrew Langham

 
     

ü

William C. Johnson

 

16 | Welbilt, Inc. 2021 Proxy Statement

 

MANAGEMENT

Set forth below is a brief biography of each our executive officers, other than Mr. Johnson, 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.

Martin Agard
Executive Vice President and CFO

Mr. Agard, 58, has served as Executive Vice President and Chief Financial Officer (the “CFO”) of the Company since April 2019. Previously, he was the Chief Financial Officer of Lumber Liquidators Holdings, Inc. (NYSE:LL), a leading North American specialty retailer in the hard surface flooring market, since September 2016. From 2013 to 2015, he served as Senior Vice President and Chief Financial Officer of Kohler Company, a manufacturer of kitchen and bathroom fixtures. Prior to Kohler, he held various financial roles, including Vice President and Treasurer with Georgia Pacific Corporation, a pulp and paper company, since 2001. Earlier in his career, he spent time in financial roles at Homebanc Mortgage Corporation, The Eastman Kodak Company and The Procter and Gamble Company. Mr. Agard holds a Bachelor of Science degree in Chemistry and Economics from the College of William and Mary and a Master of Business Administration degree from the University of Michigan.

Joel H. Horn
Executive Vice President, General Counsel and Corporate Secretary

Mr. Horn, 52, has served as Executive Vice President, General Counsel and Corporate 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, a foodservice equipment manufacturer that was acquired by MTW, from 2004 until the acquisition in 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 in Boston, Massachusetts.

Richard N. Caron
Executive Vice President and Chief Innovation Officer

Mr. Caron, 64, has served as Executive Vice President and Chief Innovation Officer of Welbilt since 2015. Previously, he served as the Company’s Executive Vice President, Global Marketing and Innovation and Chief Technology Officer, a position that he held since 2005 since joining Enodis, the Company’s predecessor. 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. Since December 2020, Mr. Caron has also served as an advisory board member of Pontem Corporation (NYSE: PNTM-UN). Prior to joining the Company, 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 an M.S. and B.S. in Chemical Engineering Practice from the Massachusetts Institute of Technology.

Jennifer Gudenkauf
Executive Vice President and Chief Human Resources Officer

Ms. Gudenkauf, 48, has served as Executive Vice President and Chief Human Resources Officer of Welbilt since January 2020. Prior to joining Welbilt, Ms. Gudenkauf served as Vice President, Human Resources—North America for Sykes Enterprises, Inc. (Nasdaq: SYKE), a provider of process outsourcing services, information technology consulting and information technology-enabled services, from April 2017 to December 2019. From 2009 until December 2016, she held a variety of human resources leadership roles with increasing responsibility at Bloomin’ Brands, Inc. (Nasdaq: BLMN), global owner and operator of restaurants, including most recently as Vice President, Global Compensation, Benefits, HR Operations and Leadership Development, from June 2016 until December 2016. Prior to BLMN, Ms. Gudenkauf held a variety of human resources roles for Gentiva Health Services, Inc., a leading home health care and hospice services firm, from 1997 to 2009. Ms. Gudenkauf holds a Bachelor of Science degree from Fairhaven College.

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COMPENSATION DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

2020 OVERVIEW.

Throughout 2020, the COVID-19 pandemic has negatively impacted the global economy and the foodservice industry in particular. In response to adverse impact of the COVID-19 pandemic on the Company, we took several measures to reduce costs and ensure liquidity, including amending debt covenants in agreements governing our indebtedness, temporary voluntary pay reductions by our executives, employees and directors, temporary suspension of the 401(k) employer match, deferral of merit pay increases, streamlining of our staffing requirements, and cancellation of non-essential travel.

Our executive compensation programs were originally based on our prior year program designs, when the impact of the COVID-19 pandemic on the global economy and our business was not yet apparent or foreseeable. We experienced a 51.7 percent decrease in revenue in the second quarter of 2020 compared to second quarter of 2019 with little visibility or certainty as to the timing and the pace of recovery of business to pre-pandemic levels. To ensure that the compensation payouts in fiscal 2020 are reflective of the extraordinary efforts of our executives and other team members during the pandemic, and in light of the unanticipated financial and operational impact of COVID-19, our Compensation Committee made certain adjustments to the executive compensation programs, including changes to the financial targets of the short and long term incentive programs and grants of non-routine equity awards.

OUR NAMED EXECUTIVE OFFICERS.

The following six officers represent our named executive officers:

Name

Title

William C. Johnson

President and Chief Executive Officer

Martin Agard

Executive Vice President and Chief Financial Officer

Josef Matosevic

Executive Vice President and Chief Operating Officer (through May 1, 2020)*

Joel H. Horn

Executive Vice President, General Counsel and Corporate Secretary

Richard N. Caron

Executive Vice President and Chief Innovation Officer

Jennifer G. Gudenkauf

Executive Vice President and Chief Human Resource Officer

*        In March 2020, we announced the separation from the Company of Josef Matosevic, who served as the Company’s Executive Vice President and Chief Operating Officer through May 1, 2020.

2020 COMPENSATION ELEMENTS.

The following table summarizes the primary components of our 2020 executive compensation program, as described in greater detail below.

 

Compensation Element

Key Characteristics and Objectives

FIXED

Base Salary

•     Designed to attract and retain qualified executives

•     Set at competitive levels designed to adequately compensate for 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 Incentive (“STIP”)

•     Rewards executives for the achievement of certain financial targets that are aligned to our strategic plan and budget

•     Based on multiple metrics (Organic Net Sales Growth, Adjusted Operating EBITDA Margin and Free Cash Flow, each as further described below) and a threshold “hurdle” that must be met before any awards may be earned

18 | Welbilt, Inc. 2021 Proxy Statement

 

 

Compensation Element

Key Characteristics and Objectives

VARIABLE

Long-Term Equity Awards

•     Rewards executives for the achievement of certain long-term financial targets

•     Includes multiple vehicles (stock options, RSUs and performance share units (“PSU”)), with the PSU component generally subject to multiple metrics (ROIC and Adjusted EPS, each as further described below)

•     Aligned with our strategic plan forecast

•     Promotes retention

•     Aligns interests of executives and stockholders by emphasizing long-term returns

FIXED

Perquisites and Benefits

•     Market-competitive practices

•     Limited perquisites and benefits

2020 COMPENSATION DESIGN.

The performance targets used in our 2020 compensation programs, as revised to reflect the impact of the COVID-19 pandemic on our business, included a range of key financial metrics designed to promote achievement of our strategic goals while also driving long-term stockholder value. Our 2020 STIP metrics were unchanged from our 2019 STIP and consisted of Organic Net Sales Growth, Adjusted Operating EBITDA Margin and Free Cash Flow, all of which were key metrics of our 2020 annual budget. See “Non-GAAP Financial Measures” appearing elsewhere in this Proxy Statement for important additional information. Our 2020 long-term incentive plan (“LTIP”), which was aligned to our strategic plan, consisted of PSUs and RSUs with a three-year performance period and stock options that generally vest 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 the vote 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 2020 Annual Meeting of Stockholders, over 93% of the votes cast were voted “FOR” approval of the compensation of our named executive officers. The Compensation Committee believes such results affirm stockholders’ support of the Company’s approach to and structure of executive compensation. As such, the Company did not make any changes to compensation policies or practices that were specifically driven by the results of the advisory vote.

COMPENSATION PHILOSOPHY AND PRACTICES

OBJECTIVES AND PHILOSOPHY.

Our executive compensation program is designed to align the interests of our executives with those of our stockholders and motivate our executives to maximize long-term returns of our stockholders. Our Compensation Committee designs our executive compensation programs to be competitive and to ensure alignment between executive pay and Company performance. An important element of our compensation program design is providing incentive-based compensation that is directly tied to Company performance. Our Compensation Committee reviews the key elements of our program annually, 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 is considered “at risk,” meaning it is only earned if specific financial goals are achieved or, in the case of stock options, if our stock price increases.

•       Competitive. Pay levels are generally targeted to be at or near market median levels based upon comparable positions at companies of similar size and industry, and then adjusted to reflect individual factors (such as experience, length of service, and level of responsibility), internal structure and internal and external equity, business needs, Company performance and other factors.

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•       Encourage Retention. LTIP awards make up a significant portion of each named executive officer’s overall target compensation. These awards include multi-year vesting terms which encourage retention of our executives.

•       Promote Stock Ownership. LTIP 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

ü    Engage independent compensation consultant to advise Compensation Committee

û    No pledging or hedging permitted

û    No change in control excise tax gross-ups

û    No single-trigger cash or equity severance provisions

û    No excessive perquisites

û    No discounting or re-pricing of stock options without stockholder approval

ü    Adopt stock ownership guidelines for directors and executive officers

ü    Use multiple balanced performance measures to reward key drivers of our business and avoid excessive risk taking

ü    Provide majority of compensation in the form of “at risk” awards

ü    Communicate with stockholders regarding our pay practices

ü    Grant 60% of LTIP awards as PSUs, 20% as RSUs and 20% as stock options

 

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 WTW to provide information and advice with respect to executive compensation, though the Compensation Committee retains the ultimate decision-making authority for all executive pay matters. Our Compensation Committee also considers recommendations of our CEO when determining the compensation of our other executive officers.

PEER GROUP.

Following the Spin-Off, our Compensation Committee, together with WTW, considered how to best use competitive market data in designing our executive compensation programs. The Compensation Committee considered multiple 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 in achieving its compensation objectives.

Survey Data. The Survey Data is based on WTW’s Executive Compensation Survey and reflects approximately 1,000 companies across a broad range of industries. The Survey Data is adjusted, generally through regression analysis, to fit Welbilt’s revenue scope. The Company did not select the companies that comprise the Survey Data, and the component companies’ identities were not a factor in the analysis. The Survey Data serves as a reliable market reference and is used as the primary source for market compensation data.

Custom Peer Group. The Custom Peer Group is used to provide comparative information for purposes of designing the overall executive compensation program, including design of the STIP and LTIP, and serves as a secondary source for market compensation data for the CEO, CFO and General Counsel positions and also as a reference for determining competitive benefits and perquisites. In developing the Custom Peer Group, the Compensation Committee considered both quantitative factors (such as revenue, employee headcount, market capitalization and/or net income) and qualitative factors (such as company maturity, global presence,

20 | Welbilt, Inc. 2021 Proxy Statement

 

and whether companies operate within a comparable or adjacent industry). Based upon this review, the Compensation Committee selected a group of 16 core companies and two non-core companies that are only used as a check for pay practices, but not pay levels, given non-core companies’ relatively large revenue and market capitalization.

2020 Custom Peer Group

A.O. Smith Corp.
Briggs & Stratton Corporation
Carlisle Companies Incorporated
Chart Industries, Inc.
Dover Corporation*
Enerpac Tool Group Corp.
Generac 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.
Standex International Corp.
The Timken Company

*        Included in the peer group for reviewing compensation program design, but not for reviewing compensation levels.

In 2020, the Compensation Committee and WTW reviewed the peer group and replaced Actuant Corporation, which recently became Enerpac Tool Group Corp. as a result of a restructuring of Actuant. The Compensation Committee intends to continue its practice of reviewing and, if necessary, updating the peer group annually for the use in designing future compensation programs.

Determining 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 considers additional factors to reflect each individual’s experience, years in the current role, level of responsibility, performance and such other factors the Compensation Committee deems important.

The Compensation Committee annually reviews competitive market compensation data relating to salary, annual incentives and long-term incentives. The Compensation Committee is mindful of the value and limitations of comparative data, and therefore does not target specific market levels. As a result, we do not set any component of compensation or total direct compensation at levels intended to achieve a mathematically precise market position. The Compensation Committee also obtains advice and recommendations from WTW regarding retirement benefits and other areas of total compensation.

STOCK OWNERSHIP GUIDELINES.

The Compensation Committee has established stock ownership guidelines for executive officers as set forth below. Under the guidelines, each executive officer is provided with a reasonable period to achieve compliance. If the executive does not satisfy the applicable requirement prior to the end of the calendar year of the respective compliance date, the guidelines require the executive to retain all net shares from the exercise of stock options and from the vesting of RSUs and PSUs, until compliance is achieved. For purposes of these stock ownership guidelines, common stock, RSUs, PSUs (at target) and common 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)

William C. Johnson

5x

2023

In Compliance

Martin Agard

3x

2024

In Compliance

Joel H. Horn

3x

2022

Expected

Richard N. Caron

3x

2020

In Compliance

Jennifer Gudenkauf

3x

2025

Expected

(1)      Compliance date reflects five 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.

PROHIBITION OF DIRECTOR, OFFICER AND EMPLOYEE HEDGING.

Our insider trading policy prohibits our directors, officers, employees, and their related persons from entering into hedging or monetization transactions (such as zero-cost collars or forward sale contracts) that are designed to offset or reduce the risk of decreases in the market value of the underlying security, including Company securities.

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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. As such, 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.

COMPENSATION RISK ASSESSMENT.

In 2017, management and WTW each conducted separate risk assessments to provide the Compensation Committee with an internal and external view of our compensation programs and policies. In 2020, WTW updated the previous risk review of the Company’s compensation programs, reaffirming its previous conclusion that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.

Based on both the internal and external assessments, we believe our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. We also believe that our compensation program is aligned with current market practices and contains an appropriate balance of risk versus reward. 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 processes.

TAX CONSIDERATIONS.

Section 162(m) of the Internal Revenue Code (“Section 162(m)”) generally disallows a federal tax deduction by the Company for compensation paid to certain executive officers (and, beginning in 2018, certain former executive officers) in excess of $1.0 million. Historically, compensation that qualified as “performance-based compensation” under Section 162(m) could be excluded from this $1.0 million limit, but this exception has since been repealed, effective for taxable years beginning after December 31, 2017, unless transition relief for certain compensation arrangements in place as of November 2, 2017 is available.

Compensation decisions for the Company’s named executive officers prior to 2018 were generally made after consideration of the Section 162(m) implications, but the Compensation Committee retained discretion to make compensation decisions in light of a variety of considerations. Based on the repeal described above and the operation of Section 162(m), compensation granted by the Compensation Committee to the named executive officers in 2020 is not expected to qualify as “performance-based compensation.” The Compensation Committee believes that the tax deduction limitation should not compromise our ability to design and maintain executive compensation arrangements that will attract and retain the executive talent to compete successfully. Accordingly, achieving the desired flexibility in the design and delivery of compensation may result in compensation that is not deductible for federal income tax purposes. Even with respect to compensation intended to qualify as “performance-based” and granted prior to the repeal, we cannot guarantee that such compensation will so qualify or ultimately is or will be deductible for tax purposes.

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DESIGN OF 2020 COMPENSATION PROGRAM

The following section discusses the design of our 2020 compensation program for our named executive officers. For information regarding actual STIP payouts, individual equity awards, and certain other benefits and compensation, see the “2020 Summary Compensation Table” below.

Name

Base
Salary
($)

Target
STIP
(% of Base)

Target
STIP
($)

Target
LTIP
($)
(1)

Total Target
2020
Compensation
($)

William C. Johnson

844,600

110%

929,060

2,702,720

4,476,380

Martin Agard

515,000

90%

463,500

750,000

1,728,500

Josef Matosevic(2)

589,305

90%

530,375

920,000

2,039,680

Joel H. Horn

406,510

65%

264,232

450,000

1,120,742

Richard N. Caron

391,400

65%

254,410

450,000

1,095,810

Jennifer Gudenkauf

300,000

65%

195,000

200,000

695,000

(1)      Reflects aggregate target value of LTIP awards granted to each named executive officer in 2020. As further described below, 20% of such value was awarded in the form of stock options, 20% was awarded in the form of RSUs and 60% was awarded in the form of PSUs.

(2)      Reflects Mr. Matosevic’s 2020 target compensation prior to his separation on May 1, 2020.

COVID-19 IMPACT AND RESPONSE.

Our Compensation Committee initially approved our 2020 compensation program, including the specific 2020 STIP and LTIP performance metrics and targets, in February 2020, when the impact of the COVID-19 pandemic on the global economy was not yet apparent or foreseeable. We were monitoring the impact of the pandemic closely and by August, it became clear that the initial incentive targets that our Compensation Committee had defined in February were unattainable. Because our incentive plan is used both as a mechanism to communicate corporate objectives and as means to incentivize individual performance, our Compensation Committee decided to adjust the goals. We believe this decision gave our employees a new, clear directive on how to proceed in the COVID environment, and that the absence of such directive would have likely negatively impacted the morale of our employees and harmed our business. Our Compensation Committee therefore believes it was the appropriate decision for our Company to revise the previously approved 2020 STIP and LTIP targets, and made such revisions in August 2020. The Compensation Committee also granted one-time RSU awards to certain executive officers as further discussed below.

BASE SALARY.

In reviewing 2020 base salaries, the Compensation Committee considered individual-specific factors, such as competencies, skills, experience, and performance, as well as internal equity and external market data. Base salaries were generally reviewed and approved in December 2019 and became effective January 1, 2020, except with respect to Ms. Gudenkauf, whose base salary was reviewed in connection with her hiring and the negotiation of her offer letter. In March 2020, as part of company-wide expense reduction actions to mitigate the adverse financial impact of the COVID-19 pandemic, our named executive officers voluntarily agreed to reduce their base salaries by 50% for a period from April 6 to May 30, 2020. Other members of management agreed to temporary pay cuts ranging from 10% to 25% of base salary during the same period.

SHORT-TERM INCENTIVE PLAN.

2020 STIP awards to our named executive officers were made under the Welbilt 2016 Omnibus Incentive Plan. The STIP rewards executives for the achievement of certain financial goals related to our strategic plan and budget. In calculating payouts under the 2020 STIP awards, corporate performance goals were weighted 90% and individual performance goals were weighted 10%. For all of our named executive officers, the 2020 STIP corporate performance goals were based upon the following financial metrics:

•       Organic Net Sales Growth, which measures top-line growth over prior year results, disregarding acquisitions and dispositions and foreign currency translation. “Organic Net Sales Growth” represents the percentage change in actual organic third-party net sales from the prior year.

•       Adjusted Operating EBITDA Margin, which is a performance measure used by management to evaluate financial performance as a percentage of net sales and to make resource allocations and other operating decisions. Management considers it important that investors review the same operating information used by management. “Adjusted Operating EBITDA Margin” represents (a) net earnings before interest

Welbilt, Inc. 2021 Proxy Statement | 23

 

expense, income taxes, other income or expense, depreciation and amortization expense, plus certain other items such as loss from impairment of assets, gain or loss from disposal of assets, restructuring activities, loss on modification or extinguishment of debt, acquisition-related transaction and integration costs, Transformation Program expense, separation expense and certain other items, which are non-operating and unusual in nature. divided by (b) net sales, which that are identified in the Company’s publicly-filed reports.

•       Free Cash Flow, which is 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. “Free Cash Flow” represents net cash provided by or used in operating activities, less capital expenditures plus cash receipts on our beneficial interest in sold receivables and the related impact of terminating our accounts receivable securitization program. Management believes this financial measure is useful to investors in measuring our ability to generate cash internally to fund our debt repayments, acquisitions, dividends and share repurchases, if any.

All of the above metrics were calculated based upon prior year foreign currency exchange rates to remove the impact of foreign currency fluctuations during the year. See “Non-GAAP Financial Measures” appearing elsewhere in this Proxy Statement for important additional information.

2020 STIP Targets and Performance Metrics.

The target STIP award opportunity granted to our named executive officers for 2020 ranged from 65% to 110% of base salary. Target STIP awards were determined based upon a combination of factors, including internal parity and market data, with Mr. Johnson receiving a target STIP award opportunity of 110% of base salary, Messrs. Agard, Matosevic each receiving a target STIP award opportunity of 90% of base salary and other named executive officers each receiving a target STIP award opportunity of 65% of base salary. Any STIP awards earned are generally paid during the first quarter of the following fiscal year.

Targets and metrics for the 2020 STIP were originally established by our Compensation Committee in February 2020, before the impact of the COVID-19 pandemic on the global economy and our business was apparent or foreseeable. The COVID-19 pandemic and related economic downturn created significant uncertainty for Welbilt and other companies during 2020. In light of these difficulties, and desiring to maintain incentives for all Company employees to remain focused on achieving meaningful financial performance in a time of great uncertainty, the Compensation Committee reconstructed the 2020 STIP in August 2020 to reflect different operating conditions that arose from the pandemic. In determining new targets, the Compensation Committee considered stockholder expectations, examined industry trends and conducted extensive discussions with the Company’s customers in an effort to better understand the anticipated impact of the pandemic on the industry generally and the business of customers in particular. Specifically, the Compensation Committee made the following changes to the 2020 STIP:

•       Revised threshold, target, and maximum figures for each of the financial metrics used in the 2020 STIP as further summarized in the tables below;

•       Expanded the range between threshold and maximum targets to reflect for the uncertainty facing the Company and increase the difficulty of achievement of maximum targets;

•       Reduced maximum payout from 200% to 90% of the target;

•       Reduced target payout from 100% to 75% of the original target; and

•       Reduced the hurdle rate (Adjusted Operating EBITDA Margin threshold below which no portion of the 2020 STIP award would be paid to any plan participant) from 17.0% to 8.1%.

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Presented below are the specific corporate performance metrics and targets originally adopted under the 2020 STIP in February 2020, as well as 2020 actual results and the attainment percentage that would have been achieved under the original grant in the absence of the August 2020 adjustment.

Performance Goal
($ in millions)

Weight

Threshold
(Original)

Target
(Original)

Maximum
(Original)

Actual
Results

Attainment %

Organic Third-Party Net Sales Growth

  20%

 -2.0%

 0.1%

 2.0%

-27.8% 

0.0% 

Adjusted Operating EBITDA Margin

  40%

18.0%

19.0%

20.0%

14.7%

0.0% 

Free Cash Flow

  30%

 $88.9

$103.9

$118.9

-$5.1    

0.0% 

Payout (as a % of Target)

 

  50%

100%

 200%

 

 

Individual Performance Goals

  10%

 

 

 

 

0.0 – 10.0% 

Total

100%

 

 

 

 

0.0 – 10.0% 

Presented below are financial metrics, which were not changed since their approval in February 2020, and related performance targets, as revised by the Compensation Committee in August 2020, as well as 2020 actual results and actual attainment percentage.

Performance Goal
($ in millions)

Weight

Threshold
(Revised)

Target (Revised)

Maximum
(Revised)

Actual Results

Actual
Attainment %
(1)

Organic Third-Party Net Sales Growth

20%

-33.1% 

-29.1% 

-25.1%

-27.8% 

79.9% 

Adjusted Operating EBITDA Margin

40%

9.1% 

12.1%

   15.1%

14.7%

88.0% 

Free Cash Flow

30%

-$96.3      

-$81.3

-$66.3

-$5.1    

90.0% 

Payout (as a % of Target)

 

50%

75%

    90%

 

 

Individual Performance Goals

10%

 

 

 

 

0 – 10.0%(2) 

Total

100%

 

 

 

 

78.2 – 88.2% 

(1)      Reflects percentage of target STIP opportunity attained with respect to each metric.

(2)      Individual component of the 2020 STIP achievement was determined by each employee’s manager, and, in the case of named executive officers, by the Compensation Committee.

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 2020” and “2020 Summary Compensation Table,” respectively.

LONG-TERM INCENTIVE PLAN.

Our 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 executives and key employees 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” (in other words, requiring achievement of specific multi-year financial goals or stock price increase). In 2020, 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 survey data used for determining pay levels. The aggregate value was then granted in the form of stock options, which accounted for 20% of the total LTIP award, RSUs, which accounted for 20% of the total LTIP award, and PSUs, which accounted for 60% of the total LTIP award. Total LTIP target awards for each named executive officer are set forth in the table above, and actual LTIP grants made in 2020 are provided in the “Grants of Plan-Based Awards in 2020” table below.

COVID-19 Impacts and Adjustments. The COVID-19 pandemic and related economic downturn created significant uncertainty for Welbilt and other companies during our fiscal 2020. In light of these difficulties, and desiring to maintain incentives for all Company employees to remain focused on achieving meaningful financial performance in a time of great uncertainty, in August 2020 the Compensation Committee made certain changes to the LTIP for the years 2020-2022 to reflect different operating conditions that arose from the pandemic. Such changes consisted of lowering previously established financial metrics for PSU attainment and lowering the hurdle rate for PSU attainment (rate below which no PSUs would be earned regardless of achievement of targets on other metrics). The Compensation Committee did not make any changes to the LTIP for the years prior to 2020.

Stock Options. Stock options align executives’ interest with those of stockholders, as 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. The number of stock options granted to each named executive officer under our

Welbilt, Inc. 2021 Proxy Statement | 25

 

2020 LTIP was determined using the Black-Scholes option pricing model. In the case of named executive officers, these awards generally vest annually in 25% increments beginning on the first anniversary of the grant date and expire 10 years after the date of grant.

Performance Share Units. PSUs were granted to the named executive officers based on revised 2020 targets to correlate the shares earned, if any, with the achievement of certain multi-year goals. The Compensation Committee selected (i) cumulative Adjusted Diluted Earnings per Share (“Cumulative Adjusted EPS”) and (ii) weighted average Return on Invested Capital (“ROIC”) over the three-year period, each weighted 50%, as the performance metrics for the 2020 PSUs, with a performance period of January 1, 2020 to December 31, 2022. Additionally, no awards will be paid to any named executive officer under the 2020 PSUs if the Company’s Cumulative Adjusted EPS for the performance period is less than the specified hurdle rate.

The target number of PSUs granted to each named executive officer was determined based upon a price of $14.64, 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. Following 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 Company does not disclose the specific forward-looking financial performance targets of the 2020 PSUs in this Proxy Statement because (i) these goals relate to executive compensation to be earned and/or paid in future years and do not affect a fair understanding of the named executive officers’ compensation for 2020 and (ii) the Company believes that disclosure of such goals while the applicable performance period is ongoing would cause the Company competitive harm. The Company expects to disclose such goals in a future proxy statement once the applicable performance period has ended.

In setting the applicable target levels, the Compensation Committee considered potential impact of unexpected events on performance goals and the likelihood of the Company achieving the goals. We believe that the threshold goals have been established at levels that are appropriately difficult to attain, and that the target goals will require considerable collective effort on the part of the Company’s employees, including the named executive officers, to achieve. Achievement of the maximum goal has a low probability based upon information known to management and the Compensation Committee at the date of grant.

Restricted Stock Units. RSUs granted to named executive officers as a part of the 2020 STIP generally vest 100% on the third anniversary of the grant date. The number of RSUs granted to each named executive officer was determined based upon a price of $14.64, 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.

Vesting of 2018 Performance Share Units. The three-year performance period with respect to the PSUs granted in 2018 (the “2018 PSUs”) ended on December 31, 2020. Presented below are the specific performance levels adopted under the 2018 PSUs, as well as actual results for the applicable performance period. With respect to the portion of the PSU opportunity assigned to an applicable metric, threshold performance would have resulted in a payout of 16.5% of target and maximum performance would have resulted in a payout of 200% of target, with the payout corresponding to goals between threshold and maximum calculated using straight line interpolation. Additionally, no awards would have been paid to any named executive officer under the 2018 PSUs if the Company’s Cumulative Adjusted EPS for the performance period was less than $1.24, the specified hurdle rate.

Performance Goal

Weight

Threshold

Target

Maximum

Actual Results

Actual Attainment %(1)

Cumulative Diluted Adjusted Earnings per Share

50%

 $1.24

 $2.47

 $3.16

 $1.46 

7.5%

Weighted Average Return on Invested Capital

50%

10.9%

14.5%

15.8%

10.6%

0.0%

Total

100%

 

 

 

 

7.5%

(1)      Reflects percentage of target LTIP opportunity attained with respect to each metric.

26 | Welbilt, Inc. 2021 Proxy Statement

 

Based on the performance achievement described above, the named executive officers earned the following payouts for their 2018 PSUs.

Name

Target
PSUs
(#)

Earned
Shares
(#)

William C. Johnson(1)

— 

Martin Agard(1)

— 

Josef Matosevic(2)

31,322

2,349

Joel H. Horn

14,002

1,050

Richard N. Caron

12,898

   967 

Jennifer Gudenkauf(1)

(1)      Because Messrs. Johnson and Agard and Ms. Gudenkauf commenced employment with the Company after the February 2018 grant date of the PSUs, they did not hold any 2018 PSUs.

(2)      Mr. Matosevic’s 2018 PSUs continue to vest under the terms of his Separation Agreement and the Company’s Severance Policy, both as described below, upon his separation as of May 1, 2020.

SPECIAL COMPENSATION.

Off-Cycle RSU Grants

In order to recognize extraordinary efforts of certain key executives in managing the impacts on the Company of the COVID-19 pandemic and to incentivize retention, the Compensation Committee made the following one-time equity awards to our named executive officers:

•       74,000 RSUs granted to Mr. Agard in September 2020;

•       8,547 RSUs granted to Mr. Horn in December 2020; and

•       8,547 RSUs granted to Mr. Caron in December 2020.

Issuance of RSUs in response to retention concerns and in recognition of outstanding contribution is consistent with the Company’s prior practices. In determining the size of awards, the Compensation Committee considered several factors, including feedback on individual performance from the CEO and the Board, critical nature of the position, and potential impact on the Company in the event of the executive’s departure. The Compensation Committee also considered the disproportionate impact of the COVID-19 pandemic on the foodservice industry and the increased likelihood of key executives with transferable skill-sets opting to pursue more competitive compensation in less impacted industries. The awards will vest in three equal annual installments beginning on the first anniversary of the respective grant date.

BENEFITS AND PERQUISITES.

401(k) Retirement Plan. All active, regular, full-time, non-union, U.S.-based employees, including each of our currently employed named executive officers, 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, by which the Company contributes up to 100% of the first 3% and 50% of the next 2% 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. As a part of cost-saving measures taken to address the financial impacts of COVID-19, the Company temporarily discontinued matching employee 401(k) contributions for a period of approximately eight months during 2020. The value of the employer contributions made on behalf of each of our named executive officers in 2020 is presented in the “2020 Summary Compensation Table.” In January 2021, the Company reinstated the matching contributions to participant accounts at the pre-suspension levels.

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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 2020, 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 limited perquisites and supplemental benefits to our named executive officers. In 2020, we provided executive long-term disability insurance, reimbursement for tax preparation, personal use of a company car, car allowance, relocation expenses, reimbursement for an executive physical, and limited personal use of a plane leased by the Company. For more information regarding perquisites and supplemental benefits provided to the Company’s named executive officers in 2020, see the 2020 Summary Compensation Table and related footnotes below.

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EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL BENEFITS

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

Johnson Offer Letter. In connection with his appointment as President and CEO, Mr. Johnson entered into an offer letter with the Company, which sets forth Mr. Johnson’s initial annual base salary, target STIP opportunity, and target LTIP opportunity (in each case subject to increase from time to time as approved by the Board or an appropriate committee of the Board). The offer letter also provides that the Company will provide Mr. Johnson with perquisites and personal benefits on terms substantially similar to those that apply to other executive officers of the Company, including an annual vehicle allowance of $10,800, reimbursement for the reasonable cost of one physical examination per year, reimbursement for the reasonable cost of personal income tax preparation and financial planning services up to $10,000 per year, reasonable relocation services and benefits substantially consistent with the Company’s effective relocation policy (subject to full or partial repayment in the event Mr. Johnson voluntarily terminates employment prior to the second anniversary of the date of the offer letter), and premiums for reasonable life, accidental death and dismemberment and long-term disability insurance premiums as provided by the Company from time to time.

While employed by the Company, Mr. Johnson will be eligible to participate in the Company’s health, welfare and other benefits programs available to the Company’s employees generally, in accordance with their terms. Mr. Johnson is also entitled to up to four weeks of paid vacation per year and participation in the Company’s nonqualified Deferred Compensation Plan and qualified retirement plan as in effect from time to time on terms substantially similar to those that apply to other executive officers of the Company.

Mr. Johnson participates in the Severance Policy, as further described below, and his severance protections under his offer letter have ceased.

Mr. Johnson also agreed to enter into certain non-competition, non-solicitation and confidentiality provisions, consistent with those entered into with other named executive officers.

Executive Offer Letters. In early 2019, we entered into an offer letter with each of our named executive officers still serving at that time, other than Mr. Johnson, (in each case subject to increase from time to time as approved by the Board or an appropriate committee of the Board). The offer letter replaces the officer’s previously existing employment agreement. In January 2020 we entered into a similar offer letter with Ms. Gudenkauf in connection with her hiring. The offer letter provides that the Company will provide the officer with perquisites and personal benefits on terms substantially similar to those that apply to other executive officers of the Company, including an annual vehicle allowance of $10,800, reimbursement for the reasonable cost of one physical examination per year, reimbursement for the reasonable cost of personal income tax preparation and financial planning services up to $10,000 per year and premiums for additional coverage for long-term disability insurance as provided by the Company from time to time.

While employed by the Company, the executive will be eligible to participate in the Company’s health, welfare and other benefits programs available to the Company’s employees generally, in accordance with their terms. The executive is also entitled to up to four weeks of paid vacation per year and participation in the Company’s nonqualified Deferred Compensation Plan and qualified retirement plan as in effect from time to time on terms substantially similar to those that apply to other executive officers of the Company. The offer letters themselves do not include severance provisions. Instead, each named executive officer participates in our Severance Policy, as further described below. Each named executive officer also acknowledged and agreed to remain bound by certain non-competition, non-solicitation and confidentiality provisions, consistent with those entered into with other executive officers.

Severance Policy. In December 2018, the Compensation Committee approved and adopted the Welbilt, Inc. Executive Severance Policy (the “Severance Policy”). The Compensation Committee also designated Mr. Johnson as a “Tier 1 Participant,” with an effective date of April 2, 2019, and designated the other named executive officers as “Tier 2 Participants,” effective January 1, 2019, subject in each case to termination of the then-existing employment agreements of such officers (or, for Mr. Johnson, the severance protections under his offer letter, as described above). As a result, the Severance Policy has superseded the severance protections under such named executive officers’ prior employment arrangements.

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If the Company terminates the employment of a participant other than due to Cause (as defined in the Severance Policy), death or Disability (as defined in the Severance Policy), or if a participant terminates the participant’s employment with the Company for Good Reason (as defined in the Severance Policy) and absent Cause, the Company will make certain severance payments and provide certain benefits to the participant, subject to applicable tax withholding, generally as follows:

•       cash payments equal in the aggregate to the sum of (1) an amount equal to the participant’s base salary as described in the Severance Policy (for a Tier 1 Participant, multiplied by two), plus (2) an amount equal to the participant’s target STIP opportunity for the year of termination of employment, generally payable in installments over the first year (or, for a portion of the payments to a Tier 1 Participant, the first two years) following termination of employment (except as otherwise described in the Severance Policy, including for purposes of compliance with certain tax laws);

•       an amount in cash equal to a pro-rated portion (as described in the Severance Policy) of the STIP award that the participant would have earned for the year of termination of employment based on actual performance if the participant had remained employed through the end of that year, generally payable as soon as practicable after the Compensation Committee certifies performance achievement;

•       if the participant is eligible for and elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) following the termination of employment, reimbursement of 100% of the participant’s monthly COBRA cost during the COBRA continuation period as further described in the Severance Policy (subject to certain exceptions and conditions described in the Severance Policy);

•       continued eligibility to vest in any outstanding Company performance-based equity awards granted to the participant prior to the year of termination of employment based on actual performance over the full performance period;

•       full vesting of any outstanding Company equity awards other than performance-based equity awards granted to the participant prior to the year of termination of employment; and

•       continued exercisability of outstanding vested options held by the participant until the earlier of the expiration date of the options or 24 months after termination of employment.

As a condition to receiving the cash severance payments described in the first two bullets above, a participant is required to timely sign and not revoke one or more customary releases of claims in favor of the Company and its subsidiaries and affiliates. Further, the Severance Policy generally includes non-disparagement provisions in favor of the Company and a reaffirmation of the participant’s obligations under the participant’s Agreement Regarding Confidential Information, Intellectual Property, Non-Solicitation of Employees and Non-Compete with the Company. If a participant experiences a termination of employment that entitles the participant to compensation or benefits under a Contingent Employment Agreement (as described below) or other similar “change in control” severance arrangement with the Company, the participant will not be entitled to any compensation or benefits under the Severance Policy.

Matosevic Separation Agreement. Pursuant to a letter agreement dated March 18, 2020, Mr. Matosevic ceased employment with the Company, including serving as the Company’s Executive Vice President and Chief Operating Officer, effective May 1, 2020. Pursuant to the agreement, Mr. Matosevic received the compensation and benefits provided for in the event of a termination of employment without “Cause” under the Severance Policy. The severance benefits provided to Mr. Matosevic pursuant to the letter agreement were consistent with Mr. Matosevic’s employment arrangements and generally subject to Mr. Matosevic’s execution and non-revocation of a customary release of claims in favor of the Company.

Change in Control Severance Arrangements. We have also entered into Contingent Employment Agreements, which govern change in control severance arrangements, with each of our named executive officers. These Contingent Employment Agreements provide for the executives’ continued employment upon a change in control for a two-year (or, for Mr. Johnson, three-year) period. In addition, the arrangements provide for certain severance benefits in the event an executive is terminated without cause or resigns for good reason (in each case 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 end of the respective three- or two-year period (with annual incentive compensation-based payments being made on a pro-rata basis for partial years during the change in control employment period).

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The Contingent Employment Agreements also provide that if a named executive officer’s employment is terminated within the six month period prior to a change in control, and if it is reasonably demonstrated that such termination of employment (1) was at the request of a third party who has taken steps reasonably calculated to effect a change in control or (2) otherwise arose in connection with or anticipation of a change in control, then the named executive officer will generally be entitled to participate in certain health and welfare benefits for a number of years equal to the change in control employment period following termination, and the Company will pay to named executive officer or his or her representative a severance payment representing continued base salary and target annual incentive compensation for a period equal to the change in control employment period.

If outstanding equity awards are not assumed in connection with a change in control, the Contingent Employment Agreements provide that (1) the named executive officers’ stock options and stock appreciation rights (if any) will vest in full (and, in the discretion of the Company, may be canceled in exchange for a cash payment), (2) time-based restricted stock and RSU awards will vest in full (and, at the election of the named executive officer or the Company, may be canceled in exchange for a cash payment), (3) the named executive officers will have the right to elect to receive a cash payment for a pro-rata portion of outstanding performance-based equity awards determined based on the greater of target and projected actual performance, and (4) the named executive officers will have the right to elect to receive a cash payment for any dividend equivalent units then held (pro-rated to the extent the related award is pro-rated). If a named executive officer’s employment is terminated by the employer without cause or by the named executive officer for good reason within 24 months following a change in control, any outstanding equity awards will vest in full (assuming maximum performance with respect to performance-based awards).

In the event that a named executive officer receives severance payments and benefits as described above, the named executive officer will generally be subject to customary non-competition provisions for 2 years following the change in control (or 2 years following the termination date in the event such officer’s employment is terminated during the six-month period prior to the change in control). 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 2020 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, 2020 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
Janice L. Fields
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.

2020 SUMMARY COMPENSATION TABLE.

The table below sets forth the total compensation of our named executive officers during the fiscal years indicated.

Name & Principal Position

Year

Salary

Bonus(1)

Stock
Awards
(2)

Option
Awards
(3)

Non-Equity
Incentive Plan
Compensation
(4)

All Other
Compensation
(5)

Total

William C. Johnson

2020

844,600

2,068,773

516,603

819,431

45,271

4,294,678

President and CEO

2019

820,000

2,101,239

522,674

451,902

449,633

4,345,448

2018

110,385

205,607

47,827

363,818

Martin D. Agard
Executive Vice President and CFO

2020

515,000

1,020,294

143,356

408,807

32,893

2,120,349

2019

346,154

631,421

97,939

172,144

105,553

1,353,211

Josef Matosevic(6)
Executive Vice President
and Chief Operating
Officer

2020

589,305

704,199

175,850

155,930

748,260

2,373,544

2019

576,683

768,732

191,221

253,228

28,920

1,818,784

2018

547,000

62,500

934,265

212,500

643,500

39,823

2,439,589

Joel H. Horn
Executive Vice President,
General Counsel and
Corporate Secretary

2020

406,510

439,407

86,014

233,052

26,085

1,191,068

2019

382,788

62,500

407,154

84,987

129,872

30,129

1,097,430

2018

363,462

283,541

94,999

308,425

25,730

1,076,156

Richard N. Caron
Executive Vice President
and Chief Innovation
Officer

2020

391,400

439,407

86,014

224,390

28,696

1,169,907

2019

379,231

363,027

90,300

128,687

27,927

989,172

2018

359,343

261,185

87,500

304,200

28,644

1,040,871

Jennifer Gudenkauf Executive Vice President and Chief Human Resource Officer

2020

300,000

201,504

38,231

169,640

16,678

726,053

(1)      The 2018 amount listed for Mr. Johnson represents a discretionary cash bonus awarded in 2019 in recognition for 2018 services. The 2018 amount listed for Mr. Matosevic represents a discretionary cash bonus awarded to him in connection with his assumption of additional duties as interim President and CEO during 2018. The 2019 amount listed for Mr. Horn represents a discretionary cash bonus awarded in 2019 in recognition for his assuming oversight, on a transitional basis, of the Company’s human resources function in 2019.

(2)      Amounts listed represent the aggregate grant date fair value of all stock awards computed in accordance with FASB ASC Topic 718. These amounts 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 19, “Stock-Based Compensation” of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. For RSUs 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 generally 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 2020 PSU awards as of the grant date, assuming the highest level of performance conditions are attained, are as follows: Mr. Johnson: $3,103,159, Mr. Agard: $861,111, Mr. Matosevic: $0, Mr. Horn: $516,689, Mr. Caron: $516,689, and Ms. Gudenkauf: $229,652.

(3)      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 19, “Stock-Based Compensation” of the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. Amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.

(4)      Consists of amounts earned pursuant to the STIP for performance during the year indicated and paid the following year.

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(5)      All other compensation for 2020 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

Johnson

11,400

10,000

10,800

9,077