DEF 14A 1 nc10020783x1_def14a.htm DEF 14A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.   )
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Filed by a Party other than the Registrant  ☐
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to §240.14a-12


INGEVITY CORPORATION
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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March 8, 2021
To our Stockholders:
It is our pleasure to invite you to attend our annual meeting of stockholders, which is to be held on April 22, 2021 at 9:30 a.m., Eastern Standard Time. Due to ongoing public health concerns relating to the coronavirus pandemic, the annual meeting will be held in a virtual only format with no physical in-person meeting. To be admitted to the annual meeting at www.virtualshareholdermeeting.com/NGVT2021, you must enter the control number found on your proxy card, voting instruction form or Notice Regarding the Availability of Proxy Materials. The following Notice of the 2021 Annual Meeting of Stockholders outlines the business to be conducted at the meeting.
2020 was a challenging year by most measures. Yet, in many ways, it was these challenges that have, in the long run, enabled us to become a better, stronger company. During the course of the year, we experienced a CEO transition and endured the significant economic downturn caused by COVID-19. Despite these hurdles, we strengthened our senior management team; reduced costs; placed greater emphasis on organic growth and innovation; and saw our gross margins and adjusted EBITDA margin accrete.
For the company overall, in light of the global macroeconomic headwinds created by COVID-19, our financial performance is something for which we can be proud. Revenues for the year were $1.216 billion, down 6% from 2019. Net income of $181.4 million was down slightly by 1.3%, while net income margin was 14.9%, up 70 basis points. Our adjusted EBITDA* of $397.9 million were even with the prior year. Adjusted EBITDA margin* accreted to 32.7% of sales, up 200 basis points from 2019.
We continue to make significant strides in the implementation of our sustainability program. Our sustainability report issued in September included an announcement of four corporate sustainability goals to help build accountability for our environmental, social and governance (ESG) efforts. We published two reports that outline the net positive greenhouse gas (GHG) reduction benefit of our Nuchar® and Evotherm® products, demonstrating their ability to offset GHGs generated in their manufacture by 10x and up to 23x, respectively. We also maintained our Silver rating from EcoVadis for Corporate Social Responsibility and significantly improved our rating withing with the Dow Jones Sustainability Index, moving into the 70th percentile. With 77% of our revenues coming from sustainable products, we are uniquely positioned to leverage the importance of this macro-trend to drive organic growth in the future and fully expect to do so.
Our Board of Directors and evolving leadership team continue to guide our strategy and chart our growth. We were saddened to learn of the passing of Chairman Rick Kelson in February of this year. His leadership through challenging times in 2020 was vital toward enabling the company to perform well beyond expectations and perhaps most importantly, his wisdom and warmth were critical to the foundation and success of Ingevity since our spin-off from WestRock in May 2016. We are pleased to now have Jean Blackwell as our chair and look forward to a new chapter under her guidance. In addition, Stacy Cozad has joined us as executive vice president, general counsel and secretary and we very much look forward to having an executive of her caliber joining us at Ingevity.
Lastly, in addition to our annual meeting and required filings with the U.S. Securities and Exchange Commission, we have maintained a robust investor relations program. In 2020, we maintained the strong relationships we have with eight sell-side analysts, attended nine in-person and virtual conferences, conducted five virtual non-deal roadshows, and hosted a series of five investor-focused webinars on our business segments and sustainability program.
You may vote during the annual meeting by following the instructions available on the meeting website during the meeting. Whether or not you plan to attend the annual meeting virtually, we urge you to vote and submit your proxy in advance of the meeting by one of the methods described in the proxy materials for the annual meeting. Your vote will mean that you are represented at the annual meeting regardless of whether you attend the meeting virtually. We look forward to having you join us at the meeting.
Best regards,

John C. Fortson
President and CEO
*
Reconciliation of these non-GAAP financial measures can be found in Appendix A.

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Notice of Annual Meeting
NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting of Stockholders of Ingevity Corporation (the “Annual Meeting”) will be held virtually on Thursday, April 22, 2021, at 9:30 a.m., Eastern Standard Time. To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/NGVT2021, you must enter the control number found on your proxy card, voting instruction form or Notice Regarding the Availability of Proxy Materials.



Date & Time:
Thursday
April 22, 2021
9:30 a.m. EST
Location:
Exclusively virtual at:
www.virtualshareholdermeeting.com/NGVT2021
Record Date:
February 22, 2021
How to Vote
 
 
 
 
 



Vote online at www.proxyvote.com.
Vote by phone by calling the number located on your proxy card.
If you received a printed version of these proxy materials, you may vote by mail.
 
 
 
Only stockholders of record as of the close of business on February 22, 2021, are entitled to receive notice of, to attend and to vote at the Annual Meeting. Whether or not you plan to attend virtually, we urge you to review these materials carefully and to vote online or by telephone, or, if you have received a paper copy of the proxy card, you may instead choose to vote by mailing your proxy card.
Voting Matters
PROPOSAL
BOARD VOTE
RECOMMENDATION
PAGE
REFERENCE
(for more detail)
Proposal 1: Election of Directors
FOR
each nominee
Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm
FOR
Proposal 3: Advisory Vote on Compensation of our Named Executive Officers (Say On Pay)
FOR
Additional Information
For additional information on how to vote and other important matters related to the Annual Meeting, please see pages 5458 of this Proxy Statement.
 
By Order of the Board of Directors,
 

 
Stacy L. Cozad
Secretary

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Proxy Statement – Table of Contents
INDEX OF FREQUENTLY REQUESTED INFORMATION

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2021 PROXY SUMMARY
This summary highlights information about Ingevity Corporation (“Ingevity”, “we”, “our”, “us” or the “Company”) and certain information contained elsewhere in this Proxy Statement for our 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting” or the “meeting”). It does not contain all of the information that you should consider. Please read the entire Proxy Statement carefully before voting.
2020 Business Highlights
During the course of 2020, we experienced a CEO transition and endured the significant economic downturn caused by COVID-19. Despite these hurdles, we strengthened our senior management team; reduced costs; placed greater emphasis on organic growth and innovation; and saw our gross margins and adjusted EBITDA(1) margin accrete.
Mixed Bottom Line Results in Performance Chemicals
Lower oilfield and industrial specialties sales due to COVID-weakened industrial demand
Slight growth in pavement technologies sales buoyed by strength in North America and moderate growth overseas
Sales of engineered polymers products remained steady, with the successful launch of a new innovation center and completion of reactor replacement project to support future growth in the Capa® family of chemistries
Revenues were down 12% versus 2019
Segment EBITDA were down 19% versus the prior year
Record Top Line Growth in Performance Materials
Adept adaptation and response to the strong decline and then snap-back in global automotive production through skillful management of global production planning, inventory and logistics
New production records set for “honeycomb” scrubbers to meet strong customer demand
Successful kiln replacement in Covington, Va., facility and capacity increase at Zhuhai, China, facility
Continued advancement of adsorbed natural gas technology through the acquisition of the assets of ANGP, Inc. and new pilot initiatives with several U.S. natural gas utilities
Revenues were up 4% versus 2019
Segment EBITDA were up 17% versus the prior year
Solid Overall Financial Results
Revenues of $1.216 billion, down 6% versus 2019
Net income of $181.4 million was down 1.3%; net income margin was 14.9%, up 70 basis points
Adjusted EBITDA(1) of $397.9 million were fundamentally even with the prior year
Adjusted EBITDA margin(1) accreted to 32.7% of sales, up 200 basis points from 2019
Operating cash flow was $352.4 million resulting in free cash flow(1) of $270.3 million
Sold $550 million senior unsecured notes as part of debt profile restructuring and authorized $500 million in share repurchases, with $88 million in shares repurchased in 2020
Year-end net debt ratio(1) of 2.45x
Decline in Safety Performance
Total employee case incident rate (TCIR) rose to 0.59, a 37% increase from the prior year
Renewed emphasis on safety initiatives with a focus on “near misses” to drive improved performance amidst COVID-19
Progress on Key Initiatives
Continued focus on sustainability program; issued sustainability report that included four corporate sustainability goals to help build accountability for our environmental, social and governance (“ESG”) efforts; published two reports outlining the net positive greenhouse gas (“GHG”) emission reduction benefit of two products; maintained our Silver rating from EcoVadis for Corporate Social Responsibility (“CSR”) and improved to a 70th percentile rating with the Dow Jones Sustainability Index (DJSI)
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Inclusion and Diversity Task Force took on greater importance with U.S. events related to racial injustice; enhanced activities offered to employees to denounce discrimination and recommit to our “IngeviWay” values of fairness and respect
Shared “Ingevity 2.0,” a re-energized approach to our vision and strategy that places greater emphasis on sustainability, customer-centricity and innovation
Bolstered leadership team with a critical new addition in Stacy Cozad as executive vice president, general counsel and secretary
(1)
See Appendix A for more details on Adjusted EBITDA, Adjusted EBITDA margin, Free Cash Flow and Net Debt Ratio and for reconciliation of these non-GAAP financial measures to the nearest GAAP measures.
Board Overview (as of March 8, 2021)
Name
Age
Since
Experience Highlights
Indepen-
dent
AC
LD&C
NG&S
Other
Public
Company
Boards
Jean S. Blackwell (Chair)
66
2016
Retired, Senior Executive at Cummins Inc. including CFO, VP Human Resources and General Counsel
Yes
2
Luis Fernandez-Moreno
58
2016
Sole Member, Strat and Praxis; Previously Senior Executive roles at Ashland Inc. and Rohm & Haas
Yes
 
Chair
 
J. Michael Fitzpatrick
74
2016
Retired, Chairman and CEO, Citadel Plastics Holdings; previously President and COO Rohm & Haas
Yes
John C. Fortson
53
2020
President and CEO and interim CFO and Treasurer at Ingevity Corporation; previously EVP, CFO and Treasurer at Ingevity Corporation and VP, CFO and Treasurer at AAR Corporation
No
 
 
 
 
Diane H. Gulyas
64
2019
Retired, Senior Executive at E.I. du Pont de Nemours, including President, Performance Polymers
Yes
2
Frederick J. Lynch
56
2016
Operating Partner, AEA Investors LP; retired President and CEO, Masonite International Corporation
Yes
 
Chair
 
Karen G. Narwold
61
2019
EVP, Chief Administrative Officer and General Counsel, Albemarle Corporation
Yes
Daniel F. Sansone
68
2016
Retired, Senior Executive at Vulcan Materials, including CFO and EVP of Strategy
Yes
Chair
 
1
AC:
Audit Committee
NG&S:
Nominating Governance & Sustainability Committee
LD&C:
Leadership Development & Compensation Committee
 
 
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Corporate Governance Highlights
We recognize that strong corporate governance contributes to long-term stockholder value. We are committed to sound governance practices, including those described below.
Board Independence and Composition
7 of our 8 directors are independent
All standing committees are composed solely of independent members
Executive sessions of independent directors held at every regular Board meeting and most regular committee meetings
“Overboarding policy” prohibits directors from serving on more than four other public company boards (two other boards in the case of any director serving as CEO of a public company or three other boards in the case of any director serving as an officer of a public company)
Diverse board in terms of gender, ethnicity, experiences, skills
Best Practices
Active stockholder engagement; Director-stockholder engagement policy
Regular updates to Board on investor perspectives and engagement
Board leadership role in CEO and executive succession planning
Annual Board and Committee self-evaluations
Board oversight of key risk areas and risk management program, including cybersecurity related matters
Enhanced Board oversight of ESG issues and priorities, with oversight responsibility assigned to the Nominating Governance & Sustainability Committee (the “NG&S Committee”)
Robust stock ownership guidelines
Comprehensive new director orientation
Policies prohibiting hedging and pledging of our shares
Accountability
Bi-annual election of independent Chair by non-employee directors
Annual evaluation of CEO performance and compensation by independent directors; use of independent compensation consultant
Clawback policy applicable to short- and long-term incentive plans
Comprehensive Codes of Conduct and Compliance & Ethics Program
Annual sustainability report now includes measurable corporate sustainability goals
Stockholder Rights
Annual election of all directors
Majority voting with director resignation policy (plurality in contested elections)
Stockholder right to call special meeting
No poison pill or dual-class shares
One share, one vote standard
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Sustainability Highlights
Commitment to Sustainability Goals
We recognize that our actions have a global impact and we acknowledge our responsibility to conduct our business responsibly. By doing so, we not only create long-term value for our company and our stakeholders; we also create a source of great pride for our employees through our unique sustainability value proposition. To that end, we established our first set of four sustainability goals in 2020, which reflect our commitment to integrating responsible ESG principles into our global business strategy and decision making. We will use these goals to focus and track our efforts and will continue to report on our progress towards accomplishing them.
We will complete an initiative to quantifiably evaluate the societal benefit of our significant product lines by 2022
We are working to tell our story in a quantifiable way through a series of GHG lifecycle assessment studies conducted by a third party
The focus is scope 1, 2 and 3 GHG emissions1 related to our products and their end uses
Results will be published on ingevity.com and in future sustainability reports
Studies are complete for Nuchar® and Evotherm®, indicating GHG reduction benefits between 10 and up to 23 times, respectively
We will reduce our scope 1 and scope 2 GHG emissions intensity by 5% from 2020 to the end of 2025
Metrics developed in 2020 will serve as our benchmark moving forward
By reducing our GHG emissions intensity, we aim to protect human populations and our natural ecosystems by reducing the impacts of climate change
This goal is based on an evaluation of planned capital projects over the next few years
We are working to determine our scope 3 emissions and will integrate a scope 3 reduction goal into our sustainability efforts in the future
We will disclose results of improvement actions taken in response to 2020 employee engagement survey by the end of 2022
One of the ways we are fostering the company’s long-term success is by helping our team members realize their full potential and keeping them engaged
We partnered with Gallup in 2020 to conduct a robust employee engagement survey
We will report on the impacts of actions taken in response to survey results, as well as the metrics and the data used to assess our performance, by the end of 2022
Between 2020 and 2025, we will invest $6 million into our communities
Our IngeviCares philanthropy program focuses charitable giving and involvement in the areas of sustainability, education and well-being
IngeviCares will be the vehicle through which we invest $6 million into our communities in the six-year period from 2020 through 2025
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Leveraging Sustainability as a Competitive Advantage
As part of “Ingevity 2.0,” the re-energized approach to our vision and strategy, sustainability is one of the key areas where we will place greater emphasis and expect to grow our company’s revenue and profitability as a result. A remarkable 77% of our revenue comes from sustainable products, and as our customers work to decrease their carbon footprints, we have a unique, differentiated opportunity to help solve their challenges with our chemistry.
Throughout 2020, our focus on leveraging sustainability has focused on three key elements to add increased value for customers and further our brand promise to purify, protect and enhance the world around us.
GHG Reduction Benefit Studies
Initial studies completed for Nuchar and Evotherm
Launched second phase of studies for four additional products
Coordinating plan for the remainder of our portfolio to be included in the studies
ESG Ratings and Green Product Certifications
Prioritized third-party ESG ratings; aim for top-quartile rank in each one we pursue
Maintained Silver rating from EcoVadis for CSR; moved to 70th percentile on the DJSI
Participating in ACC’s sustainability metric development and reporting pilot program
Results of Q1 2021 customer survey will inform broader product certification plan
Expanding Regulatory Advocacy
Leverage success in Performance Materials gasoline vapor emission control to expand regulatory advocacy to the benefit of other product platforms
Some platforms being considered include asphalt, adhesives and alt-fuel technologies
(1)
Scope 1: Direct from operations; Scope 2: From purchased energy/utilities; Scope 3: From transacting business
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BOARD AND GOVERNANCE MATTERS
CORPORATE GOVERNANCE
Role of the Board of Directors
Ingevity is governed by a Board of Directors (the “Board”) and committees of the Board that meet throughout the year. The Board is elected by the stockholders to oversee and provide guidance on the Company’s business and affairs. The Board is actively engaged in the process of strategic development and oversight of ongoing execution of the Company’s strategic plan. It oversees management’s activities in connection with the proper safeguarding of the assets of the Company, maintenance of appropriate financial and other internal controls, compliance with applicable laws, regulations and ethical standards, and proper governance. One of the Board’s most important functions is oversight of risk management, including cybersecurity. The Board is committed to sound corporate governance policies and practices that are designed to enable the Company to operate its business responsibly, with integrity, enabling the Company to compete effectively, sustain its business and build long-term stockholder value. The Company’s Corporate Governance Guidelines which have been adopted by the Board and set forth certain corporate governance practices, are available on our website at http://ir.ingevity.com/governance/documents. These guidelines form a transparent framework for the effective governance of the Company, addressing matters such as the respective roles and responsibilities of the Board and management, the Board’s leadership structure, director independence and Board and committee membership criteria. The Corporate Governance Guidelines are periodically reviewed by the NG&S Committee in light of changing regulations, evolving best practices and other governance developments.
Board Leadership Structure
Our Board regularly reviews the Company’s Board leadership structure, how the structure is functioning and whether the structure continues to be in the best interest of our stockholders. From our inception as a public company in May 2016 until February 2020, we separated the roles of CEO and Chairman of the Board with D. Michael Wilson serving as our CEO and Richard B. Kelson serving as our independent Chairman. In February 2020, in connection with Mr. Wilson’s resignation as our President and CEO, the Board appointed Mr. Kelson to serve as the Company’s interim President and CEO and determined that, given the circumstances, it was in the best interests of the Company for Mr. Kelson to continue to serve as Chairman given his strong leadership skills and in order to maintain continuity. In accordance with our Corporate Governance Guidelines, the Board also appointed Frederick J. Lynch to serve as the Board’s Lead Independent Director beginning in February 2020.
Effective September 1, 2020, the Board appointed John. C. Fortson as the Company’s next President and CEO. The Board also determined at that time that it was in the best interests of the Company to return to its historic approach of separating the roles of CEO and Chairman with Mr. Kelson continuing to serve as Chairman. As a result, Mr. Lynch ceased serving as Lead Independent Director effective September 1, 2020. Following Mr. Kelson passing away, the Board elected Jean S. Blackwell to serve as Chair effective February 18, 2021.
The Board believes that separating the positions of CEO and Chairman (i) allows the CEO to focus on executing the Company’s strategic plan and managing the Company’s operations and performance and (ii) facilitates improved communications and relations between the Board, the CEO and other senior leaders of the Company. Under our Corporate Governance Guidelines, our Board Chair is elected to serve a two-year term, unless otherwise determined by the Board.
Our Board’s Oversight Role
The Board actively oversees the development and execution of our strategies, including those related to business, operations and finance, as well as strategies focused on legal and regulatory matters, corporate responsibility and sustainability, stockholder engagement, innovation and protection of intellectual property, cybersecurity, talent development and executive succession.
The Board, acting as a full Board and through its committees, oversees risk management on behalf of the Company. Our Board believes it has in place effective processes to identify and oversee the material risks facing the Company. The Company’s enterprise risk management processes help management and the Board identify, prioritize and manage risks that have the potential to present the most significant obstacles to achieving the Company’s business objectives or that otherwise present
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significant risk to the enterprise. The Company’s risk management processes are regularly refreshed, including priorities and planned remediations. Management reports regularly to the Board on this process.
Set forth below are key areas of risk overseen by the Board, directly or through its committees:
Legal, Compliance and Regulatory Risk: Our Board, both directly and through the Audit Committee, receives regular updates on various legal, compliance and regulatory matters, such as developments in litigation, compliance risks and our compliance programs. In addition, regular updates to the Audit Committee by our General Counsel and internal audit function provide insight into our risk assessment and risk management policies and processes.
Financial and Accounting Risk: The Audit Committee oversees the management of financial, accounting, internal controls and liquidity risks. This oversight includes interaction at Audit Committee meetings with the Chief Financial Officer, management from our financial, accounting, internal audit and treasury functions, and representatives from our independent registered public accounting firm. The Audit Committee also discusses with management our major financial risk exposures and the steps management has taken to monitor, control and remediate such exposure.
Reputational and Governance Risk: The NG&S Committee oversees risks related to Board organization, Board membership, including director refreshment and succession, Board structure and other corporate governance matters. This Committee also has responsibility for reviewing and monitoring our corporate responsibility and sustainability programs, including oversight over ESG matters. In addition to reporting to the NG&S Committee, management’s practice is to periodically review corporate responsibility and sustainability matters, including ESG programs and policies, in joint session with the full Board.
Executive Compensation Program Risk: The Leadership Development & Compensation Committee (the “LD&C Committee”) assists our Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs and with respect to succession planning for management. See “Compensation Discussion and Analysis”, beginning at page 27, for more information.
Cybersecurity Risk: The Audit Committee oversees our cybersecurity program and management of the associated risks. The Committee receives regular updates from our Chief Information Officer on cybersecurity matters and our risk management program. Cybersecurity risk matters are regularly reviewed in joint session with the full Board.
Director Independence
Our Board with the assistance of the NG&S Committee annually conducts an assessment of the independence of each director in accordance with our Corporate Governance Guidelines, applicable rules and regulations of the Securities and Exchange Commission (the “SEC”), and the general listing standards of the New York Stock Exchange (the “NYSE”). The Board assesses each director’s independence by reviewing any potential conflicts of interest and significant outside relationships. In determining each director’s independence, the Board broadly considers all relevant facts and circumstances, including specific criteria included in the NYSE’s general listing standards. For these purposes, the NYSE requires the Board to consider certain relationships that existed during a three-year look-back period. The Board considers the materiality and importance of such relationships not merely from the standpoint of the director, but also from the standpoint of persons or organizations with which the director has an affiliation. An independent director is a director who our Board affirmatively determines has no other material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company).
Upon the recommendation of the NG&S Committee, the Board has affirmatively determined that each of Mses. Blackwell, Gulyas, and Narwold, and Messrs. Fernandez-Moreno, Fitzpatrick, Lynch, and Sansone, is independent, in accordance with applicable rules and regulations of the SEC and the general listing standards of the NYSE.
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Board and Committee Self-Evaluations
The NG&S Committee assists the Board in annually assessing the effectiveness of the Board and its committees in carrying out their respective roles, as described below.


Examples of actions the Board has taken in recent years in response to the annual evaluation process include increasing the size of the Board to create more opportunity for diversity, followed by the subsequent appointment of two additional women to the Board, the assignment of oversight of corporate responsibility and sustainability to the NG&S Committee, the assignment of oversight of matters relating to the attraction, development and retention of the Company’s leadership to the newly renamed LD&C Committee and the rotation of the chair of the NG&S Committee.
Board Meetings and Attendance; Executive Sessions
Our Board meets on a regularly scheduled basis during the year to review significant developments affecting our Company and to act on matters requiring Board approval and may hold special meetings between scheduled Board meetings when appropriate. The Board met eight times during fiscal year 2020. All directors attended 75 percent or more of the aggregate of (i) the number of meetings of the Board held during the period he or she was a director and (ii) the number of meetings of all committees of the Board held during the period he or she was a member of the respective committee. All directors attended the 2020 Annual Meeting.
Our Corporate Governance Guidelines require that the non-management members of our Board meet in executive session without management present at each regularly scheduled Board meeting. Our Committees generally also meet in executive session without management participation at each regularly scheduled Committee meeting.
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Board Composition and Diversity
Our Board is committed to ensuring that it has the right mix of skills, background, tenure, experience and diversity. The current composition of our board is as follows:


Board Skills and Experience

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Committees of Our Board of Directors
Our Board has established three standing committees to assist it with the performance of its responsibilities. Our Board elects the members of these committees annually, based on the recommendations of the NG&S Committee. After each committee meeting, a report is provided by the committee Chair to the full Board. Each committee is composed entirely of directors who have been determined to be independent under the relevant SEC and NYSE standards. Each committee operates under a charter, which is reviewed annually. The committee charters are available under the Corporate Governance tab at http://ir.ingevity.com. The Board also has established an Executive Committee, currently composed of Ms. Blackwell (chair), Messrs. Fernandez-Moreno, Lynch, and Sansone. The Executive Committee is authorized to exercise certain powers of the Board between Board meetings when a meeting of the full Board is impractical or not warranted under the circumstances. The Executive Committee did not meet during the past fiscal year. The information presented below with respect to the Chair and other members of each standing committee is as of March 8, 2021.
Audit Committee
2020 Meetings: 9


Report
See page 24
Chair
Daniel F. Sansone

Other Members
Jean S. Blackwell
Luis Fernandez-Moreno
J. Michael Fitzpatrick
Karen G. Narwold
The Audit Committee assists our Board in fulfilling its responsibilities with respect to the oversight and evaluation of: (1) the integrity of our financial statements; (2) our system of internal control over financial reporting; (3) the performance of our internal audit function; (4) the independence, qualifications and performance of our independent auditor; (5) our risk review and system of compliance with legal and regulatory requirements; (6) our financial management and resources; (7) specific financial strategy initiatives as requested by the Board or management; and (8) risk management over cybersecurity. Among other things, the Audit Committee, under its charter, directly appoints, compensates, retains and oversees the work of our independent auditor, which reports directly to the Audit Committee. See pages 2425 for further information related to the Audit Committee, including fees paid to our independent auditor, the committee’s auditor fee pre-approval policy and the committee’s report.
The Board has determined that each of Ms. Blackwell and Messrs. Fitzpatrick and Sansone is an “audit committee financial expert” as that term is defined under SEC rules. The Board has also determined that all Audit Committee members are financially literate, as that qualification is interpreted by the Board in its business judgment, in compliance with the NYSE listing standards requirements for audit committee members. The Board has also determined that all members of the Audit Committee are independent in accordance with the heightened independence standards established by the Securities and Exchange Act of 1934 (the “Exchange Act”) and adopted by the NYSE for audit committee members.
Leadership Development & Compensation Committee
2020 Meetings: 8


Report
See page 41
Chair
Frederick J. Lynch

Other Members
Jean S. Blackwell
Diane H. Gulyas
Daniel F. Sansone
The LD&C Committee’s duties include setting the overall compensation strategy and policies for our executives and non-employee directors. The committee is responsible for determining and approving CEO compensation and reviewing the compensation of our other executive officers, including salary, annual incentive awards and long-term incentive awards. The LD&C Committee also oversees the development of executive succession plans, inclusion and diversity policies and programs and employee engagement initiatives. In addition, the committee evaluates the design and effectiveness of our compensation programs and monitors risks related to such design. See pages 27 - 41 for further information related to the
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LD&C Committee, including a discussion of our compensation programs and the committee’s report. The LD&C Committee consists entirely of non-management directors, all of whom our Board has determined are independent in accordance with the heightened independence standards established by the Exchange Act and adopted by the NYSE for compensation committee members.
Nominating, Governance & Sustainability Committee
2020 Meetings: 4
Chair
Luis Fernandez-Moreno

Other Members
J. Michael Fitzpatrick
Diane H. Gulyas
Frederick J. Lynch
Karen G. Narwold
The NG&S Committee identifies individuals qualified to become Board members consistent with the criteria established by our Board and described in our Corporate Governance Guidelines, and recommends a slate of nominees for election at each annual meeting of stockholders; makes recommendations to our Board concerning the appropriate size, function, needs and composition of our Board and its Committees; advises our Board on corporate governance matters; oversees the annual Board and Committee self-evaluation process; and provides oversight over corporate responsibility and sustainability matters, including the Company’s ESG programs and policies.
The NG&S Committee consists entirely of non-management directors, all of whom our Board has determined are independent within the meaning of the listing standards of the NYSE.
LD&C Committee Interlocks and Insider Participation
No member of the LD&C Committee has served as an employee of Ingevity at any time. During the past fiscal year, no executive officer of Ingevity served as a member of the LD&C Committee (or other committee performing similar functions) or on the board of directors of any entity at which a member of the LD&C Committee or Board served as an executive officer.
NG&S Committee Process – Director Candidates
The NG&S Committee evaluates all director candidates in accordance with the director qualification standards described in our Corporate Governance Guidelines. These standards include (1) an absence of conflicts of interest and other legal and ethical issues that would interfere with such candidate’s service as a director; (2) a commitment to discharge his or her duties as a director in accordance with our Corporate Governance Guidelines; (3) a willingness and ability to devote sufficient time and energy to carry out his or her duties; and (4) having sufficient experience to enable the director to meaningfully participate in deliberations of the Board and one or more of its committees and to otherwise fulfill his or her duties. In addition, the NG&S Committee will evaluate a candidate’s independence, skills and experience in the context of our Board’s needs. Pursuant to our Corporate Governance Guidelines, the Board strives to select as director candidates a mix of individuals who represent diverse experience, background and thought at policy-making levels that are relevant to the Company’s activities, as well as other characteristics that will contribute to the overall ability of the Board to perform its duties and meet changing conditions. The Board’s consideration of the diversity of experience, background and thought represented by director candidates includes the consideration of ethnic and gender diversity. In 2019, the Board elected two additional women to serve on the Board, resulting in a Board that is currently 50% diverse based on gender and ethnicity.
Stockholder Recommendations - Director Candidates
The NG&S Committee will consider director candidates recommended by stockholders and will do so in the same manner as candidates recommended by other sources. Any stockholder wishing to recommend a director candidate should provide the NG&S Committee with the information required by the Company’s By-Laws to be provided with respect to director nominees submitted by stockholders. The process for stockholders to nominate an individual for election as a director is discussed on page 58.
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Interested Party Communications with the Board
Interested parties, including stockholders, may communicate by mail with all or selected members of the Board. Correspondence should be addressed to the Board or any individual director(s) or group or committee of directors either by name or title (for example, “Chair of the Board,” “Chair of the NG&S Committee” or “All Non-Management Directors”). All correspondence should be sent via U.S. Mail to: Ingevity Corporation, 4920 O’Hear Ave, Suite 400, N. Charleston, SC 29405, Attn: Corporate Secretary, or by Email to: corporatesecretary@ingevity.com. In general, any communication delivered to the Company for forwarding to the Board, a Board committee, a particular group of directors or specified Board members will be forwarded in accordance with the stockholder’s instruction, except that we reserve the right not to forward any soliciting or advertising materials or any abusive, threatening or otherwise inappropriate materials.
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DIRECTOR COMPENSATION
Cash Compensation
During 2020, each non-employee director received $90,000 as an annual cash retainer for service as a director. Directors who are also employees of the Company receive no additional compensation for service as a director. Mr. Kelson while serving as interim President and CEO received his annual retainer and chairman retainer in addition to his interim President and CEO compensation, as discussed in the Compensation Discussion and Analysis and supporting tables beginning on page 27.
Each non-employee director who served as either the Board Chair, Lead Independent Director, or as a Committee Chair received an additional retainer as follows: Chairman of the Board: $100,000; Lead Independent Director: $18,750 (prorated amount of $25,000 retainer for partial year service), Audit Committee Chair: $20,000; LD&C Committee Chair: $15,000 and NG&S Committee Chair: $12,000.
Stock Awards
Each non-employee director receives an annual award grant of Ingevity restricted stock units (“RSUs”) equivalent to approximately $105,000 at the time of grant. These are made to non-employee directors under the Company’s 2016 Omnibus Incentive Plan (the “Omnibus Plan”) and under the terms and conditions applicable to their grants. The directors become vested in their RSUs on the first anniversary of the award date. For the fiscal year ended 2020, the number of RSUs granted was determined based on the closing price of the Company’s Common Stock as traded on the NYSE on April 24, 2020.
Non-employee directors have the option to elect to receive their annual cash retainer (both regular annual retainer for Board service, Board Chair retainer and Committee Chair retainer) in the form of deferred stock units (“DSUs”) under the Omnibus Plan. In addition, each non-employee director may also elect to receive their annual stock RSU award in the form of DSUs. DSUs representing cash retainers vest in full upon grant but settle upon termination of service with the Board. RSUs converted into DSUs (annual stock award) are subject to one-year vesting and are also settled upon termination of service with the Board.
A non-employee director must make his or her election to receive DSUs (in lieu of cash or RSUs) by December 31 of the calendar year preceding the year in which the compensation is earned, or within thirty days of becoming a director. No changes to the DSU settlement date are permitted absent a hardship.
Stock Ownership Guidelines; Prohibition on Hedging
Under our stock ownership guidelines, each non-employee director is expected to hold an amount of Ingevity common stock equal to five times the annual base cash retainer. Shares owned outright by the director, or his or her immediate family members residing in the same household, in family trusts and shares held in retirement plan accounts are deemed to be owned shares for purposes of these guidelines, as well as vested and unvested RSUs and DSUs. Until a non-employee director meets these guidelines, he or she must hold 50 percent of his or her vested RSUs. If a non-employee director does not meet these guidelines within five years, he or she must hold 100 percent of his or her vested RSUs. As of December 31, 2020, each non-employee director has attained the minimum stock ownership levels based on holdings except for Mses. Gulyas and Narwold who are respectively on track for compliance, each having joined the Board in February 2019 and therefore not having requirements to meet the minimum guidance until February 2024.
Our directors are not permitted to engage in hedging activities with respect to our stock. See page 38 for more information about the Company’s anti-hedging policy.
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2020 Director Compensation Table
Beginning February 20, 2020 through August 31, 2020, Mr. Kelson served as the Company’s interim President and Chief Executive Officer. As a result, Mr. Kelson’s 2020 compensation, including his fees and awards received on account of his service as a director, is reported and discussed in the Compensation Discussion and Analysis and supporting tables beginning on page 27.
The following table includes information concerning compensation for service as a director paid to or earned by our directors during the fiscal year ended December 31, 2020:
Name
Fees
earned
or paid
in cash
($)(1)
Stock
Awards
($)(2)
TOTAL
Jean S. Blackwell
110,000
105,024
215,024
Luis Fernandez-Moreno
90,000
105,024
 
 
 
 
195,024
J. Michael Fitzpatrick
102,000
105,024
207,024
Frederick J. Lynch(3)
123,750
105,024
 
 
 
 
228,774
Daniel F. Sansone
90,000
105,024
195,024
Diane Gulyas
90,000
105,024
 
 
 
 
195,024
Karen Narwold
90,000
105,024
195,024
D. Michael Wilson(4)
 
 
 
 
John C. Fortson(4)
(1)
This column includes fees earned or paid in cash, representing the annual retainer, and where applicable the Chairman retainer and the committee chair retainers.
(2)
The amounts shown in this column represent the aggregate grant date fair market value of restricted stock units granted in 2020 to non-employee directors computed in accordance with FASB ASC Topic 718. As of December 31, 2020, each director held 2,695 restricted stock units that will vest on April 24, 2021.
(3)
Upon Mr. Kelson’s appointment as Interim President & Chief Executive Officer of the Company, Mr. Lynch was appointed as Lead Independent Director. Further, Mr. Lynch’s appointment resulted in an increase in his independent director fees in the amount of $25,000 which was pro-rated for his service time, resulting in him earning $18,750 for service as the lead independent director during the period February 20 – August 31, 2020.
(4)
Neither Mr. Wilson nor Mr. Fortson earned or were paid any director fees during their respective service as a non-independent director in 2020.
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Proposal
 
 
1
Election of Directors
 
Our Board recommends a vote FOR each nominee.
 
 
 
 
 
 
Our NG&S Committee has recommended, and the Board of Directors has nominated for election as directors at the Annual Meeting, the eight nominees named below. Each nominee currently serves as a director of the Company, and each nominee, with the exception of Mr. Fortson who was appointed by the Board on September 1, 2020, was elected by our stockholders to serve until the 2021 Annual Meeting of stockholders and until his or her successor has been elected and qualified.
Each director elected at the 2021 Annual Meeting will serve until the 2022 Annual Meeting of Stockholders and until his or her successor has been elected and qualified. Each director nominee has consented to being named in this proxy statement and to serving as a director if elected. If any nominee is unable to stand for election for any reason, the shares represented at our annual meeting by proxy may be voted for another candidate proposed by our Board, or our Board may choose to reduce its size.
At any meeting of stockholders for the election of directors at which a quorum is present, the election will be determined by a majority of the votes cast by the stockholders entitled to vote in the election, except that in the case of a contested election, the election will be determined by a plurality of the votes cast by the stockholders entitled to vote in the election.
Any director who is not elected shall offer to tender his or her resignation to the Chair of the Board and the NG&S Committee. The NG&S Committee will promptly consider the resignation offer and make a recommendation to the Board as to whether to accept or reject the tendered resignation and whether other action should be taken. The Board will act on the tendered resignation within 90 days following the stockholders’ meeting at which the election occurred. The NG&S Committee, in making its recommendation, and the Board, in making its decision, may consider all the information, factors and alternatives it considers appropriate. Any director who offers his or her resignation pursuant to this provision may not participate in the NG&S Committee deliberations and recommendation or in the Board’s deliberations and decision whether to accept or reject the resignation offer.
The information below and in the matrix on page 12 provides information as to the particular experiences, qualifications, attributes and skills of each nominee. The NG&S Committee and the Board believe that, as a group, these nominees provide our Board with an optimal balance of experience, leadership, qualifications, attributes and skills and that each individual nominee can make a significant contribution to the Board and should serve as a director of the Company.
Recommendation of the Board
The Board recommends a vote “FOR” each of the eight director nominees named in this Proxy Statement.
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2021 Director Nominees
Jean S. Blackwell

Age: 66
Director Since: 2016
Board Committees:
 Audit
 Leadership
   Development &
   Compensation
Other public company directorships:
 Johnson Controls International
 Celanese Corporation
Skills and Experience:

Ms. Blackwell is our Board Chair, a position she has held since February 17, 2021. Ms. Blackwell has substantial experience in the areas of finance and law, and also as to matters of corporate responsibility, sustainability and human resources, having served both as a public company CFO and General Counsel, among other corporate leadership roles, and is an “audit committee financial expert”. She also has significant oversight and governance expertise as an experienced public company board member.
Professional Highlights:

CEO of Cummins Foundation and EVP of Corporate Responsibility for Cummins Inc. from 2008 until her retirement in 2013. Previous positions with Cummins (joined, 1997) included Chief Financial Officer; Vice President, Cummins Business Services and Human Resources; and General Counsel.

Earlier experience includes Budget Director for the State of Indiana; Executive Director of the Indiana State Lottery Commission, and Partner at the law firm of Bose McKinney & Evans, LLC.

Prior public company directorships: Essendant Inc. (formerly, United Stationers Inc.) and Phoenix Companies, Inc.
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Luis Fernandez-Moreno

Age: 58
Director Since: 2016
Board Committees:
 Audit
 Nominating,
  Governance &
  Sustainability (Chair)
 
 
 
Skills and Experience:

Mr. Fernandez-Moreno has over thirty years of executive and operational experience in the performance materials, specialty chemicals and coatings industries. He has significant M&A and international experience, having had leadership roles in complex global business operations in Mexico, Brazil, France and the United Kingdom, as well as the United States. Mr. Fernandez also has extensive expertise in the area of sustainability with a focus on integrating responsible ESG principles and metrics into global business strategies to maximize stakeholder value.
Professional Highlights:

Sole Manager and Member of Strat and Praxis LLC, a consulting services company, since June 2018.

Senior Vice President of Ashland Inc. from 2013 through 2017, including serving as President of its Chemicals Group, President of Ashland Specialty Ingredients, and President, Ashland Water Technologies. Previous experience included 27 years at Rohm & Haas Company and, after its acquisition, with The Dow Chemical Company. He also served as Executive Vice President at Arch Chemicals until its acquisition by Lonza Group AG.

Board Chair Huber Engineered Materials, a portfolio company of J.M. Huber Corporation, since 2019; Director Ascensus Specialties International Company, a portfolio company of WindPoint Partners, since 2016; director OQ Chemicals GmbH (formerly Oxea S.a.r.l.), a subsidiary of OQ, an integrated energy company, owned by the Oman government, since 2018.
J. Michael Fitzpatrick

Age: 74
Director Since: 2016
Board Committees:
 Audit
 Nominating,
  Governance &
  Sustainability
 
 
 
Skills and Experience:

Dr. Fitzpatrick has over thirty five years executive experience in the chemicals industry, including service as Chief Executive Officer and Chief Operating Officer. He has extensive experience in technology, M&A and international operations, and is an “audit committee financial expert.” Mr. Fitzpatrick also has significant oversight and governance expertise as an experienced public company board member.
Professional Highlights:

Chairman and Chief Executive Officer of Citadel Plastics Holdings until his retirement in 2012. Previous experience included thirty years with Rohm & Haas Company, last serving as President and COO; other roles included Chief Technology Officer and Vice President of Research.

Chairman of the Board of Directors of Aurora Plastics, Inc., a privately held company, since 2016; Executive Advisor at WindPoint Partners, a private equity firm, since 2005.

Prior public company directorships: McCormick & Company; SPX Corporation; and Carpenter Technology Corporation.
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John C. Fortson

Age: 53
Director Since:2020
 
 
Skills and Experience:

Mr. Fortson has served as our President and Chief Executive Officer and interim CFO and Treasurer since September 1, 2020. He previously served as the Company’s Executive Vice President, Chief Financial Officer and Treasurer. Mr. Fortson has more than 23 years of experience in executive, management, strategic planning, financial, M&A and sustainability matters and has held leadership positions in the chemicals, manufacturing, global aerospace and defense industries.
Professional Highlights:

President and Chief Executive Officer and Interim Chief Financial Officer and Treasurer of Ingevity since September 1, 2020.

Executive Vice President, Chief Financial Officer and Treasurer of Ingevity (October 2015 – September 2020).

Vice President, Chief Financial Officer and Treasurer, AAR Corporation (2013 – October 2015).

Managing Director, Bank of America Merrill Lynch (2000 – 2013).
Diane H. Gulyas

Age: 64
Director Since: 2019
Board Committees:
 Leadership
  Development &
  Compensation
 Nominating,
  Governance &
  Sustainability
Other public company directorships:
 W.R. Grace & Co.
 Expeditors International of
  Washington, Inc.
 
 
Skills and Experience:

Ms. Gulyas’ qualifications to serve as a director include her extensive executive experience at one of the world’s largest chemical companies, as well as her extensive experience in international operations, global manufacturing and sales, including in the automotive parts industry. Ms. Gulyas also has significant oversight and governance expertise as an experienced public company board member.
Professional Highlights:

President, Performance Polymers business of E.I. du Pont de Nemours and Company from 2009 until her retirement in 2014. Previous positions in her thirty-five year du Pont career included Global Chief Marketing and Sales Officer, Group Vice President of the Electronic and Communication Technologies platform, and Vice President and General Manager of the Advanced Fiber business.

Chair of the Board of Directors, Ladies Professional Golfing Association.

Prior public company directorships: Mallinckrodt Pharmaceuticals and Navistar International Corporation.
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Frederick J. Lynch

Age: 56
Director Since: 2016
Board Committees:
 Leadership
  Development &
  Compensation (Chair)
 Nominating,
  Governance &
  Sustainability
 
Skills and Experience:

Mr. Lynch served as President and Chief Executive Officer of a public, global manufacturing Company for twelve years until his retirement in 2019, also having served as a director. He also brings substantial prior executive experience in the chemicals industry, and in-depth knowledge of global business, manufacturing, supply chain management, sustainability and strategic planning.
Professional Highlights:

Operating Partner, AEA Investors, LP, a global private investment firm, since January 2020; and Director of Traeger Grills (since July 2020) and Process Sensing Technologies (since December 2020) (portfolio companies of AEA Investors LP).

President and CEO of Masonite International Corporation, a global manufacturer of doors and door systems from 2006 until his retirement in 2019.

Previous experience includes President of human generics division and Senior Vice President of global supply chain for Apharma, Inc., and eighteen years at Honeywell International, including Vice President and General Manager of its specialty chemicals business.

Prior public company directorships: Masonite International Corporation.
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Karen G. Narwold

Age: 61
Director Since: 2019
Board Committees:
 Audit
 Nominating,
  Governance &
  Sustainability
 
 
 
Skills and Experience:

Ms. Narwold has over twenty-five years of executive, management, legal and compliance experience in chemicals and manufacturing, including as Chief Administrative Officer and General Counsel of a public company. Her areas of expertise include law, corporate governance and compliance, executive compensation, risk oversight, strategic planning, M&A, and cybersecurity. Ms. Narwold also has expertise in the area of sustainability with a focus on leveraging best-in-class benchmarking to drive corporate accountability and reporting.
Professional Highlights:

Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary of Albemarle Corporation, a global specialty chemicals company, since 2010, including leadership of legal, public affairs (government and regulatory affairs and communications) and compliance organizations. Member of Albemarle’s Enterprise Risk Management and Disclosure Committees.

Previously held various leadership roles at Symmetry Holdings and Barzel industries, including for both as General Counsel, and at GrafTech International, a global graphite and carbon manufacturer and former subsidiary of Union Carbide, including serving as Vice President, General Counsel, Human Resources and Secretary.
Daniel F. Sansone

Age: 68
Director Since: 2016
Board Committees:
 Audit (Chair)
 Leadership
  Development &
  Compensation
Other public company directorships:
 AdvanSix Inc.
Skills and Experience:

Mr. Sansone has extensive executive and general management experience and substantial financial expertise, including service as Chief Financial Officer and Treasurer at a global manufacturing public company, is an “audit committee financial expert”. Given his level of financial expertise, Mr. Sansone is well qualified to chair the Company’s Audit Committee. He also brings expertise in the asphalt and paving markets.
Professional Highlights:

Executive Vice President and Chief Financial Officer at Vulcan Materials Company, an S&P 500 company and the largest U.S. producer of aggregate-based construction materials, including asphalt, from 2005 until his retirement in 2014. Other roles at Vulcan included President, Southern and Gulf Coast Division, President, Gulf Coast Materials, EVP Strategy, Treasurer and Corporate Controller.
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AUDIT COMMITTEE MATTERS
Audit and Other Fees
The following table shows the fees paid by the Company to PricewaterhouseCoopers LLP (“PwC”) for audit and other services provided for the fiscal years 2020 and 2019, all of which were preapproved by the Audit Committee or the Audit Committee Chair.
Amounts Shown in $
2020
2019
Audit Fees
1,810,625
2,134,000
Audit-Related Fees
325,000
—0—
Tax Fees
36,000
104,000
All Other Fees
20,000
10,000
Total
2,191,625
2,248,000
Audit Fees. Fees for professional services performed for the integrated audit of the Company’s annual consolidated financial statements included in the Company’s Form 10-K filing and review of financial statements included in the Company’s Form 10-Q filings. The amount also includes other services that are normally provided by PwC in connection with statutory and regulatory filings or engagements. For 2019, this amount includes audit services related to the acquisition of the Capa caprolactones business.
Audit-Related Fees. This includes fees paid for services that are reasonably related to the performance of the audit or review of the Company’s financial statements. For 2020, this includes services provided in connection with debt financing transactions.
Tax Fees. This includes fees and expenses for U.S. federal, state, and international tax planning and tax compliance services.
All Other Fees. This category includes fees for services in connection with attestations by PwC that are required by statute or regulation.
Pre-Approval Policy and Procedures
The Audit Committee’s pre-approval policy requires that all services to be performed by the Company’s independent registered public accounting firm be pre-approved either on a case-by-case basis by the Audit Committee or its delegate or on a categorical basis based on the Audit Committee’s prior approval of a specific category of service and the expected cost thereof. Any request for services involving less than $150,000 may be approved by the Chair of the Audit Committee, provided that any such approval is presented to the full Audit Committee at its next regularly scheduled meeting.
AUDIT COMMITTEE REPORT
Management is responsible for the Company’s financial reporting process, including the effectiveness of its internal control over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s financial statements and the Company’s internal control over financial reporting and issuing reports thereon. The Audit Committee’s responsibility is, among other things, to monitor and oversee these processes and to report thereon to the Board.
Throughout 2020, the Audit Committee received regular reports from management, the internal auditors and PwC, the Company’s independent registered public accounting firm, regarding the plans for, and scope and results of, their audits and reviews of the Company’s financial statements and internal control over financial reporting.
Management has represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and PwC.
This review included discussions with PricewaterhouseCoopers LLP of the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees,” as adopted by the Public Company Accounting Oversight Board (“PCAOB”).
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The Audit Committee also received from PwC the written disclosures and letter required by applicable requirements of the PCAOB regarding PwC’s communications with the Audit Committee concerning independence and has discussed with PwC the issue of their independence from the Company.
Based on the foregoing, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
THE AUDIT COMMITTEE
Daniel F. Sansone, Chair
Jean S. Blackwell*
Luis Fernandez-Moreno
J. Michael Fitzpatrick
Karen G. Narwold
*
Ms. Blackwell served as the Chair of the Audit Committee at the time the Audit Committee made the recommendation referred to in this report. Effective February 18, 2021, Mr. Sansone succeeded Ms. Blackwell as Chair of the Audit Committee.
 
 
Proposal
 
 
2
Ratification of the Appointment of
Independent Registered Public Accounting Firm
Our Board recommends a vote FOR ratification of the appointment of PricewaterhouseCoopers LLP
 
 
 
 
 
 
The Audit Committee is directly responsible for appointing, retaining, fixing the compensation of, and overseeing the work of our independent registered public accounting firm. The Audit Committee has appointed PwC to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2021.
Although it is not legally required to do so, the Board has elected to seek stockholder ratification of the appointment of PwC as a matter of good corporate governance. If stockholders do not ratify the appointment of PwC, the Audit Committee will reconsider the appointment. Regardless of the outcome of this proposal, the Audit Committee may, in its discretion, select a new independent registered public accounting firm at any time during the year if it believes such a change would be in the Company’s best interest.
Representatives of PwC will present at the Annual Meeting. They will have the opportunity to make a statement if they so desire and will be available to respond to appropriate questions from stockholders.
Recommendation of the Board
The Board recommends a vote “FOR” the ratification of the appointment of PwC as the independent registered public accounting firm of the Company.
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EXECUTIVE COMPENSATION MATTERS
Ingevity’s Executive Officers
Set forth below is information about our executive officers as of March 8, 2021, with the exception of Mr. Fortson, who is also a director. See page 21 for a description of Mr. Fortson’s experience and skills. Mr. Woodcock has served in his position with the Company since the Separation from WestRock. Mr. Smith joined the Company in June 2016 and was promoted to his current position in January 2017. Ms. Cozad joined the Company in February 2021.
Michael P. Smith  (age 60)

Mr. Smith serves as Executive Vice President and President, Performance Chemicals, Strategy and Business Development. Mr. Smith joined Ingevity in June 2016 after 23 years of service at FMC Corporation. He served as Vice President and Global Business Director for FMC’s Health and Nutrition business after holding multiple positions of increasing responsibility within that business. During his career with the company, Mr. Smith held various roles including Marketing Manager for FMC Water Treatment Chemicals in Manchester, England; Global Business Manager for FMC Process Additives, also in Manchester; Director of Business Planning for FMC Chemicals; Division General Manager for the Active Oxidants division; Division General Manager for Hydrogen Peroxide; General Manager for Food Ingredients for FMC BioPolymer; and Division General Manager for FMC BioPolymer. Prior to joining FMC, Mr. Smith held several sales and management positions with Hercules Incorporated, a supplier of hydrocarbon and pine-based resins. Mr. Smith holds a Bachelor of Arts degree in chemistry from the University of Virginia and a Master of Business Administration degree from the University of Michigan.
S. Edward Woodcock, Jr.  (age 55)

Mr. Woodcock serves as Executive Vice President and President, Performance Materials. Mr. Woodcock served as Vice President of MeadWestvaco’s, and later, WestRock’s Carbon Technologies business from 2010 to 2016 after holding multiple positions of increasing responsibility within that business, most recently Global Business Director, Automotive. During his 30-year career with the Company, Mr. Woodcock has held various roles including Business Director, Automotive, for the Asia-Pacific region, Worldwide Marketing Manager for the Chemical Division’s non-U.S. business, Area Sales Manager for Latin America, and Technical Manager for the Process Technology business. Mr. Woodcock holds a Bachelor of Science degree in chemical engineering from the University of Virginia.
Stacy L. Cozad  (age 50)

Ms. Cozad serves as Executive Vice President, General Counsel and Secretary of Ingevity. Ms. Cozad came to Ingevity from Spirit AeroSystems Holdings, Inc. where she served as Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary since September 2017 and Senior Vice President, General Counsel and Corporate Secretary from January 2016 to September 2017. Prior to joining Spirit AeroSystems, Ms. Cozad served in various roles with Southwest Airlines Co., including Associate General Counsel – Litigation from 2009 to 2015 and Senior Attorney from 2006 to 2009. From 1997 to 2006, Ms. Cozad served as an associate and partner in private law practices. Ms. Cozad holds a bachelor’s degree in behavioral science from Concordia University Texas and a Juris Doctor degree from Pepperdine University.
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
This Compensation Discussion and Analysis (“CD&A”) discusses the compensation program and the compensation decisions made for fiscal year 2020 with respect to the following Named Executive Officers (“NEOs”):
Name
Title
John C. Fortson
President & Chief Executive Officer and Interim Chief Financial Officer & Treasurer
Michael P. Smith
Executive Vice President & President, Performance Chemicals, Strategy and Business Development
S. Edward Woodcock
Executive Vice President & President, Performance Materials
D. Michael Wilson
Former President and Chief Executive Officer
Richard B. Kelson
Former Interim President and Chief Executive Officer
Katherine P. Burgeson
Former Executive Vice President, General Counsel & Secretary
Effective February 20, 2020, Mr. Wilson resigned from his position as President and Chief Executive Officer of the Company and as a member of our Board. Effective as of the same date, Richard B. Kelson, the Company’s Board Chair assumed the position of interim President and CEO. Effective September 1, 2020, the Board appointed Mr. Fortson as President and Chief Executive Officer in addition to holding the position of Interim Chief Financial Officer and Treasurer. Upon Mr. Fortson’s appointment as President and CEO, Mr. Kelson resumed his position as Non-Executive Chairman of the Board. Effective July 13, 2020, Ms. Burgeson transitioned from Executive Vice President, General Counsel & Secretary to the role of Special Counsel until her retirement from the Company effective as of August 1, 2020. This CD&A includes compensation paid to and earned by Mr. Wilson, Mr. Kelson and Ms. Burgeson in 2020.
2020 Business Highlights
See page 4, “Proxy Summary – 2020 Business Highlights.”
Compensation Design; Pay Elements
Ingevity’s compensation program reflects the Company’s “pay-for-performance” philosophy. Compensation is directly linked to business plans and individual performance, with short- and long-term incentive programs based on achievement of key financial metrics and individual performance. We are focused on achieving long-term, sustainable stockholder value, while also recognizing significant annual contributions.
When taken as a whole, along with other elements of our executive compensation program, these pay elements are intended to provide a level of compensation sufficient to attract and retain an effective management team, while being generally targeted around the market median within the Company’s peer group:
Pay Element
Description and Purpose
Base Salary
Fixed cash compensation that recognizes level of responsibilities, contributions towards meeting the Company’s goals and objectives, individual performance and experience, internal pay equity
Also reflects the economic and business environment in which the Company operates and other relevant considerations
Short-term Incentive Plan (“STIP”)
Performance-based cash compensation that rewards achievement of key annual financial performance targets
Performance targets for 2020 STIP were based on STIP Adjusted EBITDA (using corporate results for our CEO and a blend of corporate results and business segment results for the segment presidents)
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Pay Element
Description and Purpose
Long-term Incentive Plan (“LTIP”)
Equity compensation that promotes achievement of long-term strategic objectives and aligns the executive’s interest with those of our stockholders
Fifty percent of the 2020 LTIP opportunity was allocated to Performance Stock Units (“PSUs”) with a three-year performance window, with the balance allocated evenly between Restricted Stock Units and non-qualified stock options
Performance targets for 2020 PSUs were based on a combination of 2022 “ROIC” and “Cumulative EPS” (as defined on page 35)
Additional elements of NEO compensation are described on page 39 under “Retirement Plans, Welfare Benefits and Perquisites.” From time to time the LD&C Committee may authorize a special equity award under circumstances where the Committee deems such an award appropriate and in the best interests of the Company, for example to recognize extraordinary performance and/or to enhance retention.
2020 Pay Mix
The mix of compensation elements awarded this year to our CEO (Mr. Fortson) and Messrs. Smith and Woodcock, the currently employed NEOs (the “Other NEOs”), as illustrated below, reflects our compensation philosophy. Performance-based pay through STIP and LTIP equity awards represents the most significant portion of total compensation. The information below includes Mr. Fortson’s annual equity grant as interim CFO, his performance-based equity award granted upon his appointment as CEO on September 1, 2020, as well as a prorated short-term incentive payment based on eight months as interim CFO and four months as CEO.

Say-on-Pay
The LD&C Committee values the input received from our stockholders on the Company’s executive compensation practices. At the 2020 annual meeting, our stockholders cast an advisory vote on the compensation of our NEOs, with 97.8% of the shares voting to approve the compensation. Although the vote was non-binding, the LD&C Committee reviewed the results of the vote and considered the approval rate as an indication that the stockholders support the Company’s executive compensation philosophy and decisions. The company is again soliciting a non-binding advisory vote at the 2021 Annual Meeting. For more information, see “Proposal No. 3 – Advisory Vote To Approve Executive Compensation (Say-on-Pay)” at page 51.
Executive Compensation Philosophy
Ingevity’s compensation program reflects the Company’s “pay-for-performance” philosophy. Compensation is directly linked to business plans and individual performance, with short- and long-term incentive programs based on achievement of key financial metrics and individual performance. We are focused on achieving long-term, sustainable stockholder value.
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We designed our executive compensation program to attract, motivate and retain highly-talented executives. In setting compensation, the LD&C Committee considers both our peer group and national survey data (“Comparative Compensation Data”). We also consider other factors including the executive's role and level of responsibilities, the importance of the executive's contributions toward meeting the Company's goals and objectives, individual performance and experience, internal pay equity and the economic and business environment in which the Company operates.
The Company's compensation program is meant to:
Support our Business Strategy — Align our program with our business strategy, which is focused on long-term earnings growth and sustained growth in stockholder value, by providing our NEOs with long-term incentives tied to growth and value creation.
Pay for Performance — A large portion of our executive pay is dependent upon the achievement of corporate and business unit goals as well as individual performance. We pay higher compensation when goals are exceeded and lower compensation when goals are not met.
Pay Competitively — Target compensation is set to be around the market median of our peer group and comparative compensation data. However, compensation targets for individual executives may differ from the median based on roles and responsibilities, performance, strategic impact, experience, internal pay equity, special hiring situations, retention, succession planning needs and other relevant considerations.
Align NEO and Stockholders Interests — We provide significant portion of the overall compensation opportunity of our NEOs in the form of equity-based compensation, including performance-based restricted stock units (“PSUs”), and we set multi-year performance goals for the PSUs that align with the long-term interests of our stockholders.
Discourage Excessive Risk Taking — Our program is comprised of balanced short- and long-term, cash and equity elements that discourage excessive risk taking.
Executive Compensation Governance Practices
The LD&C Committee continues to implement and maintain practices in our compensation programs and related areas that reflect responsible corporate governance and compensation policies. These practices include the following:
What We Do
What We Don’t Do
Use performance metrics to align pay with performance
No repricing, backdating or discounting of stock options taking
Balance short-term and long-term incentives through focused use of performance metrics
No hedging, pledging or short sales of Ingevity stock by any director, executive officer or other employee
Link a substantial portion of executive pay to company performance
No excise tax gross-ups for Change-in-Control payments; no income tax gross-ups for executive financial counseling services
Cap incentive compensation to 200% of target performance
No excessive executive perquisites
Maintain a “clawback” policy for misconduct leading to restatement of financial results
Use “double trigger” change of control or severance and equity vesting provisions
 
 
Engage an independent consultant to advise the Committee
Balanced compensation program discourages excessive risk taking
 
 
Roles and Responsibilities: Leadership Development and Compensation Committee, Compensation Consultant, Executive Officers
The LD&C Committee is responsible for assisting the Board in fulfilling its responsibilities with respect to compensation of the Company’s CEO and other senior executives, including the NEOs. The LD&C Committee’s role includes oversight and risk management relating to the Company’s equity compensation and employee benefit plans. Additionally, the Committee has oversight of matters relating to the attraction, development and retention of the Company’s leadership.
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The LD&C Committee has retained Pearl Meyer as its independent compensation consultant. The LD&C Committee has the sole discretion and is directly responsible for the appointment, termination, compensation, and oversight of the work of Pearl Meyer. Although the LD&C Committee retains Pearl Meyer directly, in carrying out assignments Pearl Meyer also interacts with Ingevity management when appropriate. Specifically, Pearl Meyer interacts with the Company’s Chief Human Resources Officer and other members of management with respect to compensation and benefits data, best practices, peer group developments and executive compensation trends. In addition, Pearl Meyer may also seek input and feedback from members of management regarding its consulting work product prior to presentation to the LD&C Committee, for example to confirm its alignment with Ingevity’s business strategy, determine what additional data may need to be gathered or identify other issues. The Committee regularly meets with the Compensation Consultant in executive session—independent of management—and the Committee Chair also speaks on occasion with the Compensation Consultant on executive compensation matters, also independently of management. The Committee also meets in executive session after each regularly scheduled committee meeting.
Pearl Meyer does not provide any services to Ingevity other than its consulting services to the LD&C Committee related to executive and director compensation. The LD&C Committee determined that in fiscal 2020 the work performed for the LD&C Committee by Pearl Meyer did not raise any conflict of interest. In making its determination, the LD&C Committee considered the independence of Pearl Meyer in light of SEC and NYSE listing standards.
The Committee on behalf of the Board is responsible for reviewing and approving the goals and objectives of the Company’s CEO, evaluating the CEO’s performance in light of such goals and objectives, and setting the CEO’s compensation based on such evaluation. The LD&C Committee meets with the CEO to discuss his performance and compensation, but ultimately, decisions regarding the CEO’s compensation are made by the LD&C Committee, meeting in executive session, without the CEO or any other executive present. In setting the compensation for the CEO, the LD&C Committee also takes into account such other matters as the LD&C Committee deems appropriate, including overall leadership and external survey data compiled by Pearl Meyer from our peer group of companies and other Comparative Compensation Data and the advice of its compensation consultant.
The LD&C Committee on behalf of the Board is also responsible for reviewing and approving the compensation of senior executives reporting to the CEO, including the NEOs. In approving compensation for the NEOs, the LD&C Committee takes into account the CEO’s assessment of their performance, addressing such factors as achievement of individual goals and objectives, contribution to Ingevity’s performance and corporate goals and such other matters as the LD&C Committee deems appropriate, including Comparative Compensation Data and the advice of its compensation consultant. In making his recommendations to the LD&C Committee, the CEO is supported by the Company’s Chief Human Resource Officer.
Peer Group Analysis
Consistent with Ingevity’s goal to provide compensation that remains competitive, the LD&C Committee considers among other things, the executive compensation practices of companies in a peer group selected by the LD&C Committee based on recommendation of its compensation consultant. In selecting the peer group, the LD&C Committee considered such factors as: (i) revenue size and profit margins; (ii) industry and business characteristics comparable to Ingevity; (iii) location and geographic reach, including global operations and/or distribution; (iv) competition for talent; and (v) data availability. The LD&C Committee generally targets compensation to the market median within the peer group when determining a NEO’s compensation. However, market data provided by the peer group is only one of several reference points in determining the form and amount of compensation. Competitive market data is supplemented with broader Comparative Compensation Data. Compensation decisions also take into account other relevant factors including an executive’s role and responsibilities, performance, the importance of an executive’s contributions towards meeting the Company’s goals and objectives, experience and tenure, internal pay equity, special hiring situations, retention and other relevant factors that may be present.
The peer group is reviewed periodically for appropriateness and comparability. For 2020, Eagle Materials was removed following its spin-off of its heavy and light materials businesses, and Cabot Microelectronics Corporation, PQ Group Holdings and Tronox Holdings were added based on such factors as industry classification, annual revenues, international revenues, EBITDA margin, market capitalization and pending transactions.
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The following 18 companies comprise the peer group used in connection with evaluating our 2020 executive compensation program:
Balchem Corp.
Hexcel Corp.
Quaker Chemical Corp.
Cabot Corp.
Innophos Holdings Inc.
Sensient Technologies Corp.
Cabot Microelectronics Corporation
Innospec Inc.
Stepan Co.
Ferro Corp.
Kraton Corp.
W.R. Grace and Co.
GCP Applied Technologies, Inc.
Minerals Technologies Inc.
PQ Group Holdings
H.B. Fuller Co.
Omnova Solutions Inc.
Tronox Holdings
NEO Compensation
When taken as a whole, along with other elements of our executive compensation program, the pay elements described below are intended to provide a level of compensation sufficient to attract and retain an effective management team, while being generally targeted to market median within the Company’s peer group. Additional elements of NEO compensation are described on page 39 under “Retirement Plans, Welfare Benefits and Perquisites.”
Our compensation program is designed to discourage excessive risk taking by using several forms of LTI equity instruments, multiple metrics, short- and long-term programs and active LD&C Committee oversight. The Committee’s independent Compensation Consultant also advises the Committee as to the appropriateness of the compensation program relative to discouraging excessive risk.
Base Salary
Base salaries are intended to provide a level of compensation sufficient to attract and retain an effective management team when considered in combination with the long-term and short-term incentive awards and other elements of our executive compensation program. The relative levels of base salary for executive officers are designed to reflect each executive officer’s scope of responsibility, experience and performance, competitive pay levels, market trends in salary adjustments, accountability within Ingevity, economic factors and other relevant factors.
Base salaries are reviewed annually to determine if they are equitably aligned within Ingevity and are at sufficiently competitive levels to attract and retain top talent. In addition, consideration is given to Comparative Compensation Data and such other considerations as the LD&C Committee considers appropriate. The LD&C Committee also reviews base salary compensation with the LD&C Committee’s compensation consultant.
Prior to implementation of base salary adjustments in February 2020, our then-current CEO’s base salary was at the median of the companies in our peer group, and our other then-current NEOs’ base salaries ranged from 89 percent to 108 percent of the market median based on our peer group and Comparative Compensation Data. In February 2020, base pay increases for our then-current NEOs (other than Mr. Wilson) were made to recognize individual performance, experience, roles and responsibilities, and where applicable, to bring compensation more in line with that reflected in Comparative Compensation Data. Mr. Fortson’s data reflects his February 2020 base salary increase as CFO and the further base salary increase that was negotiated upon his appointment as CEO effective September 1, 2020.
NEO
Percentage Increase
2020 Annual Base Salary ($)
John C. Fortson (1)
58.6%
825,000
Michael P. Smith
9.6%
455,000
S. Edward Woodcock
16.4%
425,000
Katherine P. Burgeson
3.7%
415,000
(1)
Mr. Fortson received an 2.9% increase In February 2020 while serving as CFO and on September 1, 2020 he received an increase of 54.2% reflecting his appointment as President and CEO.
Mr. Kelson received $225,000 monthly compensation for serving as Interim President and Chief Executive Officer, plus $90,000 for his annual Board retainer and $100,000 for his Chairman retainer.
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Short-Term Incentive Plan and 2020 Awards
Ingevity’s short-term incentive plan (“STIP”) consists of an annual cash incentive that is designed to motivate and reward participants, generally including NEOs, for achieving Ingevity’s annual financial performance targets and personal performance goals. The incentive award range that a NEO may earn is determined at the beginning of the year as a percentage of the NEO’s base salary. The terms of the plan permit the Committee to make certain discretionary adjustments to exclude the effect of certain non-recurring items of gain or loss, or other adjustments reflecting substantial, out of the ordinary matters. Messrs. Wilson and Kelson did not participate in the 2020 STIP program.
The STIP will be funded for any given year only if the Company meets pre-established financial performance targets, as determined by the LD&C Committee. If earned, funding runs between 25 percent (threshold) to 200 percent (maximum) of the STIP target incentive. For 2020, the “threshold” level of the applicable financial performance objectives was set at 87% of the “target” level financial performance objectives. Linear interpolation is used to determine awards for performance between the identified points. For each NEO, STIP payout is based in part on business performance and in part on his or her personal performance through an “individual performance modifier” (but subject to an overall 200 percent cap, regardless of individual performance). No payout is earned, regardless of personal performance, if Ingevity’s results are below threshold.
The LD&C Committee set 2020 annual earnings before interest, taxes, depreciation and amortization (“EBITDA’’), subject to certain specified adjustments, as the basis for 2020 STIP determinations, believing this to be an appropriate and effective measure of short-term performance. STIP EBITDA is measured company-wide (“Company STIP-Adjusted EBITDA”), and also for each of the Company’s two business segments (“BU STIP-Adjusted EBITDA”)(1). Funding for corporate employees is based 100 percent on Company STIP-Adjusted EBITDA, and funding for business segment employees are based on a blend of Company STIP-Adjusted EBITDA and their respective BU STIP-Adjusted EBITDA.
Mr. Fortson's and Ms. Burgeson’ s STIP funding was based 100 percent on Company STIP-Adjusted EBITDA. Mr. Smith’s STIP funding was based 70 percent on Company STIP-Adjusted EBITDA and 30 percent on Performance Chemicals STIP-Adjusted EBITDA. Mr. Woodcock’s STIP funding was based 70 percent on Company STIP-Adjusted EBITDA and 30 percent on Performance Materials STIP-Adjusted EBITDA.
The 2020 Target Company STIP-Adjusted EBITDA was set at $410 million. At the time the LD&C Committee set the target performance level, the goal was believed to be challenging, but achievable. The maximum level of performance was based on 106 percent of target and was believed to be achievable, but only with exceptional performance. The LD&C Committee set the threshold at 25% funding rather than 50% funding due to volatility in oilfield technologies and certain industrial specialties markets.
The following table shows the 2020 STIP metrics:
Metric(1)
Performance
2020 Goal
Funding
Actual Performance
($ in millions)
Company STIP-
Adjusted EBITDA
Threshold
358
25%
$397.9 Million
Below Target
375
50%
Target
410
100%
Above Target
425
150%
Maximum
435
200%
Performance Chemicals’ BU STIP-Adjusted EBITDA
Threshold
140
50%
$148.7 Million
Below Target
150
50%
Target
170
100%
Above Target
175
150%
Maximum
180
200%
Performance Materials’ BU STIP-Adjusted EBITDA
Threshold
218
50%
$249.2 Million
Below Target
225
50%
Target
240
100%
Above Target
250
150%
Maximum
255
200%
(1)
BU STIP-Adjusted EBITDA for the Performance Chemicals segment is “Performance Chemicals STIP-Adjusted EBITDA”, and for the Performance Materials segment is “Performance Materials STIP-Adjusted EBITDA”. See Appendix A for more details on Company STIP-Adjusted EBITDA, Adjusted EBITDA, Performance Chemicals BU STIP-Adjusted EBITDA and Performance Materials BU STIP-Adjusted EBITDA, and for a reconciliation of these non-GAAP financial measures to the nearest GAAP measure.
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For 2020, the LD&C Committee established the following threshold, target, and maximum STIP incentive opportunities for the NEOs:
NEO
Threshold (as a
percentage of
base salary)
Target (as a
percentage of
base salary)
Maximum (as a
percentage of
base salary)
Mr. Fortson (1)
50%
100%
200%
Mr. Smith
33%
65%
130%
Mr. Woodcock
30%
60%
120%
Ms. Burgeson
30%
60%
120%
(1)
In connection with his appointment as CEO effective September 1, 2020, the LD&C Committee increased Mr. Fortson’s annual incentive target payout to 100 percent of base salary at target (from the 75% payout in effect for 2020 as CFO). This adjustment was made to more closely align this STIP compensation with the market median for the CEO position.
Individual Performance Multiplier. An individual NEO’s annual incentive award is further influenced by the NEO’s achievement of his or her individual goals and overall performance for the year (the “individual performance modifier”). Performance goals are typically established in the beginning of the year and generally include both leadership objectives and strategic business objectives. Individual NEO performance is evaluated by comparing actual performance to the pre-established individual goals, as well as considering individual accomplishments and other relevant performance criteria. The LD&C Committee annually assesses the performance of the CEO and the other NEOs, and an individual performance modifier is determined for each.
For NEOs other than Messrs. Wilson and Kelson and Ms. Burgeson, in determining the individual performance element of each NEO’s short-term incentive payment for 2020, and therefore their final STIP payouts, the LD&C Committee considered each NEO’s individual performance as compared to his or her individual goals and their respective overall contribution to the Company’s performance for the year. See “2020 Business Highlights”, page 4, for a summary of Company performance in 2020.
For Mr. Fortson, the LD&C Committee considered his contributions with respect to his leadership during the COVID-19 pandemic and focus on strengthening the Company’s balance sheet, increasing liquidity by reducing SG&A costs, emphasis on EBITDA, cash flow, and the completion of a bond offering and credit facility amendment that extended the company’s debt maturity profile, as well as the continued strengthening of the Company’s cyber security program.
The LD&C Committee considered for Messrs. Woodcock and Smith their effective leadership in dealing with the effects of the COVID-19 pandemic within the Performance Materials and Performance Chemicals segments. For Mr. Woodcock, the Committee also considered reductions in SG&A costs, record Performance Materials segment EBITDA and record revenue in the second half of the fiscal year for the Performance Materials segment and significant year over year growth in China. In recognition of Mr. Woodcock’s individual performance, the LD&C Committee increase his incentive from 108.7% to 125.0%. For Mr. Smith, the Committee noted that the Performance Chemicals segment’s results were significantly impacted by the COVID-19 pandemic’s effects on global industrial demand reductions across the majority of end use markets. To offset these headwinds, the segment realized material reductions in SG&A and production costs.
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Mr. Wilson and Ms. Burgeson did not receive a STIP payment for 2020. Mr. Kelson was not eligible for a STIP based on his agreement with the Board while serving as interim President and CEO. For 2020, the Committee increased Mr. Fortson’s STIP award to 75% from 70% to reflect the strong performance of the Company and his leadership. On September 1, 2020 Mr. Fortson was appointed President and CEO resulting in an increased STIP target opportunity to 100% from 75%. The resulting STIP payments for our NEOs based on the 2020 STIP financial results, after giving effect to each NEO’s individual performance multiplier, were as follows:
NEO
Target STIP
Percentage
Eligible Salary
($)
2020 STIP Target
($)
2020 STIP Payout
Percentage(1)
2020 STIP Payout
($)
Mr. Fortson(2)
85.9%
630,417
541,562
84.1%
455,453
Mr. Smith
65%
455,000
295,750
72.9%
214,020
Mr. Woodcock(3)
60%
425,000
255,000
125%
315,010
Ms. Burgeson(4)
60%
415,000
249,000
0
0
(1)
See Appendix A for the calculation of the 2020 BU STIP Payout Percentage for Messrs. Smith and Woodcock.
(2)
Mr. Fortson’s STIP payout percentage reflects a proration based on his time as CFO and as CEO. See Appendix A for calculation of his prorated 2020 STIP payout amount.
(3)
Mr. Woodcock’s STIP payout percentage reflects an individual performance increase awarded by the LD&C Committee from the calculated BU STIP Payout percentage of 108.7% to 125.0%.
(4)
Ms. Burgeson took early retirement and was not eligible for a STIP under the terms of the early retirement program. For more information regarding the payments and benefits received by Ms. Burgeson in connection with her early retirement, please see the discussion in the Compensation Discussion and Analysis under the heading “Ms. Burgeson.”
Long-Term Incentive Plan and Awards
Ingevity’s long-term incentive plan (“LTIP”) is designed to recognize the performance of our executives who drive the development and execution of our long-term business strategies and goals. These awards are designed to further align executives’ interests with those of Ingevity’s stockholders, reward executives for stockholder value creation, maintain the competitiveness of our total compensation packages, foster executive stock ownership and promote retention. LTIP awards are granted under the 2016 Omnibus Incentive Plan, which provides for “double trigger” vesting in connection with a change in control, as described under the heading “Severance and Double Trigger Change of Control Arrangements” on page 38.
The awards granted annually under the Company’s LTIP are delivered in three components: Performance-Based Restricted Stock Units (“PSUs”) represent 50 percent of each NEO’s annual LTIP opportunity, and non-qualified stock options and service based Restricted Stock Units (“RSUs”) each represent 25 percent of such opportunity. The Committee considers this an appropriate allocation, as performance-orientation is reflected in the PSU and option opportunities, while grants of RSUs enhance our ability to retain our management team over a longer-term horizon. The values of individual NEO awards as a percentage of base compensation are set early in each year by the LD&C Committee, in accordance with the Company’s executive compensation philosophy. The number of shares subject to each LTIP component is based on the closing price of the Company’s shares on the date of grant.
Mr. Kelson did not participate in the Company’s LTIP program for NEOs. Instead, under Mr. Kelson’s agreement as interim President and CEO, he was eligible for his annual RSU grant as a Director of the company. This grant was in the amount of $113,246 and was awarded in April 2020 as DSUs based on his election.
Mr. Wilson did not receive an LTIP award under the Company’s 2020 LTIP program.
Service-Based Restricted Stock Units
RSUs generally vest ratably in one-year increments over three years from the date of grant, provided the recipient meets the terms including continued service. 2020 RSU award grants are reflected in the tables “Grants of Plan Based Awards in 2020,” and “Summary Compensation Table”. The 2020 award under our regular LTIP program for each NEO (other than Messrs. Kelson and Wilson) as a percentage of base salary is as follows:
2020 RSU Grants (as a percentage of base salary)
Mr. Fortson
43.8%
Mr. Smith
32.5%
Mr. Woodcock
31.3%
Ms. Burgeson
28.8%
Mr. Fortson’s percentages are based on his annual compensation of $535,000 as of date the award was granted.
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Non-Qualified Options
Options vest ratably in one-year increments over three years from the date of grant, provided the recipient meets the terms of the award including continued service. Options have an exercise price equal to the fair market value per share on the date of grant and have a ten-year term. Grants prior to 2020 vested in full on the third anniversary date of the grant. In 2019 the LD&C Committee approved the change from 3-year cliff vesting to 3-year ratable vesting to bring options vesting in line with peer group practices and Comparative Compensation Data.
The options granted as a part of the 2020 LTIP program to each NEO (other than Messrs. Kelson and Wilson) as a percentage of base salary is as follows:
2020 NQO Grants (as a percentage of base salary)
Mr. Fortson
43.8%
Mr. Smith
32.5%
Mr. Woodcock
31.3%
Ms. Burgeson
28.8%
Mr. Fortson’s percentages are based on his annual compensation of $535,000 as of the date the award was granted.
Performance-Based Restricted Stock Units
PSUs vest on the third anniversary of the date of grant, provided the recipient meets the terms including continued service. Payout is dependent on the achievement of pre-determined performance targets set by the LD&C Committee for the related three-year performance period.
The LD&C Committee determined that for PSU awards granted in 2020 (“2020 PSU Awards”), 2022 adjusted return on invested capital (ROIC)1 and adjusted three-year cumulative earnings per share (Cumulative EPS)1 continued to be an appropriate and effective measure of Ingevity’s overall performance, and established threshold, target and maximum performance targets for the related three-year performance period from January 1, 2020 through December 31, 2022.
There is no payout for performance under threshold. Payout at threshold is at 25 percent of units granted, at target is 100 percent and at maximum is 200 percent. The LD&C Committee set the threshold at 25 percent funding rather than 50 percent, due to volatility in oilfield technologies and certain industrial specialties markets. Linear interpolation is used to determine award payouts between these pre-determined points. At the time that the performance levels were set, target level of performance was believed to be challenging, but achievable; maximum level was believed to be achievable, but only with exceptional performance.
The 2020 PSU Awards vest on performance certification by the LD&C Committee. The number of vested shares are determined based on the Company’s financial performance relative to the pre-established ROIC and Cumulative EPS targets for the 2020-2022 performance period, with adjusted payouts for threshold, target and maximum performance (capped at 200 percent payout), as determined by the LD&C Committee at the end of the performance period.
In 2020, the NEOs (other than Messrs. Kelson and Wilson) were granted the following 2020-2022 PSU opportunity:
2020-2022 PSU Targets (as percent of base salary)
Threshold
Target
Maximum
Mr. Fortson
35.4%
141.6%
283.2%
Mr. Smith
16.3%
65.0%
130%
Mr. Woodcock
15.6%
62.5%
125%
Ms. Burgeson
14.4%
57.5%
115%
Mr. Fortson received a $700,000 PSU award upon being appointed President and CEO on September 1, 2020, in addition to his February 2020 grant of $468,146. The percentages are based on $825,000, his compensation at the time of his appointment as CEO. The targets and vesting terms for the $700,000 RSU grant are consistent with those described above for the 2020 PSU Awards granted in February 2020.
1
See Appendix A for more detail on the calculation of ROIC and Cumulative EPS.
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PSU Target Metric Adjustments
The LD&C Committee may adjust PSU metrics from time to time to exclude the effect of certain non-recurring items of gain or loss or other significant, out of the ordinary matters, where they had not been factored into established performance targets, such as mergers, acquisitions and dispositions; entry into joint ventures; significant restructurings; or changes in accounting rules or tax codes. These adjustments are made to ensure that executives are neither unduly rewarded nor penalized for successfully implementing Board-approved strategic initiatives, or as a result of external events such as changes in effective tax rates.
In late 2018 and early 2019, the LD&C Committee considered the impact of several significant, unplanned 2018 events impacting Company results, including Average ROIC and Cumulative EPS:
the reduction in the Company’s effective tax rate (U.S. Tax Reform of 2017);
the 2018 acquisition of Georgia-Pacific’s pine chemicals business;
the 2018 acquisition of the remaining 30% interest in the Company’s Purification Cellutions, LLC joint venture; and
the 2019 acquisition of the Capa business.
Consistent with the approach described above, the LD&C Committee approved adjustments, both positive and negative, to the ROIC and Cumulative EPS targets for the PSUs granted for 2018. This approval reflected the LD&C Committee’s judgment that adjustment of performance targets of unvested LTIP grants was appropriate in light of these significant, non-recurring items, such that executives would not be unduly rewarded nor penalized.
Consistent with the approach described above and the actions taken with respect to 2018 events, the LD&C Committee approved further adjustments, both positive and negative, to the ROIC and Cumulative EPS targets for the PSUs granted for 2018 based on unplanned events occurring in 2018 and 2019. This approval similarly reflected the LD&C Committee’s judgment that adjustment of performance targets of unvested LTIP grants was appropriate in light of these significant, non-recurring items, such that executives would not be unduly rewarded nor penalized.
Payments of 2018 PSUs Awards
The PSU awards made in 2018 (“2018 PSU Awards”) had ROIC and Cumulative EPS as the performance targets for the related 2018-2020 performance period. The performance targets for these grants were established in the beginning of 2018, reflecting the long-term goals in place at that time. As indicated above under “Metric Adjustments” the Committee made adjustments to these targets to reflect the impact, both positive and negative, from the changes described.
The table below shows the adjustments to the financial metrics for the 2018 PSU Awards:
Metric
Performance
Goal before
Adjustment
Adjusted Goal
Cumulative EPS (weighted 50%)
Threshold
$10.37
$11.39
Target
12.20
$13.40
Maximum
$13.42
$14.74
2020 ROIC (weighted 50%)
Threshold
22.46%
12.93%
Target
24.96%
15.43%
Maximum
27.46%
17.93%
The LD&C Committee approved payment to the NEOs of the 2018 PSU Awards, based upon the achievement of ROIC goal between threshold and target levels and Cumulative EPS three-year performance goal between target and maximum levels. As a result, these PSUs were paid at 123% percent of the amount of the target number of PSUs. In determining performance results, the Committee previously determined that it would be appropriate to make adjustments for certain unanticipated, extraordinary costs that were incurred in 2018, the year in which the Company initiated litigation to protect certain intellectual property against infringing activity. Therefore, the Committee approved adjustments to actual performance to include those 2018 litigation costs, which resulted in a $0.55 positive adjustment to Cumulative EPS results and a 0.36 percent positive adjustment ROIC costs.
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The LD&C Committee certified and approved the payout based on Cumulative EPS of $14.54 and 2020 ROIC of 13.50 percent as described in the table below:
Metric
Threshold
(50%)
Target
(100%)
Maximum
(200%)
Actual
Performance
Funding
Cumulative EPS(1)
(weighted 50%) - as adjusted
$11.39
$13.40
$14.74
14.54
185%
2020 ROIC(1)
(weighted 50%) - as adjusted
12.93%
15.43%
17.93%
13.50%
61%
(1)
See Appendix A for more details on the calculation of actual performance on the Cumulative EPS and Average ROIC.
Payment calculation for 2018 PSU Awards settled in February 2021, is described in the table below:
Name
Target Units
Percentage Payable
Units Payable
John C. Fortson
5,899
123%
7,256
Michael P. Smith
2,937
123%
3,613
S. Edward Woodcock
2,203
123%
2,710
Katherine P. Burgeson
2,097
123%
2,579
Mr. Wilson’s 2018 PSU Awards were forfeited upon the termination of his employment, and Mr. Kelson did not participate in the Company’s 2018 LTIP program for NEOs.
Additional Elements of NEO Compensation
Other than Mr. Kelson, our NEOs generally participate in the same retirement and welfare benefit plans as other Ingevity employees. Such plans are intended to be competitive with market practice and are described on page 39 under “Retirement Plans, Welfare Benefits and Perquisites”. Where IRS rules limit the ability of executives to participate at the same level as other employees, they may participate in a non-qualified deferred compensation plan, which is described more fully on page 47. We do not offer a defined benefit pension plan. However, the Company maintains a Retirement Restoration Plan that mirrors benefits provided under a qualified defined benefit plan sponsored and maintained by our former parent company, WestRock (the “WestRock Pension Plan”).
The Retirement Restoration Plan is a non-qualified plan that was adopted by the Company to honor historical WestRock obligations under an Employee Matters Agreement between WestRock and the Company as part of the Separation. The plan was frozen at the time of the Separation, and none of our NEOs currently accrue a benefit under this plan.
Our perquisites program is limited and designed to promote the security and wellbeing of our executives, thereby allowing them to focus on Company business. Executive perquisites are financial counseling and executive physicals. The value of the financial counseling is credited to the NEO as imputed income. There is no tax gross-up.
Other Compensation Policies and Practices
NEO Stock Ownership Policy
Our stock ownership guidelines align the long-term interests of our NEOs with those of our stockholders and discourage excessive risk taking. Our guidelines require stock ownership levels as a value of Ingevity shares equal to a multiple of base salary or retainer for non-employee directors. The Ownership Guidelines require all NEOs to retain 50 percent of net shares received under LTIP awards until the following stock ownership levels are met:
Position
Required Salary Multiple
CEO
5x
Other NEOs
3x
In determining compliance with these guidelines, stock ownership includes shares and unvested RSUs. Unvested PSUs and vested but unexercised stock options are not included. Executives generally have five years from the date of their designation to achieve the targeted level of ownership. As of December 31, 2020, Mr. Smith has met his ownership guidelines, and the other NEOs employed on that date are on track to achieve their target ownership levels in a timely manner.
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Anti-Hedging
Ingevity’s insider trading policy prohibits members of our Board, officers and other employees from trading in options, warrants, puts and calls or similar instruments of Company securities or selling Company securities “short.” The policy also prohibits holding Company securities in margin accounts.
Recoupment Policy
We maintain a compensation recoupment (or “claw-back”) policy covering our NEOs. In the event of a material restatement of the Company’s financial statements filed with the SEC, the Company’s Board will review the facts and circumstances that led to the requirement for the restatement. In that review, the Board will consider whether any covered current or former executive received Incentive Compensation (as defined in the policy) that was awarded or paid based in whole or in part on the apparent achievement of financial results that were determined by reference to the originally filed financial information, but which financial results were not achieved under the Company’s restated results. The Board will further consider whether any such current or former executive engaged in Misconduct (as defined in the policy) that resulted in or substantially contributed to the material restatement.
If the Board determines that any covered executive engaged in Misconduct and received Incentive Compensation within the three-year period preceding the restatement that would not have been payable if the original financial information had reflected the restated results of operations, the Board has the power to direct that the Company recover all or a portion of the excess Incentive Compensation.
The Board may consider such factors as it shall determine relevant in determining the appropriate recoupment from a covered current or former executive and the means of recovery. The Board may seek recoupment from any of the following sources: future payments of incentive compensation, cancellation of outstanding equity awards, future equity awards and direct repayment.
Equity Grant Practices
The LD&C Committee has adopted equity grant practices that set forth guidelines for the granting of equity based compensation, including, among others, approval of annual awards by the LD&C Committee at regularly scheduled first quarter committee meeting, no back-dating of awards, and providing limited discretion to the CEO to grant awards to employees who are not executive officers for the purpose of attracting, retaining and motivating such employees.
Severance and Double Trigger Change of Control Arrangements
The LD&C Committee approved severance and double trigger change of control agreements covering each of the NEOs (other than Mr. Kelson), which became effective on March 1, 2017.
A NEO whose employment is terminated by the Company in the absence of a change of control is entitled to receive severance benefits, provided the termination was without Cause (as defined). A NEO whose employment is terminated within two years after a change of control is entitled to receive severance benefits provided the termination was without Cause or is a resignation by the NEO for Good Reason (as defined). The purpose of the agreements is to ensure that Ingevity (a) offers benefits that provide an overall compensation package that is competitive with that offered by other companies with whom Ingevity competes for talent; (b) retains and relies upon the undivided focus of its senior executives during and following a change of control; and (c) diminishes the inevitable distraction of our NEOs by virtue of personal uncertainties and risks created by the potential job loss following a change in control. The cash severance entitlement is equal to a multiple of the NEO’s actual base salary and target annual incentive, which varies by executive level, and in the case of change of control severance, the multiple is enhanced. The agreements also include one-year post-termination restrictive covenants relating to non-solicitation of customers and employees and non-competition provisions. All severance payable is further subject to the NEO signing an appropriate release of claims. None of the agreements include any tax gross ups arising from any excise tax imposed by the Internal Revenue Code on excess parachute payments.
The treatment of Ingevity’s equity awards in the event of a change of control is governed by the award agreements and our 2016 Omnibus Incentive Plan, which was amended in 2019 to clarify that vesting of our NEOs’ awards occurs on a double-trigger basis (that is, upon both a change of control and a qualifying termination of employment without cause or for good reason). In particular, under the 2016 Omnibus Incentive Plan, outstanding Ingevity equity awards that are replaced by the acquirer in a change of control by a qualifying replacement award will not become vested as a result of the change of control and instead will remain subject to the vesting conditions of the replacement award, with accelerated vesting in full (without pro-ration) only in the event of involuntary termination or termination by the employee for good reason. In the
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event of a change of control of Ingevity in which the acquirer does not issue replacement awards, outstanding performance based awards would vest on a pro-rata basis up to the date of the change of control, based on performance through that date (or the target level of performance, if higher) and time-based awards would vest in full (without pro-ration) as of the date of the change of control.
Retirement Plans, Welfare Benefits and Perquisites
NEOs (other than Mr. Kelson) participate in each of the benefit plans or arrangements that generally are made available to all U.S. based salaried employees including:
medical and dental benefits;
life, accidental death and disability insurance; and
401(k) retirement plan with a 6 percent Company match, 3 percent non-contributory Company contribution and a 5-year Company transition contribution of either 10 percent for employees grandfathered in the WestRock final average pay pension plan or 4 percent for employees grandfathered in the WestRock cash balance pension plan. These transition contributions terminate December 31, 2020.
Additional benefits made available to NEOs are:
financial counseling; and
executive physicals.
The value of the financial counseling is credited to the NEO as imputed income. There is no tax gross-up.
The Company also makes available a non-qualified deferred compensation plan to a select group of highly compensated employees, including the NEOs, which allows participants to defer up to 80 percent of their base compensation and 100 percent of their annual incentive. The plan also contains a restoration component that restores lost defined contribution benefits due to IRS limits.
Mr. Wilson
Effective February 20, 2020, Mr. Wilson resigned from his position as President and Chief Executive Officer of the Company and as a member of our Board. Upon his resignation, Mr. Wilson entered into a Separation and Release Agreement (the “Separation Agreement”) that terminated that certain Severance and Change of Control Agreement between Mr. Wilson and the Company, dated March 1, 2017 (except for the non-competition, non-solicitation, confidentiality and certain other restrictive covenants specified in that Separation Agreement), and Mr. Wilson did not receive any severance pay from the Company. In connection with his resignation, Mr. Wilson was entitled only to retain stock options that had previously become vested, his PSUs earned for the 2017-2019 performance period, and his vested account balance under the Ingevity Corporation Deferred Compensation Plan. Mr. Wilson received no cash payments, outside from payments on account of any accrued unused vacation, as a result of his resignation.
Ms. Burgeson
On June 16, 2020, Ms. Burgeson participated in the Company’s previously announced early retirement program available to certain U.S. employees who met minimum age and length of service requirements. Effective July 13, 2020, Ms. Burgeson transitioned from Executive Vice President, General Counsel & Secretary to the role of Special Counsel until her retirement from the Company effective as of August 1, 2020. Pursuant to the terms of the early retirement program, Ms. Burgeson received (i) a lump sum severance payment of $415,000 equal to 1 times her annual base salary; (ii) accelerated vesting of all of her unvested stock options and a pro rata portion of her outstanding RSUs and PSUs (contingent upon achievement of applicable performance goals, in the case of PSUs); (iii) a lump sum cash payment of $598,592 for her unvested RSUs and PSUs based on the closing price of the Company’s common stock on the date of her retirement; (iv) a lump sum payment of $11,971 for any accrued and unused vacation time as of her retirement date; (v) a three-month COBRA subsidy of $3,300; and (vi) access to certain financial planning services for the remainder of 2020. Ms. Burgeson’s benefits under the early retirement program were contingent upon her execution of a general release of claims in favor the Company and its affiliates. For more information regarding the amounts of payments and benefits received by Ms. Burgeson in connection with her early retirement, please see the disclosure on page 43 of this Proxy Statement.
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Risk Analysis
The LD&C Committee reviewed Ingevity’s executive and non-executive compensation programs to assess whether they encourage or create excessive risk-taking not in the best interest of the Company or its stockholders.
In conducting this assessment, the LD&C Committee reviewed various components and design features of all of the Company’s executive and non-executive plans and programs and analyzed them in the context of risk mitigation. A summary of the findings of the assessment was provided to the LD&C Committee, which concluded that Ingevity’s compensation arrangements are not constructed or administered in a way that is likely to create risks that could materially and adversely affect the Company.
Among the factors considered in the assessment and reviewed by the LD&C Committee were: (i) the balance of the Company’s overall program design, including the mix of cash and equity compensation; (ii) the mix of fixed and variable compensation; (iii) the balance of short-term and long-term objectives of our incentive compensation; (iv) the performance metrics, performance targets, threshold performance requirements and capped payouts related to our incentive compensation; (v) the Company’s share ownership guidelines, including share ownership levels, retention practices and prohibitions on hedging, pledging and other derivative transactions related to Ingevity stock; (vi) the LD&C Committee’s ability to exercise negative discretion to reduce the amount of the annual and long-term incentive awards; (vii) the existence of a recoupment policy; and (viii) internal controls and oversight structures in place at the Company.
Based on its review, the LD&C Committee’s deliberations and such other matters as the LD&C Committee deemed relevant, the LD&C Committee believes Ingevity’s well-balanced mix of salary and short-term and long-term incentives, as well as the performance metrics that are included in the incentive programs, are appropriate and consistent with the Company’s risk management practices and overall strategies.
Tax and Accounting Considerations
The LD&C Committee considers tax and accounting considerations in structuring our executive compensation program.
Section 162(m) of the Internal Revenue Code (“Section 162(m)”) was amended by the Tax Cuts and Jobs Act of 2017 to significantly expand the disallowance of tax deductions to public companies for compensation over $1 million paid for any fiscal year to the Company’s covered employees (generally, the chief executive officer, chief financial officer and three most highly compensated executive officers (other than the chief executive officer or chief financial officer)). As a result of the amendments to Section 162(m), except as otherwise provided in the transition relief provisions of the Tax Cuts and Jobs Act of 2017, compensation paid to any of our covered employees generally will not be deductible to the extent that it exceeds $1 million. However, the LD&C Committee believes that stockholder interests are best served if the LD&C Committee’s discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expenses. Thus, the LD&C Committee reserves the ability to approve compensation that is not deductible for income tax purposes, where the LD&C Committee determines that such compensation is appropriate.
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LEADERSHIP DEVELOPMENT AND COMPENSATION COMMITTEE REPORT
The LD&C Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the LD&C Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K for fiscal 2020.
THE LEADERSHIP DEVELOPMENT AND COMPENSATION COMMITTEE
Frederick J. Lynch, Chair
Jean S. Blackwell
Diane H. Gulyas
Daniel F. Sansone
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COMPENSATION TABLES AND OTHER MATTERS
SUMMARY COMPENSATION TABLE
The table below includes the total compensation of our Chief Executive Officer, our Chief Financial Officer and the three other most highly compensated executive officers of our Company during 2020, whom we refer to in this proxy statement as NEOs, for the fiscal year ended December 31, 2020.
Name and Principal Position
Year
Salary(1)
($)
Bonus
($)
Stock
Awards(2)
($)
Option
Awards(3)